COPPER DEVELOPMENT CORP For immediate release: 7.00am 30 September 2015
('CDC' or 'the Company')
Interim results for the six months ended 30 June 2015Copper Development Corporation (AIM: CDC}, the copper development and exploration company focused on the Philippines, today announces its unaudited results for the six months ended 30 June 2015.
The Company announced on 10 February 2015 that it had released its interest in the Basay project on Negros Island in the Philippines by selling for a nominal price its 70% shareholding in Basay Copper Limited to Solfotara Mining Holdings (BVI) Limited, its joint venture partner in that company.
The joint venture agreement with Solfotara Mining Holdings (BVI) Limited required the Company relinquish a 45% interest in Basay on 8 April 2015 if a pre-feasibility study on the project had not been completed. By relinquishing the full 70% holding, the Company incurs no further costs in maintaining the Basay property on a care and maintenance basis or any future liability that could arise therefrom.
Subject to the approval by a general shareholders' meeting to be held on 5 October 2015, the Company has entered into an agreement to sell its interest in the Hinoba-an Copper Project in the. The Hinoba disposal constitutes a fundamental change of business of the Company. CDC also proposes, subject to shareholder approval, to change its name to Life Science Developments Limited and to adopt a new investment policy that involves seeking to invest in or acquire companies within biotechnology, life sciences and related technologies. In addition, the Company intends to appoint Mr. James Mellon to the Board as a non-executive director following the general meeting, conditional on the proposed investing policy being approved by shareholders.
There were no new options or warrants issued during the period and none of the vested warrants and options were exercised during the period.
Cash reserves decreased due to operational costs which purely relate to care and maintenance cost of the two Philippine projects (Sierra Leone only up to the date of disposal) and corporate salary and administration costs, all of which have been cut down to a bare minimum.
Total number of shares in issue as at 30 June 2015 was 37,501,033. No new shares were issued during the period.
Loss per share at 30 June 2015 is 0.70 cents (30 June 2014: 0.87 cents).
A copy of the Interims and this announcement are available from the Company's website, www .copperdevelopmentcorp.com.
Contact details
Copper Development Corporation
Mitch Alland - Chairman Denham Eke - CFO
Beaumont Cornish Limited (Nominated advisor and Broker)
Roland Cornish/ James Biddle
+44 (0)1624 639396
+44 (0)1624 639396
+44 (0)20 7628 3396
-Ends-
Dear Shareholders,
Subject to the approval by a general shareholders' meeting to be held on 5 October 2015, the Company has entered into an agreement to sell its interest in the Hinoba-an Copper Project in the Philippines, which was the original asset when CDC was floated on AIM in December 2010. The Hinoba disposal follows the previously announced release of the Company's interest in the Basay Copper Project in February 2015 and constitutes a fundamental change of business of the Company. CDC also proposes, subject to shareholder approval, to change its name to Life Science Developments Limited and to adopt a new investment policy that involves seeking to invest in or acquire companies within biotechnology, life sciences and related technologies. In addition, the Company intends to appoint Mr. James Mellon to the Board as a non-executive director following the general meeting, conditional on the proposed investing policy being approved by shareholders. Mr. Mellon is a successful, experienced entrepreneur and investor, whose focus since 2012 have targeted the life science sector.
The proposed re-orientation of the Company through the Hinoba-an disposal follows a strategic review by CDC in the wake of the latest downward adjustments in the market consensus of long-term copper price forecasts in late July 2015. Previously, since late-2012 CDC has operated the Hinoba-an Project on a care and maintenance basis, to minimize costs and conserve cash to be able to market the Hinoba-an Project while pursuing actively other potential acquisition, investment or merger opportunities. The Company embarked in April 2012 on an extensive marketing campaign for a sale or joint venture of the project, contacting several Chinese mining companies and some ninety Canadian and Australian junior and mid-sized mining companies, as well as several Philippine mining companies. Despite the attractiveness of the Hinoba-an Project at the then projected US$3.00/lb copper price, interest of Chinese mining companies in a trade sale or a joint venture was negated by the territorial dispute in the South China Sea between China and the Philippines. Other strategic partners or buyers for Hinoba-an Project were restricted due to limited cash resources and the inability to raise additional funds as their share prices were decimated, largely parallel to the sharp decline in CDC's share price since mid-2012.
While the long term copper price forecasts of leading financial institutions had remained at about US$3.00/lb since mid-2012, just recently, in late-July 2015, with the issuing of a new long term copper price forecast by Goldman Sachs, the market for copper projects took a turn for the worse.
The new Goldman Sachs copper price forecast is only one of several recently revised forecasts, but it represents the current general market consensus. This consensus has been reflected in further drops in the share prices of copper focused mining companies, abandonment of projects, and sale of properties at distressed and significantly lower prices. In essence, the market consensus is based on the supply and demand factors that are outlined in the Goldman Sachs report, which has concluded that the market is in oversupply, as base supply is not declining while new supply is coming on-stream; demand is falling, as Chinese demand is faltering; developed markets' demand is flattening; emerging markets' demand (ex. China) is too small to have a material impact; and, as a result, the market is in surplus; productivity improvement, as well as cost deflation (capex + opex), will provide lower cost support, and prices need to fall sharply to incentivize mine closures and disincentivize new supply.
Following the downward adjustment of long-term copper price forecasts in the latest Goldman Sachs forecast and in the new market consensus, CDC completed a strategic review. This review was also stimulated by the fact that several possible investors who had shown interest in buying the Hinoba-an Project at a price in the $2-4 million range withdrew in the wake of the increased negative sentiment surrounding the copper price because they no longer wished to invest in copper. Indeed, as the consensus of the market is that the copper price is not likely to reach US$2.50/lb until after 2020, few investors would be interested in the Hinoba-an Project, considering that the projected internal rate of return is only 12.5% at the latter copper price. This is not sufficient to raise the loan and equity financing that is necessary to invest in the US$480 million capex costs, despite the project being attractive at a US$3.00/lb copper price.
The Company's strategic review also considered the working capital requirements to continue to fund the care and maintenance operations at Hinoba-an. At the current annual burn rate, the cash balance of the Company would last two years. If the Company were delisted, the burn rate could be reduced to one-half the current level. This, net of delisting costs, would last approximately three years. In any case, a two or three year horizon is not sufficient, in
the Board's view, to assure that CDC or the Hinoba-an Project would have sufficient funding under the current outlook for copper projects until the Hinoba-an Project were sold.
The final consideration taken into account by the Board is that, failing a sale of Hinoba-an, any realistic hope of concluding a merger or reverse takeover would be greatly enhanced by the Company becoming a 'clean shell'. But hiving off the Hinoba-an Project to the shareholders as 'stub-equity' would hinder this; the stub-equity would need to be provided with funding of some US$600,000 to cover the cost of management and administration; but that might also last as little as two years - and there was also the problem as to who would assume management of the Project. Against this, the proposed sale of the Hinoba-an Project for US$500,000 obviates the need for providing the stub-equity with US$600,000 and allows the Company the opportunity to pursue investment opportunities with US$1.1 million more cash than in a hive-off to shareholders and thereby the Board envisages negotiating a better deal for shareholders pursuant to future investment activity.
Subject to shareholder approval and completion of the Hinoba-an disposal, the Company anticipates a cash balance of approximately US$1.5 million, that it intends to provide working capital for day-to-day business and for due diligence and investments or acquisitions, in accordance with the proposed new investing policy.
Mitchell Alland
Executive Chairman
29 September 2015
The Directors present their interim report and the unaudited consolidated interim financial statements for Copper Development Corporation (the Company) for the six month period ended 30 June 2015.
Principal activity
The Group was formed primarily to engage in the exploration, development, mining and processing of minerals, petroleum and other mineral oils.
The Company, through its holding company subsidiaries, own 92.5% rights to the Hinoba-an copper mine development project within the jurisdiction of the Republic of the Philippines.
Results and transfers to reserves
The results and transfers to reserves for the year are set out on pages 8 to 11of the interim financial statements .
The Group made a total comprehensive loss attributable to equity shareholders for the year after taxation of US$260,232 (2014: US$314,280).
Dividend
The Directors do not propose the payment of a dividend for the period (2014: US$nil).
Directors
The Directors who served during the period and to date are:
Denham Eke Mitchell Alland
By order of the Board
Denham Eke
Secretary Craigmuir Chambers
Road Town
Tortola British Virgin Islands
Unaudited consolidated statement of comprehensive income
for the six month period ended 30 June 2015
Notes | Period ended 30June 2015 | Period ended 30June 2014 | Year ended 31 December 2014 | |
(unaudited) US$ | (unaudited) US$ | (audited) US$ | ||
Unrealised loss on investment | 12 | (108,605) | ||
Impairment losses | 21 | (16,072,099) | ||
Loss on subsidiary disposal | {60,411} | |||
Operating expenses | ||||
Directors' fees | 4,17 | (84,434} | {90,098) | (179,294) |
Consultants' fees | (7,000} | (7,816) | (13,838) | |
Salaries and wages | (2,024} | (22,714) | (24,874) | |
Other professional fees | (88,805) | (119,415) | (284,841) | |
Travel and entertainment | (12) | {750) | ||
Administration expenses | (47,370} | (112,863) | (182,063) | |
Share option charge | 15 | (3,918) | {3,918) | |
Share warrants charge | 14 | |||
Foreign exchange gains/(loss) | 9,203 | 4,417 | {57,185) | |
Deed payments | 6 | (6,887) | ||
Loss before finance income | 4 | (280,841) | (352,419) | {16,934,354) |
Finance income | 19,613 | 21,887 | 42,585 | |
Loss before income tax | (261,228} | (330,532) | (16,891,769) | |
Deferred tax expense | 5 | |||
Loss after income tax | (261,228) | {330,532) | (16,891,769) | |
Other comprehensive income/(loss) - | ||||
foreign currency translation reserve | 6,704 | 256 | (26) | |
Total comprehensive loss for the period | (254,524} | (330,276} | (16,891,795) | |
Loss attributable to: | ||||
Non-controlling interests | (378} | (2,988) | (1,066,352) | |
Equity shareholders | (260,850) | (327,544) | (15,825,417) | |
(261,228} | (330,532) | (16,891,769) | ||
Total comprehensive (loss)/gain attributable to: | ||||
Non-controlling interests | 5,708 | (15,996) | {1,060,474) | |
Equity shareholders | (260,232) | (314,280) | (15,831,321) | |
(254,524} | {330,276) | (16,891,795) | ||
Basic and diluted loss per share | 20 | (0.0070} | (0.0087) | (0.4220) |
Unaudited consolidated statement of financial position
as at 30 June 2015
Assets
Property, plant and equipment Investment in Crazy Horse Resources
Total non-current assets Current assets
Cash and cash equivalents
Loan receivable
Trade and other receivables Assets held for sale
Total current assets Total assets
Equity
Share premium
Share option reserves Warrants
Foreign currency translation reserve Retained deficit
Shareholders' equity Non-controlling interest Total equity
Notes
6
12
11
9
6
13
15
14
At At
30June 2015 31 December 2014 (unaudited) (audited)
US$ US$
32,208 32,208
32,208 32,208
363,316 586,786
785,850 776,600
86,255 111,686
1,235,421 1,475,072
1,267,629 1,507,280
62,147,849 62,147,849
1,294,823 1,294,823
1,195,694 1,195,694
(103,763) (104,381)
(58,095,358) (57,834,509)
6,439,245 6,699,476
(5,235,687) (5,241,395)
1,203,558 1,458,081
Non-current liabilities
Deferred tax liability 5
Total non-current liabilities Current liabilities
Trade and other payables 10
Total liabilities
Total equity and liabilities
These condensed consolidated interim financial statements were approved September 2015 and were signed on their behalf by:
44 44
44 44
64,027 49,155
64,071 49,199
1,267,629 1,507,280
by the Board of Directors on 29
Mitchell Alland Director
Denham Eke Director
Unaudited consolidated statement of changes in equity
for the six month period ended 30 June 2015
Foreign currency | Total attributable | Non - | ||||||
Notes | Share | Share | exchange | Retained | to | controlling | ||
premium | Warrants | options | reserves | deficit | shareholders | interest | Total | |
US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | |
Balance at 1January 2015 (audited) | 62,147,849 | 1,195,694 | 1,294,823 | (104,381} | (57,834,509} | 6,699,476 | (5,241,395} | 1,458,081 |
Total comprehensive loss for the period | ||||||||
Loss for the period | (260,850) | (260,850) | (378) | (261,228) | ||||
Other comprehensive income/(loss) for | ||||||||
the period | 618 | 618 | 6,086 | 6,704 | ||||
Transactions with owners of the | ||||||||
Company | ||||||||
Share options charge | 15 | |||||||
Balance at 30 June 2015 (unaudited} | 62,147,849 | 1,195,694 | 1,294,823 | (103,763} | (58,095,359} | 6,439,244 | (5,235,687} | 1,203,557 |
Share premium US$ | Warrants US$ | Share options US$ | Foreign currency exchange reserves US$ | Retained deficit US$ | Total attributable to shareholders US$ | Non - controlling interest US$ | Total US$ | |
Balance at 1Janua ry 2014 (audited) | 62,147,849 | 1,195,694 | 1,290,905 | (98,477) | (42,009,092) | 22,526,879 | (4,180,921) | 18,345,958 |
Total comprehensive loss for the period Loss for the period | (327,544) | (327,544) | (2,988) | (330,532) | ||||
Other comprehensive income/(loss) for the period | 13,264 | 13,264 | (13,008) | 256 | ||||
Transactions with owners of the | ||||||||
Company Share options charge | 15 | 3,918 | 3,918 | 3,918 | ||||
Balance at 30 June 2014 (unaudited) | 62,147,849 | 1,195,694 | 1,294,823 | (85,213} | (42,336,636) | 22,216,517 | (4,196,917} | 18,019,600 |
Unaudited consolidated statement of cash for the six month period ended 30 June 2015 | flows | |||
Period ended | Period ended | Year ended | ||
Notes | 30June 2015 (unaudited) | 30 June 2014 (unaudited) | 31 December 2014 (audited) | |
US$ | US$ | US$ | ||
Cash flows from operating activities | ||||
Loss before income tax | (261,228) | (330,532) | (16,891,769) | |
Adjusted for non-cash and non-operating items; | ||||
Share option charge | 15 | 3,918 | 3,918 | |
Share warrants charge | 14 | |||
Unrealised loss on investment | 12 | 108,605 | ||
Impairment losses | 21 | 16,072,099 | ||
Loss on sale of subsidiary | 60,411 | |||
Finance income | (19,613) | (21,887} | (42,585) | |
(220,430) | (348,501) | (749,732) | ||
Change in trade and other receivables | (25,431) | 7,173 | 49,655 | |
Change in trade and other payables | 14,872 | (63,219) | (48,472) | |
Net cash used in operating activities | (230,989) | (404,547} | (748,549) | |
Cash flows from investing activities | ||||
Payment of deferred mine exploration costs | 6 | |||
Net cash used in investing activities | ||||
Cash flows from financing activities | ||||
Interest received | 19,613 | 21,887 | 42,585 | |
Warrants exercised Unrealised foreign exchange (loss) I gains | 13, 14 | (12,094) | 256 | 49,318 |
Net cash generated from financing activities | 7,519 | 22,143 | 91,903 | |
Decrease in cash and cash equivalents | (223,470) | (382,404) | (656,646} | |
Cash and cash equivalents at beginning of period/year | 586,786 | 1,243,432 | 1,243,432 | |
Cash and cash equivalents at end of period/year | 363,316 | 861,028 | 586,786 | |
Notes |
forming part of the condensed consolidated interim financial statements for the six month period ended 30 June 2015
Reporting Entity
Copper Development Corporation is a company domiciled in the British Virgin Islands. The address of the Company's registered office is Craigmuir Chambers, Road Town, Tortola, British Virgin Islands. The condensed consolidated interim financial statements of the Company as at and for the six month period ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the Group and individually as Group entities). The Group primarily is engaged in the exploration, development, mining and processing of minerals, petroleum and other mineral oils.
Basis of preparation
Statement of compliance
The condensed consolidated interim financial statements have been prepared in accordance with IAS34 Interim Financial Reporting and do not include all of the information required for full annual financial statements.
The condensed consolidated interim financial statements were authorised for issue by the Board of Directors on 29 September 2015.
(b) Basis of measurement
Functional and Presentation Currency
The condensed consolidated interim financial statements of the Group are presented in US Dollars {US$), which is the Group's functional currency. All financial information presented in US Dollars has been rounded to the nearest dollar.
Estimates
The preparation of the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2014.
Going concern
The Company's ability to continue as a going concern is dependent upon conducting successful exploration and the recovery of mineral resources and obtaining financing to fund its exploration efforts in the future. Although as at the period end, there is sufficient cash balances to meet current obligations, there can be no assurance the Company will be able to raise sufficient funds as and when funds are required in order to complete its current available projects in entirety. If such funding is not available, the Company may cease operations.
These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and liabilities that might be necessary, should the Company be unable to complete its currently on-going projects. Such adjustments could be material.
It is currently the intention of the Directors to realize its investment in the Hinoba-an project through a disposal (see note 22). However, in light of the global weakness, management has decided that a full impairment was appropriate and recognised a loss during the year ended 31 December 2014.
The Basay project has been relinquished during the year by selling for a nominal price the Company's holding in Basay Copper Limited, see full details in Note 7. The Company's Basay project has remained fully impaired since 2002.
Significant accounting policies
The condensed consolidated interim financial statements of the Company for the period ended 30 June 2015 comprise the Company and its subsidiaries (together referred to as the 'Group').
The accounting policies adopted by the Group in the preparation of these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2014. There were no new accounting policies adopted during the period.
The audited consolidated financial statements of the Group as at and for the year ended 31 December 2014 are available at the Group's website: http: l www .copperd evelopm entcorp. com/investors/financia lreports. html
Loss before finance income
Company loss
The loss made by the Company during the period was US$203,456 (period ended 30 June 2014: US$299,554) (year ended 31 December 2014: US$16,891,795)
Trade and other receivables
At At
30June 2015 31December 2014 (unaudited) (audited)
US$ US$
Advances and deposits - others 12,496 72,868
Prepayments and other debtors 73,759 38,818
86,255 111,686
Trade and other payables
Loans receivable
The Company entered into the following loan arrangements:
On 5 September 2012, the Company placed £350,000 I US$550,095 (year ended 31 December 2014 (US$543,620)with Manx Financial Group pie (MFG) as a bond. The bond bears a fixed rate interest of 5% per annum payable quarterly in arrears. The principal together with any unpaid interest is repayable after 5 years. Total interest earned during the period was £8,678 (US$13,506).
On 3 October 2012, the Company placed £150,000 / US$235,755 (year ended 31 December 2014 US$232,980) with Manx Financial Group pie (MFG) as a bond. The bond bears a fixed rate interest of 5% per annum payable quarterly in arrears. The principal together with any unpaid interest is repayable after 5 years. Total interest earned during the period was £3,719 (US$5,789).
Investment in Crazy Horse Resources
Share premium
At At
30 June 2015 31 December 2014
(unaudited) (audited)
2,496,880 2,496,880
US$ US$
32,208 32,208
(5,861,409) (5,861,409)
(5,829,201) (5,829,201)
Authorised
The Company is authorised to issue an unlimited number of nil par value shares of a single class.
Issued ordinary shares of US$0.00 each
Date Price Shares Share capital US$
Share premium
US$
At 01 January I 31December 2014 (audited)
37,501,033 62,147,849
At 30 June 2015 (unaudited) 37,501,033 62,147,849
Wa rrants
Loss before finance income is stated after charging :
Period ended 30 June 2015 | Period ended 30 June 2014 | Year ended 31 December 2014 | |
Company and Group | (unaudited} | (unaudited) | (audited) |
US$ | US$ | US$ | |
Auditors' Fees | 3,490 | 2,158 | 57,274 |
Directors' Fees (note 17) 84,434 90,098
S Taxation
179,294
Income tax
The British Virgin Islands under the International Business Companies Act 2004 imposes no corporate taxes or capital gains taxes. However, the Group may be liable for taxes in the jurisdictions where it is operating, however such operations are currently loss making.
Deferred tax assets and liabilities
Deferred tax assets have not been recognised because there is insufficient evidence of the timing of suitable future profits against which they can be recovered. The Group's deferred tax liability amounting to US$44 pertains to interest income at a subsidiary level of US$30,869 recognised during the year ended 31 December 2010.
6 Assets held for sale
In 2012, the Group had taken a strategic decision to suspend all the drilling activities in the Hinoba-an project to pursue a trade sale or a joint venture. In accordance with the Group's accounting policy, all costs attributable to this project have been reclassified to Assets held for sale. These costs include the following:
Deferred mine exploration cost
Deferred mine exploration costs represent intangible assets and comprises costs directly attributable to exploration activities. Equipment and other assets used in exploratory activities are capitalised in Property, Plant and Equipment. Depreciation charges in respect of these assets are capitalised in deferred mine exploration costs.
Advances
Refers to the monthly advanced royalty payments to Colet, the total of which shall be deductible from any future carried net benefit payment owed by SMC to Colet under the IMOA.
Assets reclassified from:
Deferred mine exploration costs (note 7)
Hinoba-an Basay
(Selenga) (Adanacex)
Advances Royalties Hinoba-an (Selenga)
Total
COST At 01January 2014 (audited) Additions during the year | US$ 33,493,905 | US$ 12,461,646 | US$ 990,000 | US$ 46,945,551 |
At 31December 2014 (audited) | 33,493,905 | 12,461,646 | 990,000 | 46,945,551 |
Disposal during the period | (12,461,646) | (12,461,646) | ||
At 30 June 2015 (unaudited) | 33,493,905 | 990,000 | 34,483,905 | |
IMPAIRMENT At 01January 2014 (audited) | 18,411,806 | 12,461,646 | 30,873,452 | |
Charge during the year (note 21) | 15,082,099 | 990,000 | 16,072,099 | |
At 31 December 2014 (audited) | 33,493,905 | 12,461,646 | 990,000 | 46,945,551 |
Disposal during the period | (12,461,646) | (12,461,646) | ||
At 30 June 2015 (unaudited) | 33,493,905 | 990,000 | 34,483,905 | |
Net carrying value at 30 June 2015 | ||||
Net carrying value at 31 December 2014 |
Hinoba-an Project
During the previous year, the Company completed an internal interim review of the Hinoba-an Project in the light of the global weakness in copper price which has fallen to 2009 levels. As previously reported, whilst Hinoba-an remains the Company's primary asset, management is currently marketing the project for a possible trade sale (see
note 22). As a result, management concluded that a full impairment was appropriate and recognised impairment loss during the year ended 31 December 2014.
Whilst under care and maintenance, significant cost reductions have been implemented to the minimum necessary to meet the regulatory requirements of the Philippine government for mining companies.
Basay Project
The Basay project has been relinquished during the year by selling for a nominal price the Company's holding in Basay Copper Limited, see full details in Note 7. The Company's Basay project has remained fully impaired since 2002.
7 Investments in subsidiary undertakings
Cost
CDC Philippines Holdings Limited Basay Copper Limited
At 30 June 2015 I 31 December 2014
At At
30 June 2015 31 December 2014
(unaudited) (audited)
US$ US$
1,500,000 1,500,000
1,900,000
1,500,000 3,400,000
All subsidiary companies are included in the consolidated financial statements of Copper Development Corporation. At 30 June 2015, the Group had the following subsidiaries:
Place of Ownership
Name of company incorporation interest Principal activity
Hinoba Holdings (Australia) Pty Limited Australia
CDC Philippines Holdings Limited* British Virgin
Islands
100%
100%
Administration Offices (Dormant) Holding company of Hinoba Holdings (Philippines), Inc.
Hinoba Holdings (Philippines), Inc. Philippines 100%
Holding company of Hinoba-an & Sipalay Holdings
Hinoba-an & Sipalay Holdings,lnc. Philippines 100% Holding company of Selenga Mining Corporation Selenga Mining Corporation Philippines 92.5% Mining exploration
* Held directly by Copper Development Corporation. All other holdings are indirect.
HHPI is a wholly owned subsidiary of CDC Philippines Holdings Limited which is a wholly owned subsidiary of Copper Development Corporation. Hence, the Group has a 100% economic equity interest in the Company and it is consolidated accordingly. ·
Hinoba Holdings (Philippines), Inc. (HHPI) is a wholly owned subsidiary of CDC Philippines Holdings Limited which is a wholly owned subsidiary of Copper Development Corporation. Hence, the Group has a 100% economic equity interest in the Company and it is consolidated accordingly.
Hinoba-an & Sipalay Holdings Inc (HSHI) has two different classes of shares, being class A ordinary shares and class B preferred shares. Hinoba Holdings (Philippines), Inc (HHPI) owns 100% of the class A shares and three Directors of Hinoba-an & Sipalay Holdings Inc. own 100% of the class B shares. The class A shares entitle the holder to 100% of the economic benefits of the Company after the class B shares preference dividend. Holders of class B shares are entitled to a fixed cumulative annual preference dividend equal to 10% of the par value of the Class B shares (which cannot exceed US$32/PHP 1,500 per annum). The voting rights of the class A and B shares are 40% and 60% respectively. The Group has executed Assignable Option Agreements with each of the Class B shareholders which granted the Group a call option to acquire the Class B shares at a total purchase price of PHP 3,396,000 (US$82,800) at any time during a two year term, which originally expired on 08 September 2014, but renewed upon mutual agreement by both parties for a period of two years, and a right of first refusal should a Class B shareholder wish to dispose of his Class B shares. The Group shall also pay the Class B shareholders an annual fee of PHP 300,000 (US$6,887) during the two year option period until the option is exercised.
On signing of the joint venture agreement in April 2011,the Company completed the acquisition of a 70% interest in Basay Copper Limited (BCL) from Solfotara Mining Corp., a private Canadian Company. The acquisition was completed through conversion of an existing US$1.9 million convertible loan. BCL is a company incorporated in the British Virgin Islands which legally and/or beneficially owns 100% of the Basay Project through its wholly owned
subsidiary Adanacex Resources, Inc. (Adanacex). Full details of acquisition are disclosed in the Group's audited consolidated financial statements for the year ended 31 December 2011.
Relinquishment of Basay Project
The Company's holding in the Basay Project has remained fully impaired since 2012, after the Company completed an internal interim report for Basay project which provided a non-AIM compliant estimate of resource and grade that the Board has concluded was insufficient to support a mining operation, and also in view of the lack of progress on the renewal of the exploration permit, which expired in December 2012.
On 10 February 2015, the Company relinquished its interest in the Basay Project on Negros Island in the Philippines by selling for a nominal price its 70% holding in Basay Copper Limited, a BVI company, to Solfotara Mining Holdings (BVI) Limited, its joint venture partner in that company.
The joint venture agreement with Solfotara Mining Holdings (BVI) Limited required the Company relinquish a 45% interest in Basay on 8 April 2015 if a pre-feasibility study on the project had not been completed. By relinquishing the full 70% holding, CDC has no further costs in maintaining the Basay property on a care and maintenance basis or any future liability that could arise therefrom.
Following the relinquishment, the Group derecognised the subsidiary's assets and liabilities and any surplus or deficit arising on the loss of control in recognised in the profit and loss.
At At
30 June 2015 31 December 2014 (unaudited) (audited)
US$ US$
Accounts payable 43,771
Accrued expenses and other payables 20,256 49,155
64,027 49,155
On 1 July 2011, the Company acquired, by way of private placement, a strategic investment in Crazy Horse Resources Inc. (CHR), a copper and gold company traded on the TSX Venture Exchange and owns the Taysan Project, an advanced copper gold porphyry deposit located 100 km south of Manila in the Philippines. At the time of the acquisition Brian Lueck was a Director of both the Company and CHR. The total number of shares acquired was 2,496,880 (post 3:1 share consolidation) at a total cost of US$5,861,409.
This investment is classified as financial asset at fair value through profit or loss. For valuation purposes, it was revalued using the closing bid price as at the reporting period.
Total number of shares held
Market value of investment at closing bid price Total cost
Unrealised loss on investment
A reconciliation of total number of share warrants in issue as at the year-end is set out below. None of these warrants were subject to any vesting period and therefore can be exercised anytime. Accordingly, the value of these warrants has been expensed immediately.
Expiry date | At | Exercised | Expired | At | ||||
Issue | (years from | Exercise | 01January 2015 | during | during the | 30 June 2015 | Fair value at | |
Holder | Date | admission) | Price | (audited) | the period | period | (unaudited) | 30 June 2015 |
Brant Investments | £0.35 | |||||||
Limited | 23/12/10 | 5 years | US$0.55 | 2,000,000 | 2,000,000 | 1,195,694 | ||
2,000,000 | 2,000,000 | 1,195,694 |
The Company has utilised the Black Scholes Model for the purposes of estimating fair value of the warrants upon issue. In accordance with accounting guidance the Company used share price data of a similar actively listed company as the Company did not have its own appropriate share trading data at the point of issue of such warrants.
The following table lists the inputs to the models used for warrants issued at:
23 December 2010
Dividend yield (%) Expected volatility (%) Risk-free interest rate (%) Share price at grant date
Share price (market value) Exercise price
Expected exercise period
100.00%
1.24% US$0.67
US$0.60 US$0.35
4 years
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