The Company is actively seeking new opportunities to expand its exploration portfolio
The equity capital markets for junior exploration and development companies have been dire before, during and after the reporting period. This was a significant factor in the Board's decision, immediately prior to the start of the reporting period, to negotiate the sale of its remaining 25% interest in KEFI Minerals (Ethiopia) Limited (formerly Nyota Minerals (Ethiopia) Limited); the entity that holds the Tulu Kapi gold project in Ethiopia. Shareholders gave their approval at a General Meeting on 3 September 2014 with the transaction completing on 5 September 2014.
The sale raised £750,000 in cash and 50 million new ordinary shares in KEFI Minerals Limited ('KEFI'); taking Nyota's holding in that company to 152,481,158 shares. 144,823,917 KEFI shares were subsequently distributed in‐specie to Nyota shareholders via a reduction in the issued share capital of Nyota equal to the value of those KEFI shares. This in‐specie distribution was approved by shareholders at the General Meeting and completed on 17 September 2014 when Nyota shareholders received 1 Kefi share for every 6 Nyota shares held as at 10 September 2014.
The principal use of funds for exploration in the first half of the financial year was continuing work on the Brantham and Towchester exploration licenses, referred to as the Northern Blocks. Specifically on developing plans for the exploitation of the alluvial river gravel deposits adjacent to the Abay River, or Blue Nile, within the license area for which a mining license application had been submitted in April 2014. The mining license application was refused in January 2015 despite repeated indications of support from the Ministry of Mines. The Board decided that to appeal the decision would be a non‐ productive use of resources given the negligible chance of success.
Following the refusal Nyota initially continued its hard rock gold exploration activities in the Northern Blocks whilst it considered its response and conducted a strategic review of its activities in Ethiopia and new opportunities therein. The main focus for which was to seek third party financial and technical support in order to justify the renewal of the two Northern Block licenses and to seek equity funding support for on‐going operations in Ethiopia.
In February 2015, Nyota announced the acquisition of 70% of the Ivrea nickel project in the Piemonte region of Italy.
Support for a fundraising to complete the proposed work program in Ethiopia for the year was not forthcoming and the Directors decided to withdraw financial support for Brantham and Towchester at the end of April. Notwithstanding this decision, applications for the renewal of the exploration licenses were made by Brantham and Towchester consistent with an option agreement with a third party for the potential transfer of ownership of the companies. These license renewals remain pending at the date of this report. Nyota continues to own 100% of Brantham and Towchester (notwithstanding that they have been deconsolidated from the financial report and accounts of the Group) but should the transfer of ownership be effected, the Company may not receive any disposal proceeds, although it will be relieved of any further liabilities in respect of Brantham and Towchester.
At the end of May a placing of 545,454,545 new shares to raise £300,000 was arranged in order to provide funds for general working capital purposes and to advance the project with an airborne geophysical survey. The airborne geophysical survey was completed in June, while the placing was completed in July. Results provide proof of concept for the Ivrea project and clearly demonstrate the potential of the Alpe di Laghetto area, where a 6km long anomaly has been delineated coincidental with two areas of historic workings.
The Board of Nyota is continuing to review additional project and joint venture opportunities, which it believes is important in order to see a recovery in the value of its shares.
IVREA NICKEL PROJECT ‐ Italy
Figure 1: Location of the Ivrea Nickel Project
In February 2015 Nyota announced that it had concluded a binding agreement to acquire 70% of the Ivrea Project in the Piemonte region of northwest Italy.
The Ivrea Project is focused on the evaluation of that part of the Ivrea Gabbroic Complex that hosts a number of small mines that operated intermittently between the mid‐1800s and early 1900s, with some being brought back into operation between 1937 and 1949. All of them are typical of the lode type, high grade underground style of the time. During the late 1800s ores were smelted locally to a matte containing nickel, copper and cobalt (one reference from 1898 citing matte containing 24% nickel, 12% copper and 6% cobalt) some of which was processed locally and the remainder exported.
The Ivrea Complex has a rare combination of known nickel occurrences, sufficient scale to host a significant nickel deposit, and no modern exploration activities. As well as nickel, there is strong potential for significant by‐product credits from copper, cobalt and precious metals. A combination of these factors plus the fact that virtually no systematic exploration has taken place since the mines closed represents a strong opportunity to build value rapidly.
Transaction Summary
Nyota paid a combined consideration of 75 million new ordinary shares in Nyota and cash of A$100,000 to acquire 70% of the Ivrea Project by acquiring 70% of the issued share capital of KEC Exploration Pty Ltd, a non‐operating tenement holding special purpose company.
Nyota is funding 100% of of the Ivrea Project expenses until such time as either it decides not to continue with the Ivrea Project, or a JORC‐Compliant Mineral Resource of 50,000 tonnes of contained nickel at an average grade of not less than 0.75% (or a metal equivalent) is defined anywhere within the Ivrea Project area (the 'Project Hurdle'). This Project Hurdle would trigger a Deferred Consideration of A$250,000 in cash and 150 million new Ordinary Shares (subject to shareholder approval at the time of issuance). Following which the Ivrea Project minority partners will be required to contribute pro‐ rata to the Ivrea Project funding.
The completion of the airborne survey, as described below, has discharged Nyota's initial exploration work programme and budget for the first 12 months.
Project Progress
Rapid progress with the project has been made since acquisition. Most significantly an airborne geophysical survey has been completed, covering a total of 431 line kilometres, with the objective of identifying any extensions to the nickel sulphide mineralisation mined historically and any additional accumulations of sulphides in chosen areas of interest that may host nickel and associated base and precious metals.
Significant conductors were detected at three of the target areas surveyed with anomalies close to old nickel mines and exhibiting conductivity characteristics that are consistent with massive sulphide mineralisation. Specifically, adjacent conductivity and magnetic responses are evident over approximately 6km in the Alpe di Laghetto survey block that are in alignment with the old mine workings at Alpe di Laghetto and La Balma (Figure 2).
The highest order exploration target is the Alpe di Laghetto survey block followed by the two other anomalous areas of Fej and Gula. The aim is to drill one of these targets during the next twelve months.
Further work will also be required to assess the areas in and around the historic mines that exhibited no anomalous response to the EM survey; of which there are four.
Figure 2: Alpe di laghetto and La Balma area of interest
THE NORTHERN BLOCKS ‐ Ethiopia
An application for the renewal of the Northern Block licences was submitted in July 2014 and the renewals were received in December; enabling fieldwork to recommence promptly in early 2015. This fieldwork focused on the NW‐trending structural corridor that hosts the known mineralisation at Boka West, Bendokoro and Tsoli‐Mole. Field activities comprised mainly of mapping and sampling (soil; heavy mineral concentrate and rock chip).
Work also continued on planning the implementation of the mechanised mining of the gold‐bearing alluvial river gravels along the Blue Nile. After receiving initial strong support from the Ministry of Mines, a mining licence application for this project was submitted in April 2014 and revised in October 2014 based on their feedback. Preparations for implementation included engaging a local development partner and supplier of earth moving equipment, starting discussions with potential sources of finance, a visit by a prospective project manager and working with plant equipment suppliers in South Africa.
The application for a mining licence was rejected by the Ministry of Mines in January 2015. The government rationale for its decision is that the success of the Grand Ethiopian Renaissance Dam and its intended transformation of the Ethiopian economy is so much in the national interest that the risk of any negative impacts arising from any mining activities outweigh the potential economic gains from gold royalties and taxes during the period that those activities might take place before flooding from the dam.
Following the decision on the mining license application, the Board conducted a strategic review of the Group's remaining activities in Ethiopia, although usual exploration activities on the Northern Blocks continued until the end of March 2015 with the goal of drilling the Boka West gold prospect the following quarter. The Northern Block project was subsequently placed on care and maintenance in April 2015 and no further technical work has been undertaken since.
TULU KAPI ‐ Ethiopia
At the date of this report, Nyota has no interest in the Tulu Kapi project.
Those Nyota shareholders that were shareholders on 10 September 2014 have benefited from an in‐species distribution of shares in KEFI to them. During the reporting period the Tulu Kapi project occupied almost none of the Directors' time and no summary of activities is included; although the costs associated with the sale transaction and distribution are included in the report and accounts. Shareholders that received KEFI shares should obtain an update on the Tulu Kapi project directly from KEFI.
CORPORATE
Tulu Kapi Project and KEFI Shareholding
In June 2014 a further agreement, subject to the approval of Nyota's Shareholders, to sell the remaining 25% interest to KEFI was announced. The consideration for which would be £750,000 in cash and 50,000,000 new ordinary KEFI shares (Second Sale).
Shareholders gave their approval to the Second Sale at a General Meeting on 3 September 2014 and the Second Sale consideration was received on 5 September 2014.
In addition, the Nyota shareholders approved a pro‐rata in‐specie distribution to shareholders of 1 KEFI share for every 6 Nyota shares. This distribution was achieved via a reduction, of $3,688,287 (being the market value of 144,823,917 KEFI shares distributed), in the issued share capital of Nyota, without the cancellation of any Nyota shares. This in‐specie distribution was to shareholders at the record date of 10 September 2014 and was completed on 17 September 2014.
Competent Person's Statement
The information in this annual report that relates to exploration results is based on information reviewed and approved by Richard Chase, Chief Executive Officer of Nyota and a Member of the Institute of Materials, Minerals and Mining and a Fellow of the Geological Society of London. Mr Chase is a full time employee of the Company and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and as a qualified person under the AIM Note for Mining and Oil & Gas Companies. Mr Chase consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.
DIRECTORS' REPORT
Your directors present their report on the consolidated entity (referred to hereafter as the 'Group') consisting of Nyota Minerals Limited (Nyota or the Company) and the entities it controlled at the end of, or during, the year ended 30 June 2015 (Financial Year).
Directors
The following persons were directors of the Company during the whole of the Financial Year and up to the date of this report:
Richard Chase; Michael Langoulant and Evan Kirby
Information on Directors
Richard Chase Aged 43 ‐ Executive director (Appointed June 2011)
Richard Chase holds a BSc (Hons.) in Geology from the University of Birmingham and a MSc in Exploration Geology from the University of Rhodes, South Africa. In addition he is a Member of Institute of Materials, Minerals and Mining and a Fellow of The Geological Society. He has 20 years' experience in the resources sector: eight of those working in the mining industry as an exploration and mining geologist with SAMAX Resources, which was acquired by Ashanti Goldfields in 1998 and the last eight with Ambrian Capital Plc, the AIM‐listed natural resources investment bank. Richard was Managing Director of the Board of Ambrian Partners Limited (a wholly owned subsidiary of Ambrian Capital plc) from September 2009 until May 2011.
Special Responsibilities Executive director Qualifications
BSc (Hons) Geology; MSc Exploration Geology
Interests in shares and options
Ordinary Shares 476,713
Current listed directorships
None
Former listed directorships in last 3 years
None
Michael Langoulant Aged 58 -Executive Director (Appointed April 2005)
Mike Langoulant is a chartered accountant with over 25 years' experience in corporate administration and fundraising for public companies. Mike spent ten years with large international accounting firms, and has acted as chief financial officer, company secretary and non‐executive director for a number of publicly listed companies. Mike has operated his own consultancy firm since 1994.
Special Responsibilities
Executive director and Company Secretary
Qualifications
B Com; Chartered Accountant (CA)
Interests in shares and options
Ordinary Shares 3,652,796
$0.35 Options expiring 31 December 2015 500,000
Current listed directorships
White Cliff Minerals Limited (since 2007)
Former listed directorships in last 3 years
Luiri Gold Limited (from 2011 to September 2014)
Evan Kirby Aged 64 ‐ Non‐Executive Director (Appointed November 2002)
Evan Kirby is a metallurgist with over 30 years' experience. He worked in South Africa for 17 years primarily for Impala Platinum, Rand Mines and Rustenburg Platinum Mines before moving to Australia in 1992. In Australia, Evan worked for Minproc Engineers and Bechtel before starting his own consulting business a decade later. With his broad experience, he has been involved in the development of a wide range of mining and minerals processing projects in Africa and Australia, as well as other parts of the world.
Special Responsibilities
Nil
Qualifications
BSc (Hons) Metallurgy; PhD Metallurgy
Interests in shares and options
Ordinary Shares 3,492,396
$0.35 Options expiring 31 December 2015 500,000
Current listed directorships Bezant Resources Plc (since 2008) Former directorships in last 3 years
Luiri Gold Limited (from 2011 to September 2014)
Directors' Meetings
The number of meetings of directors (including meetings of committees of directors) held during the Reporting Period and the number of meetings attended by each Director is set out in the table below.
|
Name
|
Full Meetings of Directors
|
|
Attended
|
Held
|
|
M Langoulant
|
8
|
8
|
|
R Chase
|
8
|
8
|
|
E Kirby
|
8
|
8
|
All other matters that required formal board resolutions were dealt with via circulating written rotary resolutions. In addition the directors met on an informal basis at regular intervals during the year to discuss the Company's affairs.
Principal activities
The principal activity of the Group during the course of the Financial Year was mineral exploration and evaluation.
Review of operations
Information on the operations and financial position of the Group and its business strategies and prospects is set out in the Operations and Financial Review section of this annual report.
Remuneration report
The Remuneration report, which is audited, forms part of this directors' report and immediately follows this directors' report.
Dividends
No dividend has been paid since the beginning of the Financial Year and no dividend has been recommended for the Financial Year.
Likely developments and expected results
Further commentary on expected results of certain operations of the Group is included in the Operations Review section of this annual report.
Environmental regulation
The Group's exploration and evaluation activities are subject to significant environmental legal regulations. Field work programmes are carried out in accordance with the Group's environmental management policies and procedures.
There have been no significant known breaches of these regulations and principles during the year.
Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the Financial Year were:
-
On 5 September 2014 Nyota completed the sale of its residual 25% interest in KME for £750,000 cash and 50 million KEFI shares;
-
On 17 September 2014 Nyota completed a capital reduction by way of a pro‐rata distribution of KEFI shares to Nyota shareholders on the basis of 1 KEFI Share for every 6 Nyota shares held. This resulted in Nyota distributing 144,823,917 KEFI shares to Nyota shareholders and a corresponding reduction in capital of $3,688,287 based on the market value of the KEFI shares on that date;
-
In February 2015 Nyota agreed to acquire 70% of the Ivrea nickel project in Italy by the issue of 75 million shares and the payment of $100,000.