A PDF version of this report is available at
http://www.marianaresources.com/pdf/2009/Mariana_Annual_Report_2008.pdf
MARIANA RESOURCES LIMITED ANNUAL REPORT
CHAIRMAN'S REVIEW
Mariana has become more focussed and streamlined as it maintains an
exciting portfolio of properties in some prospective mining friendly
districts of Chile and Argentina. An active year culminated in the
discovery of epithermal silver-gold mineralization at the 70% owned
Sierra Blanca Project in Southern Argentina. Also important
financial backing from Hochschild Mining in the form of an initial
placement in Mariana was achieved, in what has been a universally
difficult year in the markets.
Forward strategy is very much one of a combination of joint venture
funding from senior partners and our own efforts to expand the level
of drill target testing in 2009. Mariana is in the fortunate
position of having a major presence in Santa Cruz Province in
Southern Argentina, now regarded as a truly world class gold-silver
region. Apart from the flagship project at Sierra Blanca, many of
its 100% owned areas are already producing high priority drill
targets, such as Tongoril. There is abundant scope to generate early
drill targets in other Mariana areas.
Meanwhile, there is some exciting exposure to copper in the form of
company-maker drill targets in the Candelaria Iron-Oxide-Copper-Gold
Belt in Chile at Buenaventura and in the Northern Argentina Porphyry
Copper Region at La Borita.
Managing Director John Sutcliffe, regional managers Gustavo Rodriguez
and Walter Espinosa and teams are to be congratulated on their
efforts during the year. Co-directors Roger Thomson and Grahame
Hamilton stepped down last year and their valuable contributions to
the company's development since its early days are acknowledged.
John Horsburgh
Chairman
Mariana Resources Limited
The directors present their report for the year ended 31 December
2008.
Principal activities
The focus of Mariana Resources Limited's activities is investment and
exploration for Minerals, mainly gold, silver and copper in Argentina
and Chile.
Business review
The results for the Group are set out in Financial Statements
accompanying this report. The directors do not recommend the payment
of a dividend.
The company implemented an aggressive programme of reducing operating
costs during the year and the programme has continued into 2009.
Contributing to the cost cutting efforts long-serving directors
Grahame Hamilton and Roger Thomson resigned from the board. The
directors thank them for their substantial contributions to Mariana
since its inception.
Argentina
Mariana completed a multi-phased programme of both RC percussion
drilling and diamond drilling at the Sierra Blanca project in the
Santa Cruz Province specifically at the Veta Chala, Lucila and
Vetarron prospects (Santa Cruz Joint Venture). Expenditure on the
programme meant that the Company earnt a 70% interest in the Sierra
Blanca and Canadon Largo projects with IAMGOLD holding the remaining
30%.
At Veta Chala, epithermal silver-gold mineralisation was discovered
along the vein trend. Better intersections included 11.0m @ 3.4 g/t
Au and 386 g/t Ag from 46m in hole SBD51 and 21.0m @ 0.7 g/t Au and
189 g/t Ag from 33m in hole SBD27. Results are sufficiently
encouraging to warrant further extensive drilling. The cumulative
vein strike is approximately 1.2km and the system is open to the west
under cover.
At Lucila, drilling tested the 1.8km long vein trend. Zones of
silicification (up to 30m wide) and quartz-chalcedony veins with
prominent pyrite together with sphalerite and galena mineralisation
were intersected in the RC holes at depths of 30-45 metres below
surface. The diamond drill holes intersected the target about 80
metres below surface with a wide zone of strongly anomalous gold and
silver which may indicate targets at greater depth.
At Vetarron, six RC holes in three lines 80 metres and 320 metres
apart tested the 1.7 kilometres long by 200 metres wide target area.
The best result was a sulphide-rich silicified zone of 10m @ 0.4 g/t
Au.
Elsewhere in Santa Cruz, Mariana has in excess of 130,000 hectares
under application covering about eight groups of gold-silver targets
selected from analysis of satellite imagery.
At the La Borita property in Catamarca Province in NW Argentina,
Mariana completed magnetic and pole-dipole IP surveys over a
coincident magnetic low (interpreted as a non-magnetic porphyry
intrusion at depth) and extensive copper-bearing travertine at the
surface. The IP survey revealed chargeability anomalies interpreted
to be consistent with significant porphyry scale sulphides at depth.
Mariana is seeking a joint venture partner to advance the project.
Chile
The Buenaventura project is in the prolific Chilean IOCG (Iron Oxide
Copper Gold) Belt, positioned mid-way between the Candelaria
(Freeport) and Manto Verde (Anglo American) major copper mines.
Previous drilling by owners Buenaventura CSM intersected from 10 to
90m of 0.2 to 0.5% copper. Approximately 75% of the area is masked by
shallow gravels. Mariana, in joint venture with Minotaur Exploration
Limited, completed a comprehensive gravity survey which revealed an
anomalously large gravity high in the NE part of the project area.
Interpretation of the new gravity data indicates the known
copper-gold mineralisation is peripheral to and sits above a larger
deeper IOCG target. Drill testing is proposed in 2009. Collectively
the Joint Venture has spent US$300,000 of the first year commitment
of US$400,000 and the holders of the property have recently agreed to
extend the period for expenditure of the first US$400,000 for a
further year. Mariana can earn 51% by expenditure of US$3 million
over three years and up to 80% by completeing a bankable feasibility
study within a further 4 years.
Mariana has optioned the Perro Chico copper-gold prospect and made
appliiation for surrounding areas. Perro Chico has a number of
copper-gold occurrences and a skarn hosted copper-gold target
extending over 500 metres and at least 5.5 metres thick with rock
chip assays of up to 1.8% Cu and 2.2 g/t Au. The area also has IOCG
potential. The results of a gravity survey commissioned by Mariana
are being assessed.
The Exploradora property has been returned to its owner, the Anglo
American Group following drilling which returned results
unsatisfactory for Mariana. As a consequence the carrying value has
been written off.
Ecuador
Legislative and policy changes in Ecuador have made exploration and
sovereign risk in the country uncertain and the Company has elected
to withdraw from activity there. As a consequence the carrying
values of all of the group's assets in Ecuador have been written off.
Risk
Exploration risks
Exploration for minerals involves significant degrees of risk. Until
such time as it has or acquires a tenement which contains an
economically exploitable mineral deposit, the company is likely to
operate at a loss.
Foreign Exchange risks
The Group operates internationally and therefore is exposed to the
effects of changes in currency exchange rates. The company has cash
resources principally denominated in Pounds but the majority of its
expenditure is denominated in other currencies. The Group does not
currently hedge these risks.
Environmental risks
The group's projects are subject to relevant environmental
legislation and will themselves have varying levels and types of
potential environmental impacts. Like most countries, Argentina,
Chile and Ecuador have laws and regulations regarding environmental
matters, including disturbance and rehabilitation issues and the
discharge of hazardous waste and materials. These are dealt with in
the normal course of operations. In general terms the minerals
industry has become subject to increasing environmental
responsibility and liability. The potential for liability is an
ever-present risk, which the company mitigates through sound
operational practices and appropriate insurance where available at
reasonable cost.
Political risks
Political climate, changes in government, monetary policies, taxation
and other laws and regulations can have a significant influence on
the outlook for projects and companies.
Directors and directors' interests
The directors who held office during the year are given below. In
November 2008 Grahame Hamilton and Roger Thomson resigned as
directors of the company in order to reduce its administration
costs. Both were long-serving directors and the Board thanks both of
them for their significant contribution to the Group over many years.
John Robert Horsburgh (Age 63) ARSM, MSc, DIC, FAIMM, Chairman
John Horsburgh, a graduate of the Royal School of Mines, is a
geologist with more than 30 years experience in exploration, project
development and company management. He was a co-founder of Solomon
Pacific Resources NL which achieved success with the discovery and
development of the Brocks Creek gold mine in the Northern Territory
in Australia. As Executive Chairman he was involved in the
acquisition, exploration and financing if the project. Prior to this
he was Exploration Manager for SE Australia with Getty Oil
Development (minerals division). Before Getty, John gained extensive
exploration experience with Billiton and the RTZ Group in Australia,
South America and Europe. He is a director and co-founder of Cullen
Resources Ltd.
John Sutcliffe (Age 64) BSC, ARSM, FGS, MIMM, C. Eng., Managing
Director
John Sutcliffe graduated from the Royal School of Mines and has 38
years experience in Latin America, Spain and the Middle East. John,
South America specialist, has managed successful exploration for
Anglo American, Shell-Billiton, International Minerals Corp,
Antofagasta Holdings and Greenwich Resources. He led teams which
discovered the Rio Narcea gold belt, now in production, the Rio
Blanco bonanza gold-silver deposit in Ecuador, (feasibility stage),
the Pallancata bonanza silver-gold deposit in Peru (feasibility
study) and the Dos Amigo porphyry copper deposit in Chile (producing
mine). He has been involved in significant copper and gold
discoveries in the Middle East and Central America. As initiator and
manager of the Billiton office in Chile, he was responsible for
identifying the potential of the Collahuasi copper district. He
speaks Spanish fluently and is based in Quito, Ecuador.
Grahame Hamilton (Age 59) BSc, MSc, MAIG, Executive Director
Grahame Hamilton, a graduate of University of New South Wales and
James Cook University, has over 30 years experience in exploration,
corporate and project management. He has wide-ranging expertise in
project evaluation. Between 1994 and 1996, he managed the Brocks
Creek exploration, environmental impact statement, feasibility study,
mine development and construction for Solomon Pacific Resources NL,
of which he was co-founder. Before Solomon, Grahame managed the
minerals division of Getty Oil Development in Queensland, Australia.
Grahame resigned as a director on 12 November 2008.
Roger Thomson (Age 63) BSc, ARSM, MAIMM, MAIG, Non-executive Director
Roger Thomson, a graduate of the Royal School of Mines, is a
geologist with more than 30 years experience in mineral exploration,
mining geology and management in Australia, South America and South
East Asia. He has held the positions of General Manager Exploration
with Delta Gold Ltd and Sons of Gwalia Ltd and has been responsible
for, or closely associated with, making economic discoveries of gold
and tantalum in Australia. Roger successfully managed the programme
that led to the discovery of the multi-million ounce Sunrise gold
deposit near Laverton in Western Australia. He is a director of
Image Resources NL, Meteoric Resources NL, Magnetic Resources NL and
Emu Nickel NL.
Roger resigned as a director on 12 November 2008.
Raymond John Angus (Age 44) BAppSc, MSEG, Non-executive Director
Ray Angus is a geologist with over 20 years of international
experience in the Americas, Africa, Australia and the Middle East. He
graduated with a Bachelor of Applied Science - Applied Geology from
the Queensland University of Technology in 1987. He worked in mineral
exploration and mining in Australia for Cyprus Gold Australia before
venturing into overseas postings in Zimbabwe and Saudi Arabia. In
1994 Mr. Angus established a foothold in Peru where he is a local
resident. He worked in property evaluation and new business
opportunities and obtained a senior position with Newcrest Mining
(Peru), followed by specific consulting assignments to companies
including Queenstake, Goldfields Limited and Billiton plc. He is a
co-founder of Monterrico Metals Plc and was its Executive Director
and Chief Operating Officer until June 2007 prior to the company
being taken over. He then assumed the role of Non-executive Director
of that company until June 2008.
The directors who held office during the year had the following
interests in ordinary shares in the company at 31 December 2008.
Ordinary shares of GBP 0.001
Held at 31 Dec 2008 Held at 31 Dec 2007
J R Horsburgh 2,520,002 1,720,002
J Sutcliffe 1,675,000 1,125,000
G Hamilton* 1,999,002 1,599,002
R Thomson* 798,500 298,500
R J Angus 3,354,300 2,854,300
*Grahame Hamilton and Roger Thomson resigned as directors on 12
November 2008.
John Horsburgh's interest in ordinary shares includes 1,285,000
shares held by Dunslair Pty Ltd and 235,000 shares held by
Innerleithen Pty Ltd.
Grahame Hamilton's interest in ordinary shares includes 1,302,502
shares held by Kitchsmith Pty Ltd, 106,500 held by Weeroona
Investments Pty Ltd and 40,000 shares held jointly with his wife
Janet Hamilton.
John Sutcliffe's interest in ordinary shares includes 75,000 shares
held by his son and 50,000 shares held by his wife.
Roger Thomson's interest in ordinary shares includes 281,000 shares
held by the Thomson Superannuation Fund
Ray Angus' interest in ordinary shares includes 2,350,000 shares held
by Pershing Keen Nominees.
The directors who held office during the year had the following
interests in options over ordinary shares in the company at 31
December 2008.
During
the period
Director No. Granted Exercised Expired No. Exercise Expiry
held on or held at price date
31 Dec. cancelled end of
2007 year
(pence)
J R 500,000 - 500,000 - - 4 25/08/2008
Horsburgh
200,000 - 200,000 - - 4 14/10/2008
100,000 - 100,000 - - 4 16/11/2008
150,000 - - - 150,000 6 11/05/2009
150,000 - - - 150,000 8 11/05/2009
66,000 - - - 66,000 24 31/12/2012
67,000 - - - 67,000 28 31/12/2012
67,000 - - - 67,000 30 31/12/2012
J 250,000 - 250,000 - - 4 14/10/2008
Sutcliffe
300,000 - 300,000 - - 6 11/05/2009
400,000 - - - 400,000 8 15/06/2010
266,000 - - - 266,000 24 31/12/2012
267,000 - - - 267,000 28 31/12/2012
267,000 - - - 267,000 30 31/12/2012
- 300,000 - - 300,000 10 31/05/2013
- 300,000 - - 300,000 15 31/05/2013
- 300,000 - - 300,000 20 31/05/2013
G 200,000 - 200,000 - - 4 25/08/2008
Hamilton*
200,000 - 200,000 - - 4 14/10/2008
150,000 - - - 150,000 6 11/05/2009
150,000 - - - 150,000 8 11/05/2009
80,000 - - 80,000 - 24 31/12/2012
80,000 - - 80,000 - 28 31/12/2012
80,000 - - 80,000 - 30 31/12/2012
R 200,000 - 200,000 - - 4 25/08/2008
Thomson*
200,000 - 200,000 - - 4 14/10/2008
100,000 - 100,000 - - 4 16/11/2008
150,000 - - - 150,000 6 11/05/2009
150,000 - - - 150,000 8 11/05/2009
46,000 - - 46,000 - 24 31/12/2012
47,000 - - 47,000 - 28 31/12/2012
47,000 - - 47,000 - 30 31/12/2012
R J Angus 400,000 - - - 400,000 10 31/12/2012
300,000 - - - 300,000 15 31/12/2012
300,000 - - - 300,000 20 31/12/2012
* In accordance with the terms of the options expiring 31 December 2012,
those held by G Hamilton and R Thomson were cancelled when they ceased to
be directors during the year.
Significant shareholders
At 31 December 2008, in addition to holdings of directors the
following held more than a 3% interest in the issued shares of the
company.
No. held % of share capital
Hochschild Mining Holdings Ltd. 11,002,948 16.03
Credit Suisse Client Services (UK) Ltd 7,725,000 11.39
Bank Paribas Custodians 5,968,352 8.80
Bank Julius Baer & Co 3,700,000 5.46
Goldman Sachs Securities (Nominees) 3,550,000 5.24
Limited
Apex Silver Mines Limited 3,117,500 4.60
Corporate governance
The directors acknowledge the importance of the guidelines set out in
the Combined Code on Corporate Governance. They therefore intend to
comply with the Combined Code so far as is appropriate having regard
to the size and nature of the company.
Board structure and committees
The Board comprises two executive directors and one non-executive
director. The roles of Chairman and Managing Director are separate,
ensuring a division of responsibilities at the head of the company.
The Chairman conducts Board and shareholder meetings and ensures all
directors are properly briefed. The Board is responsible for
formulating, reviewing and approving the company's strategy, budgets
and major items of capital expenditure. The directors have access to
independent advice at the Company's expense.
Each of the directors must retire by rotation at least every three
years when they can offer themselves for re-election if eligible.
The Board has established three committees;
Audit Committee, consisting of John Horsburgh and Ray Angus;
Remuneration Committee consisting of John Horsburgh and Ray Angus;
and
Nomination Committee, consisting of John Horsburgh and Ray Angus.
Internal controls
The Board is responsible for maintaining a sound system of internal
controls to safeguard shareholders' investment and the Group's
assets. The directors monitor the operation of internal controls.
The objective of the system is to safeguard Group assets, ensure
proper accounting records are maintained and that financial
information used within the business and for publication is
reliable. Any such system of control can only provide reasonable but
not absolute assurances against material loss or misstatement.
The Board has reviewed the operation and effectiveness of the
company's system of internal controls for the financial period and
for the period up to the approval of the financial statements.
Directors' remuneration
All matters concerning the remuneration of executive directors are
considered by the Remuneration Committee.
Remuneration policy
The Remuneration Committee's policy is that director's remuneration
be commensurate with services provided by them to the company. The
remuneration of all directors is considered by the Committee and
comprises basic salary only. There are no formal bonus arrangements
in place or other long-term incentive schemes; however all directors
hold share options issued prior to the company's listing on AIM.
Shareholder relations
Communications with shareholders are considered important by
directors. The executive directors speak regularly with investors
and analysts. Company press releases and circulars have been issued
regularly issued during the reporting period and subsequent to
balance date to keep investors informed about the company's progress.
The company maintains a web site, www.marianaresources.com which is
regularly updated and contains a wide range of information about the
company.
Financial reports and accounting standards
The company has adopted International Financial Reporting Standards
from incorporation on 31 January 2006.
Events after balance date
Other than matters referred to in the financial statements and
business review, there are no significant events affecting the
company since 31 December 2008.
Auditors
A resolution proposing the reappointment of Grant Thornton Limited
will be put to the annual general meeting of the company.
Dated 27 May 2008
By order of the Board
J. R Horsburgh
Chairman
.
MARIANA RESOURCES LIMITED
Statement of directors' responsibilities in respect of the financial
statements
Company law requires the directors to prepare financial statements
for each financial year which give a true and fair view of the state
of affairs of the company and the group and of the profit or loss of
the Group for that year. In preparing those financial statements, the
directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping proper accounting records
which disclose with reasonable accuracy at any time the financial
position of the Group and the company and to enable them to ensure
that the financial statements comply with the Companies (Guernsey)
Law 1994. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF MARIANA
RESOURCES LIMITED
We have audited the consolidated financial statements of Mariana
Resources Limited and controlled entities which comprise the
consolidated balance sheet and company balance sheet as at 31
December 2008 and the consolidated income statement, consolidated and
company statements of changes in equity and consolidated and company
cashflow statements for the year ended 31 December 2008 and the notes
to the consolidated financial statements comprising of a summary of
accounting policies and other explanatory notes. These financial
statements have been prepared under the accounting policies set out
therein.
This report is made solely to the company's shareholders, as a body,
in accordance with section 64 of The Companies (Guernsey) Law 1994.
Our audit work has been undertaken so that we might state to the
company's shareholders those matters we are required to state to them
in an auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's shareholders as a
body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual Report and
the financial statements in accordance with applicable Guernsey law
and International Financial Reporting Standards ("IFRSs") are set out
in the Statement of Directors' Responsibilities.
Our responsibility is to audit the financial statements in accordance
with relevant legal and regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements
give a true and fair view and have been properly prepared in
accordance with The Companies (Guernsey) Law, 1994.
In addition we report to you if, in our opinion, the Directors'
Report is inconsistent with the financial statements, if the company
or group has not kept proper accounting records, or if we failed to
obtain all access, information and explanations we require for our
audit.
We read other information contained in the Annual Report and consider
whether it is consistent with the audited financial statements. The
other information comprises the Chairman's Review, the Directors'
Report and the Directors' Statement of Responsibility. We consider
the implications for our report if we become aware of any apparent
misstatements or material inconsistencies with the financial
statements. Our responsibilities do not extend to any other
information.
We read the Directors' Report and consider the implications for our
report if we become aware of any apparent misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with International Standards on
Auditing (UK and Ireland) issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of evidence relevant to
the amounts and disclosures in the financial statements. It also
includes an assessment of the significant estimates and judgements
made by the directors in the preparation of the financial statements,
and of whether the accounting policies are appropriate to the
company's circumstances, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance
that the financial statements are free from material misstatement,
whether caused by fraud or other irregularity or error. In forming
our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Opinion
In our opinion:
* the consolidated financial statements give a true and fair
view, in accordance with IFRSs, of the state of the company's
affairs as at 31 December 2008 and of its loss and cash flows for
the year then ended; and
* the consolidated financial statements have been properly
prepared in accordance with The Companies (Guernsey) Law, 1994.
GRANT THORNTON LIMITED
CHARTERED ACCOUNTANTS
GUERNSEY
DATE: 27 May 2009
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED INCOME STATEMENT
for the financial year ended 31 December 2008
Notes 2008 2007
£ £
Employee benefits expense (550,484) (183,171)
Depreciation expense (15,605) (24,922)
Professional services expense (199,126) (175,788)
Impairment of deferred exploration (1,332,971) (669,824)
costs
Exchange gains/(losses) 143,909 (36,069)
Other expenses (265,310) (480,977)
Total expenses (2,219,587) (1,570,751)
Interest receivable 3 56,527 76,114
Loss Before Tax 4 (2,163,060) (1,494,637)
Tax 8 - -
Loss for the year (2,163,060) (1,494,637)
(pence) (pence)
Loss per share - basic and diluted 9 (4.2) (4.1)
The accompanying notes are an integral part of these consolidated
financial statements.
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
BALANCE SHEETS
at 31 December 2008
Notes Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Non-current
assets
Deferred 10 2,066,922 1,477,822 - -
exploration
costs
Property, plant 11 101,138 101,611 - -
and equipment
Investment in 12 - - 2,646,957 2,701,643
subsidiaries
Loans to - - - -
subsidiaries
Total non 2,168,060 1,579,433 2,646,957 2,701,643
current assets
Current assets
Other 13 294,494 51,846 - -
receivables and
prepayments
Cash and cash 20(b) 747,998 1,501,075 642,163 1,363,438
equivalents
Total current 1,042,492 1,552,921 642,163 1,363,438
assets
Current
liabilities
Trade and other 14 94,596 5,610 530,352 421,365
payables
Provisions 15 34,433 - - -
Total current 129,029 5,610 530,352 421,365
liabilities
Net current 913,463 1,547,311 111,811 942,073
assets
Net Assets 3,081,523 3,126,744 2,758,768 3,643,716
Equity
Issued share 16 6,781 4,581 6,781 4,581
capital
Share premium 17 6,404,488 4,935,790 6,404,488 4,935,790
account
Other reserves 19(a) 739,223 92,282 334,217 71,600
Retained losses 19(b) (4,068,969) (1,905,909) (3,986,718) (1,368,255)
Total Equity 3,081,523 3,126,744 2,758,768 3,643,716
The accompanying notes are an integral part of these consolidated
financial statements.
These financial statements were approved and authorised for issue by
the Board on 26 May 2009 and were signed on its behalf by:
John
Horsburgh
Ray Angus
Chairman
Director
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2008
Share Share Foreign Retained Total
capital based currency Loss
and payments translation
premium reserve reserve
£ £ £ £
£
Balance at 1 3,899,872 - (35,855) (411,272) 3,452,745
January 2007
Foreign
exchange - - 56,537 - 56,537
adjustments
Net income
recognised - - 56,537 - 56,537
directly in
equity
Net loss for - - - (1,494,637) (1,494,637)
the year
Total
recognised - - 56,537 (1,494,637) (1,438,100)
income and
expense
Recognition of
share based - 71,600 - - 71,600
payments
Issue of 1,040,499 - - - 1,040,499
shares
Balance at 31
December 2007 4,940,371 71,600 20,682 (1,905,909) 3,126,744
Balance at 1 4,940,371 71,600 20,682 (1,905,909) 3,126,744
January 2008
Foreign
exchange - - 384,324 - 384,324
adjustments
Net income
recognised - - 384,324 - 384,324
directly in
equity
Net loss for - - - (2,163,060) (2,163,060)
the year
Total
recognised - - 384,324 (2,163,060) (1,778,736)
income and
expense
Recognition of
share based - 262,617 - - 262,617
payments
Issue of 1,470,898 - - - 1,470,898
shares
Balance at 31
December 2008 6,411,269 334,217 405,006 (4,068,969) 3,081,523
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
COMPANY STATEMENT OF CHANGES IN EQUITY
For the financial year ended 31 December 2008
Share Share Foreign Retained Total
capital based currency Loss
and payments translation
premium reserve reserve
£ £ £ £
£
Balance at 1 3,899,872 - - (477,854) 3,422,018
January 2007
Net loss for - - - (890,401) (890,401)
the year
Total
recognised - - - (890,401) (890,401)
income and
expense
Recognition
of share - 71,600 - - 71,600
based
payments
Issues of 1,040,499 - - - 1,040,499
shares
Balance at
31 December 4,940,371 71,600 - (1,368,255) 3,643,716
2007
Balance at 1 4,940,371 71,600 - (1,368,255) 3,643,716
January 2008
Net loss for - - - (2,618,463) (2,618,463)
the year
Total
recognised - - - (2,618,463) (2,618,463)
income and
expense
Recognition
of share - 262,617 - - 262,617
based
payments
Issue of 1,470,898 - - - 1,470,898
shares
Balance at
31 December 6,411,269 334,217 - (3,986,718) (2,758,768)
2008
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
CASHFLOW STATEMENTS
For the financial year ended 31 December 2008
Notes Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Cash Flow from
Operating
Activities
Payments to (727,623) (699,073) (326,914) (698,883)
suppliers and
employees
Management fees - - (364,057) (244,845)
paid to
subsidiaries
Interest 56,527 76,114 55,920 75,986
received
Net Cash used 20(a) (671,096) (622,959) (635,051) (867,742)
in Operating
Activities
Cash Flows from
Investing
Activities
Payments for
purchase of (64,076) (29,219) - -
property, plant
and equipment
Proceeds on
disposal of 46,075 - - -
property, plant
and equipment
Increase in - - (1,677,592) (1,249,326)
loans to
subsidiaries
Increase in - - 120,470 374,889
loans from
subsidiaries
Payments for (1,655,036) (1,407,241) - -
exploration
expenditure
Net Cash Used (1,673,037) (1,436,460) (1,557,122) (874,437)
in Investing
Activities
Cash Flows from
Financing
Activities
Proceeds from 1,470,898 1,040,499 1,470,898 1,040,499
issue of share
capital
Net Cash
Received From 1,470,898 1,040,499 1,470,898 1,040,499
Financing
Activities
Net decrease in (873,235) (1,018,920) (721,275) (701,680)
cash and cash
equivalents
Effect of
exchange rate 120,158 28,737 - -
fluctuations on
cash held
Cash and cash
equivalents at 1,501,075 2,491,258 1,363,438 2,065,118
the beginning
of the year
Cash and cash
equivalents at 747,998 1,501,075 642,163 1,363,438
the end of the
year
MARIANA RESOURCES LIMITED AND ITS CONTROLLED ENTITIES
NOTES TO THE FINANCIAL STATEMENTS
for the financial year ended 31 December 2008
1. Nature of operations, going concern and adequacy of
project finance
Mariana Resources Limited ("Mariana" or the "Company") is a public
limited company incorporated and domiciled in Guernsey and is listed
on the Alternative Investment Market of the London Stock Exchange.
Mariana is a holding company of a mineral exploration group of
companies (the "Group"). The Group is involved in mineral
exploration in Argentina, Chile and Ecuador.
Going concern
The financial statements have been prepared on the going concern
basis, which contemplates the realisation of assets and settlement of
liabilities in the normal course of business. In common with many
exploration companies, the Company raises finance for its exploration
and appraisal activities. Further funding is raised as and when
required. When any of the Group's projects move to the development
stage, specific funding will be raised.
The Company had signed an agreement with Hochschild Mining Limited
which enabled the Company to raise funds by a placement of shares in
December 2008 and provided for the Company to raise additional funds
by placing US$750,000 worth of shares within 12 months.
The Company is raising up to another £1.09 million by placing shares
at three pence per share to institutions and others. Part of the
issue is subject to the passing of a resolution at Mariana's
forthcoming annual general meeting called for 29th May 2009 to
empower the directors to issue the shares.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below.
a) Statement of Compliance
The consolidated financial statements of Mariana Resources Limited
have been prepared in accordance with International Financial
Reporting Standards ("IFRSs") and their interpretations adopted by
the International Accounting Standards Board (IASB).
The accounting policies set out below have been applied consistently
to all periods presented in these consolidated financial statements.
b) Basis of preparation
The consolidated financial statements of Mariana Resources Limited
are presented in Pounds Sterling and have been prepared on the
historical cost basis or the fair value basis for certain financial
instruments.
c) Basis of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company (its
subsidiaries) made up to 31 December each year. Control is recognised
where the Company has the power to govern the financial and operating
policies of an investee entity so as to obtain benefits from its
activities.
(ii) Transactions eliminated on consolidation
Intra-group transactions, balances and unrealized gains on
transactions between group companies are eliminated. Unrealized
losses are eliminated in the same way as unrealized gains, but only
to the extent that there is no evidence of impairment.
c) Basis of consolidation continued
(iii) Business combinations
On entering into a business combination, an acquirer is identified
based on the identity of the entity which gains control of the
combining entities.
The assets, liabilities and contingent liabilities of the acquiree
are measured at their fair value at the date of acquisition. Any
excess of the fair value of the consideration paid over the fair
value of the identifiable net assets acquired is recognised as
goodwill. If the fair value of the consideration is less than the
fair value of the identifiable net assets acquired, the difference is
recognised directly in the income statement.
d) Segment reporting
A geographical segment is engaged in providing products or services
within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in
other economic environments. A business segment is a group of assets
and operations engaged in providing products or services that are
subject to risks and returns that are different from those of other
business segments.
e) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group's
entities are measured using the currency of the primary economic
environment in which the entity operates ('the functional currency').
The consolidated financial statements are presented in Pounds
Sterling, which is the Group's
presentation currency and the functional currency of the Company.
(ii) Group companies
The results and financial position of all the group entities (none of
which has the currency of a
hyperinflationary economy) that have a functional currency different
from the presentation currency are translated into the presentation
currency as follows:
* assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
* income and expenses for each income statement are translated at
average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
* all resulting exchange differences are recognised as a separate
component of equity.
On consolidation, exchange differences arising from the translation
of the net investment in foreign operations are taken to
shareholders' equity. When a foreign operation is sold, exchange
differences that were recorded in equity are recognised in the income
statement as part of the gain or loss on sale.
The most important foreign currencies for the Group are US dollars,
Australian dollars, Argentina pesos and Chile Pesos. The relevant
exchange rates for these currencies in sterling were:
+-------------------------------------------------------------------+
| Exchange Rates | US | Australian | Argentina | Chile |
| | Dollars | Dollars | Pesos | Pesos |
|----------------------+---------+------------+-----------+---------|
| Average rate for the | 0.5449 | 0.4585 | 0.17731 | 0.00105 |
| year | | | | |
|----------------------+---------+------------+-----------+---------|
| Closing rate for the | 0.6910 | 0.4772 | 0.20055 | 0.00110 |
| year | | | | |
+-------------------------------------------------------------------+
f) Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated
amortisation and less any
accumulated impairment losses.
Amortization methods and amortization rates are applied consistently
within each asset class except where significant individual assets
have been identified which have different amortisation patterns.
Residual values are reviewed at least annually. Amortisation is not
adjusted retrospectively for changes in the residual amount. Gains
and losses on disposals are determined by comparing proceeds with
carrying amount and are included in the income statement.
The assets are depreciated using the straight line method over the
useful life of the asset as follows:
Office furniture and equipment 10% - 33.3% per annum
g) Deferred exploration and evaluation
All costs incurred prior to obtaining the legal right to undertake
exploration and evaluation activities on a project are written-off as
incurred.
Exploration and evaluation costs arising following the acquisition of
an exploration licence are capitalised on project-by-project basis,
pending determination of the technical feasibility and commercial
viability of the project. Costs incurred include appropriate
technical and administrative overheads. Deferred exploration costs
are carried at historical cost less any impairment losses recognised.
Upon demonstration of the technical and commercial feasibility of a
project, any past deferred exploration and evaluation costs related
to that project will be reclassified as Mine Development and
Infrastructure.
Capitalised deferred exploration expenditures are reviewed for
impairment losses (see accounting policy note below) at each balance
sheet date. In the case of undeveloped properties, there may be only
inferred resources to form a basis for the impairment review. The
review is based on a status report regarding the Group's intentions
for development of the undeveloped property.
h) Other receivables and prepayments
Other receivables and prepayments are not interest bearing and are
stated at amortised cost.
i) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at
call with banks and other short-term highly liquid investments with
original maturities of three months or less.
j) Impairment
Whenever events or changes in circumstance indicate that the carrying
amount of an asset may not be recoverable an asset is reviewed for
impairment. An asset's carrying value is written down to its
estimated recoverable amount (being the higher of the fair value less
costs to sell and value in use) if that is less than the asset's
carrying amount.
Impairment reviews for deferred exploration and evaluation costs are
carried out on a project by project basis, with each project
representing a potential single cash generating unit. An impairment
review is undertaken when indicators of impairment arise but
typically when one of the following circumstances apply:
(i) unexpected geological occurrences that render the resource
uneconomic;
(ii) title to the asset is compromised;
(iii) variations in metal prices that render the project
uneconomic; and
(iv) variations in the currency of operation.
k) Share based payment
Certain Group employees and consultants are rewarded with share based
instruments. These are stated at fair value at the date of grant and
either expensed to the income statement or capitalized to deferred
exploration costs, based on the activity of the employee or
consultant, over the vesting period of the instrument.
Fair value is estimated using the Black-Scholes valuation model. The
estimated life of the instrument used in the model is adjusted for
management's best estimate of the effects of non-transferability,
exercise restrictions and behavioural considerations.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share premium
when the options are exercised.
l) Provisions
Provisions are recognised when the Group has a legal or constructive
obligation as a result of past events and it is more likely than not
that an outflow of the resources will be required to settle the
obligation and the amount can be reliably estimated.
m) Trade and other payables
Trade and other payables are not interest bearing and are stated at
amortized cost.
n) Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest
in the assets of the Group after deducting all of its liabilities.
Equity instruments issued by the company are recorded at the proceeds
received, net of direct issue costs.
o) Income Tax
With effect from 1 January 2008, Guernsey abolished the exempt
company regime. Thereafter, the company will be taxed at the company
standard rate (0%). In the prior year the company was exempt from
taxation under the terms of The Income Tax (Exempt Bodies) (Guernsey)
Ordinance 1989 and was liable to an annual fee of £600.
The charge for taxation is based on the profit or loss for the year
and takes into account deferred tax.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the
computation of taxable profit or loss, and is accounted for using the
balance sheet method.
Deferred tax assets are only recognised to the extent that it is
probable that future taxable profit will be available in the
foreseeable future against which the temporary differences can be
utilised.
p) Investment in subsidiaries
Investments in subsidiaries are recognised at cost less any provision
for impairment.
q) Revenue
(i) Interest income
Interest income is recognised as it accrues to the Company.
r) Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. Many of the amounts included in the financial
statements involve the use of judgement and/or estimation. These
judgements and estimates are based on managements' best knowledge of
the relevant facts and circumstances, having regard to prior
experience, but actual results may differ from the amounts included
in the financial statements.
Information about such judgements and estimation is contained in the
accounting policies and/or the Notes to the financial statements, and
the key areas are summarised below. Areas of judgement that have the
most significant effect on the amounts recognised in the financial
statements:
Capitalisation and impairment of exploration costs - Note 2(g) and
Note 10
Estimation of share based compensation amounts - Note 2(k) and Note
18
s) Standards and interpretations not yet effective
At the date of authorisation of these financial statements, the
following Standards and Interpretations that have not been applied in
these financial statements were issued but not yet effective or
endorsed (unless otherwise stated).
IFRS 2 Share based payment - Amendments relating to
vesting conditions and cancellations
IFRS 3 Business Combinations - Amendments
IFRS 7 Financial Instruments: Disclosures - Consequential
amendments arising from amendments to IAS 32
IFRS 8 Operating Segments (endorsed)
IAS 1 Presentation of Financial Statements - Revised
IAS 1 Presentation of Financial Statements - Amendments
relating to Puttable Financial Instruments and
obligations arising on liquidation
IAS 23 Borrowing Costs - Amendments
IAS 27 Consolidation and separate Financial Statements -
Consequential amendments arising from amendments
from IFRS 3
IAS 28 Investments in Associates - Consequential
amendments arising from amendments to IFRS 3
IAS 31 Interest in Joint Ventures - Consequential
amendments arising from amendments to IFRS 3
IAS 32 Financial Instruments: Presentation - Amendments
relating to Puttable Financial Instruments and
obligations arising on liquidation.
IAS 39 Financial Instruments: Recognition and Measurement
- Consequential amendments arising from amendments
to IAS 32
IFRIC 2 Members' Shares in Co-operative Entities and
Similar Instruments - Consequential amendments
arising from amendments to IAS 32
IFRIC 11 IFRS 2 - Group and Treasury Share Transactions
(endorsed)
IFRIC 12 Service Concession Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 - IAS 19 The limit on a defined benefit asset, minimum
funding requirements and their interaction
The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the
financial statements of the Group, except for additional segment
disclosures and terminology changes to, and presentation of, the
financial statements when IFRS 8 and IAS 1 respectively, come into
effect for periods on or after 1 January 2009.
3. Interest receivable
2008 2007
£ £
Bank interest receivable 56,527 76,114
56,527 76,114
4. Loss before tax
2008 2007
£ £
Loss on ordinary activities before taxation is stated
after charging:
Auditors' Remuneration - audit 24,195 20,817
Depreciation and amounts written off property, plant & 15,605 24,922
equipment
Share based payments 262,617 71,600
5. Remuneration of directors
Salaries Annual Super- Share Total Total
& fees leave annuation based 2008 2007
& long contributions payments
service
leave
£ £ £ £ £ £
J. 83,083 - - 35,292 118,375 98,707
Sutcliffe
J. 47,630 24,476 4,286 4,275 80,667 45,521
Horsburgh
G. Hamilton 42,709 22,844 3,968 1,812 71,333 34,543
R. Thomson 12,774 - 1,150 1,042 14,966 15,679
R. Angus 13,648 - - 34,621 48,269 27,789
199,844 47,320 9,404 77,042 333,610 222,239
The Company does not have a pension scheme. Contributions paid are
defined contributions to the relevant director's personal retirement
scheme.
6. Employees
The average number of employees during the period, including
directors was 31 (2007: 29).
The aggregate payroll costs of these persons included in loss on
ordinary activities were as follows:
2008 2007
Staff Costs £ £
Wages and salaries 247,164 174,058
Social Security cost 9,404 7,343
Share based payments 262,617 71,600
519,185 253,001
7. Group Segment Reporting
The Group's only business segment is that of mineral exploration.
The Group reports by geographical segment. During 2007 and 2008,
exploration activities were undertaken in Argentina, Ecuador and
Chile. Support is provided from Australia and Guernsey.
There was no Group revenue during the year (2007: nil).
+-------------------------------------------------------------------------------+
|2008 | | | | | |
|------------------------+---------+---------+---------+------------+-----------|
|Geographical |Argentina| Ecuador| Chile|Un-allocated| Total|
|Segment | £| £| £| £| £|
|------------------------+---------+---------+---------+------------+-----------|
|Segment assets |1,725,991| 62,219| 361,074| 1,061,268| 3,210,552|
|------------------------+---------+---------+---------+------------+-----------|
|Segment liabilities | (59,167)| (961)| 18,430| (87,331)| (129,029)|
|------------------------+---------+---------+---------+------------+-----------|
|Exploration expenditure | 782,107| 482,440| 390,489| -| 1,655,036|
|------------------------+---------+---------+---------+------------+-----------|
|Segment result |(248,225)|(747,033)|(317,719)| (850,082)|(2,163,060)|
|------------------------+---------+---------+---------+------------+-----------|
|Depreciation | (10,586)| -| (4,702)| (317)| (15,605)|
|------------------------+---------+---------+---------+------------+-----------|
|Impairment of | | | | | |
|exploration expenditure |(127,593)|(817,382)|(312,731)| (71,265)|(1,332,971)|
+-------------------------------------------------------------------------------+
+-------------------------------------------------------------------------------+
|2007 | | | | | |
|------------------------+---------+---------+---------+------------+-----------|
|Geographical |Argentina| Ecuador| Chile|Un-allocated| Total|
|Segment | £| £| £| £| £|
|------------------------+---------+---------+---------+------------+-----------|
|Segment assets | 617,502| 863,759| 204,187| 1,446,906| 3,132,354|
|------------------------+---------+---------+---------+------------+-----------|
|Segment liabilities | 37,986| (12,844)| 20,075| (50,827)| (5,610)|
|------------------------+---------+---------+---------+------------+-----------|
|Exploration expenditure | 468,833| 199,110| 289,851| 449,447| 1,407,241|
|------------------------+---------+---------+---------+------------+-----------|
|Segment result | (90,205)|(692,559)|(157,625)| (554,248)|(1,494,637)|
|------------------------+---------+---------+---------+------------+-----------|
|Depreciation | (3,386)| (18,668)| (2,712)| (156)| (24,922)|
|------------------------+---------+---------+---------+------------+-----------|
|Impairment of | | | | | |
|exploration expenditure | -|(349,406)|(124,874)| (449,447)| (923,727)|
+-------------------------------------------------------------------------------+
8. Taxation
2008 2007
£ £
Tax reconciliation
Loss on ordinary activities before tax (2,163,060) (1,494,637)
Tax at 0% - -
Effects of:
Transfer to deferred tax asset (not (228,069) (63,926)
recognised)
Higher tax rates on overseas income 228,069 63,926
Total tax charge - -
The Group's unrelieved tax losses of approximately £467,000 (2007:
£239,000) have not been recognised as a deferred tax asset, as there
is currently insufficient evidence that the asset will be recoverable
in the foreseeable future.
9. Loss per share
The calculation of basic and diluted loss per ordinary share is based
on the following losses and number of shares:
2008 2007
£ £
Loss for the year 2,163,060 1,494,637
Weighted average number of shares 51,512,821 36,643,901
Due to the loss incurred in the year, there is no dilutive effect
from the issue of share options.
10. Deferred exploration costs
2008 2007
£ £
At beginning of year 1,477,822 966,508
Exchange differences 267,035 27,800
Additions 1,655,036 1,407,241
Impairment (1,332,971) (923,727)
At end of year 2,066,922 1,477,822
Exploration costs incurred on all remaining projects in Ecuador and
on Exploradora project in Chile have been fully impaired as those
projects were abandoned during the year.
11. Property, plant and equipment
Furniture and office equipment 2008 2007
£ £
Cost
At beginning of year 136,284 107,065
Additions 64,076 29,219
Disposals (65,091) -
At end of year 135,269 136,284
Depreciation
At beginning of year (34,673) (9,751)
Charge for year (15,605) (24,922)
Disposals 16,147 -
At end of year (34,131) (34,673)
Net book value at end of year 101,138 101,611
12. Investments in subsidiaries
2008 2007
£ £
Shares in subsidiary undertakings 716,600 716,600
Loans forming part of the net investment in 3,662,635 1,985,043
subsidiaries
Impairment of loans to subsidiaries (1,732,278) -
2,646,957 2,701,643
The undertakings in which the Company's interest at 31 December 2008
is more than 20%, all of which are engaged in mineral exploration,
are as follows:
Class of Percentage Country of
holding held Incorporation
Mariana Exploration Pty Ordinary 100 Australia
Limited
Compania Minera Mariana Ordinary 100 Ecuador
S.A.
Minera Mariana Argentina Ordinary 100 Argentina
S.A.
Minera Mariana de Chile Ordinary 100 Chile
Ltda.
13. Other receivables and prepayments
Group Group Company Company
2008 2007 2008 2007
£ £ £
Pre-paid expenses, advances to 63,981 5,945 - -
suppliers & tax credits
Advances to employees 7,215 9,636 - -
Owing by project joint venture - 27,649 - -
participant
Guarantee deposits 1,520 8,616 - -
VAT Refundable 221,778 - - -
294,494 51,846 - -
All amounts are short term and are expected to be recovered within
0-3 months. The carrying values are considered to be reasonable
approximation of fair value.
14. Trade and other payables
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Trade creditors 53,718 12,399 30,460 46,476
Other creditors - (35,933) - -
Accruals 40,878 29,144 4,533 -
Amounts payable to subsidiaries - - 495,359 374,889
94,596 5,610 530,352 421,365
All amounts are short term and the carrying values are considered to
be reasonable approximation of fair value.
15. Provisions
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Employee benefits 34,433 - - -
34,433 - - -
The current provision for employee benefits comprises annual leave
entitlements accrued and expected to be taken within 12 months.
Movements during the year:
At beginning of year - - - -
Additional provisions recognised 34,433 - - -
At end of year 34,433 - - -
16. Share capital
2008 2007 2008 2007
Authorised Number Number £ £
Ordinary shares of £0.0001 each 100,000,000 100,000,000 10,000 10,000
Allotted, issued and fully paid
Ordinary shares of £0.0001 each 67,806,868 45,810,568 6,781 4,581
During the year the following shares were issued, principally to
provide funding for the Company's operations.
No. of shares Issue price per share Amount
Date issued issued £ raised
£
30 June 2008 8,743,352 0.10 874,335
17 July 2008 1,950,000 0.04 78,000
17 July 2008 300,000 0.06 18,000
22 December 11,002,948 0.0455 500,634
2008
The ordinary shares participate in dividends and are entitled to one
vote per share at shareholders meetings. In the event of winding up
the company, ordinary shareholders rank after creditors and are
entitled to any proceeds of liquidation in proportion to the number
of shares held.
17. Share Premium
2008 2007
£ £
At beginning of year 4,935,790 3,896,333
Premium on shares issued 1,468,698 1,039,457
At end of year 6,404,488 4,935,790
18. Share Options
(a) Number of Options
At 31 December 2008, the following options over ordinary shares of
the Company had been granted and not exercised:
Expiry date First exercise Number of Exercise price
date options UK pence
17/02/2009 (a) 50,000 4
11/05/2009 (a) 450,000 6
12/05/2009 (a) 450,000 8
14/10/2009 (a) 140,000 8
28/10/2009 (a) 200,000 8
06/02/2010 (a) 300,000 8
18/05/2010 (b) 353,548 25
15/06/2010 (a) 400,000 8
01/08/2010 (c) 164,124 20
31/05/2011 (d) 1 June 2007 13,000 24
31/05/2011 (d) 1 June 2008 13,000 28
31/05/2011 (d) 1 June 2009 14,000 30
31/01/2012 (d) 1 February 2008 99,000 24
31/01/2012 (d) 1 February 2009 97,000 28
31/01/2012 (d) 1 February 2010 94,000 30
31/05/2012 (e) 1 June 2008 400,000 10
31/05/2012 (e) 1 June 2009 300,000 15
31/05/2012 (e) 1 June 2010 300,000 20
31/05/2012 (f) 1 June 2008 332,000 24
31/05/2012 (f) 1 June 2009 334,000 28
31/05/2012 (f) 1 June 2010 334,000 30
Issued during
2008
01/07/2010 (g) 4,371,676 15
30/10/2012 (d) 1 November 2008 265,000 15
30/10/2012 (d) 1 November 2008 265,000 20
30/10/2012 (d) 1 November 2008 200,000 25
31/08/2012 (d) 31 August 2009 500,000 10
31/08/2012 (d) 31 August 2010 474,000 15
31/08/2012 (d) 31 August 2011 466,000 20
31/05/2013 (d) 1 June 2009 300,000 10
31/05/2013 (d) 1 June 2010 300,000 15
31/05/2013 (d) 1 June 2011 300,000 20
(a) Issued to shareholders and option holders of Mariana
Exploration Pty Limited on acquisition of all shares and options of
Mariana Exploration Pty Limited by the Company in March 2006.
(b) Issued to Nominated Advisor in relation to share
placement in May 2006.
(c) Issued to technical consultant.
(d) Issued to employees under the Company's Employee Option
Plan.
(e) Issued to Ray Angus.
(f) Issued to Directors, other than Ray Angus.
(g) Issued to subscribers to the share placement on 30 June
2008.
(b) Movements during the year
Number Weighted Number of Weighted
of average Options average
Options exercise price exercise
(pence) price (pence)
2008 2008 2007 2007
Outstanding at 9,379,672 14.2 6,489,672 10.2
beginning of year
Granted during 7,441,676 15.4 2,890,000 22.9
the year
Exercised during (2,250,000) 4.3 - -
the year
Expired during (1,692,000) 17.7 - -
the year
Cancelled during (600,000) 27.3 - -
the year
Outstanding at 12,279,348 15.6 9,379,672 14.2
the end of the
year
Exercisable at 8,098,348 14.4 6,462,672 10.3
the end of the
year
(c) Fair value of options granted
The fair value of options granted during
the year as calculated using a Black
Scholes based model was £ 279,491
(2007:£178,808) which will be spread over
three years as benefits of the options
vest.
The inputs into the Black Scholes based
model are as follows:
2008 2007
Weighted average share price at date of 7.64 11.97
grant (in pence)
Weighted average exercise price (in pence) 15.42 22.81
Weighted average expected volatility 1.004 0.734
Weighted average expected life (in years) 3.02 4.98
Risk free rates 5.25% to 6.83% 6% to 6.39%
(d) Weighted average exercise price
Weighted average exercise price of all
options: 15.09 pence
15.68 pence
Weighted average exercise price of options held by
directors: 14.06 pence 15.55 pence
19. Reserves
Group Group Company Company
2008 2007 2008 2007
(a) Other Reserves £ £ £ £
Share-based payments:
At beginning of year 71,600 - 71,600 -
Movements during the year 262,617 71,600 262,617 71,600
At end of year 334,217 71,600 334,217 71,600
Foreign currency translation reserve:
At beginning of year 20,682 (35,855) - -
Movements during the year 384,324 56,537 - -
At end of year 405,006 20,682 - -
Total other reserves 739,223 92,282 334,217 71,600
(b) Retained losses
At beginning of year (1,905,909) (411,272) (1,368,255) (477,854)
Loss for the (2,163,060) (1,494,637) (2,618,463) (890,401)
financial year
At end of year (4,068,969) (1,905,909) (3,986,718) (1,368,255)
20. Cash flows
a) Reconciliation of operating loss to net cash outflow from
operating activities.
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Loss after income tax (2,163,060) (1,494,637) (2,618,463) (890,401)
Non cash flows in
operating activities
- Depreciation 15,605 24,922 - -
- Share based payments 262,617 71,600 262,617 71,600
- Impairment of 1,332,971 923,727 - -
deferred exploration
costs
- Impairment of loans - - 1,732,278 -
from subsidiaries
Changes in assets and
liabilities
Increase/(decrease) in 123,419 (121,027) (11,483) (48,941)
creditors
Increase in receivables (242,648) (27,544) - -
Net Cash Used in (671,096) (622,959) (635,051) (867,742)
Operating Activities
b) Analysis of net funds
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Cash at bank and in hand 747,998 226,075 642,163 88,438
Cash on deposit - 1,275,000 - 1,275,000
747,998 1,501,075 642,163 1,363,438
21. Financial Instruments
Significant accounting policies
Details of significant accounting policies and methods adopted,
including the criteria for recognition, the basis of measurement and
the basis on which income and expenses are recognised in respect of
each class of financial asset, financial liability and equity
instrument are disclosed in Note 2 to the financial statements.
Risk Management
Capital risk management
The Group manages its capital to ensure that entities in the Group
will be able to continue as a going concern while maximising the
return to stakeholders. The Board monitors operating and capital
expenditure commitments to ensure sufficient capital is available.
The capital structure of the Group consists of equity attributable to
equity holders of the Parent, comprising issued capital, reserves and
accumulated losses as disclosed in Notes 16, 17 and 19.
There are no externally imposed capital requirements.
Financial risk management
Risk management is carried out by the Board of Directors. These
risks include market risk (including currency risk and fair value
interest risk), credit risk and liquidity risk. The Board reviews and
agrees policies for managing each of these risks as summarised below.
Market risk management
Market risk is the risk that changes in market prices and interest
rates, will affect the Group's results or the value of its holdings
of financial instruments. The objective of market risk management is
to manage and monitor market risk exposures within acceptable
parameters, while optimising the return on risk.
* Interest rate risk
The Group is exposed to interest rate risk as a consequence of its
cash and deposits balances which attracts average variable interest
rates. Refer to Note 20(b). All other financial assets and
liabilities are non-interest bearing.
The sensitivity analysis below has been determined based on the
Group's exposure to interest rates for its financial assets as at the
reporting date and the stipulated change taking place at the
beginning of the financial year and held constant throughout the
reporting period.
If interest rates on the Group's cash and deposit balances had been
50 basis points higher or lower and all other variables were held
constant, the Group's net profit and net assets would increase/
decrease by £3,740 (2007: £7,505). If interest rates on the
Company's cash and deposit balances had been 50 basis points higher
or lower and all other variables were held constant, the Company's
net profit and net assets would increase/decrease by £3,211 (2007:£
6,817).
* Foreign currency risk
The Group's subsidiaries undertake their transactions denominated in
foreign currencies, hence exposures to exchange rate fluctuations
arise.
The fair value of the Group's monetary items that have foreign
currency exposure at 31 December are shown below:
Australian Argentina Chile US
Dollar Peso Peso Dollar
2008
Receivables 4,669 268,838 3,995 16,992
Cash and cash equivalents 3,101 19,741 52,956 30,037
Trade creditors and other (26,864) (50,208) 18,431 (961)
payables
Foreign currency exposure (19,094) 238,371 75,382 46,068
2007
Receivables - 9,987 3,490 38,370
Cash and cash equivalents 31,488 70,574 8,059 27,516
Trade creditors and other (4,350) 37,985 (266) (12,844)
payables
27,138 118,546 11,283 53,042
The above year end amounts are not representative of the exposure to
risk during the year, because the levels of monetary foreign currency
exposure change significantly throughout the year.
Foreign currency sensitivity analysis
The Group is mainly exposed to the Australian Dollar, US Dollar,
Argentina Peso and Chilean Peso, as these are the functional
currencies of the operating entities outside of Guernsey.
The following table details the Group's sensitivity to a 10% increase
and decrease in the Pound Sterling against the relevant foreign
currencies. The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their
translation at the period end for a 10% change in foreign currency
rates. The sensitivity includes loans to foreign operations within
the Group only where denomination of the loan is in a currency other
than that of the lender or the borrower. A positive number indicates
an increase in profit or loss and other equity where the Pound
Sterling strengthens against the respective currency. For a
weakening of the Pound Sterling, against the respective currency
there would be an equal and opposite impact on the profit and other
equity, and the balances below would be negative. The Company has no
foreign currency exposure.
Australian Dollar US Argentina Chile
Dollar Peso Peso
2008 2007 2008 2007 2008 2007 2008 2007
£ £ £ £ £ £
Profit (48,566) (36,929) 5,989 85,042 225,956 235,640 36,543 41,548
or loss
Equity (48,566) (36,929) 5,989 85,042 225,956 235,640 36,543 41,548
Credit risk management
Credit risk refers to the risk that a counterparty will default on
its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with credit
worthy counterparties as a means of mitigating risk of financial loss
from defaults.
Trade receivables consist of minor amounts receivable from a small
number of counterparties.
The Group does not have any significant credit risk exposure to any
single counterparty or any group of counterparties having similar
characteristics. The credit risk on liquid funds is limited because
the counterparties are banks with high credit ratings assigned by
international credit-rating agencies.
The carrying amount of financial assets recorded in the financial
statements which represent the Company and the Group's maximum
exposure to credit risk, are summarised below:
Maximum credit risk
2008 2007
Group £ £
Other receivables and prepayments 294,494 51,846
Cash and cash equivalents 747,998 1,501,075
1,042,492 1,552,921
Maximum credit risk
2008 2007
Company £ £
Loans to subsidiaries 1,930,357 1,985,043
Cash and cash equivalents 642,163 1,363,438
2,572,520 3,348,481
Liquidity risk management
Management of the risk
Ultimate responsibility for liquidity risk management rests with the
Board of Directors. The Group manages liquidity risks by maintaining
adequate cash reserves and by continuously monitoring forecast and
actual cash flows.
Liquidity risk exposure
The contractual maturities of the financial liabilities at 31
December, based on the earliest date on which payment can be required
were as follows:
3 mths or More than 3 mths Total
less £
Group £ £
2008
Non interest bearing:
Trade and other payables 94,596 - 94,596
94,596 - 94,596
2007
Non interest bearing:
Trade and other payables 5,610 - 5,610
5,610 - 5,610
Company
2008
Non interest bearing
Trade creditors 34,993 - 34,993
Amount payable to subsidiaries 495,359 - 495,359
530,352 - 530,352
2007
Non interest bearing
Trade creditors 46,476 - 46,476
Amount payable to subsidiaries 374,889 - 374,889
421,365 - 421,365
Fair Values of financial assets and liabilities
The Group has performed a review of financial assets and liabilities
as at 31 December 2008 and has concluded that the fair value of those
assets and liabilities is not materially different to book value.
Summary of financial assets and financial liabilities by category
The carrying amounts of the Company and Group's financial assets and
financial liabilities as recognised at the balance sheet date of the
reporting periods under review are categorised as follows:
Group Group Company Company
2008 2007 2008 2007
£ £ £ £
Financial assets
Loans to subsidiaries - - 1,930,357 1,985,043
Other receivables and 294,494 51,846 - -
prepayments
Cash and cash equivalents 747,998 1,501,075 642,163 1,363,438
1,042,492 1,552,921 2,576,520 3,348,481
Financial liabilities
Trade and other creditors 94,596 5,610 530,352 421,365
94,596 5,610 530,352 421,365
Fair value of financial instruments
The directors consider that the carrying amounts of financial assets
and financial liabilities recorded at amortised cost in the financial
statements approximate their respective fair values, determined in
accordance with the accounting policies disclosed in the financial
statements.
22. Related Party Disclosures
Related party disclosures are shown below:
a) Balances with Related Parties
Related Party Relationship Nature of 2008 2007
Transaction £ £
Mariana Subsidiary Intercompany loan (495,359) (374,889)
Exploration Pty
Ltd
Compania Minera Subsidiary Intercompany loan - 852,314
Mariana S.A.
Minera Mariana Subsidiary Intercompany loan 1,126,172 736,527
Argentina S.A.
Minera Mariana de Subsidiary Intercompany loan 804,185 390,478
Chile Ltda.
All of the above loans are interest free, except for the loan to
Minera Mariana Argentina S.A., which bears interest at LIBOR.
Interest received from Minera Mariana Argentina SA for the year ended
31 December 2008 amounted to £18,518 (2007: £19,760)
b) Transactions with Related Parties
Management fees of £364,057 were payable by Mariana Resources Limited
to Mariana Exploration Pty Limited for the year ended 31 December
2008 (2007: £244,845). The amount remained owing at year end and is
included in the intercompany loan shown above.
The Board decided to withdraw from activity in Ecuador as a result of
policy changes by the Ecuador government which made continued
investment in the company's Ecuador subsidiary Compania Minera
Mariana SA unattractive. Consequently all the related inter-company
debt was written off.
Directors were paid remuneration during the year as set out in Note
5.
There is no ultimate controlling party.
23. Capital Commitments
There were no capital commitments contracted for but not provided for
in the accounts in either 2008 or 2007.
24. Post Balance Sheet Date Events
Since balance sheet date the Company has undertaken fund raising of
up to £1.09 million by placing shares at three pence per share to
institutions and others. The initial tranche of 22,220,010 shares
(£666,667) have been issued. The balance of the issue is subject to
the passing of a resolution at Mariana's forthcoming annual general
meeting called for 29th May 2009 to empower the directors to issue
the shares. Commitments for all of the placing have been received.
The Company's Ecuador subsidiary has been sold for approximately
£7,500.
---END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.