🕐25.02.14 - 10:27 Uhr

HORIZONTE MINERALS FINAL RESULTS HIGHLIGHT MAJOR MILESTONES DELIVERED ON THE PAT
H TO PFS DELIVERY EXPECTED IN Q1 2014 AT ARAGUAIA - THE NEXT MAJOR NICKEL PROJECT IN BRAZIL



Horizonte Minerals plc / Index: AIM and TSX / Epic: HZM / Sector: Mining 20 February 2014 FINAL RESULTS ____________________________________________________________________ 20 February 2014 – Horizonte Minerals Plc, (AIM: HZM, TSX: HZM) (‘Horizonte’ or ‘the Company’) the exploration and development company focused in Brazil, announces its results for the year ended 31 December 2013. Overview * Delivery of a number of major milestones during 2013, further de-risking of 100%-owned Araguaia Nickel Project (‘Araguaia’) located south of the producing Carajas mineral district, Brazil * Pre-Feasibility Study (‘PFS’) being conducted by Snowden Mining Industry Consultants on track for completion in Q1 2014 * Metallurgical test work completed – confirming Araguaia ore as suitable for the proven Rotary Kiln Electric Furnace processing route for ferro-nickel production * 321 holes (9,309 metres) of the final Phase 3 infill drill programme completed on time and within budget targeting five zones at Araguaia with continual high grade intercepts including 20.21 metres grading 2.29% Ni * Results from Phase 3 drilling to feed into a new resource update as part of the PFS aiming to convert sufficient resources to the Indicated category to provide a minimum of 20 years mine life * Solid cash position following raising of £3.08 million underpinning the continued support from major shareholders including Teck Resources and Henderson Global Investors Chairman’s Statement 2013 was a highly active year for Horizonte with the prime focus on the commencement and near completion of the Pre-Feasibility Study (‘PFS’) on our 100%-owned Araguaia Nickel Project, located south of the Carajas Mining District in northern Brazil (‘Araguaia’).

The PFS is a major study aimed at further increasing the confidence that Araguaia is set to become Brazil’s next major nickel project.

The completion of the PFS, which is on budget and on schedule for Q1 2014, will be a significant de-risking milestone for the project and add inherent value for shareholders. Key aspects of the project advancement during 2013 included the completion of a 9,309m infill drilling programme at Araguaia, where a total of 35,200m (1,412 holes) have now been drilled to date.

The recent drilling has continued to return high grade nickel results including 20.21 metres at 2.29% nickel and show good vertical thickness over the main target zone.

These drilling results will feed into a new resource statement, which will convert part of the current Inferred resources into the Indicated category, and will be included as a part of the PFS.

A second key aspect, as well as a critical de-risking milestone, was the completion of a metallurgical test programme at Araguaia in May 2013.

This has demonstrated that Araguaia ore can be processed using the proven Rotary Kiln Electric Furnace (‘RKEF’) process in order to produce a saleable ferronickel product that meets the requirements of international stainless steel plants. In June 2013, despite difficult market conditions, we successfully completed a £3.08 million placing before expenses, to help support the development at Araguaia.

The placing underpinned the continued strong support Horizonte has from its major shareholders, including Teck Resources and Henderson Global Investors.

Following this placing Horizonte had a strong net cash position which will take the Company through to the delivery of the PFS at Araguaia and 2014. With the funding secured, in July 2013, Snowden Mining Consultants was appointed to deliver a PFS at Araguaia.

The study is looking at preliminary pit optimisation and development of feed schedules for a RKEF process plant for two options: the first, a single line at 900,000 tonnes per annum, the second with two lines at 2.7 million tonnes per annum.

The former of these options could offer lower capital expenditure.

Additional aspects necessary for the viability of Araguaia will also be included in the PFS, such as project infrastructure planning and a Social and Environmental Impact Assessment and we look forward to the culmination of this study, targeted for Q1 2014, as we progress the project up the development curve towards production. One of the recurring question marks about Araguaia and future production from the project is the nickel price.

Mining has been and always will be a cyclical business, but the need for metals will persist, and that includes nickel.

Nickel-containing materials play a major role in our everyday lives – food preparation equipment, mobile phones, medical equipment, transport, buildings, power generation, rechargeable batteries – the list is almost endless.

These materials are selected because, compared with other materials, they offer better corrosion resistance, strength at high and low temperatures, as well as a range of special magnetic and electronic properties. Most important are alloys of iron, nickel and chromium, of which stainless steels (frequently 8-12% nickel) represent the largest volume.

Nickel based alloys – like stainless steel but with higher nickel contents – are used for more demanding applications such as gas turbines and some chemical plants.

In addition, iron and nickel alloys are used in electronics and specialist engineering, while copper-nickel alloys are used for coinage and marine engineering.

There are about 3,000 nickel-containing alloys in everyday use.

About 90% of all new nickel sold each year goes into alloys, two-thirds going into stainless steel. Nickel use is growing at approximately 4% to 5% each year while use of nickel-containing stainless steel is growing at around 6%.

The fastest growth today is seen in the newly and rapidly industrialising countries, especially in Asia.

Nickel-containing materials are needed to modernise infrastructure, for industry and to meet the material aspirations of their populations. China and India, the two leading emerging economies, are experiencing roughly 10 times the economic acceleration of the Industrial Revolution, on 100 times the scale, resulting in an economic force that is over 1,000 times as big.

In emerging market economies today, the population of cities grows by 65 million people per year or the equivalent of seven cities the size of Chicago.

Over the next 15 years, some 440 emerging market cities will generate nearly half of global GDP and 40% of global consumption growth. The rapid cut-back of expansion to slow long-term supply, will prolong a super cycle scarcity premium for explorers.

That is where Araguaia fits in; an advanced major nickel project progressing towards the full feasibility stage which can fill the gap that will inevitably appear in the nickel supply and that will see us realise higher prices than those currently in play. The recent announcement by the Indonesian government, banning all exports of direct shipping nickel ore, should have a positive effect on the nickel price in the mid-term if the ban continues to be fully implemented.

Indonesia was estimated to account for around 18% to 20% of all nickel ore imports to China.

This growth from only 14% in 2007 has been driven by demand from China, to feed the country’s increasing consumption of nickel pig iron and latterly RKEF production. The fundamental issue, even without the strict implementation of the ban, is that beyond 2016 the nickel industry is facing a lack of new projects to continue to supply the industry.

This positions Horizonte with its Araguaia project prominently to take advantage of this new exciting nickel cycle.

Metal forecasters predict that by the end of 2016 a switch will occur in the supply-demand dynamics of nickel resulting in underlying demand outstripping supply and therefore an upwards drive in nickel prices as we bring Araguaia on line. Having completed a number of major de risking milestones at Araguaia during 2013 in terms of geology and metallurgy and with nickel futures in mind, we are eager to progress the project towards production.

We therefore look forward to detailing the results of the PFS as soon as available and proving the potential viability of this major nickel project for Horizonte as we continue along our clear path to generate significant value uplift for shareholders. The on-going support Horizonte Minerals has had from our loyal shareholders and the hard work and dedication shown by our management team and Board is greatly appreciated and I would like to take this opportunity to thank you all, and I look forward to another positive and successful period ahead.
David J.

Hall Chairman For further information visit www.horizonteminerals.com or contact: Jeremy Martin Horizonte Minerals plc Tel: +44 (0) 20 7763 7157 David Hall Horizonte Minerals plc Tel: +44 (0) 20 7763 7157 Joanna Weaving Matthew Robinson Ben Thompson finnCap Ltd (Corporate Broking) finnCap Ltd (Corporate Finance) finnCap Ltd (Corporate Finance) Tel: +44 (0) 20 7220 0500 Tel: +44 (0) 20 7220 0500 Tel: +44 (0) 20 7220 0500 Felicity Edwards Lottie Brocklehurst
St Brides Media & Finance Ltd (PR) St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177 Tel: +44 (0) 20 7236 1177 The Annual Report for the year ended 31 December 2013, together with the Management’s Discussion and Analysis prepared as at 31 December 2013 and Notice of Meeting and Management Information Circular with Respect to the Annual General Meeting of Shareholders to be held on 25 March 2014 will be posted to shareholders and are available on the Company’s website at www.horizonteminerals.com and on Sedar www.Sedar.com The Annual General Meeting of the Company will be held at 2:30 pm on 25 March 2014 at FinnCap 60 New Broad Street London EC2M 1JJ
Financial Statements
Consolidated Statement of Comprehensive Income For the year ended 31 December 2013
Year ended Year ended
31 December 31 December
2013 2012
Notes £ £ Continuing operations
Revenue
— — Cost of sales
— — Gross profit
— — Administrative expenses
(1,260,604) (1,741,384) Charge for share options granted
(171,277) (321,400) Toronto Stock Exchange listing and compliance costs
(28,154) (114,426) Changes in fair value of contingent consideration 19 46,940 545,439 Project and fixed asset impairment 7 (1,033,240) (700,397) Gain/(loss) on foreign exchange
(149,199) (181,618) Other operating income 6 — 125,229 Operating loss 7 (2,595,534) (2,388,557) Finance income 8 47,451 88,262 Finance costs 8 (165,138) (189,186) Loss before taxation
(2,713,221) (2,489,481) Taxation 9 — — Loss for the year from continuing operations
(2,713,221) (2,489,481) Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Changes in value of available for sale financial assets 13 (174,985) (55,291) Currency translation differences on translating foreign operations 18 (4,124,364) (3,039,094) Other comprehensive income for the year, net of tax
(4,299,349) (3,094,385) Total comprehensive income for the year attributable to equity holders of the Company
(7,012,570) (5,583,866) Earnings per share from continuing operations attributable to the equity holders of the Company
Basic (pence per share) 21 (0.709) (0.762) Diluted (pence per share) 21 (0.709) (0.762)
Consolidated Statement of Financial Position As at 31 December 2013
31 December 31 December
2013 2012
Notes £ £ Assets
Non-current assets
Intangible assets 10 20,041,937 20,417,739 Property, plant & equipment 11 107,451 145,564 Deferred tax assets 9 5,373,634 6,308,978
25,523,022 26,872,281 Current assets
62,127
Trade and other receivables 12 44,842 Other current financial assets 13 22,729 197,714 Cash and cash equivalents 14 3,091,880 5,887,174
3,176,736 6,129,730 Total assets
28,699,758 33,002,011 Equity and liabilities
Equity attributable to owners of the parent
4,011,395
Share capital 15 3,600,462 Share premium 16 26,997,998 24,384,527 Other reserves 18 1,139,550 5,438,899 Retained losses
(8,410,040) (5,868,096) Total equity
23,738,903 27,555,792 Liabilities
Non-current liabilities
2,477,310
Contingent consideration 19 2,359,112 Deferred tax liabilities 9 2,335,492 2,742,012
4,812,802 5,101,124 Current liabilities
148,053
Trade and other payables 19 345,095
148,053 345,095 Total liabilities
4,960,855 5,446,219 Total equity and liabilities
28,699,758 33,002,011
Company Statement of Financial Position As at 31 December 2013
31 December 31 December
Notes 2013 2012
Assets
Non-current assets
Property, plant & equipment 11 5,137 5,455
Investment in subsidiaries 27 34,525,339 33,356,363
35,530,476 33,361,818
Current assets
Trade and other receivables 12 12,035 25,742
Cash and cash equivalents 14 2,756,368 5,154,986
2,768,403 5,180,728
Total assets
37,298,879 38,542,546
Equity and liabilities
Equity attributable to owners of the parent
Share capital 15 4,011,395 3,600,462
Share premium 16 26,997,998 24,384,527
Merger reserve 18 10,888,760 10,888,760
Retained losses
(7,551,817) (3,344,872)
Total equity
34,346,336 35,528,877
Liabilities
Non-current liabilities
Contingent consideration 19 2,477,310 2,359,112
Current liabilities
Trade and other payables 19 475,233 654,557
Total liabilities
2,952,543 3,013,669
Total equity and liabilities
37,298,879 38,542,546
Statements of Changes in Equity For the year ended 31 December 2013
Attributable to owners of parent
Share Share Retained Other
capital premium losses reserves Total
£ £ £ £ £ Consolidated
As at 1 January 2012 2,795,600 18,772,797 (3,700,015) 8,533,284 26,401,666 Loss for the year — — (2,489,481) — (2,489,481) Other comprehensive income — — — (3,094,385) (3,094,385) Total comprehensive income for the year — — (2,489,481) (3,094,385) (5,583,866) Issue of ordinary shares 804,862 5,710,387 — — 6,515,249 Issue costs — (98,657) — — (98,657) Share-based payments — — 321,400 — 321,400 Total transactions with owners 804,862 5,611,730 321,400 — 6,737,992 As at 31 December 2012 3,600,462 24,384,527 (5,868,096) 5,438,899 27,555,792 Loss for the year — — (2,713,221) — (2,713,221) Other comprehensive income — — — (4,299,349) (4,299,349) Total comprehensive income for the year — — (2,713,221) (4,299,349) (7,012,570) Issue of ordinary shares 410,933 2,671,066 — — 3,081,999 Issue costs — (57,595) — — (57,595) Share-based payments — — 171,277 — 171,277 Total transactions with owners 410,933 2,613,471 171,277 — 3,195,681 As at 31 December 2013 4,011,395 26,997,998 (8,410,040) 1,139,550 23,738,903
Attributable to equity shareholders
Share Share Retained Merger
capital premium losses reserves Total
£ £ £ £ £ Company
As at 1 January 2012 2,795,600 18,772,797 (2,786,938) 10,888,760 29,670,219 Loss for the year — — (879,334) — (879,334) Total comprehensive income for the year — — (879,334) — (879,334) Issue of ordinary shares 804,862 5,710,387 — — 6,515,249 Issue costs — (98,657) — — (98,657) Share-based payments — — 321,400 — 321,400 Total transactions with owners 804,862 5,611,730 321,400 — 6,737,992 As at 31 December 2012 3,600,462 24,384,527 (3,344,872) 10,888,760 35,528,877 Loss for the year — — (4,378,222) — (4,378,222) Total comprehensive income for the year — — (4,378,222) — (4,378,222) Issue of ordinary shares 410,933 2,671,066 — — 3,081,999 Issue costs — (57,595) — — (57,595) Share-based payments — — 171,277 — 171,277 Total transactions with owners 410,933 2,613,471 171,277 — 3,195,681 As at 31 December 2013 4,011,395 26,997,998 (7,551,817) 10,888,760 34,346,336
Consolidated Statement of Cash Flows For the year ended 31 December 2013
31 December 31 December
2013 2012
Notes £ £ Cash flows from operating activities
Loss before taxation
(2,713,221) (2,489,481) Interest income
(47,451) (88,262) Finance costs
165,138 189,186 Share-based payments
171,277 321,400 Gain on sale of fixed assets
— (13,249) Project impairment
1,048,282 639,505 Exchange difference
(27,424) 19,931 Change in fair value of contingent consideration
(46,940) (545,439) Depreciation
4,370 5,871 Operating loss before changes in working capital
(1,445,969) (1,960,538) (Increase)/decrease in trade and other receivables
(17,285) 128,064 (Decrease)/increase in trade and other payables
(177,040) (157,789) Net cash used in operating activities
(1,640,294) (1,990,263) Cash flows from investing activities
Purchase of intangible assets
(4,199,863) (2,848,040) Purchase of property, plant and equipment
(100,037) (102,672) Purchase of available-for-sale financial assets
— (253,004) Proceeds from sale of property, plant and equipment
91,247 16,673 Interest received
47,451 88,262 Net cash used in investing activities
(4,161,202) (3,098,781) Cash flows from financing activities
Proceeds from issue of ordinary shares
3,081,999 5,240,249 Issue costs
(57,595) (98,657) Net cash from financing activities
3,024,404 5,141,592 Net increase in cash and cash equivalents
(2,777,092) 52,548 Cash and cash equivalents at beginning of year
5,887,174 5,856,949 Exchange loss on cash and cash equivalents
(18,202) (22,323) Cash and cash equivalents at end of the year 14 3,091,880 5,887,174
Major non-cash transactions During the year ended 31 December 2013 additions to intangible exploration assets included £80,109 (2012: £73,664) in relation to depreciation charges on property, plant and equipment used for exploration activities. On 7 February 2012 the Company issued 8,500,000 new ordinary shares of 1 pence per share each to Lara Exploration Limited at a premium of 14 pence per share in consideration for the acquisition of the Vila Oito and Floresta nickel laterite projects.
Company Statement of Cash Flows For year ended 31 December 2013
31 December 31 December
2013 2012
Notes £ £ Cash flows from operating activities
Loss before taxation
(4,378,222) (879,334) Interest income
(45,075) (79,424) Share-based payments
171,277 321,400 Impairment of investment in subsidiaries
4,264,167 — Depreciation
2,868 2,233 Operating loss before changes in working capital
15,015 (635,125) Decrease in trade and other receivables
13,707 82,254 (Decrease)/increase in trade and other payables
(179,324) 18,324 Net cash flows used in operating activities
(150,602) (534,547) Cash flows from investing activities
Loans to subsidiary undertakings
(5,314,945) (3,775,342) Purchase of property, plant and equipment
(2,550) (1,599) Interest received
45,075 79,424 Net cash used in investing activities
(5,272,420) (3,697,517) Cash flows from financing activities
Proceeds from issue of ordinary shares
3,081,999 5,240,249 Issue costs
(57,595) (98,657) Net cash from financing activities
3,024,404 5,141,592 Net (decrease)/increase in cash and cash equivalents
(2,398,618) 909,528 Cash and cash equivalents at beginning of year
5,154,986 4,245,460 Cash and cash equivalents at end of the year 14 2,756,368 5,154,986
Major non-cash transactions On 7 February 2012 the Company issued 8,500,000 new ordinary shares of 1 pence per share each to Lara Exploration Limited at a premium of 14 pence per share in consideration for the acquisition of the Vila Oito and Floresta nickel laterite projects. The non-cash movement in contingent consideration of £118,198 (2012: £356,253) was charged to a subsidiary undertaking and adjusted for in the loans to subsidiary undertakings balance.
Notes to the Financial Statements 1 General information The principal activity of Horizonte Minerals Plc (‘the Company’) and its subsidiaries (together ‘the Group’) is the exploration and development of precious and base metals.

The Company’s shares are listed on the Alternative Investment Market of the London Stock Exchange and on the Toronto Stock Exchange.

The Company is incorporated and domiciled in the UK. The address of its registered office is 26 Dover Street, London W1S 4LY. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these Financial Statements are set out below.

These policies have been consistently applied to all the years presented. 2.1 Basis of preparation These Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU), IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The Financial Statements have been prepared under the historical cost convention as modified by the revaluation of certain subsidiaries’ assets and liabilities to fair value for consolidation purposes. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.

It also requires management to exercise its judgement in the process of applying the Group’s Accounting Policies.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements, are disclosed in Note 4. 2.2 Changes in accounting policy and disclosures a) New and amended standards adopted by the Group A number of new standards and amendments to standards and interpretations are effective for the annual period beginning after 1 January 2013 and have been applied in preparing these financial statements. Amendment to IAS 1, ‘Financial statement presentation’ regarding other comprehensive income became effective during the period.

Items in the consolidated statement of comprehensive income that may be reclassified to profit or loss in subsequently periods are now presented separately from items that will not be reclassified to profit or loss in subsequent periods. IFRS 13, “Fair value measurement” became effective during the period.

The standard requires specific disclosures on fair values, some of which replace existing disclosure requirements in IFRS 7, “Financial instruments: Disclosures”.

The fair values of cash and cash equivalents, trade and other receivables and trade and other payables approximate to their book values due to the short maturity periods of these financial instruments.

Available for sale financial assets consist of equity investments whose fair value is determined by reference to quoted market prices (level 1 in the fair value measurement hierarchy). b) New and amended standards, and interpretations mandatory for the first time for the financial year beginning 1 January 2013, but not currently relevant to the Group A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2013, and have not been applied in preparing these financial statements.

None of these is expected to have a significant effect on the financial statements of the Company or Group. IAS 19, ‘Employee benefits’ eliminate the option to defer the recognition of gains and losses, known as the “corridor method”; streamline the presentation of changes in assets and liabilities arising from defined benefit plans, including requiring re-measurements to be presented in other comprehensive income; and enhance the disclosure requirements for defined benefit plans, providing better information about the characteristics of defined benefit plans and the risks that entities are exposed to through participation in those plans. IFRS 7, ‘Financial Instruments: Disclosures’ was amended for asset and liability offsetting.

This amendment requires disclosure of information that will enable users of financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. Amendment to IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ on government loans, addresses how first-time adopters would account for a government loan with a below-market rate of interest when transitioning to IFRS.

It also adds an exception to the retrospective application of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS Financial Statements when the requirement was incorporated into IAS 20 ‘Accounting for Government Grants and Disclosure of Government Assistance’ in 2008. IFRIC 20, ‘Stripping Costs in the Production Phase of a Surface Mine’, clarifies when production stripping should lead to the recognition of an asset and how that asset should be measured, both initially and in subsequent periods. ‘Annual Improvements 2009 – 2011 Cycle’ sets out amendments to various IFRSs as follows:
· An amendment to IFRS 1, ‘First-time Adoption’ clarifies whether an entity may apply IFRS 1: (a) if the entity meets the criteria for applying IFRS 1 and has applied IFRS 1 in a previous reporting period; or (b) if the entity meets the criteria for applying IFRS 1 and has applied IFRSs in a previous reporting period when IFRS 1 did not exist. · The amendment to IFRS 1 also addresses the transitional provisions for borrowing costs relating to qualifying assets for which the commencement date for capitalisation was before the date of transition to IFRSs. · An amendment to IAS 1, ‘Presentation of Financial Statements’ clarifies the requirements for providing comparative information when an entity provides Financial Statements beyond the minimum comparative information requirements. · An amendment to IAS 16, ‘Property, Plant and Equipment’ addresses a perceived inconsistency in the classification requirements for servicing equipment. · An amendment to IAS 32, ‘Financial Instruments: Presentation’ addresses perceived inconsistencies between IAS 12, ‘Income Taxes’ and IAS 32 with regard to recognising the consequences of income tax relating to distributions to holders of an equity instrument and to transaction costs of an equity transaction. · An amendment to IAS 34, ‘Interim Financial Reporting’ clarifies the requirements on segment information for total assets and liabilities for each reportable segment. c) New and amended standards and interpretations issued but not yet effective for the financial year beginning 1 January 2013 and not early adopted
The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the financial statements are disclosed below.

The Company and Group intend to adopt these standards, if applicable, when they become effective. IAS 27, ‘Separate Financial Statements’, replaces the current version of IAS 27, ‘Consolidated and Separate Financial Statements’ as a result of the issue of IFRS 10.

The revised standard includes the requirements relating to separate financial statements.

The revised standard becomes effective for annual periods beginning on or after 1 January 2014. IAS 28, ‘Investments in Associates and Joint Ventures’, replaces the current version of IAS 28,’Investments in Associates’, as a result of the issue of IFRS 11.

The revised standard includes the requirements for associates and joint ventures that have to be equity accounted following the issue of IFRS 1.

The Group is yet to assess full impact of the revised standard and intends to adopt IAS 28 (revised) no later than the accounting period beginning on or after 1 January 2014. Amendment to IAS 19, ‘Defined Benefit Plans: Employee Contributions’, provides guidance added to IAS 19 Employee Benefits on accounting for contributions from employees or third parties set out in the formal terms of a defined benefit plan.

The Directors do not believe that this will have an impact on the Group however will be adopted no later than accounting period beginning on or after 1 January 2014. Amendment to IAS 32, ‘Offsetting Financial Assets and Financial Liabilities’, add application guidance to address inconsistencies identified in applying some of the criteria when offsetting financial assets and financial liabilities.

This includes clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement.

The Group is yet to assess the full impact of the amendment to IAS 32 and intends to adopt the amended standard no later than the accounting period beginning on or after 1 January 2014. Amendment to IAS 36, ‘Recoverable Amount Disclosures for Non-Financial Assets’, to reduce the circumstances in which the recoverable amount of assets or cash-generating units is required to be disclosed, clarify the disclosures required, and to introduce an explicit requirement to disclose the discount rate used in determining impairment (or reversals) where recoverable amount (based on fair value less costs of disposal) is determined using a present value technique.

The Group is yet to assess full impact of the revised standard and intends to adopt the amendment to IAS 36 no later than the accounting period beginning on or after 1 January 2014. Amendment to IAS 39, ‘Novation of Derivatives and Continuation of Hedge Accounting’, make it clear that there is no need to discontinue hedge accounting if a hedging derivative is novated, provided certain criteria are met.

The Group is yet to assess full impact and intends to adopt the amendment to IAS 39 no later than the accounting period beginning on or after 1 January 2014. IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities.

IFRS 9 was issued in November 2009 and October 2010.

It replaces parts of IAS 39 that relate to the classification and measurement of financial instruments.

IFRS 9 requires financial assets to be classified into two measurement categories: those measured as at fair value and those measured at amortised cost.

The determination is made at initial recognition.

The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics for the instrument.

For financial liabilities, the standard retains most of the IAS 39 requirements.

The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

The Group is yet to assess IFRS 9’s full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2014, subject to endorsement by the EU.

The Group will also consider the impact of the remaining phases of IFRS 9 when completed by the Board. IFRS 10, ‘Consolidated financial statements’, builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company.

The standard provides additional guidance to assist in the determination of control where this is difficult to assess.

The Group is yet to assess IFRS 10’s full impact and intends to adopt IFRS 10 no later than the accounting period beginning on or after 1 January 2014. IFRS 11, ‘Joint Arrangements’ provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form.

There are two types of joint arrangement; joint operations and joint ventures.

Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and therefore accounts for its share of assets, liabilities, revenue and expenses.

Joint ventures arise where the joint venture has rights to the net assets of the arrangement and therefore equity accounts for its interest.

Proportional consolidation of joint ventures is no longer allowed.

The Group is yet to assess IFRS 11’s full impact and intends to adopt IFRS 11 no later than the accounting period beginning on or after 1 January 2014. IFRS 12, ‘Disclosures of interests in other entities’, includes the disclosure requirements for all forms of interests in entities, including joint arrangements, associates, special purpose vehicles and other off Statement of Financial Position vehicles.

The Group is yet to assess IFRS 12’s full impact and intends to adopt IFRS 12 no later than the accounting period beginning on or after 1 January 2014. Amendments to IFRS 10, “Consolidated Financial Statements”, IFRS 12, “Disclosure of Interests in Other Entities” and IAS 27, ‘Separate Financial Statements’, provide ‘investment entities’ (as defined) an exemption from the consolidation of particular subsidiaries and instead require that an investment entity measure the investment in each eligible subsidiary at fair value through profit or loss in accordance with IFRS 9 Financial Instruments or IAS 39 Financial Instruments: Recognition and Measurement.

The Group is yet to assess the full impact of these amendments and intends to adopt the amended standards no later than the accounting period beginning on or after 1 January 2014. Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint Arrangements” and IFRS 12 “Disclosure of Interests in Other Entities” clarify the IASB’s intention when first issuing the transition guidance in IFRS 10, provide similar relief in IFRS 11 and IFRS 12 from the presentation or adjustment of comparative information for periods prior to the immediately preceding period, and provide additional transition relief by eliminating the requirement to present comparatives for the disclosures relating to unconsolidated structured entities for any period before the first annual period for which IFRS 12 is applied.

The Group plans to adopt these amendments no later than the annual period beginning on or after 1 January 2014. IFRIC 21, ‘Levies’, provides guidance on when to recognise a liability for a levy imposed by a government, both for levies that are accounted for in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and those where the timing and amount of the levy is certain.

It provides the following guidance on recognition of a liability to pay levies: · The liability is recognised progressively if the obligating event occurs over a period of time; · If an obligation is triggered on reaching a minimum threshold, the liability is recognised when that minimum threshold is reached. The Group is yet to assess the full impact and intends to adopt the standard no later than the accounting period beginning on or after 1 January 2014, subject to endorsement by the EU. “Annual Improvements 2010 – 2012 Cycle” sets out amendments to various IFRSs and provides a vehicle for making non-urgent but necessary amendments to IFRSs: · IFRS 2 “Share-based Payment”: amendment to the definition of a vesting condition. · IFRS 3 “Business Combinations”: amendments to the accounting for contingent consideration in a business combination. · IFRS 8 “Operating Segments”: aments to the aggregation of operating segments and the reconciliation of the total of the reportable segments’ assets to the entity’s assets. · IFRS 13 “Fair Value Measurement”: amendments to short-term receivables and payables. · IAS 16 “Property, Plant and Equipment”: amendments to the revaluation method in relation to the proportionate restatement of accumulated depreciation. · IAS 24 “Related Party Disclosures”: amendments regarding key management personnel. · IAS 38 “Intangible Assets”: amendments to the revaluation method in relation to the proportionate restatement of accumulated depreciation. The Group intends to adopt the amended standards no later than the annual period beginning on or after 1 July 2014, subject to EU endorsement. “Annual Improvements 2011 – 2013 Cycle” sets out amendments to various IFRSs and provides a vehicle for making non-urgent but necessary amendments to IFRSs: · IFRS 1 “First-time Adoption of International Financial Reporting Standards”: amendment to the meaning of ‘effective IFRSs’. · IFRS 3 “Business Combinations”: amendments to the scope exceptions for joint ventures. · IFRS 13 “Fair Value Measurement”: amendments to the scope of paragraph 52 (portfolio exception). · IAS 40 “Investment Property”: amendments clarifying the interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property. The Group intends to adopt the amended standards no later than the annual period beginning on or after 1 July 2014, subject to EU endorsement. 2.3 Basis of consolidation Horizonte Minerals Plc was incorporated on 16 January 2006.

On 23 March 2006 Horizonte Minerals Plc acquired the entire issued share capital of Horizonte Exploration Limited (HEL) by way of a share for share exchange.

The transaction was treated as a group reconstruction and was accounted for using the merger accounting method as the entities were under common control before and after the acquisition. Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.

The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

They are de-consolidated from the date that control ceases. Other than for the acquisition of HEL as noted above, the Group uses the acquisition method of accounting to account for business combinations.

The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group.

The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Acquisition-related costs are expensed as incurred unless they result from the issuance of shares, in which case they are offset against the premium on those shares within equity. If an acquisition is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.

Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or a liability is recognised in accordance with IAS 39 either in profit or loss or as a change in other comprehensive income.

The unwinding of the discount on contingent consideration liabilities is recognised as a finance charge within profit or loss.

Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. The excess of the consideration transferred and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.

If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in profit or loss. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with policies adopted by the Group. Investments in subsidiaries are accounted for at cost less impairment. References to various joint venture arrangements in the Chairman’s Statement and the Operations Review do not meet the definition of joint ventures under IAS 31 ‘Interests in Joint Ventures’ and therefore these Financial Statements do not reflect the accounting treatments required under IAS 31. The following 100% owned subsidiaries have been included within the consolidated Financial Statements:
Subsidiary undertaking
Parent company
Country of incorporation
Nature of business
Horizonte Exploration Ltd
Horizonte Minerals Plc
England
Mineral Exploration
Horizonte Minerals (IOM) Ltd
Horizonte Exploration Ltd
Isle of Man
Holding company
HM Brazil (IOM) Ltd
Horizonte Minerals (IOM) Ltd
Isle of Man
Holding company
HM Peru (IOM) Ltd
Horizonte Minerals (IOM) Ltd
Isle of Man
Holding company
Horizonte Nickel (IOM) Ltd
Horizonte Minerals (IOM) Ltd
Isle of Man
Holding company
HM do Brasil Ltda
HM Brazil (IOM) Ltd
Brazil
Mineral Exploration
Araguaia Niquel Mineração Ltda
Horizonte Nickel (IOM) Ltd
Brazil
Mineral Exploration
Lontra Empreendimentos e
Arguaia Niquel Mineração Ltda/
Participações Ltda
Horizonte Nickel (IOM) Ltd
Brazil
Mineral Exploration
Mineira El Aguila SAC
HM Peru (IOM) Ltd
Peru
Mineral Exploration
Mineira Cotahusi SAC
Mineira El Aguila SAC
Peru
Mineral Exploration
South America Resources Ltd
Horizonte Minerals Plc
Isle of Man
Holding company
Brazil Mineral Holdings Ltd
South America Resources Ltd
Isle of Man
Holding company
PMA Geoquimica Ltda, a subsidiary of Brazil Mineral Holdings Ltd, was dissolved during the year and South America Resources Ltd and Brazil Mineral Holdings Ltd are in the process of being dissolved. 2.4 Going concern The Group’s business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman’s Statement on pages 4 and 5; in addition note 3 to the Financial Statements includes the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit and liquidity risk. The Financial Statements have been prepared on a going concern basis.

Although the Group’s assets are not generating revenues and an operating loss has been reported, the Directors consider that the Group has sufficient funds to undertake its operating activities for a period of at least the next 12 months including any additional payments required in relation to its current exploration projects.

The Group has considerable financial resources which will be sufficient to fund the Group’s committed expenditure both operationally and on its exploration projects for the foreseeable future.

However, as additional projects are identified and the Araguaia project moves towards production, additional funding will be required.

The amount of funding is estimated without any certainty at the point of approval of these Financial Statements and the Group will be required to raise additional funds either via an issue of equity or through the issuance of debt.

The Directors are confident that funds will be forthcoming if and when they are required. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

Thus they continue to adopt the going concern basis of accounting in preparing these Financial Statements. 2.5 Intangible Assets (a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets, liabilities and contingent liabilities of the acquired subsidiary at the date of acquisition.

Goodwill arising on the acquisition of subsidiaries is included in ‘intangible assets’.

Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

Impairment losses on goodwill are not reversed.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for the purpose of impairment testing.

The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segment. (b) Exploration and evaluation assets The Group recognises expenditure as exploration and evaluation assets when it determines that those assets will be successful in finding specific mineral resources.

Expenditure included in the initial measurement of exploration and evaluation assets and which are classified as intangible assets relate to the acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability of extracting a mineral resource.

Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production. Exploration and evaluation assets arising on business combinations are included at their acquisition-date fair value in accordance with IFRS 3 (revised) ‘Business combinations’.

Other exploration and evaluation assets and all subsequent expenditure on assets acquired as part of a business combination are recorded and held at cost. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an asset may exceed its recoverable amount.

The assessment is carried out by allocating exploration and evaluation assets to cash generating units, which are based on specific projects or geographical areas. Whenever the exploration for and evaluation of mineral resources in cash generating units does not lead to the discovery of commercially viable quantities of mineral resources or the Company has decided to discontinue such activities of that unit, the associated expenditures are written off to profit or loss. 2.6 Property, plant and equipment All property, plant and equipment is stated at historic cost less accumulated depreciation.

Historic cost includes expenditure that is directly attributable to the acquisition of the items. All repairs and maintenance costs are charged to profit or loss during the financial period in which they are incurred. Depreciation is charged on a straight-line basis so as to write off the cost of assets, over their estimated useful lives, using the straight-line method, on the following bases:
Office equipment
25%
Vehicles and other field equipment
25% – 33%
An asset’s carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount. Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within ‘Other (losses)/gains’ in the Statement of Comprehensive Income. 2.7 Impairment Assets that have an indefinite useful life; for example, goodwill or intangible exploration assets not ready to use, are not subject to amortisation and are tested annually for impairment.

Intangible assets that are subject to amortisation and tangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. 2.8 Foreign currency translation (a) Functional and presentation currency Items included in the Financial Statements of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the ‘functional currency’).

The functional currency of the UK and Isle of Man entities is Sterling and the functional currency of the Brazilian and Peruvian entities is Brazilian Real and Peruvian Nuevo Sol respectively.

The Consolidated Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Company’s functional and Group’s presentation currency. (b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured.

Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. (c) Group companies The results and financial position of all the Group’s 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: (1) assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; (2) each component of profit or loss is translated at average exchange rates during the accounting period (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 (3) all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future are taken to other comprehensive income.

When a foreign operation is sold, such exchange differences are recognised in profit or loss as part of the gain or loss on sale. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. 2.9 Financial assets Financial assets within the scope of IAS 39 are classified as loans and receivables or available-for-sale financial assets, as appropriate.

The Group determines the classification of its financial assets at initial recognition. (a) Available-for-sale financial investments Available-for-sale financial investments consist of equity investments that are neither classified as held for trading nor designated at fair value through profit or loss.

After initial recognition, available-for-sale financial investments are subsequently measured at fair value with unrealised gains or losses recognised as other comprehensive income in the available-for-sale reserve until the investment is derecognised, at which time the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the available-for-sale reserve to the Income Statement in finance costs.

The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices. (b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method, less impairment.

The Group’s loans and receivables comprise ‘trade and other receivables’ in the Statement of Financial Position. Derecognition A financial asset is derecognised when the rights to receive cash flows from the asset have expired. 2.10 Cash and cash equivalents Cash and cash equivalents comprise cash at bank and in hand and demand deposits with banks and other financial institutions, that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 2.11 Taxation The tax credit or expense for the period comprises current and deferred tax.

Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. The charge for current tax is calculated on the basis of the tax laws enacted or substantively enacted by the end of the reporting period in the countries where the company and its subsidiaries operate and generate taxable income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.

It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred tax is accounted for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax assets are recognised on tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax assets and liabilities are not discounted. 2.12 Share capital Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. 2.13 Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.

Accounts payable are classified as current liabilities if payment is due within one year or less.

If not, they are presented as non-current liabilities. Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method. 2.14 Operating leases Leases of assets under which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases.

Operating lease payments are charged to the Income Statement on a straight-line basis over the period of the respective leases. 2.15 Share-based payments and incentives The Group operates equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group.

The fair value of employee services received in exchange for the grant of share options are recognised as an expense.

The total expense to be apportioned over the vesting period is determined by reference to the fair value of the options granted:
· including any market performance conditions; · excluding the impact of any service and non-market performance vesting conditions; and · including the impact of any non-vesting conditions. Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

At the end of each reporting period the Group revises its estimate of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity. When options are exercised, the Company issues new shares.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium. The fair value of goods or services received in exchange for shares is recognised as an expense. 2.16 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer, the Company’s chief operating decision-maker. 2.17 Finance income Interest income is recognised using the effective interest method, taking into account the principal amounts outstanding and the interest rates applicable. 3 Financial risk management 3.1 Financial risk factors The main financial risks to which the Group’s activities are exposed are liquidity and fluctuations on foreign currency.

The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out by the Board of Directors under policies approved at the quarterly Board meetings.

The Board frequently discusses principles for overall risk management including policies for specific areas such as foreign exchange. (a) Liquidity and related market risks In keeping with similar sized mineral exploration groups, the Group’s continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital.

The Group monitors its cash and future funding requirements through the use of cash flow forecasts. All cash, with the exception of that required for immediate working capital requirements, is held on short-term deposit. (b) Foreign currency risks The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Brazilian Real, US Dollar and the UK pound. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations that are denominated in a foreign currency.

The Group holds a proportion of its cash in US Dollars and Brazilian Reals to hedge its exposure to foreign currency fluctuations and recognises the profits and losses resulting from currency fluctuations as and when they arise.

The volume of transactions is not deemed sufficient to enter into forward contracts. At 31 December 2013, if the US Dollar had weakened/strengthened by 5% against Pound Ste



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