third quarter report 2017 - element asa · • cecilie grue, previously interim ceo, was employed...
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Third Quarter Report 2017
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Interim Consolidated Financial Statements
Highlights of the quarter and subsequent events
• The Company rebranded and changed its name to Element ASA.
• The ticker used for trading the Company’s shares was changed to ELE.
• The parent Company launched a new web-site at www.elementasa.com.
• The Group entered into a Terms of Agreement with Harmonychain AS for the purpose of exploring
issuance of an asset-backed crypto currency.
• The Group became member of the Enterprise Ethereum Alliance.
• The Group secured and completed a private placement with gross proceeds in excess of MNOK 5 million.
• The MNOK 50 Convertible Loan Facility with Warrants with Blue Ocean Advisors Inc. was signed and
approved by the Extraordinary General meeting. Under the Convertible Note Facility Element may draw
ten (10) tranches (each a “Tranche”) of 5 MNOK in convertible bonds over a period of three years. Each
Tranche entitles Blue Ocean to warrants. Element is obligated to draw three (3) Tranches but may choose
not to draw the remaining if for instance other means of financing at better terms becomes available.
The first three tranches were drawn down providing MNOK 15 million in cash funding.
• Blue Ocean Advisors Inc. converted the first three tranches to shares.
• Cecilie Grue, previously interim CEO, was employed as CEO on a permanent basis.
Financial Results
(All numbers in brackets refer to comparable 2016 figures; profit and loss related figures compares to same period
2016 while balance sheet figures compare to figures as at 31 December 2016).
Based on the Group’s accounting principles the Mindoro Nickel Project has from December 2015 been classified
as “Asset held for sale”, and is recorded as “discontinued operations” according to IFRS.
There was no exploration activity in Q3 of 2017 or 2016. Exploration expenses were limited to license fees.
Net loss from continued operations before and after tax amount to USD 411 thousand for the quarter (loss of USD
653 thousand).
Year end
Audited
(USD '000) 30.09.2017 30.09.2016 30.09.2017 30.09.2016 31.12.2016
Loss from continuing operations -259 -351 -1 309 -1 353 -1 943
Loss from discontinued operations -152 -302 -546 -826 -1 100
Loss for the period -411 -653 -1 855 -2 179 -3 043
Third Quarter Year to Date
Non-audited Non-audited
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At 30 September 2017, cash and cash equivalents amount to USD 256 thousand (USD 706 thousand). On 31 August
2017, the Group raised NOK 5,144 thousand through a private placement. In addition, the Group has secured a
zero coupon convertible note facility from Blue Ocean Advisors Inc.
Book equity as at 30 September 2017 was USD 4,710 thousand or USD 0.10 per outstanding share (USD 3,953
thousand or USD 0.11 per share). The equity ratio was 63.4 per cent as at 30 September 2017 (57.3 per cent).
Review of project portfolio
The Group has a portfolio of assets with substantial economic potential. The portfolio consists of Mindoro Nickel
in the Philippines and a minority stake in addition to an option to become owner of 51% of the issued shares in
Ambershaw Metallics Inc (AMI) in Canada. The Company also holds licenses for the Nordli Molybdenum project in
Norway.
Asset-backed Token Project
On 27 October 2017, the Company announced that it had entered into a Terms of Agreement with Harmonychain
AS to explore the issuance of asset-backed Tokens. The Tokens will be based on blockchain technology and can be
exchangeable into the Group’s commodities or products derived thereof. In essence, the asset-backed Tokens
could be viewed as an advance sale of the commodities. For the Group this means that funding may be received
before the commodities are produced and the interest-free funding may be used to start production or expand
production (or other purposes) without any dilution for the shareholders of Element. The Token holders can
decide if and when they want physical delivery, even far into the future, giving an advantage to existing alternatives
in terms of securing exposure to future delivery of the commodities. This is one of the first Tokens which is backed
by a physical commodity and the credit risk of expensive middlemen is removed with the Blockchain technology
applied.
In a rapid changing world of technology there have been a lot of developments in token- and blockchain based
technology. This technology provides a fast and secure transaction structure with a verifiable, publicly available
audit trail. Almost all tokens and "coins", like Bitcoin, are not backed by any physical assets in comparison to the
Tokens Element is contemplating to issue.
The Group is currently working on structuring the issuance of Tokens for the iron ore owned by Ambershaw
Metallics Inc. The Group will update the market on the progress as soon as possible.
Ambershaw Metallics Inc – Canada
AMI is a metals and mining company incorporated under the laws of the Province of British Columbia, Canada.
AMI is controlled by LHR and it has specific experience in magnetite mining and pelletising technology. AMI intends
to provide the North American and international steel industry with DR-grade magnetite pellets suitable for DRI
(Direct Reduced Iron) production and Iron Ore condensate.
DRI is used by EAFs as a substitute for scrap steel trading in excess of US$ 280/t. It commands a significant premium
to standard iron ore. DRI production is heavily dependent on the supply of high quality iron ore pellets, which are
currently in short supply. End-users have to pay premiums for pellets with a higher Fe content and a further
premium for magnetite. DRI production is forecast to grow to 200Mt by 2030, up from 73Mt produced in 2015.
There is an acute shortage of DR-grade pellets in the North American Steel market.
AMI holds the Bending Lake iron deposit in NW Ontario, Canada, which hosts a NI 43-101 compliant and valuable
resource of 336 Mt magnetite ore upgradable to 68% Fe. The NPV (10) of the asset is USD 499 million. Comparable
iron ore producers in Canada are currently valued at ca. USD 1/ton.
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In AMI’s mining plan the ore is made into concentrate, which in turn may be pelletized and shipped to customers.
With the rise of 65% Fe concentrate prices in the US steel market, it has become attractive to start production of
both concentrate for sale, as well as pellets. AMI expect to be able to sell concentrate by the end of H1 2018, given
sufficient financing. The Group is providing financing and thus gradually increasing its ownership in AMI.
For further information about AMI see http://ambershaw.ca/
In connection with the Group’s investment in convertible notes issued by AMI, the Group obtained an option to
become holder of 51% of AMI by issuance of new shares. On 23 May 2017, the Group acquired 5% of the shares
outstanding in AMI through a share swap agreement with Legacy Hill Resources (LHR) issuing 2,130,266 Element
shares as settlement. The Group has provided a convertible loan to AMI in the amount of USD 950,000 convertible
into approximately 9% of the shares in AMI.
During the third quarter and the subsequent period the Group has continued to work closely with LHR, the
manager of AMI, to develop the budgets and proceeding with plans for production of concentrate by the end of
the second quarter 2018 and the longer term production of pellets. The Group has provided additionally USD
150,000 in funding through an increase of the convertible loan to AMI.
In July 2017 AMI completed successful initial test production of pellets at LHR's test facilities in England. Initial
quality control tests indicate that AMI’s pellets pass all compressive strength, drop and RDI simulation tests,
meeting all the required parameters for traditionally produced pellets.
Mindoro Nickel project – The Philippines
According to reports by Bloomberg, Reuters, and the London Metal Exchange several blue-chip firms started to
absorb the changes taking place in the nickel market during the fall of 2017. UBS Bank is expecting 15 million
electric vehicles by 2025. Porsche states that electric cars with high-driving ranges are fueling demand for nickel-
rich batteries. Trafigura & Glencore claim that nickel production will increase by 1.2 million tons by 2030, equal to
more than half of current global output, to keep up with demand from the battery industry. Nickel currently trades
at $11,900 per ton, up 18 percent for the year. The previous peak in nickel was $51,600 per ton in 2007. With the
stockpiles gone the upside seems substantial.
Mindoro Nickel is a nickel-laterite deposit, which originally was discovered by the Group in 1996. It is one of the
largest undeveloped nickel deposits in the world, with more than 350 million tonnes mineral resources defined,
holding 3 million tonnes nickel. A Definitive Feasibility Study concluded that Mindoro Nickel could be a substantial
low-cost producer of nickel for more than 100 years.
During 2017 Sunbright Consulting has performed several laboratory tests with a CRSM technology, which is a low
energy consumption, low Opex and CapEx technology, which indicate that it is capable of upgrading the existing
grade of the Mindoro ore into concentrate. Upgrading tests of the limonite and saprolite ore showed significant
upgrades to the Nickel ratio. The laboratory reports indicate that the Mindoro Nickel deposit may produce 600,000
tonnes of nickel concentrate per module with a capex of USD 26-35 million. The results show profitability with a
nickel price at 2.85 USD/lb and an EBITDA (before royalties) of USD 28-32 million p.a. with the current market
price of 5 USD/lb and mining only 0.5% of the total recorded resources p.a. Pending pilot testing and subsequent
full scale testing of the CRSM technology the Group expect that the annual production can be increased by
investing in several modules.
The Group is experiencing interest from various parties showing interest in Mindoro Nickel and continues to have
an open approach to divestment of the asset, through sale or other forms of partnerships.
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The Group is working on increasing the potential of its Mindoro Nickel asset through realization or otherwise. The
Group interprets the political climate to be changing in a positive direction following the appointment of the new
Secretary of Environment and Natural Resources in May 2017.
Nordli Molybdenum – Norway
The Nordli molybdenum project is a porphyry-style molybdenum deposit which is considered the largest
undeveloped molybdenum deposit in mainland Europe known today, having inferred resources of over 200 million
tonnes at 0.13 per cent MoS2. The company maintains its licenses for exploration but due to market pricing of
molybdenum there is no ongoing activity in the project.
Outlook
The key focus of the Group is to progress with issuing its asset-backed Tokens. The Group is currently working on
the terms of the Whitepaper in cooperation with Harmonychain, AMI and other advisors. The goal of the Group is
to complete the Whitepaper as soon as possible.
The Group continues to focus on its investment and increase its investment in AMI. The Group currently owns 5%
of the shares in AMI and has the right to convert the convertible loan to AMI into approx. 9% additional
shareholding. The Group will increase its involvement on the operational level of AMI through participation on the
Board of Directors.
The Group is working to increase the potential of its Mindoro Nickel asset through realization or other forms of
partnerships. The Group view the political climate to be changing in a positive direction following the appointment
of the new Secretary of Environment and Natural Resources in May 2017.
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Interim consolidated statement of profit and loss and other comprehensive
income
Year end
Audited
(USD '000) Note 30.09.2017 30.09.2016 30.09.2017 30.09.2016 31.12.2016
Other Revenue - 53 - 158 211
Exploration and evaluation costs -0 - -3 -3 -3
Sa lary and socia l securi ty cost -72 - -218 - -508
Other Operating expenses -181 -403 -820 -1 342 -1 477
Operating loss -253 -350 -1 041 -1 187 -1 777
Financia l income -0 - -0 3 4
Financia l costs -5 -1 -268 -170 -170
Net financial items -5 -1 -268 -166 -166
Loss before tax -259 -351 -1 309 -1 353 -1 943
Loss after tax -259 -351 -1 309 -1 353 -1 943
Loss discontinued operations , after tax 10 -152 -302 -546 -825 -1 100
Loss for the period -411 -653 -1 855 -2 179 -3 043
-0,01 -0,00 -0,04 -0,02 -0,09
-0,01 -0,00 -0,03 -0,01 -0,05
-0,00 -0,00 -0,01 - -0,03
-47 -844 -100 -648 -178
Total comprehensive income -458 -1 497 -1 955 -2 827 -3 221
Currency trans lation adjustments
Other comprehensive income:
Non-auditedNon-audited
Third Quarter Year to Date
Bas ic and di luted earnings per share
Bas ic and di luted earnings per share -
continued operations
Bas ic and di luted earnings per share -
discontinued operations
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Interim consolidated statement of financial position
Third Quarter Year end
Non-audited Audited
(USD '000) Note 30.09.2017 31.12.2016
ASSETS
Exploration and evaluation assets
Property, plant and equipment 9 5 9
Total non-current assets 5 9
Other receivables 31 27
Other financia l assets 9 1 413 192
Cash and cash equiva lents 5 256 706
Total current assets 1 699 925
Assets class i fied as held for sa le 10 5 721 5 956
Assets classified as held for sale 5 721 5 956
TOTAL ASSETS 7 425 6 890
EQUITY
Share capita l 484 339
Other pa id-in-capita l 75 663 69 599
Cumulative trans lation adjustments 10 299 14 015
Other equity -81 736 -80 000
Total equity 8 4 710 3 953
LIABILITIES
Other long term l iabi l i ties 343 317
Total long term liabilities 343 317
Trade payables 29 19
Other current l iabi l i ties 90 208
Total current liabilities 119 227
Liabi l i ties associated with assets class i fied as held for sa le 10 2 253 2 393
Liabilities associated with assets classified as held for sale 2 253 2 393
TOTAL EQUITY AND LIABILITIES 7 425 6 890
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Interim consolidated statement of cash flow
Third Quarter Year end
Non-audited Audited
(USD '000) 30.09.2017 31.12.2016
Profi t/-loss for the year, continued operations -1 309 -1 943
Profi t/-loss for the year, discontinued operations -546 -1 100
Depreciation, amortisation and impairment 5 -6
Operating activities
Non-cash expenses 268 -
Change in trade and other receivables -5 129
Change in trade payables and other current l iabi l i ties -99 -112
Changes in other long term l iabi l i ties 39 6
Change in financia l assets -8
Change in assets held for sa le -50 277
Cash flow from operating activities -1 705 -2 749
Investment activities
Net expenditure on property, plant and equipment 9 15
Investment in other financia l assets -1 154 -192
Cash flow from investment activities -1 145 -177
Financing activities
Capita l increase 2 418 3 414
Cash flow from financing activities 2 418 3 414
Net change in cash and cash equiva lents -432 488
Cash and cash equiva lents at the s tart of the period 834 527
Sum trans lation effects -100 -181
Cash and cash equivlents at the end of the period/year 302 834
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Interim consolidated statement of changes in equity
(USD '000)
Share
capital
Other paid-
in capital
Cumulative
translation
adjustments Other equity
Held for
sale Total
Equity 1 January 2016 208 64 953 15 546 -11 502 -65 420 3 785
Capita l increase 126 3 231 3 357
Share option costs 32 32
Profi t/-loss for the period -3 043 -3 043
Discontinued operation 1 100 -1 100 -
Other comprehens ive income 5 1 415 -1 531 170 -237 -178
Equity 31 December 2016 339 69 599 14 015 -13 243 -66 757 3 953
(USD 1 000)
Share
capital
Other paid-
in capital
Cumulative
translation
adjustments Other equity
Held for
sale Total
Equity 1 January 2017 339 69 599 14 015 -13 243 -66 757 3 953
Capita l increase 127 2 291 - - - 2 418
Share option costs - - - 294 - 294
Profi t/-loss for the period - - - -1 855 - -1 855
Discontinued operation - - - 546 -546 -
Other comprehens ive income 18 3 773 -3 716 - -175 -100
Equity 30 September 2017 484 75 663 10 299 -14 258 -67 478 4 710
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Notes to the consolidated statements
1 Information about the Group
2 Basis for preparation of the interim financial statements
3 Accounting principles
4 Estimates
5 Financial risk management
6 Segment information
7 Related parties
8 Shareholder value and stock value
9 Assets
10 Discontinued operations
11 Subsequent events
1 Information about the Group
Element ASA is a public limited liability company incorporated and domiciled in Norway. The Company’s office
address is Karenslyst Allé 53, 0279 Oslo, Norway. The Company’s shares are listed on the Oslo Stock Exchange.
As at 30 September 2017, the Group’s main activity is to identify assets close to or in production for investment.
Current projects are related to Ambershaw Metallics Inc (AMI) in Canada, and the Mindoro Nickel Project in the
Philippines. Based on pure accounting principles the Mindoro Nickel Project is classified as “Asset held for sale”.
The Group has issued a convertible loan to Ambershaw, holds 5% of the issued shares, and holds an option to
become holder of 51% of AMI.
2 Basis for preparation of the financial statements
This condensed consolidated interim financial information has been prepared in accordance with IAS 34, ’Interim
financial reporting’. The condensed consolidated interim financial information should be read in conjunction with
the annual financial statements for the year ended 31 December 2016, which have prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU.
3 Accounting principles
The same accounting principles and methods of calculation have been applied as in the Annual Report for 2016.
Future effects of new accounting standards were described in the Consolidated Financial Statements for 2016.
4 Estimates
The preparation of interim financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities,
income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements made by
management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements for the year ended 31 December 2016.
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5 Financial risk management
General
The Group is exposed to a number of types of financial market risk arising from its normal business activities:
• Credit risk
• Liquidity risk
• Currency risk
The corporate management monitors the Group’s most important financial risks and assesses whether measures
are required to reduce a specific risk if a need to do so is identified.
Credit risk
Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its
contractual obligations. Most of the Group’s financial assets are bank deposits and other receivables.
Credit risk related to bank deposits is considered limited as the Group uses only banks that international credit
rating firms consider having high creditworthiness. A large proportion of the Group’s cash is placed on high-
interest-bearing account with DNB Bank in Norway.
Liquidity risk
Liquidity risk is the risk that the Group becomes unable to fulfil its financial obligations when they fall due. The
Group seeks a cash management that ensures that there is sufficient available cash to fulfil the Group’s obligations
without involving unacceptable losses or a risk of damaging the Group‘s reputation.
As of 30 September 2017, the Group did not have sufficient cash to fund the company for 12 months. On 4 October
2017, the Company entered into an agreement for a NOK 50 million zero coupon convertible loan facility with
connected Warrants (the Convertible Note Facility) from Blue Ocean Advisors Inc. (Blue Ocean). On 7 November
2017, the Group raised NOK 15 million through a drawdown of 3 tranches of the Convertible Note Facility. The
Convertible Note Facility provides the Company with access to cash if the Company's liquidity position necessitates
it.
Under the Convertible Note Facility, Element has the right to draw up to ten (10) tranches (each a “Tranche”) of 5
MNOK in convertible bonds (including the three Tranches already drawn down) over a period of three years. The
Tranches may be drawn following a “cool down period” of maximum 30 days following issuance of any single
Tranche. Each Tranche entitles Blue Ocean to warrants, as set out below. Blue Ocean is also entitled to require
that Element draws minimum two (2) Tranches, but may choose not to draw the remaining Tranches if for instance
other means of financing at better terms becomes available.
The conversion price under the Convertible bonds shall equal 90% of the lowest daily VWAP of the ten (10) trading
days preceding the day the notice of conversion is received by the Company. The convertible bonds are convertible
at the option of Blue Ocean, but will automatically convert twelve (12) months after the issue date (i.e. at the
maturity date) if not already converted at that point in time. Each Tranche triggers payment of a cash fee of 5% of
the amount drawn.
The Company shall issue Warrants in respect of each Tranche giving Blue Ocean the right to a number of shares
equaling 50% of the loan amount under a Tranche divided by an amount corresponding to 90% of the lowest daily
VWAP of the Company's shares in a period of 10 trading days prior to the date Element makes a draw down of a
Tranche. The exercise price for the Warrants shall equal 120% of the lowest daily VWAP during the ten (10) trading
days preceding the notice of drawdown by the Company. Blue Ocean is required to exercise 50% of the Warrants
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of each Tranche if the weekly VWAP of the shares over five (5) consecutive trading days exceeds 130% of the
exercise price. The exercise period for the Warrants is three (3) years from the date of issue.
In addition, the Group has a share subscription facility with GEM Global Yield Fund in the amount of NOK 80 million.
Under the share subscription facility, and subject to its terms, GEM Global Yield Fund undertakes to subscribe to
the Group’s ordinary shares upon the Group’s exercise of a Draw Down Notice. The Group will control the timing
and maximum amount of any Draw Down, and has the right, not the obligation, to draw down on the full
commitment amount up to NOK 80 million.
GEM Global Yield Fund is obliged to honor the draw down request from the Group based upon a subscription price
per share equal to 90% of the volume weighted average price ("VWAP") of the shares during a pricing period of
15 consecutive trading days following the draw down notice (the “Pricing Period”). The Group shall set a minimum
subscription price for which the shares will be issued. The Group may change the minimum subscription price at
every draw down. The draw down amount in each subscription notice shall not exceed 1,000 per cent of the
average daily trading volume during the fifteen trading days immediately preceding the date of the relevant
subscription notice, and as such the availability of this facility is dependent on the liquidity of the Company's
shares.
As a part of the share subscription agreement with GEM Global Yield Fund, Group has issued 2 125 000 warrants
to GEM Global Yield Fund with a strike price of NOK 2.37 per share. The Group recorded a financial cost related to
the warrant issue amounting to USD 263 thousand.
As a condition for entering into the convertible bond arrangement with Blue Ocean, the share subscription facility
provided by GEM Global Yield Fund was replaced in its entirety and on the same terms by Blue Ocean, without
any additional cost to the company.
Currency risk
The Group is exposed to currency risk relating to costs, receivables and liabilities in currency other than the
functional currencies for its entities, which are NOK and PHP. Foreign exchange transactions are mainly in USD. At
present, the Group does not utilize financial instruments to handle its currency risk. However, the Group regularly
assesses whether there is a need to convert currency in order reduce any currency risk that may arise.
In addition, the Group‘s balance sheet is exposed to exchange rate movements between the functional currencies
and the presentation currency (USD). The majority of the Group’s cash and cash equivalents are in NOK.
The following table shows the exposure of the group’s main financial assets in currencies other than the
presentation currency.
The tables show the effect on the Group’s equity as at 30 September 2017 if the specified currencies had
appreciated/depreciated by 10% and all other variables remained constant.
('000)
Amount in
currency
Exchange
rate
30.09.2017
Carrying
amount in
USD
Effect of a
10% change
in exchange
rates
Cash and cash equivalents denominated in NOK 2 000 7,96 251 25
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6 Segment Information
Management considers that the Group has three business segments: Exploration and evaluation of mineral
resources in the Philippines, Canada and Norway. The Group’s primary activity is the Mindoro Nickel project in the
Philippines and Ambershaw Metallics Inc in Canada. The Group also has the Hurdal Molybdenum project in
Norway.
Since 31 December 2015, the Group has classified the segment Exploration and evaluation of mineral resources
in the Philippines as “Asset held for sale”. Loss before and after tax for the segment is the same as for the
continuing operation in the Statement of profit and loss and other comprehensive income. Further, see note 10
Discontinued operation for further information.
7 Related parties
As of 30 September 2017, the number of shares held by directors and management of Element ASA are:
The shares controlled by Mr. Frode Aschim are held by Hannibal AS, a company owned by closely related
persons to Mr. Frode Aschim
Service Agreement with Global Vision Trading Limited
With effect from 30 June 2017, the Group extended the service agreement with Global Vision Trading Limited for
providing administrative and consultancy services to the Group. The services from Global Vision Limited are
provided by Mr. Lars C. Beitnes, Chairman of the Board of Element ASA. The services provided under this
agreement are those over and above those duties normally covered by a non-executive Chairman. The agreement
is in effect until 30 June 2018, and the monthly fee amounts to NOK 70,000 per month.
Service Agreement with Ether Capital Ltd
With effect from 30 June 2017, the Group extended the service agreement with Ether Capital Ltd for providing
administrative and consultancy services to the Group. The services from Ether Capital Ltd are provided by Mr.
Frode Aschim, a Board Member of Element ASA. The services provided under this agreement are those over and
above those duties normally covered by a non-executive Board Member. The agreement is in effect until 30 June
2018, and the monthly fee amounts to NOK 75,000 per month.
Stock options
In the third quarter of 2017, the Group has expensed USD 0 as personnel cost, based on option incentive programs
to employees.
8 Shareholder value and stock value
As at 30 September 2017, Element ASA had a share capital of NOK 3,936,204.32 comprising 49,202,554 shares
with a par value of NOK 0.08. All shares have equal voting rights and rights to dividends from the Group. All shares
are fully paid. As at 30 September 2017 the Group held 87,927 treasury shares. From which the Group cannot
vote and have no right to dividends.
Name Position Shares Options Warrants CFDs
Lars Chris tian Beitnes Chairman of the board 25 000 182 578 - 180 000
Frode Aschim Member of the board 65 562 182 578 - -
Mona Lynne Ei tzen Member of the board - 182 578 - -
Ceci l ie Grue Acting CEO 89 000 182 578 - -
Kim Andre Evensen VP Finance and Accounting - - 400 000 -
Total 179 562 730 312 400 000 180 000
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The share price at 30 September 2017 was NOK 1.25, down NOK 0.48 compared to the closing price at the end of
2016. Total shares were 49,202,554, fully diluted 52,557,866. The Group’s market capitalization amounted to USD
7,721 thousand/ NOK 61,503 thousand
9 Assets
As of 30 September 2017, the Group owns 5% of Ambershaw Metallics Inc and holds an option to acquire 51% of the through a direct cash injection to AMI of USD 7 million. The option is conditional of financing. Completion of the equity transaction is conditional on a shareholders’ agreement with Legacy Hill and a management agreement between LHR and AMI, on standard market terms. The Group acquired the five per cent interest in AMI through purchase of AMI shares from LHR with a settlement in the Group’s shares. The Group has bought 1 million AMI shares valued at USD 439,000, settled in the Group’s shares valued at 60 days VWAP after the disclosure of the transaction. The increase in share capital was registered on 26 May 2017. In addition, the Group holds convertible notes in AMI in the amount of USD 950 thousand, which is convertible to shares in AMI.
10 Discontinued operations
The Group has sharpened its strategy and focused its financial- and management resources to pursue the realization of the Mindoro Nickel Project. From this, it is considered that the carrying amount will be recovered through a sale transaction. As a result of this and from December 2015, the Mindoro Nickel Project is considered as held-for-sale. Further, as this represent a major line of business, this will be classified as Discontinued operation. The classification as Discontinued operation changes the measurement basis of any non-current assets included in the segment. On initial classification, any such assets are measured to the lower of carrying amount and fair value less costs to sell.
Number of
shares
Ownership
in % of total
shares
PASCHI INTERNATIONAL LIMITED 10 553 167 21,45 %
LEGACY HILL RESOURCES 2 134 993 4,34 %
AVANZA BANK AB 1 520 380 3,09 %
TRAPESA AS 1 466 868 2,98 %
PRO AS 1 441 807 2,93 %
SIX-SEVEN AS 1 438 010 2,92 %
SVENSK HYDRO AS 1 241 800 2,52 %
NIMECO AS 1 000 000 2,03 %
JOMANI AS 985 607 2,00 %
RUNNING RIGS AS 973 918 1,98 %
PETRUS AS 960 081 1,95 %
STAVANGER KARTING AS 843 549 1,71 %
FIRST PARTNERS HOLDING 16 AS 800 000 1,63 %
DELRAY TRADING AS 717 065 1,46 %
NETFONDS LIVSFORSIKRING AS 716 454 1,46 %
J.P. MORGAN BANK LUXEMBOURG S.A. 639 542 1,30 %
FRANKPLADS 637 614 1,30 %
E. LARRE HOLDING AS 580 157 1,18 %
EPSILON AS 579 304 1,18 %
STA-FONDET 561 589 1,14 %
Other 19 410 781 39,45 %
Total shares 49 202 686 100,00 %
20 largest shareholders 30.09.2017
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Statement of profit and loss for Discontinued operation:
Assets and liability related to Discontinued operation:
Year end
Audited
(USD '000) Note 30.09.2017 30.09.2016 30.09.2017 30.09.2016 31.12.2016
Other Revenue - 6 - 6 6
Exploration and evaluation costs -39 -52 -154 -188 -238
Sa lary and socia l securi ty cost -75 - -239 -578
Other Operating expenses -38 -256 -153 -643 -290
Operating loss -152 -302 -546 -825 -1 100
Financia l income - - - - -
Financia l costs - - - - -
Net financial items - - - - -
Loss before tax -152 -302 -546 -825 -1 100
Loss after tax -152 -302 -546 -825 -1 100
Loss for the period -152 -302 -546 -825 -1 100
Non-audited Non-audited
Second quarter Year to date
Third Quarter Year end
Non-audited Audited
(USD '000) 30.09.2017 31.12.2016
ASSETS
Exploration and evaluation assets 5 511 5 674
Property, pland and equipment 4 12
Total non-current assets 5 515 5 686
Other receivables 50 66
Other financia l assets 110 76
Cash and cash equiva lents 46 128
Total current assets 206 270
TOTAL ASSETS 5 721 5 956
LIABILITIES
Deferred tax 215 193
Other long term l iabi l i ties 0 196
Total long term liabilities 215 389
Trade payables 135 103
Other current l iabi l i ties 1 903 1 901
Total current liabilities 2 038 2 004
TOTAL EQUITY AND LIABILITIES 2 253 2 393
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11 Subsequent events
Rebranding and name-change
On 27 October 2017, the Group completed its rebranding strategy and changed its name. The rebranding comes with a new web page, www.elementasa.com, and the ticker was changed to ELE. Changes in management
On 15 November 2017, Cecilie Grue, previously interim CEO, was employed as CEO on a permanent basis. Convertible note facility
On 7 November 2017, the Group raised NOK 15 million through a drawdown of 3 tranches of a zero coupon convertible loan facility from Blue Ocean Investment Group. The convertible loans of tranche 1 and 2 were subsequently converted to shares in full, while tranche 3 was partially converted Agreement with Harmony Chain
On 27 October 2017 the Group entered into a Terms of Agreement with Harmonychain AS for the purpose of exploring issuance of asset-backed crypto currency. Political situation in the Philippines
The Group view the political climate to be changing in a positive direction following the appointment of the new
Secretary of Environment and Natural Resources in May 2017.