Annual Report 2009
19. Capital management — continued The Company manages its capital to ensure that the Company will be able to continue as a going concern, to increase the value of the assets of the business and to provide an adequate return to shareholders in the future when exploration assets are taken into production.
The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its assets. In order to maintain or adjust the capital structure the possibilities open to the Company in future include issuing new shares, consolidating shares, returning capital to
shareholders, taking on debt, selling assets and adjusting the amount of dividends paid to the shareholders.
20. Financial instruments At 30 September 2009, the Company’s financial assets consisted of receivables due within one year and cash at bank. At the same date, the Company had no financial liabilities other than trade and other payables due within one year and had no agreed borrowing facilities as at this date. There is no material difference between the carrying and fair values of the Company’s financial assets and liabilities.
The carrying amounts for each category of financial instrument held at 30 September 2009, as defined in IAS 39, are as follows:
Loans & receivables Financial liabilities
Risk management The principal risks faced by the Company resulting from financial instruments are liquidity risk, foreign currency risk and, to a lesser extent, interest rate risk and credit risk. The directors review and agree policies for managing each of these risks as summarised below. The policies have remained unchanged from previous periods as the risks are assessed not to have changed.
Liquidity risk The Company currently holds cash balances in Sterling to provide funding for exploration and evaluation activity. The Company is dependant on equity fundraising through private placing which the directors regard as the most cost effective method of fundraising. The directors monitor cash flow in the context of their expectations for the business to ensure sufficient liquidity is available to meet foreseeable needs.
Currency risk The Company’s financial risk management objective is broadly to seek to make neither profit nor loss from exposure to currency or interest rate risks. The Company is exposed to transactional foreign exchange risk and takes profits and losses as they arise, as in the opinion of the directors, the cost of hedging against fluctuations would be greater than the related benefit from doing so. Fluctuations in the exchange rate are not expected to have a material affect on reported loss or equity.
Bank balances were held in the following denominations:
United Kingdom Sterling