Audited Financial Results
22 July 2021
AfriTin Mining Limited
("AfriTin" or the "Company")
Audited Financial Results for the twelve months ended 28 February 2021
AfriTin Mining Limited (AIM: ATM), an African tin mining company with its flagship asset, the Uis Tin Mine ("Uis") in Namibia, is pleased to announce its final audited results for the year ended 28 February 2021.
Highlights:
§ First material revenue numbers amounted to £5m (2020: £0.069m)
§ Total production for the year amounted to 473t (2020: 32t) of tin concentrate which equates to 311.7t (2020:18.6t) of contained tin metal
§ Ended the financial year with cash and cash equivalents of: £1.351m (2020: £0.575m)
§ Post balance sheet date:
§ The placing of 216 666 667 ordinary shares to raise £13m (before expenses)
§ The remaining 2019 convertible loan notes and 2020 loan notes were settled
Anthony Viljoen, CEO of AfriTin Mining Limited had the following to say:
" Given the backdrop of COVID-19 and the difficulties that the pandemic presented, the AfriTin team managed to reach significant milestones in the pursuit of first notable revenues and development of our flagship Uis Tin Mine. The announcement of first notable revenues is a monumental first step and a precursor of what is to ensue as expansion plans are implemented. The robust balance sheet forms the basis from which AfriTin will grow and underpins our ambition of becoming a significant multi-commodity tech metals producer out of Africa.
With tin becoming a new technology metal and the demand for lithium and tantalum, we believe the economics of the historical operation have been transformed. We also believe the Erongo region in which we operate will become a globally significant metallogenic province for new technology metals, allowing for increased revenues and economies of scale within AfriTin's licence areas."
The preliminary financial information does not constitute full statutory accounts but is derived from accounts for the year ended 28 February 2021 which are audited. This preliminary announcement is prepared on the same basis as set out in the statutory accounts for the year ended 28 February 2021. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRS.
The auditor's report for the year ended 28 February 2021 was unqualified.
The full Annual Report along with a Notice of Annual General Meeting ("AGM") will be distributed to shareholders on 30 July 2021 and will be available on the Company's website from that date.
We will be hosting an investor webcast on Wednesday 28 July 2021 at 11h00 (BST) where the CEO, Anthony Viljoen will be presenting on becoming the technology metals champion in Africa.
Please register for the event at: https://webcasting.brrmedia.co.uk/broadcast/60f82a8205da7a5c2646fd6f
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AfriTin Mining Limited |
+27 (11) 268 6555 |
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Anthony Viljoen, CEO |
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Nominated Adviser |
+44 (0) 207 220 1666 |
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WH Ireland Limited Katy Mitchell James Sinclair-Ford |
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Corporate Adviser and Joint Broker |
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H&P Advisory Limited Andrew Chubb Jay Ashfield Nilesh Patel |
+44 (0) 20 7907 8500 |
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Tavistock Financial PR (United Kingdom) |
+44 (0) 207 920 3150 |
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Jos Simson Nick Elwes |
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CHAIRMAN'S STATEMENT
In reviewing our financial year, I first want to thank AfriTin's staff, shareholders and broader stakeholder groups for their continued support of and belief in this Company. No corner of the globe has escaped the COVID-19 pandemic during this period, and we are particularly appreciative of our staff's efforts during these difficult and testing times.
Given this backdrop, what we have achieved this year as a Company has been all the more admirable. I would like to congratulate the AfriTin Mining team for their cohesive efforts on behalf of those same stakeholders and the non-executive directors. Despite the challenges of 2020, the Company has had a transformative year at the Uis Tin Mine, as demonstrated by the achievements and ramp-up of the Uis Phase 1 pilot plant.
To ramp up production and surpass nameplate production capacity is a testament to the hard work carried out on site, and to the team's resolve and determination to deliver.
Since November 2020, Uis continues to grow total monthly production which has exceeded the planned production of 60 tonnes of tin concentrate per month.
Having achieved the tin production goals of the Uis Phase 1 pilot plant, the senior management team, led by Anthony Viljoen, is now focussed on a number of key initiatives:
· The expansion of Phase 1 to increase production to 120 tonnes of concentrate per month;
· Exploration work to potentially increase Mineral Resources and Mineral Reserves;
· Fast tracking test work to assess the potential of unlocking two additional by-product revenue streams, namely lithium and tantalum.
These are exciting developments for AfriTin, and we look forward to seeing the results of the test work and providing further updates.
The safety of all our staff remains a priority for the Company. We continue to implement the strictest measures to combat the pandemic and protect our employees, while also supporting the communities in which they live.
The Company continues to successfully transition from developer to producer, which can only be achieved through the focus and dedication of our team, management, my fellow directors, and of course, our shareholders, all of whom I thank.
We have built an excellent platform to continue our growth story, and I look forward to our future.
GLEN PARSONS
Chairman
21 July 2021
CHIEF EXECUTIVE OFFICER'S STATEMENT
The year under review has been transformative for AfriTin Mining, especially at our flagship Uis Tin Mine in Namibia. These achievements are even more impressive given the immense challenges that everyone has faced as a result of the global COVID-19 pandemic.
After navigating these difficult circumstances, the financial year culminated in the Company announcing the first material revenue numbers from the mine of £5m. Total production for the year amounted to 473t of tin concentrate (311.7t of contained tin metal). This is a monumental first step and we believe it's just a precursor of what is to ensue as the plant cost base becomes more efficient and the expansion plans are implemented. The post balance sheet date equity raise also allowed for the extinguishing of all the loan note obligations, providing a robust balance sheet for the next growth phase of the Company. We are incredibly proud of our team for efficiently accomplishing this ramp-up in production, while maintaining an exemplary safety record. This basis from which AfriTin will grow underpins our ambition of becoming a significant multi-commodity tech metals producer out of Africa.
The historical mining heritage of the Erongo province resided primarily in its tin production with no meaningful uses for lithium and tantalum. Forty years on since the mine closure, tin has become a new technology metal and the demand for lithium and tantalum has transformed the economics of the historical operation. We believe this province will become a globally significant metallogenic province for new technology metals, allowing for increased revenues and economies of scale within AfriTin's licence areas.
Despite challenges resulting in project delays, AfriTin's production has come on stream at a time when tin prices have reached highs that have not been seen in the last decade. This is mainly due to an increase in demand from new technologies, especially electric vehicles and semi-conductors, at a time when there have been supply issues that are likely to persist after decades of underspending on exploration and mine development. The lithium market has matched this buoyancy and AfriTin is well placed to take advantage of this growth phase. The Uis JORC (2012) resource of 95,539t of tin, 6,091t of tantalum and 450,265t of lithium oxide establishes a globally significant resource from the currently exploited V1 and V2 pegmatites.
We are now planning to grow the Company's revenue streams by expanding the throughput of the pilot plant and introducing tantalum and lithium by-product revenue streams. The metallurgical test work to develop the process design has been a key priority to unlocking the significant potential of AfriTin.
In December 2020, it was a pleasure to confirm that the Company's existing offtake partner, Thaisarco, renewed and extended its tin concentrate offtake agreement for three years. This deal further cements the Company's future and allows us to supply what has become a highly demanded product. We were also delighted to conclude a maiden tantalum concentrate offtake agreement with AfriMet Resources AG, demonstrating the commercial viability of AfriTin's plans. We believe these deals are substantive votes of confidence in AfriTin, its strategy, and its vision, from two leaders in the global and African metal markets.
In an attempt to direct all of the Company's attention to the investment-friendly jurisdiction of Namibia, and to unlocking the metallogenic jewel that is the Erongo region, a decision was made to relinquish and impair the Company's South African asset base. Namibia continues to be an incredibly gracious host country within which to conduct business. An overarching theme in all decisions and corporate strategy is the safety, health and wellbeing of all our employees and the people in the surrounding communities where we operate. We remain sensitive to the environment and its people and are committed to mitigating the impact of our operations. This philosophy will continue to be built into our corporate DNA as we strive to become the new technology metals champion of Africa.
Post period activities
Subsequent to the period under review, we reached two further significant milestones: publication of the Definitive Feasibility Study for Phase 1 ('DFS') and declaration of a JORC (2012) Ore Reserve estimate over the V1 and V2 pegmatites. The robust economics of the DFS provide us with an opportunity to increase the revenue and profit margin of the current operation, while importantly de-risking the expansion of the project into the much larger Phase 2 operation.
In addition to the above, on 12 May 2021 the Company announced the placing of 216 666 667 ordinary shares to raise £13m (before expenses). This puts the Company into a position to expedite the Phase 1 expansion of our flagship Uis Tin Mine and develop the inherent value of our Namibian licence portfolio through the unlocking of its metallurgy and exploration potential. This includes further test work on the lithium and tantalum by-product potential.
I would like to congratulate and thank our management teams, staff, and stakeholders for their outstanding efforts and continued support in what has been a challenging time globally. In addition to this, I would like to thank the Board of Directors for their guidance and advice over the past year. We are committed to expanding and developing Uis and our other Namibian exploration assets as we look to become a significant African multi-commodity tech metals producer. I look forward to updating the market on our progress.
This report was approved by the Board of Directors on 21 July 2021
ANTHONY VILJOEN
Chief Executive Officer
21 July 2021
FINANCIAL REVIEW
I am pleased to report the Company's first notable annual revenue of £5m from the sale of tin concentrate. This was achieved by ramping up the Uis operation to commercial production from March through to November 2020 producing 473t of tin concentrate during the financial year (311.7t of contained tin metal).
With our flagship asset, the Uis Tin Mine, transitioning from a developing to a producing operation, administrative expenses across the Group increased to £2.540m for the year (in comparison to £1.815m incurred in the previous financial year, ending 29 February 2020 ("2020")). Furthermore, the increase is as a result of an increase in salaries and head count given the growth phase of the business and a discretionary bonus awarded to senior management in January 2021 settled through the issue of shares.
A decision was made to relinquish and impair the Company's South African exploration asset base resulting in an impairment charge of £3.069m during the financial year under review.
The increase in finance cost for the year to £0.184m (2020: £0.041m) is mainly due to interest on Nedbank facilities no longer being capitalised to the mining asset subsequent to the achievement of commercial production at Uis on 1 December 2020.
The Group's loss for the year totalled £5.796m (2020: £1.830m). This loss includes an impairment charge of £3.069m, as detailed above.
A basic loss per share from operations of 0.76 pence was recorded (2020: 0.29 pence loss per share).
Expenditure amounting to £0.978m (2020: £0.522m) was capitalised to the intangible exploration and evaluation asset. This included costs relating to the Definitive Feasibility Study for the expansion of the Phase 1 mining and processing facility which was finalised and announced in May 2021, costs relating to the conversion of the JORC (2012) Mineral Resource estimate into an initial JORC (2012) Proved and Probable Ore Reserve estimate, as well as costs relating to additional exploration and evaluation work.
Capital expenditure relating to the mining asset under construction amounted to £2.028m during FY2021 (2020: £7.370m). Included in this amount is £0.418m relating to capitalised ramp up costs at the Uis operation and £0.842m relating to upgrades to improve plant availability, utilisation and recoveries. The remainder of the capitalised expenditure related to project team salary and travel costs and finance costs capitalised to the mining asset under construction. Upon reaching commercial production, the mining asset under construction of £13.550m was transferred to the mining asset. Mining asset additions totalled £0.124m and depreciation of the mining asset amounted to £0.718m.
As at 28 February 2021, the Group had cash in the bank amounting to £1.351m (2020: £0.575m) with the primary movements reflecting cash used in operations totalling £1.501m (mainly the result of operating costs incurred and changes in working capital), investing cash outflows of £2.955m (mainly due to the capital expenditure detailed above), and £5.160m of financing cash inflows.
The Nedbank working capital facility was successfully renewed and increased to N$43m (c. £2.038m) in July 2020. Furthermore, Nedbank continued to provide a bank guarantee letter in favour of Namibia Power Corporation Pty Limited for an amount of N$4.118m (c. £0.195m) in relation to a deposit for the supply of electrical power to the Uis operations. At 28 February 2021, N$36m (c. £1.7m) had been drawn down on this facility. The facility is due for annual review in July 2021, and discussions are currently underway with the lender to secure the rollover of the facility. The remaining significant financing cash inflows relate to £2.05m raised through loan notes in May 2020 and an equity raise in August 2020 as detailed below. The loan notes matured and were settled post year-end in May 2021.
The inventory balance increased to £0.997m (2020: £0.247m) as a result of the operations at the Uis Tin Mine reaching commercial production, and £0.373m (2020: £0.185m) of tin concentrate (36 tonnes) being on hand and ready for shipment at year-end (these have subsequently been shipped).
Trade receivables increased to £0.717m at year end (2020: £0.043m). Contributing to the increase was an increase in shipments in transit as a result of the higher production rates achieved during the last quarter of the financial year, as well as a fair value adjustment that was passed to reprice the shipments in transit in accordance with the requirements of IFRS. All trade receivables relating to the sale of tin concentrate at year end have been subsequently settled by our valued offtake partner, Thailand Smelting and Refining Company (Thaisarco).
The movement in the share capital balance for the financial year under review is accounted for by net proceeds from an equity raise in August 2020 of £2.797m, the conversion of £1.6m of the convertible loan notes held by AfriMet Resources AG, and the issue of shares to employees, directors and suppliers of £0.724m.
Share-based payment charges relating to the share option scheme amounting to £0.175m (2020: £0.365m), as well as a charge of £0.107m (2020: £0.038m) relating to shares to be issued to directors, employees and suppliers in lieu of salaries/fees, were recognised in the share-based payment reserve during the financial year.
Trade and other payables increased to £1.484m (2020: £0.895m) as a result of Uis becoming a fully-fledged operation running at commercial production levels at year-end.
FUNDING
Subsequent to year-end, on 12 May 2021, an equity placing raised £13m gross proceeds.
Furthermore, the remaining 2019 convertible loan notes and the 2020 loan notes were settled on 25 May 2021. The outstanding convertible loan notes were partially settled through conversion into ordinary shares and the remainder settled in cash. The outstanding loan notes were all settled in cash.
Management and the Board of Directors have considered cash flow forecasts and stress testing of the cash flow forecasts contained herein and have concluded that the Company will be able to continue in operation for the foreseeable future as a going concern and will be able to realise its assets and discharge its liabilities in the normal course of operations. Please refer to Note 2 for further details.
ROBERT SEWELL
Chief Financial Officer
21 July 2021
DIRECTORS' REPORT
The Directors of AfriTin hereby present their report together with the consolidated financial statements for the year from 1 March 2020 to 28 February 2021.
Principal Activities, Business Review and Future Developments
The principal activity of the Group (AfriTin and its subsidiaries) is mineral exploration and the development of mining and exploration projects in Namibia. A review of the Group's progress and prospects is given in the CEO's statement in this Annual Report.
Principal Risks and Uncertainties
The Group is subject to a variety of risks, specifically those relating to the mining and exploration industry. As an entrepreneurial business operating in commodities and emerging markets, there is clearly an elevated risk which is balanced by potentially greater rewards. The Board is mindful of, and monitors, both its corporate risk and individual project risk. Outlined below are the principal risk factors that the Board feels may affect performance. The risks detailed below are not exhaustive, and further risks and uncertainties may exist which are currently unidentified or considered to be immaterial. The risks are not presented in any order of priority.
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Risk and Impact |
Mitigation |
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COVID-19 |
COVID-19 resulted in widespread socio-economic disruption around the world. The countries where the Group operates, namely Namibia, South Africa and the United Kingdom continue to be subject to varying levels of lockdown restrictions to contain the spread of the disease. Despite lockdowns, the Group's operation in Namibia remained open during the course of the reporting period (albeit with a temporary suspension on mining in April 2020) due to an exemption granted to the mining industry but did suffer supply-chain disruptions which delayed production ramp-up. The Group's operations are continuing with minimal disruption now that the global lockdown measures have eased. However, there continues to be a risk that lockdown measures return in the event of further COVID-19 outbreaks, which may result in interruptions to operations through supply chain disruption, illness amongst our workforce and related personnel, together with potential volatility in tin, tantalum and lithium prices.
In addition to the above, COVID-19 restrictions have resulted in shipping disruptions and congestion at container shipping ports. Despite this, the shipping of tin concentrate to Thaisarco has continued. |
The countries in which the Group operates have all instituted measures to limit the spread of COVID-19. The Group is following the World Health Organisation (WHO) guidelines and is complying with the regulations of Namibia, South Africa and the United Kingdom related to COVID-19. In addition, the Group has updated its health and safety policies and procedures to align with the above guidelines and to translate these guidelines into workplace-specific measures.
The Group has adopted technological tools, such as online video conferencing and project and team management software, to enable office-bound staff to work remotely.
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Volatility of metal prices |
Tin, tantalum and lithium prices are subject to high levels of volatility and are impacted by numerous factors that are outside of the control of the Group. A low tin, tantalum or lithium price as well as commodity demand could affect the financial performance of the Group and this may affect the ability of the Group to fund future growth. |
The Board and management constantly monitor the markets in which the Group operates. Long-term financial planning is undertaken on a regular basis. |
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Foreign exchange |
With AfriTin's operations mainly in Namibia and South Africa, but tin sales based in US Dollars and equity funding based in Pound Sterling, the volatility and movement in the Rand/Namibian Dollar exchange rate could be a significant risk factor to the Group. |
The Group holds the majority of its funds in major currencies. It attempts to match cash held in a particular currency to the currency in which liabilities are incurred. |
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Development projects
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Development projects have no operating history upon which to base estimates of future cash operating costs. For development projects, estimates of proven and probable reserves and cash operating costs are, to a large extent, based on the interpretation of geological data obtained from drillholes and other sampling techniques and feasibility studies which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed, as well as the configuration of the orebody, expected throughput and recovery rates, comparable facility and equipment operating costs and other factors. |
The Group has appointed an experienced team of geoscientists and engineers, complemented by experienced consultants in specialist areas. Any new capital projects are supported by feasibility studies. The Uis Phase 1 pilot plant will assist in understanding the metallurgy and processing elements of the project which will provide essential up-front information for the implementation of Phase 2. |
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Exploration and mining risks |
The business of mineral exploration involves a high degree of risk. Whilst the discovery of a mineral deposit may result in substantial rewards, few properties at the exploration stage are ultimately developed into producing mines.
The operations of the Group may be disrupted by a variety of risks and hazards which are beyond the control of the Group, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupational and health hazards, technical failures, labour disputes, unexpected rock properties, explosions, flooding, and extended interruptions due to inclement or hazardous weather conditions and other acts of God. |
Exploration projects are carefully managed with regular review by the Board of progress against targets and expenditure. Funds are only expended in areas deemed prospective.
The Group adheres strictly to a health and safety programme. When constructing a mine site, external geotechnical, environmental and geo-hydrological consultants are used to ensure all potential risks of this nature are understood and mitigation plans are put in place. |
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Social license to operate |
Past environmental incidents in the extractive industry highlight risks such as water management, tailings storage facilities and other potential hazards to both the environment and community health and safety. |
Our ability to maintain regulatory compliance in order to protect the environment, as well as the health and safety of host communities and workers, remains our top priority. We seek to build partnerships with host governments and local communities based on trust to drive shared long-term value while working to minimise the social and environmental impacts of our activities. The Board oversees the Group's environmental, safety and health, and corporate social responsibility programmes, policies and performance and is in the process of setting up an ESG board sub-committee to focus on these matters. |
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Capital budget overruns |
Whilst best estimates are used in preparing capital project budgets, these budgets are dependent on a number of external factors which are beyond the control of the Group, resulting in a risk of material overruns versus budget. |
Capital expenditure and project execution are subject to pre-defined governance and approval procedures, which include feasibility studies prior to implementation. Management and the Board regularly review project progress and related expenditure on projects. This includes reviewing actual costs against budgeted costs, updating working capital models, and assessing potential impacts on future cash flow. |
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Power and water supply |
Power sources and water supply are key to the functioning of viable mining operations. A lack of power or water, or uncertainties around their uninterrupted supply, would adversely impact the feasibility of the operation. |
The Group has concluded a formal electrical power supply agreement with Namibia Power Corporation for power to the mining and processing facility at Uis and this will provide enough power for Phase 1 of the project. Diesel generators will serve as backup power.
A geohydrological study, water drilling and test pumping programme has demonstrated the viability of using groundwater sources for the Phase 1 pilot plant. This was confirmed with the implementation and successful operation of a water supply network.
Solutions for Phase 2 in terms of both electrical power and water supply are in the process of being reviewed. |
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Country and political risk |
AfriTin's operations are predominantly based in Namibia. Emerging-market economies are generally subject to greater risks including legal, regulatory, tax, economic and political risks, which are potentially subject to rapid change. |
The AfriTin team is experienced at operating in Africa. AfriTin routinely monitors political and regulatory developments in Namibia at both regional and local level. |
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Key personnel risk |
The success and operational performance of the Group is dependent on the skills, expertise and knowledge of management and qualified personnel. Group profitability could be impacted in the event that key personnel leave the business. |
The Group has built a team of executives, scientists, engineers and support personnel who are experienced and versatile enough to address shortcomings that may arise from the loss of employees. In addition, the Group has developed long-standing relationships with consulting firms in key specialist areas. Remuneration arrangements, given the stage of the Group's development, are intended to be sufficiently competitive to attract, retain and motivate high-quality staff capable of achieving the Group's objectives, thereby enhancing shareholder value. |
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Financing |
The successful extraction of tin, tantalum and eventually lithium will require significant capital investment. The Group's ability to raise further funds will depend on the success of existing operations. Market conditions may not be conducive to financing. The Group may not be successful in procuring the requisite funds. |
The Group has sufficient funds to continue as a going concern and has a supportive shareholder base, as well as significant future investor interest, to engage with for future funding rounds. The Group monitors cash flows on a monthly basis. |
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Climate change |
Climate change and regulatory actions to reduce its impact may affect our suppliers, customers and business model, and hence affect AfriTin's growth and profitability. This impact could be amplified by the perception that the Company is undertaking activities that are harmful to the environment. |
AfriTin is working towards implementing the recommendations of the Task Force on Climate-Related Financial Disclosures. Current risk mitigation around climate change involves assessing exposure across a wide range of outcomes, monitoring government action around climate change and constantly striving to reduce the environmental impact of our operations. The Board oversees the Group's environmental, safety and health, and corporate social responsibility programmes, policies and performance and is in the process of setting up an ESG board sub-committee to focus on these matters. |
Results and Dividend
The Group's results show a loss for the year of £5 795 883. The Directors will not be recommending a dividend.
Share Capital and Funding
Full details of the authorised and issued share capital, together with details of the movements in the Company's issued share capital during the year, are shown in Note 20. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company.
Directors
The Directors who served the Company during the year and to date are as follows:
Anthony Viljoen Chief Executive Officer
Glen Parsons Chairman/Independent Non-Executive Director
Laurence Robb Independent Non-Executive Director
Roger Williams Independent Non-Executive Director
(resigned 29 September 2020)
Terence Goodlace Independent Non-Executive Director
Directors' Interests
The Directors' beneficial interests in the shares of the Company at 28 February 2021 were:
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Ordinary shares of no par value |
Share options |
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Anthony Viljoen |
11 296 690
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10 600 000 |
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Glen Parsons |
4 307 486
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4 500 000 |
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Laurence Robb |
1 300 815 |
4 000 000 |
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Terence Goodlace |
- |
4 000 000 |
Directors' Indemnity Insurance
The Group has maintained insurance throughout the year for its directors and officers against the consequences of actions brought against them in relation to their duties for the Group.
Employee Involvement Policies
The Group places considerable value on the awareness and involvement of its employees in the Group's exploration and development activities. Within the bounds of commercial confidentiality, information is disseminated to all levels of staff about matters that affect the progress of the Group, and that are of interest and concern to them as employees.
Creditors' Payment Policy and Practice
The Group's policy is to ensure that, in the absence of dispute, all suppliers are dealt with in accordance with its standard payment policy to abide by the terms of payment agreed with suppliers when agreeing the terms of each transaction. Suppliers are made aware of the terms of payment.
Related-party Transactions
Details of related-party transactions are given in Note 26 of the consolidated financial statements.
Events after Balance Sheet Date
Events after balance sheet date are detailed in Note 25 of the consolidated financial statements.
Statement as to Disclosure of Information to Auditor
The Directors who were in office on the date of approval of these financial statements have confirmed that, as far as they are aware, there is no relevant audit information of which the auditor is unaware. Each of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that it has been communicated to the auditor.
Auditor
The Directors will place a resolution before the Annual General Meeting to reappoint BDO LLP as the Group's auditor for the ensuing year.
Electronic Communications
The maintenance and integrity of the Group's website is the responsibility of corporate management and the Directors; the work carried out by the auditor does not involve consideration of these matters and accordingly the auditor accepts no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
The Group's website is maintained in compliance with AIM Rule 26.
By order of the Board
ANTHONY VILJOEN
Chief Executive Officer
21 July 2021
CORPORATE GOVERNANCE REPORT
Introduction
As a listed company traded on the AIM market of the London Stock Exchange, we recognise the importance of sound corporate governance throughout our organisation, giving our shareholders and other stakeholders including employees, customers, suppliers and the wider community confidence in our business. We endeavour to conduct our business in an ethical and sensitive manner irrespective of gender, race, colour or creed.
AfriTin has chosen to adopt the Quoted Companies Alliance (QCA) Corporate Governance Code 2018 for Smaller Companies. The table below outlines how we apply each of the code's ten key principles to our business.
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Principle |
Application |
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1. Establish a strategy and business model that promotes long-term value for shareholders. |
The Company is a pure tin company listed in London and its vision is to create a portfolio of world-class, conflict-free, tin-producing assets. The Company's flagship asset is the Uis brownfield tin mine in Namibia, formerly the world's largest hard-rock tin mine.
The Company is managed by an experienced Board of Directors and management team with a current two-fold strategy: fast-track Uis brownfield tin mine in Namibia to commercial production (the intention is to ramp up to 10 000 tonnes of concentrate) and consolidate other quality African tin assets. The Company strives to capitalise on the solid supply/demand fundamentals of tin by developing a critical mass of tin resource inventory, achieving production in the near term and further scaling-up production by consolidating tin assets in Africa.
Sustainable development principles are integrated into corporate strategies and decision-making processes by the Board of Directors and management team. The Company endeavours to ensure that responsible health and safety, environmental, human rights and labour practices and policies are adopted by suppliers and contractors.
The Company is subject to a variety of risks, specifically those relating to the mining and exploration industry. The principal risk factors facing the business as well as mitigation of those risks are outlined in the Directors' Report in this Annual Report. |
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2. Seek to understand and meet shareholder needs and expectations. |
The Board is committed to maintaining good communication and having a constructive dialogue with all its shareholders.
Management, led by the CEO, undertake regular presentations and roadshows to investors as appropriate. This enables them to develop a balanced understanding of the issues and concerns of shareholders. The views of shareholders are communicated to the rest of the Board.
Furthermore, the Company keeps shareholders informed on the Company's progress through its public announcements and its website. All reports and press releases are published in the 'Investors' section of the Company's website. |
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3. Take into account wider stakeholder and social responsibilities and their implications for long-term success. |
The Board recognises that its prime responsibility is to promote the success of the Company for the benefit of its stakeholders and members as a whole. This success is largely reliant on its relations with its stakeholders, both internal (employees and shareholders) and external (customers, suppliers, business partners and advisors).
Employees, community members and other stakeholders work in collaboration with one another and with transparency and accountability. Open dialogue and engagement with community members at our sites is central to maintaining a successful relationship, and is essential to ensuring long-term sustainability for all parties involved. The Company continually implements inclusive and supportive approaches with local communities, to contribute to their economic and social well-being.
The Company endeavours to systematically examine the environmental impact of any of our operations and will adopt measures to mitigate this challenge. The goal is to minimise the negative impacts on the environment of the different processes related to the extraction of tin. At our operational project area, Uis, the non-chemical nature of ore beneficiation, combined with an ore that is largely free of deleterious elements, contributes to a reduced level of environmental risk. Nonetheless, the Company ensures compliance with its operational environmental management plan through continuous monitoring of dust, water and waste management.
The Company maintains a regular dialogue with key suppliers.
Managing human capital equitably and sustainably is central to the Company's project development strategy. The Company promotes an inclusive work environment through its recruitment policies, management and remuneration policies and development initiatives. Within the bounds of commercial confidentiality, information is disseminated to all levels of staff about matters that affect the progress of the Company and that are of interest and concern to them as employees.
The Company has set up a share option scheme for key employees which gives them a stake in the Company's long-term success. |
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4. Embed effective risk management, considering both opportunities and threats, throughout the organisation. |
As an entrepreneurial business operating in emerging markets there is clearly an elevated risk which is balanced by potentially greater rewards. The Board is mindful of and monitors both its corporate risks and individual project risks.
The Board ensures that there is a risk-management framework in place which identifies and addresses all relevant risks in order to execute and deliver strategy. Key risks are reviewed by the Board regularly and disclosed in the Directors' Report.
The Audit Committee receives feedback from the external auditor on the state of the Company's internal controls, and reports their findings to the Board. |
|
5. Maintain the Board as a well-functioning, balanced team led by the chair. |
The Board is made up of a Chairman, two Non-Executive Directors and the CEO.
The roles of the Chairman and CEO are clearly separated.
The CEO is responsible for the day-to-day operational management of the business and is supported by a Chief Financial Officer, a Chief Operating Officer, geologists and engineers.
The Chairman is responsible for the leadership and effective working of the Board, for the implementation of sound corporate governance, for setting the Board agenda, and ensuring that Directors receive accurate, timely and clear information.
The Chairman and Non-Executive Directors (Glen Parsons, Terence Goodlace and Laurence Robb) are considered to be independent of management and free to exercise independent judgement. It is acknowledged that the Non-Executive Directors do have share options. However, the quantum of these share options is not material and is too low to affect independence. The Board meets at least every three months or at any other time deemed necessary for the good management of the business. Every Director has attended all Board meetings whilst being a Director of the Company. |
|
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities. |
Directors who have been appointed to the Company have been chosen because of the skills, knowledge and experience they offer considering the stage of the Company and the strategy that it is pursuing.
The composition of the Board as well as biographical details of Board members can be found on the Board of Directors page on the Company website.
Furthermore, the Company has put in place an Audit Committee and a Remuneration Committee.
The Directors have access to training (online training or external training courses) to ensure that their skills are kept up to date. The Board and its committees will also seek external expertise and advice where required.
As part of the induction programme conducted by the Company's nominated adviser, Directors are briefed on regulations that are relevant to their role as directors of an AIM-quoted company.
Robert Sewell (Chief Financial Officer) and Frans van Daalen (Chief Operating Officer) attend Board meetings by invitation to provide input from a financial and operational perspective. |
|
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. |
The Board considers evaluation of its performance and that of its committees and individual Directors to be an integral part of corporate governance to ensure Board Members have the necessary skills, experience and abilities to fulfil their responsibilities. The goal of the Board evaluation process is to identify and address opportunities for improving the performance of the Board and to solicit honest, genuine and constructive feedback.
The Chairman is responsible for ensuring the evaluation process is "fit for purpose", as well as for dealing with matters raised during the process.
Succession planning is a vital task for boards and the management of succession planning represents a key measure of the effectiveness of the Board. |
|
8. Promote a corporate culture that is based on ethical values and behaviours. |
The Company has a strong ethical culture, which is promoted by the Board and the management team.
The Company endeavours to conduct its business in an ethical, professional and responsible manner, treating all employees, customers, suppliers and partners with equal courtesy irrespective of gender, race, colour or creed. |
|
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board. |
The Board approves the Company's strategy and ensures that necessary resources are in place in order for the Company to meet its objectives.
Whilst the Board has delegated the operational management of the Company to the Chief Executive Officer and other senior management, a number of specific matters are subject to the approval of the Board. These include: · annual budget; · interim and final financial statements; · management structure and appointments; · mergers, acquisitions and disposals; · capital raising; · joint ventures and investments; · corporate strategy; · projects of a capital nature; and · major contracts.
The Non-Executive Directors have a particular responsibility to constructively challenge the strategy proposed by the executive management team, to scrutinise and challenge performance, to ensure appropriate remuneration, and to ensure that succession planning is in place in relation to senior members of the management team. The senior management team enjoy open access to the Non-Executive Directors.
The Chairman is responsible for leadership of the Board and ensuring its effectiveness. The Chairman with the assistance of the Chief Executive Officer sets the Board's agenda and ensures that adequate time is available for discussion of all agenda items, in particular strategic issues.
The roles of the Audit Committee and the Remuneration Committee are set out further on in this report.
The governance structures will evolve over time in parallel with the Company's objectives, strategy, and business model to reflect the development of the Company. |
|
10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. |
The Board is committed to maintaining good communication and having constructive dialogue with all of its stakeholders, including shareholders, providing them with access to information to enable them to come to informed decisions about the Company. The 'Investors' section on the Company's website provides all required regulatory information as well as additional information shareholders may find helpful, including: · information on Board members, advisers and significant shareholdings; · a historical list of the Company's announcements; · corporate governance information; · historical Annual Reports and notices of Annual General Meetings; and · share price information and interactive charting facilities to assist shareholders in analysing performance.
Results of shareholder meetings and details of votes cast will be publicly announced through the regulatory system and displayed on the Company's website with suitable explanations of any actions undertaken as a result of any significant votes for or against resolutions. |
The Board of Directors
The Board currently comprises:
Independent Non-Executive Chairman
· Glen Parsons (appointed 23 October 2017)
Independent Non-Executive Directors
· Laurence Robb (appointed 23 October 2017)
· Terence Goodlace (appointed 23 May 2018)
Executive Director- Chief Executive Officer
· Anthony Viljoen (appointed 23 October 2017)
Operational management in South Africa and Namibia is led by Anthony Viljoen supported by a Chief Financial Officer (Robert Sewell), a Chief Operating Officer (Frans van Daalen), geologists and engineers. Operational management is also supported technically through various consultancy agreements that were in place during the year under review.
The Board met formally four times during the year and also met frequently on an ad-hoc basis.
All press releases, including operational updates, are approved by the entire Board.
The Audit Committee
The Audit Committee meets at least twice a year and is composed exclusively of Non-Executive Directors: Glen Parsons (Chairman) and Terence Goodlace. The Chief Financial Officer, Robert Sewell, attends Audit Committee meetings by invitation. The committee is responsible for:
· reviewing the annual financial statements and interim reports prior to approval, focusing on changes in accounting policies and practices, major judgemental areas, significant audit adjustments, going concern and compliance with accounting standards, stock exchange requirements, and legal requirements;
· receiving and considering reports on internal financial controls, including reports from the auditor, and reporting auditor findings to the Board;
· considering the appointment of the auditor and their remuneration, including reviewing and monitoring their independence and objectivity;
· meeting with the auditor to discuss the scope of the audit, issues arising from their work and any matters they wish to raise; and
· developing and implementing policy on the engagement of the external auditor to supply non-audit services.
The Audit Committee is provided with details of any proposed related-party transactions in order to consider and approve the terms and conditions of such transactions.
The Audit Committee met three times during the year to consider the following agenda items:
August 2020:
· External audit report
· Critical accounting estimates
· Going concern assessment
· Approval of the Annual Report for the period ended February 2020
September 2020:
· Approval of the half-year results and report to 31 August 2020
· Going concern assessment
February 2021:
· Auditor independence
· External audit plan for the year ended February 2021
The Remuneration Committee
The Remuneration Committee meets at least once a year and is composed exclusively of Non-Executive Directors: Glen Parsons (Chairman) and Terence Goodlace.
The Committee is responsible for reviewing the performance of senior management and for setting the scale and structure of their remuneration, determining the payment of bonuses, considering the grant of options under any share option scheme and, in particular, the price per share and the application of performance standards which may apply to any such grant, paying due regard to the interests of shareholders and the performance of the Group.
The Remuneration Committee met formally once during the year to consider the following agenda items:
December 2020:
· Repricing of share options
· Awarding discretionary bonuses to the executive team settled through the issue of shares
· Consideration of salary increases
Internal Controls
The Board acknowledges its responsibility for the Group's systems of internal controls and for reviewing their effectiveness. These internal controls are designed to safeguard the assets of the Group and to ensure the reliability of financial information for both internal use and external publication. Whilst the Board is aware that no system can provide absolute assurance against material misstatement or loss, in light of the increased activity and further development of the Group, continuing reviews of internal controls will be undertaken to ensure that they are adequate and effective.
Risk Management
The Board considers risk assessment and management to be important in achieving its strategic objectives. Project milestones and timelines are regularly reviewed.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
The Companies (Guernsey) Law, 2008 requires the Directors to prepare Group financial statements for each financial year in accordance with generally accepted accounting principles. The Directors are required by the AIM rules of the London Stock Exchange to prepare Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU).
The financial statements of the Group are required by law to give a true and fair view of the state of the Group's affairs at the end of the financial year and of the profit or loss of the Group for that year and are required by IFRS as adopted in the EU to reflect fairly the financial position and performance of the Group.
In preparing the Group financial statements, the Directors are required to:
i) Select suitable accounting policies and then apply them consistently;
ii) Make judgements and accounting estimates that are reasonable and prudent;
iii) State whether they have been prepared in accordance with IFRS as adopted by the EU; and
iv) Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions, disclose with reasonable accuracy at any time the financial position of the Group, and enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors confirm they have discharged their responsibilities as noted above.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28 February 2021
|
|
Notes |
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Continuing operations |
|
|
|
|
|
|
|
Revenue |
5 |
|
4 985 107 |
|
|
69 032 |
|
Cost of Sales |
|
|
(4 987 696) |
|
|
(47 336) |
|
Gross (loss)/profit |
|
|
(2 589) |
|
|
21 696 |
|
Impairment of exploration licences |
11 |
|
(3 069 232) |
|
|
- |
|
Other administrative expenses |
6 |
|
(2 539 762) |
|
|
(1 815 227) |
|
Total administrative expenses |
|
|
(5 608 994) |
|
|
(1 815 227) |
|
Operating loss |
|
|
(5 611 583) |
|
|
(1 793 531) |
|
Finance income |
|
|
- |
|
|
3 793 |
|
Finance cost |
8 |
|
(184 300) |
|
|
(40 719) |
|
Loss before tax |
|
|
(5 795 883) |
|
|
(1 830 457) |
|
Income tax expense |
9 |
|
- |
|
|
- |
|
Loss for the year |
|
|
(5 795 883) |
|
|
(1 830 457) |
|
Other comprehensive income/(loss) |
|
|
|
|
|
|
|
Items that will or may be reclassified to profit or loss: |
|
|
|
|
|
|
|
Exchange differences on translation of share-based payment reserve |
|
|
(531) |
|
|
(1 039) |
|
Exchange differences on translation of foreign operations |
|
|
(526 231) |
|
|
(1 113 281) |
|
Exchange differences on non-controlling interest |
|
|
1 390 |
|
|
4 167 |
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the year |
|
|
(6 321 255) |
|
|
(2 940 610) |
|
|
|
|
|
|
|
|
|
Loss for the year attributable to: |
|
|
|
|
|
|
|
Owners of the parent |
|
|
(5 694 962) |
|
|
(1 781 962) |
|
Non-controlling interests |
|
|
(100 921) |
|
|
(48 495) |
|
|
|
|
(5 795 883) |
|
|
(1 830 457) |
|
|
|
|
|
|
|
|
|
Total comprehensive loss for the year attributable to: |
|
|
|
|
|
|
|
Owners of the parent |
|
|
(6 221 724) |
|
|
(2 896 282) |
|
Non-controlling interests |
|
|
(99 531) |
|
|
(44 328) |
|
|
|
|
(6 321 255) |
|
|
(2 940 610) |
|
|
|
|
|
|
|
|
|
Loss per ordinary share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share (in pence) |
10 |
|
(0.76) |
|
|
(0.29) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 28 February 2021
|
|
Notes |
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Assets |
|
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
Intangible assets |
11 |
|
5 240 461 |
|
|
7 441 018 |
|
Property, plant and equipment |
12 |
|
13 634 701 |
|
|
12 467 868 |
|
Total non-current assets |
|
|
18 875 162 |
|
|
19 908 886 |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Inventories |
13 |
|
996 698 |
|
|
246 910 |
|
Trade and other receivables |
14 |
|
1 188 152 |
|
|
648 722 |
|
Cash and cash equivalents |
15 |
|
1 351 200 |
|
|
574 600 |
|
Total current assets |
|
|
3 536 050 |
|
|
1 470 232 |
|
|
|
|
|
|
|
|
|
Total assets |
|
|
22 411 212 |
|
|
21 379 118 |
|
|
|
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
Share capital |
20 |
|
25 608 001 |
|
|
20 487 239 |
|
Convertible loan note reserve |
27 |
|
2 170 645 |
|
|
3 770 645 |
|
Accumulated deficit |
|
|
(10 030 679) |
|
|
(4 365 500) |
|
Warrant reserve |
21 |
|
211 348 |
|
|
78 651 |
|
Share-based payment reserve |
22 |
|
743 615 |
|
|
559 534 |
|
Foreign currency translation reserve |
|
|
(2 061 339) |
|
|
(1 535 108) |
|
Equity attributable to the owners of the parent |
|
|
16 641 591 |
|
|
18 995 461 |
|
Non-controlling interests |
23 |
|
(151 344) |
|
|
(51 812) |
|
Total equity |
|
|
16 490 247 |
|
|
18 943 649 |
|
|
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
Environmental rehabilitation liability |
18 |
|
180 917 |
|
|
86 005 |
|
Lease liability |
19 |
|
260 512 |
|
|
181 544 |
|
Total non-current liabilities |
|
|
441 429 |
|
|
267 549 |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Trade and other payables |
17 |
|
1 484 482 |
|
|
894 830 |
|
Borrowings |
16 |
|
3 869 489 |
|
|
1 230 961 |
|
Lease liability |
19 |
|
125 565 |
|
|
42 129 |
|
Total current liabilities |
|
|
5 479 536 |
|
|
2 167 920 |
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
22 411 212 |
|
|
21 379 118 |
The notes that follow in this report form part of these financial statements.
The financial statements were authorised and approved for issue by the Board of Directors and authorised for issue on 21 July 2021
ANTHONY VILJOEN
Chief Executive Officer
21 July 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 28 February 2021
|
|
Share capital |
Convertible loan note reserve |
Accumulated deficit |
Warrant reserve |
Share-based payment reserve |
Foreign currency translation reserve |
Total |
Non-controlling interests |
Total equity |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
Total equity at 28 February 2019 |
17 337 718 |
- |
(2 583 538) |
78 651 |
220 729 |
(421 827) |
14 631 733 |
(7 484) |
14 624 249 |
|
Loss for the year |
- |
- |
(1 781 962) |
- |
- |
- |
(1 781 962) |
(48 495) |
(1 830 457) |
|
Other comprehensive income/(loss) |
- |
- |
- |
- |
(1 039) |
(1 113 281) |
(1 114 320) |
4 167 |
(1 110 153) |
|
Total comprehensive income/(loss) |
- |
- |
(1 781 962) |
- |
(1 039) |
(1 113 281) |
(2 896 282) |
(44 328) |
(2 940 610) |
|
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
Share-based payments in the year |
- |
- |
- |
- |
403 562 |
- |
403 562 |
- |
403 562 |
|
Issue of shares |
3 261 208 |
- |
- |
- |
(63 718) |
- |
3 197 490 |
- |
3 197 490 |
|
Share issue costs |
(111 687) |
- |
- |
- |
- |
- |
(111 687) |
- |
(111 687) |
|
Issue of convertible loan notes |
- |
3 800 000 |
- |
- |
- |
- |
3 800 000 |
- |
3 800 000 |
|
Convertible loan note issue costs |
- |
(29 355) |
- |
- |
- |
- |
(29 355) |
- |
(29 355) |
|
Total equity at 29 February 2020 |
20 487 239 |
3 770 645 |
(4 365 500) |
78 651 |
559 534 |
(1 535 108) |
18 995 461 |
(51 812) |
18 943 649 |
|
Loss for the year |
- |
- |
(5 694 962) |
- |
- |
- |
(5 694 962) |
(100 921) |
(5 795 883) |
|
Other comprehensive income/(loss) |
- |
- |
- |
- |
(531) |
(526 231) |
(526 762) |
1 390 |
(525 372) |
|
Total comprehensive income/(loss) |
- |
- |
(5 694 962) |
- |
(531) |
(526 231) |
(6 221 724) |
(99 531) |
(6 321 255) |
|
Transactions with owners: |
|
|
|
|
|
|
|
|
|
|
Share-based payments in the year (includes amounts due to staff and suppliers) |
- |
- |
- |
- |
281 431 |
- |
281 431 |
- |
281 431 |
|
Issue of shares |
3 774 079 |
- |
- |
- |
(96 819) |
- |
3 677 260 |
- |
3 677 260 |
|
Share issue costs |
(253 317) |
- |
- |
- |
- |
- |
(253 317) |
- |
(253 317) |
|
Conversion of convertible loan notes |
1 600 000 |
(1 600 000) |
- |
- |
- |
- |
- |
- |
- |
|
Warrants issued in the year |
- |
- |
- |
162 480 |
- |
- |
162 480 |
- |
162 480 |
|
Warrants expired in the year |
- |
- |
29 783 |
(29 783) |
- |
- |
- |
- |
- |
|
Total equity at 28 February 2021 |
25 608 001 |
2 170 645 |
(10 030 679) |
211 348 |
743 615 |
(2 061 339) |
16 641 591 |
(151 344) |
16 490 247 |
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 28 February 2021
|
|
Notes |
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
Loss before taxation |
|
|
(5 795 883) |
|
|
(1 830 457) |
|
Adjustments for: |
|
|
|
|
|
|
|
Fair value adjustment to customer contract |
5 |
|
(205 635) |
|
|
- |
|
Depreciation of property, plant and equipment |
12 |
|
898 528 |
|
|
128 130 |
|
Impairment of exploration licences |
11 |
|
3 069 232 |
|
|
- |
|
Share-based payments |
22 |
|
217 407 |
|
|
184 888 |
|
Equity-settled transactions |
|
|
618 260 |
|
|
109 190 |
|
Finance income |
|
|
- |
|
|
(3 793) |
|
Finance costs |
8 |
|
184 300 |
|
|
40 719 |
|
Changes in working capital: |
|
|
|
|
|
|
|
Increase in receivables |
14 |
|
(352 953) |
|
|
(220 634) |
|
Increase in inventory |
13 |
|
(753 688) |
|
|
(241 546) |
|
Increase in payables |
17 |
|
619 573 |
|
|
578 828 |
|
Net cash used in operating activities |
|
|
(1 500 858) |
|
|
(1 254 675) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
Finance income |
|
|
- |
|
|
3 793 |
|
Purchase of intangible assets |
11 |
|
(964 191) |
|
|
(596 291) |
|
Purchase of property, plant and equipment (including capitalised cash interest of £179 194 (2020: £55 235)) |
12 |
|
(1 990 856) |
|
|
(7 159 313) |
|
Net cash used in investing activities |
|
|
(2 955 047) |
|
|
(7 751 811) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Finance costs |
8 |
|
(37 612) |
|
|
(562) |
|
Lease payments |
19 |
|
(128 600) |
|
|
(68 015) |
|
Net proceeds from issue of shares |
20 |
|
2 796 683 |
|
|
2 876 705 |
|
Net proceeds from issue of convertible loan notes |
|
|
- |
|
|
3 770 645 |
|
Proceeds from borrowings |
16 |
|
7 908 028 |
|
|
4 840 989 |
|
Repayment of borrowings |
16 |
|
(5 378 742) |
|
|
(3 610 028) |
|
Net cash generated from financing activities |
|
|
5 159 757 |
|
|
7 809 734 |
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
703 852 |
|
|
(1 196 752) |
|
Cash and cash equivalents at the beginning of the year |
|
|
574 600 |
|
|
1 781 335 |
|
Foreign exchange differences |
|
|
72 748 |
|
|
(9 983) |
|
Cash and cash equivalents at the end of the year |
15 |
|
1 351 200 |
|
|
574 600 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 28 February 2021
1. Corporate information and principal activities
AfriTin Mining Limited ("AfriTin") was incorporated and domiciled in Guernsey on 1 September 2017, and admitted to the AIM market in London on 9 November 2017. The company's registered office is PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH and operates from Illovo Edge Office Park, 2nd Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg, 2116, South Africa.
These financial statements are for the year ended 28 February 2021 and the comparative figures are for the year ended 29 February 2020. The financial statements for the year ended 28 February 2021 and comparative figures set out in this announcement do not constitute the Company's statutory annual report and financial statements but are extracted from the audited financial statements for those years. The 29 February 2020 accounts have been delivered to the Registrar of Companies. The statutory financial statements for 2021 will be delivered to the Registrar of Companies in due course.
The auditors have reported on the financial statements for the year ended 28 February 2021 and their report was unqualified.
The AfriTin Group comprises AfriTin Mining Limited and its subsidiaries as noted below.
AfriTin Mining Limited ("AML") is an investment holding company and holds 100% of Guernsey subsidiary, Greenhills Resources Limited ("GRL").
GRL is an investment holding company that holds investments in resource-based tin and tantalum exploration companies in Namibia and South Africa. The Namibian subsidiary is AfriTin Mining (Namibia) Pty Limited ("AfriTin Namibia"), in which GRL holds 100% equity interest. The South African subsidiaries are Mokopane Tin Company Pty Limited ("Mokopane") and Pamish Investments 71 Pty Limited ("Pamish 71"), in which GRL holds 100% equity interest.
AfriTin Namibia owns an 85% equity interest in Uis Tin Mining Company Pty Limited ("UTMC"). The minority shareholder in UTMC is The Small Miners of Uis who own 15%.
Mokopane owns a 74% equity interest in Renetype Pty Limited ("Renetype") and a 50% equity interest in Jaxson 641 Pty Limited ("Jaxson").
The minority shareholders in Renetype are African Women Enterprises Investments Pty Limited and Cannosia Trading 62 CC who own 10% and 16% respectively.
The minority shareholder in Jaxson is Lerama Resources Pty Limited who owns a 50% interest in Jaxson. Pamish 71 owns a 74% interest in Zaaiplaats Mining Pty Limited ("Zaaiplaats"). The minority shareholder in Zaaiplaats is Tamiforce Pty Limited who owns 26%.
AML holds 100% of Tantalum Investment Pty Limited, a company containing Namibian exploration licenses EPL5445 and EPL5670 for the exploration of tin, tantalum and associated minerals.
As at 28 February 2021, the AfriTin Group comprised:
|
Company |
Equity holding and voting rights |
Country of incorporation |
Nature of activities |
|
AfriTin Mining Limited |
N/A |
Guernsey |
Ultimate holding company |
|
Greenhills Resources Limited1 |
100% |
Guernsey |
Holding company |
|
AfriTin Mining Pty Limited1 |
100% |
South Africa |
Group support services |
|
Tantalum Investment Pty Limited1 |
100% |
Namibia |
Tin & tantalum exploration |
|
AfriTin Mining (Namibia) Pty Limited2 |
100% |
Namibia |
Tin & tantalum operations |
|
Uis Tin Mining Company Pty Limited3 |
85% |
Namibia |
Tin & tantalum operations |
|
Mokopane Tin Company Pty Limited2 |
100% |
South Africa |
Holding company |
|
Renetype Pty Limited4 |
74% |
South Africa |
Tin & tantalum exploration |
|
Jaxson 641 Pty Limited4 |
50% |
South Africa |
Tin & tantalum exploration |
|
Pamish Investments 71 Pty Limited2 |
100% |
South Africa |
Holding company |
|
Zaaiplaats Mining Pty Limited5 |
74% |
South Africa |
Property owning |
1 Held directly by AfriTin Mining Limited
2 Held by Greenhills Resources Limited
3 Held by AfriTin Mining (Namibia) Pty Limited
4 Held by Mokopane Tin Company Pty Limited
5 Held by Pamish Investments 71 Pty Limited
These financial statements are presented in Pound Sterling (£) because that is the currency in which the Group has raised funding on the AIM market in the United Kingdom. Furthermore, Pound Sterling (£) is the functional currency of the ultimate holding company, AfriTin Mining Limited.
The Group's key subsidiaries, AfriTin Namibia and UTMC, use the Namibian Dollar (N$) as their functional currency. The year-end spot rate used to translate all Nambian Dollar balances was £1 = N$21.10 and the average rate for the financial year was £1 = N$21.31.
2. Significant accounting policies
Basis of accounting
These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively "IFRS") issued by the International Accounting Standards Board ("IASB") as adopted by the European Union ("EU adopted IFRS").
The Group has adopted the standards, amendments and interpretations effective for annual periods beginning on or after 1 March 2020. The adoption of these standards and amendments did not have a material effect on the financial statements of the Group. See Note 3.
The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity and areas where assumptions and estimates are significant to the consolidated financial statements are discussed further in this note. The principal accounting policies are set out below.
Going concern
These financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the company will be able to continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
At year end, the company had cash in the bank of £1.4m and had drawn down £1.7m of the £2m Nedbank working capital facility.
Subsequent to year end, an equity placement in May 2021 raised gross proceeds of £13m.
Furthermore, both long term liabilities and associated interest, namely the remaining 2019 convertible loan notes and the 2020 loan notes were settled on 25 May 2021. The outstanding convertible loan notes were partially settled through conversion into ordinary shares and partially settled in cash. The outstanding loan notes were all settled in cash.
Management have prepared a detailed cash flow forecast for the period to 31 July 2022 and stress tests of those forecasts. The forecast excludes the Group's £2.038m working capital and VAT facility that is currently due for renewal. The Directors fully anticipate renewal of the facility based on current discussions with the lender, the security in place and the history if renewals. The base case forecast demonstrates that the Group will have sufficient funds to meet its liabilities as they fall due and includes the following key assumptions:
· Prices have been set at $28,100 per tonne of tin and $150,000 per tonne of tantalum.
· The base case forecast assumes continuing steady state production for the current mining and processing facility.
· The base case forecast includes the procurement of long-lead items relating to the Phase 1 expansion but does not include the full capital expenditure required for the Phase 1 expansion, which remains discretionary, as management intends to finance this requirement with debt financing.
In addition, the Board have considered the risks and uncertainties associated with COVID-19 on the Group's operations including the potential impact of production stoppages as a result of potential outbreaks of the virus at the operation as well as downside scenarios in relation to commodity pricing and production across the period. The scenarios demonstrated that the Group will be able to maintain liquidity without use of its working capital facilities through management of its expansionary capital project expenditure.
Accordingly, the Directors have concluded that the going concern basis in the preparation of the financial statements is appropriate and that there are no material uncertainties that would cast doubt on that basis of preparation.
Basis of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.
The Group applies the acquisition method 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 to the former owners of the acquiree 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. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in 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 liability are recognised either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.
The acquisition of subsidiaries that do not meet the definition of a business and hold early stage exploration licenses are accounted for as asset purchases with the fair value of consideration being allocated to the assets.
Inter-company transactions, balances and unrealised gains/losses on transactions between Group companies are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.
Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is measured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders that present ownership interests entitling their holders to a proportionate share of the net assets upon liquidation are initially measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests' share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the management steering committee that makes strategic decisions.
Foreign currencies
Functional and presentational currency
The individual financial statements of each Group company are prepared in the currency of the primary economic environment in which they operate (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group company are expressed in Pound Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
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 date where 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 the income statement, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.
Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a financial currency different from the presentation currency are translated into the presentation currency as follows:
i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
ii) income and expenses for each income statement are translated at average exchange rates (unless the 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 rate on the dates of the transactions); and
iii) all resulting exchange differences are recognised in other comprehensive income.
Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" establishes a comprehensive framework for determining whether, how much and when revenue is recognised. The core principle is that an entity recognises revenue to depict the transfer of promised goods and services to the customer of an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Group generates revenue from its primary activity, the sale of tin concentrate, and it continued to generate immaterial revenue from the sale of sand.
The Group produces and sells tin concentrate from its Uis tin mine in Namibia. Once concentrate has been produced at the Uis plant, it is sampled, bagged and loaded into containers for transportation to the port in Walvis Bay for shipment.
The company currently has an off-take agreement with its customer, Thailand Smelting and Refining Co. ("Thaisarco"), which was signed on 1 August 2019. This contract was renewed on 1 December 2020 for a further 3 years. As per the contract, Thaisarco pays AfriTin on the basis of actual tin content in the concentrate per Thaisarco's analysis at the London Metal Exchange price less treatment charges, unit deductions and impurity charges;
The Group can elect for the sale of each shipment to occur under the following terms:
Option 1: Standard provisional payment
Thaisarco shall pay 90% provisional payment on the basis of actual tin content as per their own analysis. Payment is to be made within 10 working days after the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco when the concentrate arrives at the Songkhla Port in Thailand.
Option 2: Provisional payment option against original bill of lading
Thaisarco shall pay 90% provisional payment on the basis of provisional tin content per UTMC's analysis. The provisional payment shall be done against presentation of a provisional invoice and an original bill of lading. Title shall pass to Thaisarco when UTMC receives the 90% provisional payment.
Option 3: Provisional payment option against warehouse holding certificate
Thaisarco shall pay 70% provisional payment on the basis of provisional tin content per UTMC's analysis. The provisional payment shall be done against presentation of provisional invoice and original warehouse holding certificate. Thaisarco shall pay an additional 20% provisional payment upon presentation of the original bill of lading. Title shall pass to Thaisarco when the UTMC receives the 70% provisional payment.
During the year, the Group concluded sales under either Option 2 or Option 3.
Revenue is recognised at a point in time when title and control of the goods has transferred to the customer, which is when the concentrate arrives at the Songkhla Port in Thailand under Option 1 or when provisional payment is received by UTMC under Option 2 and Option 3. There is limited judgement needed to identify the point at which control passes: once physical delivery of the products to the agreed location has occurred, the Group no longer has physical possession of the products. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question.
Pricing for the provisional payment is determined by the published tin price on the date that title and control passes. Pricing for the final payment shall be declared within 20 market days after arrival at Thaisarco's works. The lower of the cash price and the 3-month forward-looking price is used in these calculations.
Variable consideration relating to final assay results is constrained in estimating revenue unless it is highly probable that there will not be a future reversal in the amount of revenue recognised when the final assay has been determined.
Revenue from the sale of sand is recognised at the point in time when control of the goods has transferred to the customer, which is when the sand leaves the Group's premises. At this point, the Group will have a present right to payment and retains none of the significant risks and rewards of the goods in question.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax charge is based on taxable profit for the period. The Group's liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on 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, and is accounted for using the "balance sheet liability" method.
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 is calculated at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled based upon rates enacted and substantively enacted at the reporting date. Deferred tax is charged or credited to profit or loss, except when it relates to items credited or charged to other comprehensive income, in which case the deferred tax is also dealt with in other comprehensive income.
Intangible exploration and evaluation assets
All costs associated with mineral exploration and evaluation including the costs of acquiring prospecting licenses; mineral production licenses and annual license fees; 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; are capitalised as intangible exploration and evaluation assets and subsequently measured at cost.
If an exploration project is successful, the related expenditures will be transferred at cost to property, plant and equipment and amortised over the estimated life of the commercial ore reserves on a unit of production basis (with this charge being taken through profit or loss). Where capitalised costs relate to both development projects and exploration projects, the Group reclassifies a portion of the costs which are considered attributable to near term production based on a percentage of the ore resource expected to be mined in the relevant phase. Where a project does not lead to the discovery of commercially viable quantities of mineral resources and is relinquished, abandoned, or is considered to be of no further commercial value to the Group, the related costs are recognised in the income statement.
The recoverability of deferred exploration costs is dependent upon the discovery of economically viable ore reserves, the ability of the Group to obtain necessary financing to complete the development of ore reserves and future profitable production or proceeds from the extraction or disposal thereof.
Impairment of exploration and evaluation assets
Intangible exploration and evaluation assets are reviewed regularly for indicators of impairment following the guidance in IFRS 6 "Exploration for and Evaluation of Mineral Resources" and tested for impairment where such indicators exist.
In accordance with IFRS 6, the Group considers the following facts and circumstances in their assessment of whether the Group's exploration assets may be impaired:
· whether the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed; or
· whether substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned; or
· whether exploration for and evaluation of mineral resources in a specific area have not led to the discovery of commercially viable deposits and the Group has decided to discontinue such activities in the specific area; or
· whether sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full from successful development or by sale.
If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with the provisions of IAS 36 "Impairment of Assets". In such circumstances, the aggregate carrying value of the mining exploration and assets is compared against the expected recoverable amount of the cash-generating unit. The recoverable amount is the higher of value in use and the fair value less costs to sell.
Share capital and reserves
i) W a rrant reserve
The warrants issued by the Company are recorded at fair value on initial recognition net of transaction costs. The fair value of warrants granted is recognised as an expense or as share issue costs based on their nature, with a corresponding increase in equity. The fair value of the warrants granted is measured using the Black Scholes valuation model, taking into account the terms and conditions under which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of warrants that vest.
ii) Convertible loan note reserve
The proceeds received on issue of the Group's convertible loan notes are allocated into their liability and equity components based on the terms of the agreement.
The Group takes into account:
· whether there is a contractual obligation to settle in cash;
· whether there is a contractual obligation to issue a variable number of shares; and
· whether the instruments book value is variable.
Where none of the above criteria are met, the convertible loan notes are allocated as equity.
iii) Share-based payment reserve
Where equity settled share options are awarded to directors or employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statement of comprehensive income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the statement of comprehensive income is charged with the fair value of goods and services received.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation.
Land is not depreciated. Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful economic life. The applicable rates are:
· The mining assets are depreciated using the units of production method from the point that commercial production was achieved. This reflects the production activity in the period as a proportion of the total mining reserve. Where the units of production method is used, the assets are depreciated based on a rate determined by the tonnes of ore processed divided by the estimate of the mineral reserve.
· Short-lived assets which are used in the mining and processing plant are depreciated over a period of between one and ten years;
· Right-of-use asset over the period of the lease contract;
· Computer equipment over three years;
· Furniture over five years;
· Vehicles over four years.
Mining assets under construction are not depreciated.
The estimated useful lives, residual values and depreciation methods are reviewed at each year end and adjusted if necessary.
Gains or losses on disposal are included in profit or loss.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Right-of-use asset
At inception of a contract, the Group assesses whether a contract is, or contains a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset, for a period of time, in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
· the contract involves the use of an identified asset. This may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;
· the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
· the Group has the right to direct the use of the asset. The Group has the right when it has the decision-making rights that are most relevant to changing how and for what purposes the asset is used. In rare cases where the decision about how and for what purpose the assets is used is predetermined, the Group has the right to direct the use of the asset if either:
· the Group has the right to operate the asset; or
· the Group designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
The right-of-use asset is initially measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is annually assessed for impairment and will be adjusted for certain remeasurements of the lease liability.
Impairment of property, plant and equipment
At each statement of financial position date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible impairment in a cash-generating unit, the recoverability of the net book value relating to that mine is assessed by comparison with the estimated discounted future cash flows based on management's expectations of future commodity prices and future costs.
The recoverable amount is determined on the fair value less cost to develop basis. In assessing the recoverable amount, which is determined on a fair value less costs to develop basis, the expected future post-tax cashflows from the asset are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The Life of Mine ("LoM") plan is the approved management plan at the reporting date for ore extraction and its associated capital expenditure. The capital expenditure included in the impairment model does not include capital expenditure to enhance the asset performance outside of the existing LoM plan. The ore tonnes included in the LoM plan are those as per the Reserve Statement, which management considers economically viable.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease to the extent that it reverses gains previously recognised in other comprehensive income.
Where conditions giving rise to impairment subsequently reverse, the effect of the impairment charge is also reversed as a credit to the income statement, net of any depreciation that would have been charged since the impairment.
Inventories
Inventory consists of tin concentrate on hand, the run of mine stockpile and consumable items.
The tin concentrate is carried at the lower of cost or net realizable value. The cost of the concentrate includes direct materials, direct labour, depreciation and overhead costs relating to processing and engineering activities. Net realizable value is the estimated selling price net of any estimated selling costs in the ordinary course of business.
The run of mine stockpile is carried at the lower of cost or net realizable value. The cost of the stockpile includes direct materials, direct labour, depreciation and overhead costs relating to mining activities. Net realizable value is the estimated selling price net of necessary processing costs and any estimated selling costs in the ordinary course of business.
Consumables are valued at the lower of cost (determined on the weighted average basis) and
net realizable value. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Replacement cost is used as the best available measure of net realizable value.
Financial instruments
Financial instruments are recognised in the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.
Financial assets
The Company classifies its financial assets in the following measurement categories:
· those to be measured subsequently at amortized cost, and
· those to be measured subsequently at fair value through profit or loss
The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows.
Financial assets are classified as at amortised cost only if the asset is held to collect the contractual cash flows and the contractual terms of the asset give rise to cash flows that are solely payments of principal and interest. At subsequent reporting dates, financial assets at amortised cost are measured at amortised cost less any impairment losses.
For assets measured at fair value, gains and losses will be recorded in profit or loss.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses, defined as the difference between the contractual cash flows and the cash flows that are expected to be received, associated with its assets carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables only, the simplified approach permitted by IFRS 9 "Financial Instruments" is applied, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Losses are recognised in the income statement. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through the income statement.
Trade and other receivables
Trade and other receivables are initially recognised at the fair value of the consideration receivable less any impairment.
Trade and other receivables are subsequently measured at amortised cost or at fair value through profit or loss.
Under its offtake arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the tin price at that date. This occurs prior to the final price determination and the Group then subsequently receives the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and changes in fair value are recorded as other revenue.
Trade and other receivables are classified as a current asset as these are expected to be settled within a year.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits on a term of not greater than three months.
Financial liabilities
Financial liabilities include trade and other payables, borrowings and other longer-term financing, classified into one of the following categories:
Fair value through profit and loss: The liabilities are carried in the statement of financial position at fair value with changes in fair value recognised in the income statement. The Group currently has no financial liabilities carried at fair value through profit and loss.
Financial liabilities carried at amortised cost:
Trade and other payables
Trade and other payables are initially recognised at fair value and are subsequently measured at amortised cost, calculated using the effective interest rate method.
Borrowings
Interest bearing debt is initially recorded at fair value, less transaction costs and is subsequently measured at amortized cost, calculated using the effective interest rate method.
Borrowing costs are expensed as incurred except where they relate to the financing of construction or development of qualifying assets in which case they are capitalized up to the date when the qualifying asset is ready for its intended use.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised when:
· The rights to receive cash flows from the asset have expired: or
· The company has transferred its right to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party; and either
- The company has transferred substantially all the risks and rewards of the asset, or
- The company has neither transferred nor retained substantially all the risks and rewards of the asset; but has transferred control of the asset.
A financial liability (in whole or in part) is derecognised when the Group has extinguished its contractual obligations, it expires or is cancelled.
Any gain or loss on derecognition is taken to the profit or loss.
Rehabilitation provision
The net present value of estimated future rehabilitation costs is provided for in the financial statements and capitalised within property, plant and equipment on initial recognition. Rehabilitation will generally occur on closure or after closure of a mine.
Initial recognition is at the time of the construction or disturbance occurring and thereafter as and when additional construction or disturbances take place. The estimates are reviewed annually to take into account the effects of inflation and changes in the estimated cost of the rehabilitation works and are discounted using rates that reflect the time value of money. Annual increases in the provision due to the unwinding of the discount are recognised in the statement of comprehensive income as a finance cost. The present value of additional disturbances and changes in the estimate of the rehabilitation liability are recorded to mining assets against an increase/decrease in the rehabilitation provision.
The rehabilitation asset is amortised over the life of the mine once commercial production commences. Rehabilitation projects undertaken, included in the estimates, are charged to the provision as incurred. Environmental liabilities, other than rehabilitation costs, which relate to liabilities arising from specific events, are expensed when they are known, probable and may be reasonably estimated.
Lease liability
The lease liability is initially measured at the present value of the remaining lease payments, discounted using the interest rate implicit in the lease. The liability is subsequently measured at amortized cost using the effective interest method. Lease payments are apportioned between the finance charges and reduction of the lease liability using the incremental borrowing rate to achieve a constant rate of interest on the remaining balance of the liability.
Critical accounting estimates and judgements
In the application of the Group's accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. In particular, information about significant areas of estimation uncertainty considered by management in preparing the financial statements is described below.
Estimates and judgements are continually evaluated. Revisions to accounting estimates are recognised in the year in which the estimates are revised if the revision affects only that year, or in the year of revision and in future years if the revision affects both current and future years.
i) Going concern and liquidity
Significant estimates were required in forecasting cash flows used in the assessment of going concern including tin and tantalum prices, the levels of production, operating costs and capital expenditure requirements. Additionally, judgement has been applied in assessing the risks associated with COVID-19, together with mitigating steps available to the Group if required. Refer to going concern considerations noted earlier in Note 2 for further details.
ii) Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation obligations is complex and requires management to make estimates and judgements as most of the obligations will be fulfilled in the future and contracts and laws are often not clear regarding what is required. The resulting provisions (see Note 18) are further influenced by changing technologies, political, environmental, safety, business and statutory considerations.
The Group's rehabilitation provision is based on the net present value of management's best estimates of future rehabilitation costs. Judgement is required in establishing the disturbance and associated rehabilitation costs at period end, timing of costs, discount rates and inflation. In forming estimates of the cost of rehabilitation which are risk adjusted, the Group assessed the Environmental Management Plan and reports provided by internal and external experts. Actual costs incurred in future periods could differ materially from the estimates, and changes to environmental laws and regulations, life of mine estimates, inflation rates, and discount rates could affect the carrying amount of the provision.
The carrying amount of the rehabilitation obligations for the Group at 28 February 2021 was £180 917 (2020: £86 005). In determining the amount attributable to the rehabilitation liability, management used a discount rate of 12.8% (2020: 9.35%), an inflation rate of 6% (2020: 5.5%) and an estimated mining period of 18 years, being the Phase 1 expansion life of mine. A 1% increase or decrease in the inflation rate used would result in a £34 074 difference in the liability. A 2% increase or decrease in the discount rate used would result in a £49 935 difference in the liability.
iii) Impairment indicator assessment for exploration & evaluation assets
Determining whether an exploration and evaluation asset is impaired requires an assessment of whether there are any indicators of impairment, including specific impairment indicators prescribed in IFRS 6: Exploration for and Evaluation of Mineral Resources. If there is any indication of potential impairment, an impairment test is required based on value in use of the asset. The valuation of intangible exploration assets is dependent upon the discovery of economically recoverable deposits which, in turn, is dependent on future tin prices, future capital expenditures, environmental and regulatory restrictions, and the successful renewal of licences. The Group considers the South African exploration and evaluation assets to be non-core as it continues to primarily focus on developing its Namibian assets. Accordingly, the capitalised exploration and evaluation expenditure relating to the South African assets has been impaired to nil on the basis that the Group does not intend to incur any further expenditure on its South African licences The directors have concluded that there are no indications of impairment in respect of the carrying value of Namibian intangible assets at 28 February 2021 based on planned future development of the Namibian projects, and current and forecast tin prices. Exploration and evaluation assets are disclosed fully in Note 11.
iv) Impairment assessment for property, plant and equipment
Management have reviewed the Uis mine for indicators of impairment and have considered, among other factors, the operations to date at the Uis mine, planned Phase 1 Stage II expansion of the Uis operations, forecast commodity prices and market capitalisation of the group. In undertaking the indicator review, Management have also reviewed the underlying LoM valuation model for Uis and have concluded that no indicators of impairment have been noted at year end. The LoM valuation model is on a fair value less cost to develop basis and included assessments of different scenarios associated with capital development and expansion opportunities.
The forecasts required estimates regarding forecast tin and tantalum prices, ore resources and production, and operating and capital costs. The discounted cash flows use a discount rate of 11.7% post tax nominal. Under the base case forecast using a forecast tin price of $23 889 rising to $24 505 by 2025 and forecast tantalum price of $150 000, the forecast indicates headroom as at 28 February 2021. Whilst the valuation based on the operations limited to Phase 1 Stage II expansion is sensitive to pricing with a 6% reduction being required to reach break-even point, the planned additional expansion indicates significant headroom and reduced pricing sensitivity.
v) Depreciation
Judgement is applied in making assumptions about the depreciation charge for mining assets when using the unit-of-production method in estimating the ore tonnes held in reserves. The relevant reserves are those included the in current approved LoM plan which relates to the Phase 1 expansion. Judgement is also applied when assessing the estimated useful life of individual assets and residual values. The assumptions are reviewed at least annually by management and the judgement is based on consideration of the LoM plan, as well as the nature of the assets. The reserve assumptions included in the LoM plan are evaluated by management.
vi) Commercial production
Judgement is required to determine when a construction asset is in the location and condition intended. No specific guidance exists within IFRS, particularly as to what it means for an asset to be "in the location and condition necessary for it to be capable of operating as intended by management", but it is common to simply refer to the achievement of "commercial production" as the point at which the assets are commissioned, i.e. ready for their intended use.
In determining the commercial production date, management uses certain criteria that are required to be met before commercial production is achieved. Commercial production is determined to have been reached when the asset is operating at its designed production level. The Uis Mine achieved commercial production based on production levels at 1 December 2020 and commercial production was declared. At that date capitalisation of cost to the mining asset ceased and depreciation commenced.
vii) Determination of ore reserves
The estimation of ore reserves primarily impacts the depreciation charge of evaluated mining assets, which are depreciated based on the quantity of ore reserves. Reserve volumes are also used in calculating whether an impairment charge should be recorded where an impairment indicator exists.
The Group estimates its ore reserves and mineral resources based on information, compiled by appropriately qualified persons, relating to geological and technical data on the size, depth, shape and grade of the ore body and related to suitable production techniques and recovery rates. The estimate of recoverable reserves is based on factors such as tin prices, future capital requirements and production costs, along with geological assumptions and judgements made in estimating the size and grade of the ore body.
There are numerous uncertainties inherent in estimating ore reserves and mineral resources. Consequently, assumptions that are valid at the time of estimation may change significantly if or when new information becomes available.
viii) Valuation of inventories
Judgement is applied in making assumptions about the value of inventories and inventory stockpiles, including tin prices, plant recoveries and processing costs, to determine the extent to which the Group values inventory and inventory stockpiles. The Group uses forecast tin prices to determine the net realisable value of the ROM stockpile and the tin concentrate inventory on hand at year end. Inventory stockpiles are measured using actual mining and processing costs.
ix) Determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise, or not to exercise, an extension option. Extension options are only included in the lease term where the company is reasonably certain that it will extend or will not terminate the lease when the lease expires. For all leases, the most relevant factors include:
· If there are significant penalties to terminate, the group is typically reasonably certain to extend.
· The group considers other factors including historical lease durations, related costs and the possible business disruption as a result of replacement of the leased asset.
The lease term is reassessed on an ongoing basis, especially when the option to extend becomes exercisable or on occurrence of a significant event or a significant change in circumstances which affects this assessment, and that is within the control of the group.
x) Determining the incremental borrowing rate to measure lease liabilities
Interest rate implicit in leases is not available, therefore, the group uses the relevant incremental borrowing rate (IBR) to measure its lease liabilities. The IBR is estimated to be the interest rate that the group would pay to borrow:
· over a similar term
· with similar security
· the amount necessary to obtain an asset of a similar value to the right of use asset
· in a similar economic environment
The IBR, therefore, is considered to be the best estimate of the incremental rate and requires management's judgement as there are no observable rates available.
xi) Determining the fair value of trade receivables classified at fair value through profit and loss
The consideration receivable in respect of certain sales for which performance obligations have been satisfied at year end and for which the Group has received prepayment under the terms of the offtake agreement, remain subject to pricing adjustments with reference to market prices at the date of finalisation. Under the Group's accounting policies, the fair value of the consideration is determined, and the remaining receivable is adjusted to reflect fair value. Management estimated the forward price based on the LME 3-month tin price at year end. As at 28 February 2021 the Group recognised a receivable at fair value through profit or loss of £531 583 (2020: nil).
3. Adoption of new and revised standards
The Company adopted the following amendments to standards that became effective for periods commencing on or after 1 March 2020:
|
IFRS 3 |
Amendments to IFRS 3 "Business Combinations": Definition of business |
1 January 2020 |
|
IAS 1 and IAS 8 |
Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors": Definition of material |
1 January 2020 |
|
Conceptual Framework |
Amendments to References to the Conceptual Framework in IFRS Standards |
1 January 2020 |
The adoption of these amendments did not have a material impact on the financial statements of the Group
Accounting standards and interpretations not applied
Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group:
|
Annual Improvements to IFRS: 2018-2020 Cycle |
1 January 2022 |
|
Conceptual Framework for Financial Reporting (Amendments to IFRS 3) |
1 January 2022 |
|
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - Onerous Contracts - Cost of Fulfilling a Contract) |
1 January 2022 |
|
IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended Use) |
1 January 2022 |
|
IFRS 17 Insurance Contracts |
1 January 2023 |
|
IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-Current) |
1 January 2023 |
The Directors anticipate that the adoption of these standards and interpretations in future periods will have no material impact on the financial statements of the Group based on current operations.
4. Segmental reporting
The reporting segments are identified by the management steering committee (who are considered to be the chief operating decision-makers) by the way that the Group's operations are organised. As at 28 February 2021, the Group operated within two operating segments: tin exploration and mining activities in Namibia and South Africa.
Segment results
The following is an analysis of the Group's results by reportable segment.
|
|
South Africa |
|
Namibia |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
Year ended 28 February 2021 |
|
|
|
|
|
|
Results |
|
|
|
|
|
|
Revenue |
34 863 |
|
4 950 244 |
|
4 985 107 |
|
Associated costs |
(8 786) |
|
(5 715 954) |
|
(5 724 740) |
|
Impairment of exploration licence |
(3 069 232) |
|
- |
|
(3 069 232) |
|
Segmental profit/(loss) |
(3 043 155) |
|
(765 710) |
|
(3 808 865) |
|
|
|
|
|
|
|
|
Year ended 29 February 2020 |
|
|
|
|
|
|
Results |
|
|
|
|
|
|
Revenue |
21 696 |
|
47 336 |
|
69 032 |
|
Associated costs |
(14 006) |
|
(436 922) |
|
(450 928) |
|
Segmental profit/(loss) |
7 690 |
|
(389 586) |
|
(381 896) |
The reconciliation of segmental gross loss to the Group's loss before tax is as follows:
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Segmental profit/(loss) |
|
(3 808 865) |
|
|
(381 896) |
|
Unallocated costs |
|
(1 802 718) |
|
|
(1 411 635) |
|
Finance income |
|
- |
|
|
3 793 |
|
Finance costs |
|
(184 300) |
|
|
(40 719) |
|
Loss before tax |
|
(5 795 883) |
|
|
(1 830 457) |
Unallocated costs mainly comprise of corporate overheads and costs associated with being listed in London.
Other segmental information
|
|
South Africa |
|
Namibia |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
As at 28 February 2021 |
|
|
|
|
|
|
Intangible assets - exploration and evaluation |
11 309 |
|
5 229 152 |
|
5 240 461 |
|
Other reportable segmental assets |
76 460 |
|
15 494 907 |
|
15 571 367 |
|
Other reportable segmental liabilities |
(62 302) |
|
(1 651 016) |
|
(1 713 318) |
|
Unallocated net liabilities |
- |
|
- |
|
(2 608 263) |
|
Total consolidated net assets |
25 467 |
|
19 073 043 |
|
16 490 247 |
|
|
|
|
|
|
|
|
As at 29 February 2020 |
|
|
|
|
|
|
Intangible assets - exploration and evaluation |
3 108 713 |
|
4 332 305 |
|
7 441 018 |
|
Other reportable segmental assets |
60 323 |
|
13 041 793 |
|
13 102 116 |
|
Other reportable segmental liabilities |
(64 997) |
|
(774 676) |
|
(839 673) |
|
Unallocated net liabilities |
- |
|
- |
|
(759 812) |
|
Total consolidated net assets |
3 104 039 |
|
16 599 422 |
|
18 943 649 |
Unallocated net assets/liabilities are mainly comprised of cash and cash equivalents and the working capital facility which are managed at a corporate level.
5. Revenue
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Revenue from the sale of tin |
|
4 744 609 |
|
|
47 336 |
|
Revenue from the sale of sand |
|
34 863 |
|
|
21 696 |
|
Total revenue from customers |
|
4 779 472 |
|
|
69 032 |
|
|
|
|
|
|
|
|
Other revenue - change in fair value of customer contract |
|
205 635 |
|
|
- |
|
Total revenue |
|
4 985 107 |
|
|
69 032 |
The revenue from the sale of tin and sand is recognised at the point in time at which control transfers. Refer to Note 2 for further details.
Other revenue relates to the change in the fair value of amounts receivable under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date. Refer to Note 2 for details of trade receivables recorded at fair value through profit or loss.
6. Other administrative expenses
The loss for the year has been arrived at after charging:
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Staff costs |
|
1 201 489 |
|
|
793 687 |
|
Depreciation of property, plant & equipment |
|
275 987 |
|
|
128 130 |
|
Professional fees |
|
127 902 |
|
|
88 550 |
|
Travelling expenses |
|
44 793 |
|
|
98 988 |
|
Uis administration expenses |
|
361 509 |
|
|
199 984 |
|
Auditor's remuneration |
|
69 250 |
|
|
52 873 |
|
Other costs |
|
458 832 |
|
|
453 015 |
|
|
|
2 539 762 |
|
|
1 815 227 |
Other costs mainly comprise of corporate overheads necessary to run the South African head office and the costs associated with being listed in London.
7. Staff costs
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Staff costs capitalised under property, plant and equipment |
|
1 094 729 |
|
|
1 185 121 |
|
Staff costs capitalised under intangible assets |
|
261 844 |
|
|
104 521 |
|
Staff costs recognised as administrative expenses |
|
666 746 |
|
|
575 561 |
|
Staff costs included in cost of sales |
|
285 216 |
|
|
- |
|
Share-based payment charge capitalised under property, plant and equipment |
|
45 820 |
|
|
186 835 |
|
Share-based payment charge capitalised under intangible assets |
|
18 204 |
|
|
31 839 |
|
Share-based payment charge recognised as administrative expenses |
|
207 407 |
|
|
184 888 |
|
Share issue charge (including amounts capitalised in the prior year) |
|
327 336 |
|
|
65 470 |
|
|
|
2 907 301 |
|
|
2 334 235 |
Key management personnel have been identified as the Board of Directors, Frans van Daalen (Chief Operating Officer of the Group) and Robert Sewell (Chief Financial Officer of the Group). Details of key management remuneration are shown in Note 26.
The average number of staff during the period was 108 (2020: 66) with an average total cost per employee for the year of £26 862 (2020: £25 970).
Emoluments of £289 104 including £172 323 of share options and shares to be issued (2020: £190 932 including £65 281 of share options and shares to be issued) were paid in respect of the highest-paid director during the year.
8. Finance cost
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Interest on lease liability |
|
39 691 |
|
|
33 128 |
|
Interest on environmental rehabilitation liability |
|
7 593 |
|
|
7 029 |
|
Bank interest |
|
31 696 |
|
|
562 |
|
Interest on loan notes |
|
49 863 |
|
|
- |
|
Amortisation of warrant charge |
|
49 541 |
|
|
- |
|
Other interest |
|
5 916 |
|
|
- |
|
|
|
184 300 |
|
|
40 719 |
9. Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
|
|
Year ended 28 February 2021 |
|
Year ended 29 February 2020 |
||
|
Factors affecting tax for the year: |
|
£ |
|
|
£ |
|
The tax assessed for the year at the Guernsey corporation tax charge rate of 0%, as explained below: |
|
|
|
|
|
|
Loss before taxation |
|
(5 795 883) |
|
|
(1 830 457) |
|
|
|
|
|
|
|
|
Loss before taxation multiplied by the Guernsey corporation tax charge rate of 0% |
|
- |
|
|
- |
|
Effects of: |
|
|
|
|
|
|
Differences in tax rates (overseas jurisdictions) |
|
(549 615) |
|
|
(327 821) |
|
Tax losses carried forward |
|
549 615 |
|
|
327 821 |
|
Tax for the year |
|
- |
|
|
- |
Accumulated losses in the subsidiary undertakings for which there is an unrecognised deferred tax asset are £3 244 873 (2020: £1 797 379).
10. Loss per share from continuing operations
The calculation of a basic loss per share of 0.76 pence (2020: loss per share of 0.29 pence), is calculated using the total loss for the year attributable to the owners of the Company of £5 694 962 (2020: £1 781 962) and the weighted average number of shares in issue during the year of 749 085 933 (2020: 623 591 330).
Due to the loss for the year, the diluted loss per share is the same as the basic loss per share. The number of potentially dilutive ordinary shares, in respect of share options, warrants and shares to be issued as at 28 February 2021 is 86 882 728 (2020: 69 080 819). These potentially dilutive ordinary shares may have a dilutive effect on future earnings per share.
11. Intangible assets
|
|
Exploration and evaluation assets |
|
Computer software |
|
Total |
|
|
|
£ |
|
£ |
|
£ |
|
|
As at 28 February 2019 |
7 012 317 |
|
- |
|
7 012 317 |
|
|
Additions for the year |
522 131 |
|
125 894 |
|
648 025 |
|
|
Exchange differences |
(209 954) |
|
(9 370) |
|
(219 324) |
|
|
As at 29 February 2020 |
7 324 494 |
|
116 524 |
|
7 441 018 |
|
|
Additions for the year |
977 797 |
|
4 598 |
|
982 395 |
|
|
Impairment for the year |
(3 069 232) |
|
- |
|
(3 069 232) |
|
|
Exchange differences |
(108 373) |
|
(5 347) |
|
(113 720) |
|
|
As at 28 February 2021 |
5 124 686 |
|
115 775 |
|
5 240 461 |
|
For the purposes of impairment testing, the intangible exploration and evaluation assets are allocated to the Group's cash-generating units, which represent the lowest level within the Group at which the intangible exploration and evaluation assets are measured for internal management purposes, which is not higher than the Group's operating segments as reported in Note 4.
The amounts for intangible exploration and evaluation assets represent costs incurred on active exploration projects. Amounts capitalised are assessed for impairment indicators under IFRS 6 at each year end as detailed in the Group's accounting policy.
The Group considers the South African exploration and evaluation assets to be non-core as it continues to primarily focus on developing its Namibian assets. Accordingly, the capitalised exploration and evaluation expenditure relating to the South African assets of £3.069m has been impaired to nil on the basis that the Group does not intend to incur any further expenditure on its South African licences.
The directors have concluded that there are no indicators of impairment in respect of the carrying value of the Namibian exploration and evaluation assets at 28 February 2021 based on planned future development of the projects and current and forecast tin prices.
12. Property, plant and equipment
|
|
Land |
Mining asset under construction |
Mining asset
|
Decommissioning asset |
Right-of-use Asset |
Computer Equipment |
Furniture |
Vehicles |
Total |
|
Cost |
|
|
|
|
|
|
|
|
|
|
As at 28 February 2019 |
13 439 |
5 495 771 |
- |
75 180 |
- |
66 198 |
71 234 |
85 504 |
5 807 326 |
|
Additions for the year |
- |
7 370 105 |
- |
10 715 |
276 547 |
35 768 |
20 290 |
- |
7 713 425 |
|
Foreign exchange differences |
(1 001) |
(864 947) |
- |
(6 398) |
(20 583) |
(7 593) |
(6 776) |
(6 369) |
(931 667) |
|
As at 29 February 2020 |
12 438 |
12 000 929 |
- |
79 497 |
255 964 |
94 373 |
84 748 |
79 135 |
12 607 084 |
|
Additions for the year |
- |
2 028 009 |
123 803 |
90 323 |
259 957 |
46 543 |
21 598 |
- |
2 570 233 |
|
Disposals for the year |
- |
- |
- |
- |
- |
(1 955) |
- |
- |
(1 955) |
|
Transfer between categories of assets |
- |
(13 550 114) |
13 550 114 |
- |
- |
- |
- |
- |
- |
|
Foreign exchange differences |
(576) |
(478 824) |
1 236 |
(2 777) |
(9 250) |
(3 903) |
(3 681) |
(3 662) |
(501 437) |
|
As at 28 February 2021 |
11 862 |
- |
13 675 153 |
167 043 |
506 671 |
135 058 |
102 665 |
75 473 |
14 673 925 |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation |
|
|
|
|
|
|
|
|
|
|
As at 28 February 2019 |
- |
- |
- |
- |
- |
11 040 |
4 116 |
7 127 |
22 283 |
|
Charge for the year |
- |
- |
- |
- |
58 220 |
32 573 |
15 962 |
21 375 |
128 130 |
|
Foreign exchange differences |
- |
- |
- |
- |
(4 333) |
(3 274) |
(1 468) |
(2 122) |
(11 197) |
|
As at 29 February 2020 |
- |
- |
- |
- |
53 887 |
40 339 |
18 610 |
26 380 |
139 216 |
|
Charge for the year |
- |
- |
717 864 |
- |
108 794 |
35 622 |
17 566 |
18 682 |
898 528 |
|
Foreign exchange differences |
- |
- |
6 118 |
- |
(1 407) |
(1 528) |
(669) |
(1 034) |
1 480 |
|
As at 28 February 2021 |
- |
- |
723 982 |
- |
161 274 |
74 433 |
35 507 |
44 028 |
1 039 224 |
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value |
|
|
|
|
|
|
|
|
|
|
As at 28 February 2021 |
11 862 |
- |
12 951 171 |
167 043 |
345 397 |
60 625 |
67 158 |
31 445 |
13 634 701 |
|
As at 29 February 2020 |
12 438 |
12 000 929 |
- |
79 497 |
202 077 |
54 034 |
66 138 |
52 755 |
12 467 868 |
|
As at 28 February 2019 |
13 439 |
5 495 771 |
- |
75 180 |
- |
55 158 |
67 118 |
78 377 |
5 785 043 |
The Uis tin mine reached commercial production on 1 December 2020. Nameplate capacity (taking into account mining volumes, plant throughput and recovery) of Stage I of Phase 1 was defined as 60 tonnes of tin concentrate at a grade of 60% tin in concentrate per month (36 tonnes of contained tin). 63.9 tonnes of tin concentrate was produced in November 2020 and production of 60 tonnes or more per month has been consistently achieved subsequently. Management has therefore determined that commercial production was reached at this point. Up to this date, costs directly related to the development of the mine were capitalised to the mining asset. Included in these costs was capitalised interest of £254 539 (2020: £55 235).
A deduction to assets under construction of £2 805 630 (2020: £38 143) has been recorded in respect of the revenues generated during the development phase prior to commercial production being established with a corresponding charge to cost of sales to reflect the contribution to development cost provided by such revenues.
From 1 December 2020, depreciation of the mining asset commenced in accordance with IAS 16. The total depreciation charge for the year was split between administrative expenses and cost of sales. 275 987 was included in administrative expenses, while the balance of £622 541 was included in cost of sales as it was a cost that was incurred for mining and processing purposes.
13. Inventories
|
|
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Tin concentrate on hand |
|
373 310 |
|
|
185 338 |
|
Run-of-mine stockpile |
|
427 423 |
|
|
- |
|
Consumables |
|
195 965 |
|
|
61 572 |
|
|
|
996 698 |
|
|
246 910 |
14. Trade and other receivables
|
|
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Trade receivables |
|
185 451 |
|
|
42 772 |
|
Trade receivables at fair value through profit or loss |
|
531 583 |
|
|
- |
|
Other receivables |
|
204 779 |
|
|
111 614 |
|
VAT receivables |
|
266 339 |
|
|
494 336 |
|
|
|
1 188 152 |
|
|
648 722 |
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value due to their short-term nature. No allowance for any expected credit losses against any of the receivables is provided due to no history of default or non-payment from Thaisarco. The trade receivable from Thaisarco was settled after year-end.
Trade receivables at fair value through profit or loss relates to the change in the fair value of trade receivables under the offtake agreement between the date of initial recognition and the period end resulting from forecast market prices at the estimated final pricing date.
The total trade and other receivables denominated in South African Rand amount to £79 888 (2020: £65 288), denominated in Namibian Dollars amount to £429 819 (2020: £517 322) and denominated in US Dollars amount to £627 566 (2020: nil).
15. Cash and cash equivalents
|
|
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Cash on hand and in bank |
|
1 351 200 |
|
|
574 600 |
Cash and cash equivalents (which are presented as a single class of assets on the face of the Statement of Financial Position) comprise cash at bank. The Directors consider that the carrying amount of cash and cash equivalents approximates their fair value. The total cash and cash equivalents denominated in South African Rand amount to £119 976 (2020: £48 887), the total cash and cash equivalents denominated in Namibian Dollars amount to £13 156 (2020: £240 623) and the total cash and cash equivalents denominated in US Dollars amount to £551 832 (2020: £132).
16. Borrowings
|
|
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Working capital facility |
|
1 710 247 |
|
|
1 230 961 |
|
Loan note instrument |
|
2 159 242 |
|
|
- |
|
|
|
3 869 489 |
|
|
1 230 961 |
On 16 August 2019, a working capital facility of N$35 000 000 (c. £1.659 million) and a VAT facility for N$8 000 000 (c. £379 000) was entered into between the Company's subsidiary, AfriTin Mining (Namibia) Proprietary Limited and Nedbank Namibia.
The VAT facility is secured by assessed/audited VAT returns (refunds) which have not been paid by Namibia Inland Revenue. Nedbank Namibia provides a facility amounting to 70% of the total unpaid refunds. Any drawdowns against this facility are repaid to the bank upon receipt of cash from Namibia Inland Revenue.
The working capital facility and the VAT facility were reviewed on 31 July 2020 and were renewed for a further 12-month period. The facility is due for annual review in July 2021 and discussions are currently underway with the lender in securing the rollover of the facility. Interest accrues on these loans at the prime rate charged by Nedbank Namibia.
Both AfriTin, as the parent company of AfriTin Mining (Namibia) Proprietary Limited, and Bushveld Minerals Limited ("Bushveld"), a shareholder holding approximately 5% of the Company provide collateral in the form of a joint suretyship.
In addition to the facility amount of N$35 000 000, Nedbank Namibia have provided AfriTin Mining (Namibia) Pty Limited with a N$4 117 500 guarantee to Namibia Power Corporation Pty Limited in relation to a deposit for the supply of electrical power. As a result of the guarantee provided by Nedbank Namibia, no cash was paid over for the deposit.
On 5 May 2020, £2.05 million financing was secured by way of a loan note facility. The notes, which are issued in tranches of £50 000, bear an interest rate of 10% per annum to be accrued and payable in full on redemption, and have a 12-month term.
Reconciliation of net cash flow to movement in borrowings
|
Balance at 29 February 2020 |
|
1 230 961 |
|
Cash flows |
|
|
|
Proceeds from working capital facility |
|
5 858 028 |
|
Proceeds from loan note instrument |
|
2 050 000 |
|
Repayment of working capital facility |
|
(5 378 742) |
|
Non-cash flows |
|
|
|
Interest accrued on loan note instrument |
|
146 836 |
|
Warrants issued during the year |
|
(162 480) |
|
Warrants charge amortised during the year |
|
124 886 |
|
Balance at 28 February 2021 |
|
3 869 489 |
17. Trade and other payables
|
|
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Trade payables |
|
1 094 390 |
|
|
570 779 |
|
Other payables |
|
141 677 |
|
|
71 117 |
|
Accruals |
|
248 415 |
|
|
252 934 |
|
|
|
1 484 482 |
|
|
894 830 |
Trade and other payables principally comprise amounts outstanding for trade purchases and on-going costs. The average credit period taken for trade purchases is 30 days.
The Group has financial risk management policies in place to ensure that payables are paid within the pre-arranged credit terms. No interest has been charged by any suppliers as a result of late payment of invoices during the year.
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
The total trade and other payables denominated in South African Rand amount to £232 071 (2020: £165 988) and £1 185 802 (2020: £622 762) is denominated in Namibian Dollars.
18. Environmental rehabilitation liability
|
|
£ |
|
Balance at 28 February 2019 |
75 180 |
|
Increase in provision |
10 717 |
|
Interest expense |
7 029 |
|
Foreign exchange differences |
(6 921) |
|
Balance at 29 February 2020 |
86 005 |
|
Increase in provision |
90 323 |
|
Interest expense |
7 593 |
|
Foreign exchange differences |
(3 004) |
|
Balance at 28 February 2021 |
180 917 |
Provision for future environmental rehabilitation and decommissioning costs are made on a progressive basis. Estimates are based on costs that are regularly reviewed and adjusted appropriately for new circumstances. The environmental rehabilitation liability is based on disturbances and the required rehabilitation as at 28 February 2021.
The rehabilitation provision represents the present value of decommissioning costs relating to the dismantling of mechanical equipment and steel structures related to the Phase 1 Pilot Plant, the demolishing of civil platforms and reshaping of earthworks. A provision for this requires estimates and assumptions to be made around the relevant regulatory framework, the magnitude of the possible disturbance and the timing, extent and costs of the required closure and rehabilitation activities. In calculating the appropriate provision, cost estimates of the future potential cash outflows based on current studies of the expected rehabilitation activities and timing thereof are prepared. These forecasts are then discounted to their present value using a risk-free rate specific to the liability. In determining the amount attributable to the rehabilitation liability, management used a discount rate of 12.8% (2020: 9.35%), an inflation rate of 6% (2020: 5.5%) and an estimated mining period of 18 years , being the Phase 1 expansion life of mine. Actual rehabilitation and decommissioning costs will ultimately depend upon future market prices for the necessary rehabilitation works and timing of when the mine ceases operation.
19. Lease liability
The Company assessed all rental agreements and concluded that the following rentals fall within the scope of IFRS 16: Leases and therefore a lease liability has been recognised:
|
|
Lease term |
Option to extend/terminate |
Incremental borrowing rate |
|
Office building |
5 years |
Option to extend not specified in contract. Term of lease determined to be 5 years. |
13.75% |
|
Workshop facility |
2 years |
Option to extend not specified in contract. Term of lease determined to be 2 years. |
7.5% |
|
Residential housing |
5 years |
The lease will continue automatically after the initial period for an open-ended period. Either party must provide written notice if they wish to terminate. Lease term determined to be 5 years. |
8.5% |
|
|
Office Building |
|
Workshop |
|
Housing |
|
Total |
|
|
£ |
|
£ |
|
£ |
|
£ |
|
Balance at 28 February 2019 |
- |
|
- |
|
- |
|
- |
|
Additions |
276 547 |
|
- |
|
- |
|
276 547 |
|
Interest expense |
33 128 |
|
- |
|
- |
|
33 128 |
|
Lease payments |
(68 015) |
|
- |
|
- |
|
(68 015) |
|
Foreign exchange differences |
(17 987) |
|
- |
|
- |
|
(17 987) |
|
Balance at 29 February 2020 |
223 673 |
|
- |
|
- |
|
223 673 |
|
Additions |
- |
|
108 252 |
|
151 705 |
|
259 957 |
|
Interest expense |
24 419 |
|
3 923 |
|
11 349 |
|
39 691 |
|
Lease payments |
(64 201) |
|
(30 319) |
|
(34 080) |
|
(128 600) |
|
Foreign exchange differences |
(10 749) |
|
818 |
|
1 287 |
|
(8 644) |
|
Balance at 28 February 2021 |
173 142 |
|
82 674 |
|
130 261 |
|
386 077 |
The following is the split between the current and the non-current portion of the liability:
|
|
28 February 2021 £ |
|
29 February 2020 £ |
|
Non-current liability |
260 512 |
|
181 544 |
|
Current liability |
125 565 |
|
42 129 |
|
|
386 077 |
|
223 673 |
A total of £168 792 (2020: £113 205) was included in administrative expenses during the year for the cost of short-term rentals for vehicles and lifting equipment.
20. Share capital
|
|
Number of ordinary shares of no par value issued and fully paid |
|
Share Capital £ |
|
Balance at 28 February 2019 |
544 588 525 |
|
17 337 718 |
|
Capital raise - 22 May 2019 |
99 613 074 |
|
2 988 392 |
|
Share issue costs |
- |
|
(111 687) |
|
Shares issued to Hannam & Partners |
327 868 |
|
10 000 |
|
Shares issued to directors/employees |
8 616 906 |
|
262 816 |
|
Balance at 29 February 2020 |
653 146 373 |
|
20 487 239 |
|
Capital Raise - 3 August 2020 |
145 238 089 |
|
3 050 000 |
|
Shares issued to suppliers |
15 273 480 |
|
320 743 |
|
Share issue costs |
- |
|
(253 317) |
|
Shares issued to directors/employees |
16 133 440 |
|
403 336 |
|
Loan note conversion |
44 898 630 |
|
1 600 000 |
|
Balance at 28 February 2021 |
874 690 012 |
|
25 608 001 |
Authorised: 1 220 486 913 ordinary shares of no par value
Allotted, issued and fully paid: 874 690 012 shares of no par value
On 22 May 2019, AfriTin Mining Limited completed an equity fundraising by way of a direct subscription of 99 613 074 ordinary shares of no par value in the Company at a price of 3 pence per share.
On 10 December 2019, 8 616 906 ordinary shares of no par value were issued to various directors and employees in lieu of payment of director fees and part settlement of salaries. Furthermore 327 868 shares were issued to Hannam and Partners, in accordance with the terms of their broker agreement with the Company. These shares were issued at a price of 3.05 pence per share.
On 3 August 2020, the Company completed an equity fundraising by way of a placing and direct subscription of 145 238 089 ordinary shares of no par value in the Company at a price of 2.1 pence per share.
On 3 August 2020, 15 273 480 ordinary shares of no par value were issued to various suppliers as settlement of invoices for services rendered. These shares were issued at a price of 2.1 pence per share.
On 4 January 2021, 16 133 440 ordinary shares of no par value were issued to various directors and employees in lieu of payment of director fees and part settlement of salaries. These shares were issued at a price of 2.5 pence per share.
On 15 February 2021, AfriMet Resources AG elected to convert its portion of outstanding convertible loan notes, totalling £1 600 000 into fully paid ordinary shares. These shares were issued at a price of 4 pence per share.
21. Warrants
The following warrants were granted during the year ended 28 February 2021:
|
Date of grant |
10 December 2020 |
7 July 2020 |
31 May 2020 |
5 May 2020 |
|
Number granted |
2 500 000 |
2 500 000 |
2 500 000 |
13 000 000 |
|
Contractual life |
2.4 years |
2.8 years |
2.9 years |
3 years |
|
Estimated fair value per warrant (£) |
0.0101 |
0.0122 |
0.0068 |
0.0069 |
The warrants in issue during the year are as follows:
|
Outstanding at 28 February 2019 |
5 671 939 |
|
Exercisable at 28 February 2019 |
5 671 939 |
|
Granted during the year |
- |
|
Expired during the year |
- |
|
Exercised during the year |
- |
|
Outstanding at 29 February 2020 |
5 671 939 |
|
Exercisable at 29 February 2020 |
5 671 939 |
|
Granted during the year |
20 500 000 |
|
Expired during the year |
(1 871 939) |
|
Exercised during the year |
- |
|
Outstanding at 28 February 2021 |
24 300 000 |
|
Exercisable at 28 February 2021 |
24 300 000 |
The warrants outstanding at the year-end have an average exercise price of £0.023, with a weighted average remaining contractual life of 2.14 years.
In the year ended 28 February 2021, there was a charge of £162 480 (2020: nil) accounted for due to the issue of warrants.
On 22 April 2021, notice was received from warrant holders to exercise 1 186 666 warrants at an exercise price of 4.5 pence and 500 000 warrants at an exercise price of 1.95 pence.
22. Share-based payment reserve
Director share options
The following director share options were granted during the year ended 29 February 2020:
|
Date of grant |
18 October 2019 |
18 October 2019 |
18 October 2019 |
|
Number granted |
3 200 000 |
3 200 000 |
3 200 000 |
|
Vesting period |
1 year |
2 years |
3 years |
|
Contractual life |
5 years |
5 years |
5 years |
|
Estimated fair value per option (pence) |
1.4790 |
1.3340 |
1.2510 |
The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were:
|
Date of grant |
18 October 2019 |
18 October 2019 |
18 October 2019 |
|
Share price at grant date (pence) |
3.15 |
3.15 |
3.15 |
|
Exercise price (pence) |
3.75 |
4.50 |
5.00 |
|
Expiry date |
18 October 2024 |
18 October 2024 |
18 October 2024 |
|
Expected volatility |
60% |
60% |
60% |
|
Expected dividends |
Nil |
Nil |
Nil |
|
Risk-free interest rate |
1.24% |
1.24% |
1.24% |
The director share options in issue during the year are as follows:
|
Outstanding at 28 February 2019 |
17 500 000 |
|
Exercisable at 28 February 2019 |
- |
|
Granted during the year |
9 600 000 |
|
Forfeited during the year |
- |
|
Exercised during the year |
- |
|
Expired during the year |
- |
|
Outstanding at 29 February 2020 |
27 100 000 |
|
Exercisable at 29 February 2020 |
13 125 000 |
|
Granted during the year |
- |
|
Forfeited during the year |
- |
|
Exercised during the year |
- |
|
Expired during the year |
- |
|
Outstanding at 28 February 2021 |
27 100 000 |
|
Exercisable at 28 February 2021 |
8 389 999 |
On 4 January 2021, 10 600 000 share options held by the Chief Executive Officer, Anthony Viljoen were repriced by the Remuneration Committee to align company and shareholder expectations with long-term incentivisation goals. The exercise price and the first exercise date were changed, however, the contractual life of the options remained unchanged. The fair value of the re-priced options (calculated using the Black Scholes method) decreased from the initial fair valuation. As such, no adjustment to amortising of the initial fair value over the vesting period was made.
The director share options outstanding at the year-end have an average exercise price of £0.045 (2020: £0.053), with a weighted average remaining contractual life of 2.77 years (2020: 3.77 years).
The director must remain as a director of the Company for the share options to vest. In the event that a director ceases to be a director during the vesting period, the Board reserves the right to determine whether the share options will be terminated or not. There are no market-based vesting conditions on the share options.
Employee share options
The following employee share options were granted during the year ended 29 February 2020:
|
Date of grant |
18 October 2019 |
18 October 2019 |
18 October 2019 |
|
Number granted |
4 110 001 |
4 110 000 |
4 109 999 |
|
Vesting period |
1 year |
2 years |
3 years |
|
Contractual life |
5 years |
5 years |
5 years |
|
Estimated fair value per option (pence) |
1.4790 |
1.3340 |
1.2510 |
The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were:
|
Date of grant |
18 October 2019 |
18 October 2019 |
18 October 2019 |
|
Share price at grant date (pence) |
3.15 |
3.15 |
3.15 |
|
Exercise price (pence) |
3.75 |
4.50 |
5.00 |
|
Expiry date |
18 October 2024 |
18 October 2024 |
18 October 2024 |
|
Expected volatility |
60% |
60% |
60% |
|
Expected dividends |
Nil |
Nil |
Nil |
|
Risk-free interest rate |
1.24% |
1.24% |
1.24% |
The employee share options in issue during the year are as follows:
|
Outstanding at 28 February 2019 |
22 500 000 |
|
Exercisable at 28 February 2019 |
- |
|
Granted during the year |
12 330 000 |
|
Forfeited during the year |
- |
|
Exercised during the year |
- |
|
Expired during the year |
- |
|
Outstanding at 29 February 2020 |
34 830 000 |
|
Exercisable at 29 February 2020 |
11 250 000 |
|
Granted during the year |
- |
|
Forfeited during the year |
- |
|
Exercised during the year |
- |
|
Expired during the year |
- |
|
Outstanding at 28 February 2021 |
34 830 000 |
|
Exercisable at 28 February 2021 |
- |
On 4 January 2021, 34 830 000 share options held by employees were repriced by the Remuneration Committee to align company and shareholder expectations with long-term incentivisation goals. The exercise price and the first exercise date were changed, however the contractual life of the options remained unchanged. The fair value of the re-priced options (calculated using the Black Scholes method) decreased from the initial fair valuation. As such, no adjustment to amortising of the initial fair value over the vesting period was made.
The employee share options outstanding at the year-end have an average exercise price of £0.034 (2020: £0.053), with a weighted average remaining contractual life of 2.96 years (2020: 3.96 years).
The employee must remain in employment with the Company for the share options to vest. There are no market-based vesting conditions on the share options.
Director shares to be issued
Directors' fees of £16 342 (2020: £24 050) are owing to the directors at the end of the year. These fees will be settled through the issuing of shares. The corresponding credit has been recorded in the share-based payment reserve.
Employee shares to be issued
Employee salaries of £17 720 (2020: £13 961) are owing to employees at the end of the year. These salaries will be settled through the issuing of shares. The corresponding credit has been recorded in the share-based payment reserve.
23. Non-controlling Interests
Non-controlling interest that is material in the group relates to the Small Miners of Uis ("SMU") who own 15% of UTMC. SMU is a non-profit association incorporated in Namibia. The entity was set up by the Ministry of Mines and Energy to act on behalf of small-scale miners across Namibia.
Other includes the following minority interests which are not material:
· Cannosia Trading 62 CC who own 16% of Renetype
· African Women Enterprise Investments (Pty) Ltd who own 10% of Renetype
· Lerama Resources (Pty) Ltd who own 50% of Jaxson
· Tamiforce (Pty) Ltd who own 26% of Zaaiplaats
|
As at 28 February 2021 |
|
|
|
|
|
|
|
UTMC |
|
Other |
|
Total |
|
Amount attributable to all shareholders: |
|
|
|
|
|
|
Loss after tax |
(659 673) |
|
(7 150) |
|
(666 822) |
|
|
|
|
|
|
|
|
Non-current assets |
2 678 021 |
|
15 233 |
|
2 693 254 |
|
Current assets |
2 524 054 |
|
- |
|
2 524 054 |
|
Total assets |
5 202 076 |
|
15 233 |
|
5 217 308 |
|
|
|
|
|
|
|
|
Non-current liabilities |
5 136 254 |
|
43 275 |
|
5 179 529 |
|
Current liabilities |
997 620 |
|
11 964 |
|
1 009 584 |
|
Total liabilities |
6 133 874 |
|
55 239 |
|
6 189 113 |
|
|
|
|
|
|
|
|
Net liabilities |
931 798 |
|
40 006 |
|
971 804 |
|
|
|
|
|
|
|
|
Amount attributable to non-controlling interest: |
|
|
|
|
|
|
Loss after tax |
(98 951) |
|
(1 970) |
|
(100 921) |
|
Net liabilities |
139 770 |
|
11 574 |
|
151 344 |
|
As at 29 February 2020 |
|
|
|
|
|
|
|
UTMC |
|
Other |
|
Total |
|
Amount attributable to all shareholders: |
|
|
|
|
|
|
Loss after tax |
(299 949) |
|
(13 243) |
|
(313 192) |
|
|
|
|
|
|
|
|
Non-current assets |
2 165 378 |
|
1 037 166 |
|
3 202 544 |
|
Current assets |
699 699 |
|
- |
|
699 699 |
|
Total assets |
2 865 077 |
|
1 037 166 |
|
3 902 243 |
|
|
|
|
|
|
|
|
Non-current liabilities |
2 531 291 |
|
1 057 484 |
|
3 588 775 |
|
Current liabilities |
612 209 |
|
14 058 |
|
626 267 |
|
Total liabilities |
3 143 500 |
|
1 071 542 |
|
4 215 042 |
|
|
|
|
|
|
|
|
Net liabilities |
278 423 |
|
34 376 |
|
312 799 |
|
|
|
|
|
|
|
|
Amount attributable to non-controlling interest: |
|
|
|
|
|
|
Loss after tax |
(44 992) |
|
(3 502) |
|
(48 495) |
|
Net liabilities |
41 764 |
|
10 049 |
|
51 812 |
24. Financial instruments
The Group is exposed to the risks that arise from its use of financial instruments. This note describes the objectives, policies and processes of the Group for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing returns to shareholders. In order to maintain or adjust the capital structure, the Group may issue new shares or arrange debt financing.
The capital structure of the Group consists of cash and cash equivalents and equity, comprising issued capital, issued convertible loan notes, borrowings and retained losses.
The Group is not subject to any externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement and the basis for recognition of income and expenses for each class of financial asset, financial liability and equity instrument are disclosed in Note 2.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
· Borrowings
· Lease liability
· Convertible loan notes
Categories of financial instruments
The Group holds the following financial assets:
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Measured at amortised cost: |
|
|
|
|
|
|
Trade and other receivables |
|
390 230 |
|
|
154 386 |
|
Cash and cash equivalents |
|
1 351 200 |
|
|
574 600 |
|
|
|
|
|
|
|
|
Measured at fair value through profit or loss: |
|
|
|
|
|
|
Trade and other receivables |
|
531 583 |
|
|
- |
|
Total financial assets |
|
2 273 013 |
|
|
728 986 |
Under its customer sale arrangement, the Group receives a provisional payment upon satisfaction of its performance obligations based on the spot price at that date. This occurs prior to the final price determination, with the Group then subsequently receiving or paying the difference between the final price and quantity and the provisional payment. As a result of the pricing structure, the instrument is classified at fair value through profit or loss and measured at fair value with resulting changes in fair value recorded as other revenue.
Trade receivables at fair value through profit or loss fail the criteria for being measured at amortised cost owing to the variability resulting from final pricing adjustments. Financial instruments measured at fair value are presented by level within which the fair value measurement is categorized. The levels of fair value measurement are determined as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The Group's contract receivable at 28 February 2021 is recorded at fair value through profit or loss and fair valued based on the estimated forward prices that will apply under the terms of the sales contracts on the product reaching the port of destination. The trade receivables fair value reflects amounts receivable from the customer adjusted for forward prices expected to be realised.
The forward price is based on the LME 3-month tin price as at 28 February 2021. Given the short period to final pricing, the time value of money is not considered to be significant.
Fair value of this trade receivable at fair value through profit or loss is categorized at Level 1. During the year there were no transfers between levels of fair value hierarchy.
The Group holds the following financial liabilities:
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Measured at amortised cost: |
|
|
|
|
|
|
Trade and other payables |
|
1 484 482 |
|
|
894 830 |
|
Borrowings |
|
3 869 489 |
|
|
1 230 961 |
|
Lease liability |
|
386 077 |
|
|
223 673 |
|
Total financial liabilities |
|
5 740 048 |
|
|
2 349 464 |
Maturity analysis of the contractual undiscounted cashflows:
|
|
Up to 3 months |
Between 3 and 12 months |
Between 1 and 2 years |
Between 2 and 5 years |
Total |
|
Trade and other payables |
1 484 482 |
- |
- |
- |
1 484 482 |
|
Borrowings |
2 159 242 |
1 710 247 |
- |
- |
3 869 489 |
|
Lease Liability |
29 834 |
95 730 |
128 066 |
132 447 |
386 077 |
|
|
3 673 558 |
1 805 977 |
128 066 |
132 447 |
5 740 048 |
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The Board receives reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:
Credit risk
The Group's principal financial assets are bank balances and trade and other receivables.
Credit risk arises principally from the Group's cash balances. Credit risk is the risk that the counterparty fails to repay its obligation to the Group in respect of amounts owed. The Group gives careful consideration to which organisations it uses for its banking services in order to minimize credit risk. Credit risk relating to other receivables is minimal.
The concentration of the Group's credit risk is considered by counterparty, geography and by currency. The Group has split its cash reserves across multiple banks in an effort to mitigate credit risk. The Pound Sterling and US Dollar accounts are held with a bank in Mauritius which has a rating of Baa1(Moody's), the Rand account is held with a bank in South Africa which has a rating of Ba2 (Moody's), and the Namibian Dollar account is held with a bank in Namibia with a rating of Ba3 (Moody's). While the credit ratings of the countries in which the cash is held have been downgraded during the year, the banks chosen remain stable and do not present any further risks.
The concentration of credit risk was as follows:
|
|
28 February 2021 £ |
|
29 February 2020 £ |
||
|
Currency |
|
|
|
|
|
|
Sterling |
|
666 236 |
|
|
284 958 |
|
USD |
|
551 832 |
|
|
132 |
|
South African Rand |
|
119 976 |
|
|
48 887 |
|
Namibian Dollars |
|
13 156 |
|
|
240 623 |
|
|
|
1 351 200 |
|
|
574 600 |
Please refer to note 14 for the concentration of credit risk relating to trade receivables.
At 28 February 2021, the Group held no collateral as security against any financial asset. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents the Group's maximum exposure to credit risk without taking account of the value of any collateral obtained. The Group applies IFRS 9 to measure expected credit losses for receivables and these are regularly monitored and assessed. There has been no impairment of financial assets during the year. Management considers the above measures to be sufficient to control the credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Board manages liquidity risk by regularly reviewing the Group's gearing levels, cash-flow projections and associated headroom and ensuring that excess banking facilities are available for future use.
The Group maintains good relationships with its banks and its cash requirements are anticipated via the budgetary process. At 28 February 2021, the Group had £1 351 200 (2020: £574 600) of cash reserves.
Market risk
The Group's activities expose it primarily to the financial risk of changes in commodity prices, foreign currency exchange rates and interest rates.
Interest rate risk
The Group was exposed to minimal interest rate risk during the year. For this reason, no sensitivity analysis has been performed regarding interest rate risk.
Foreign exchange risk
The Group has foreign currency denominated assets and liabilities. Exposure to exchange rate fluctuations therefore arise. The carrying amount of the Group's foreign currency denominated monetary assets and liabilities, all in Pound Sterling, are shown below.
|
|
Year ended 28 February 2021 £ |
|
Year ended 29 February 2020 £ |
||
|
Cash and cash equivalents |
|
684 964 |
|
|
289 642 |
|
Other receivables |
|
1 137 272 |
|
|
88 274 |
|
Trade and other payables |
|
(1 417 873) |
|
|
(788 750) |
|
Borrowings |
|
(1 710 247) |
|
|
(1 230 961) |
|
|
|
(1 305 884) |
|
|
(1 641 795) |
The Group is exposed to a level of foreign currency risk. Due to the minimal level of foreign exchange transactions, the Directors currently believe the foreign currency risk is at an acceptable level.
The Group does not enter into any derivative financial instruments to manage its exposure to foreign currency risk.
The following table details the Group's sensitivity to a 10% increase and decrease in the Pound Sterling against the Rand and the Namibian Dollar. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of the reasonable possible change in foreign currency rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 10% change in foreign currency rates.
|
|
Rand denominated monetary items £ |
Rand currency impact Strengthening £ |
Rand currency impact Weakening £ |
|||
|
Assets |
|
199 863 |
|
219 849 |
|
179 877 |
|
Liabilities |
|
(232 071) |
|
(255 278) |
|
(208 864) |
|
|
|
(32 208) |
|
(35 429) |
|
(28 987) |
|
|
||||||
|
|
Namibian dollar denominated monetary items £ |
Namibian dollar currency impact Strengthening £ |
Namibian dollar currency impact Weakening £ |
|||
|
Assets |
|
442 975 |
|
487 273 |
|
398 678 |
|
Liabilities |
|
(2 896 049) |
|
(3 185 654) |
|
(2 606 444) |
|
|
|
(2 453 074) |
|
(2 698 381) |
|
(2 207 767) |
25. Events after balance sheet date
Exercise of warrants
On 22 April 2021, notice was received from warrant holders to exercise 1 186 666 warrants at an exercise price of 4.5 pence and 500 000 warrants at an exercise price of 1.95 pence.
Equity Fundraising
On 12 May 2021, £13 million (before expenses) was raised by way of a private placement. 216 666 667 ordinary shares of no-par value in the company at a price of 6 pence per share were issued.
Settlement of convertible loan notes
On 25 May 2021, the remaining £2.2m of the 3.8m 2019 convertible loan notes was settled. £0.759m of the outstanding amount was settled through the issuing of 18 963 699 ordinary shares of no par value in the Company at a conversion price of 4 pence per ordinary share and the remaining portion totalling 1.8m (including 0.328m of accrued interest) was redeemed in cash.
Settlement of loan notes
On 25 May 2021, the 2020 loan note facility of 2.05m and associated interest of 0.216m was settled in full in cash.
Issue of shares
On 25 May 2021, 327 868 ordinary shares of no-par value were issued in lieu of broker fees at a price of 6 pence.
26. Related-party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
Goldiblox Pty Limited ("Goldiblox") is a related party due to Frans van Daalen, key management personnel of AfriTin Mining Limited being a 50% shareholder of Goldiblox. During the prior year, the Group acquired a DMS plant from Goldiblox for £155 678. There were no transactions during the current year. At year end, the Group did not owe Goldiblox any funds (2020: nil).
Bushveld Minerals Limited ("Bushveld") is a related party due to Anthony Viljoen, Chief Executive Officer, being a Non-Executive Director on the Bushveld Board. During the period, Bushveld charged the Group £82 423 (2020: £85 596) for the use of office space. At period end, the Group owed Bushveld £112 962 (2020: £71 762). Furthermore, Bushveld provide suretyship of N$30m (approx £1.42m) as collateral for the Nedbank Namibia working capital facility.
The remuneration of the key management personnel of the Group, which includes the Directors, Frans van Daalen and Robert Sewell, is set out below.
|
28 February 2021 |
Share Option Charge £ |
Shares Issued in Relation to Director Fees/Salary £ |
Shares Issued in Relation to Bonus £ |
Director Fees/ Salary £ |
Other Fees £ |
Total £ |
|||||||
|
Non-Executive Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Glen Parsons (Chairman) |
|
10 893 |
|
40 000 |
|
- |
|
- |
|
- |
|
50 893 |
|
|
Terence Goodlace |
|
10 761 |
|
- |
|
- |
|
28 750 |
|
- |
|
39 511 |
|
|
Laurence Robb |
|
10 761 |
|
13 000 |
|
- |
|
12 000 |
|
- |
|
35 761 |
|
|
Roger Williams (resigned 28 September 2020) |
|
10 761 |
|
- |
|
- |
|
14 583 |
|
- |
|
25 344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Director |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony Viljoen (Chief Executive Officer) |
|
26 090 |
|
17 365 |
|
128 868 |
|
116 781 |
|
- |
|
289 104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other key management personnel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Sewell (Chief Financial Officer) |
|
19 599 |
|
- |
|
65 919 |
|
86 745 |
|
- |
|
172 263 |
|
|
Frans van Daalen (Chief Operating Officer) |
|
22 099 |
|
- |
|
81 178 |
|
112 322 |
|
- |
|
215 599 |
|
|
|
|
110 964 |
|
70 365 |
|
275 965 |
|
371 181 |
|
- |
|
828 475 |
|
|
29 February 2020 |
Share Option Charge £ |
Shares Issued in Relation to Director Fees/Salary £ |
Shares Issued in Relation to Bonus £ |
Director Fees/ Salary £ |
Other Fees £ |
|
Total £ |
|||||
|
Non-Executive Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
Glen Parsons (Chairman) |
|
17 626 |
|
40 000 |
|
- |
|
- |
|
- |
|
57 626 |
|
Terence Goodlace |
|
15 471 |
|
- |
|
- |
|
28 772 |
|
- |
|
44 243 |
|
Laurence Robb |
|
15 471 |
|
13 000 |
|
- |
|
12 000 |
|
22 000 |
|
62 471 |
|
Roger Williams |
|
15 471 |
|
25 000 |
|
- |
|
- |
|
- |
|
40 471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Director |
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony Viljoen (Chief Executive Officer) |
|
41 440 |
|
23 841 |
|
- |
|
125 650 |
|
- |
|
190 932 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other key management personnel |
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Sewell (Chief Financial Officer) |
|
43 078 |
|
55 147 |
|
- |
|
87 257 |
|
- |
|
185 482 |
|
Frans van Daalen (Chief Operating Officer) |
|
68 944 |
|
10 994 |
|
- |
|
114 656 |
|
- |
|
194 594 |
|
|
|
217 501 |
|
167 983 |
|
- |
|
368 335 |
|
22 000 |
|
775 819 |
27. Reserves within equity
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Convertible loan note reserve
The convertible loan note reserve represents net proceeds on outstanding convertible loan notes.
On 26 November 2019, the Group raised £3.8m through the issuing of convertible loan notes which mature in May 2021. The instruments entitle the holders to a 10% coupon. Under the terms of the instrument the Group can elect to settle the loan note into a fixed number of shares at a 4 pence conversion rate. The Group can elect to redeem the loan notes early in cash at a premium of 10%. As there is no obligation to settle in cash the loan notes have been accounted for in equity as an increase in the convertible loan note reserve.
Warrant reserve
The warrant reserve represents the cumulative charge to date in respect of unexercised share warrants at the balance sheet date.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge to date in respect of unexercised share options at the balance sheet date as well as fees/salaries owed to directors/employees to be settled through the issuing of shares.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of entities with a functional currency other than Pound Sterling.
Retained earnings/accumulated deficit
The retained earnings/accumulated deficit represents the cumulative profit and loss net of distribution to owners.
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