Final Results for the Year Ended 30 June 2017

RNS Number : 3779E

Kennedy Ventures PLC

09 February 2018

 



 9 February 2018

Kennedy Ventures plc

Kennedy Ventures plc

Final Results for the Year Ended 30 June 2017

Kennedy Ventures plc ("Kennedy Ventures" or "the Company), the AIM quoted investment company, who through its stake in African Tantalum (Pty) Limited ("Aftan") has an interest in the Namibia Tantalite Investment Mine ("NTI" or "the Mine") in Namibia, is pleased to announce its audited final results for the full year ended 30 June 2017 ("the Period").

Highlights

Operational

·    Appointment of Larry F. Johnson as Chief Executive Officer in January 2017

·    Successful visit to the Mine by a global North American leading consumer and end user of tantalum (the "Customer") as well as Namibian government officials in March 2017. This resulted in, Post Period, the signing of a multiyear supply agreement with the Customer

·    To ensure long term value creation in line with the Customer's requirements, Aftan initiated a plant upgrade programme. The programme was designed to improve the overall performance of the Mine, generate improved utilisation rates, improve recovery rates and to produce higher quality tantalum shipments

·    Improved mining face availability and flexibility in ore sourcing as a direct result of more consistent blasting and the generation of new adits in line with the mine plan under a new explosive programme

Financial

At 30 June 2017:

·    Successfully raised a total of £3.25 million in two separate placings in July 2016 and January 2017, the proceeds of which were used to upgrade the plant and operation

·    The group's loss for the year amounted to £1.1 million  

·    Cash at bank amounted to approximately £364k and, in addition to the investment in the Mine, property plant & equipment and other intangible assets amounted in aggregate to £2.55 million

·    Overall Net Assets at 30 June 2017 amounted to £3.54 million, up from 30 June 2016 balance of £1.41 million

Post Period

·    Successfully raised £3.75 million in July 2017 through a placing with the net proceeds being used on further upgrades and execution of drilling programme

·    Positive cost savings were achieved by reducing variable cost contracts in bulk diesel, security, safety and transportation, working extensively with local Namibian vendors as well as with local governments while increasing logistic efficiencies using both air and ocean shipments

·    Third and fourth shipments sent to the Customer with further shipments due in line with planned ramp up schedule

·    Initial discussions with a second and third potential customer

Outlook

·    Continued positive progress in extracting the full value from our interest in Aftan

·    Continued core drilling over total mineralisation

·    Further shipments to the Customer as Aftan continues to work to meet the production ramp up schedule

·    Continued discussions with potential additional customers

·    The Company intends to continue to consider further growth opportunities in line with our investing policy

The Company is pleased to advise that, Aftan has strengthened its finance function with the appointment of John Fahy as Interim Chief Financial Officer.  John joins Aftan with 40 years of cross-sector experience, most recently as Managing Director of Nampak, the largest packaging company in South Africa. John has held various financial auditing consulting positions and was also a Director and Owner of National Spice Group which was later sold to the Bidvest Group.

Additionally, Kennedy Ventures is at an advanced stage in the appointment of a Technical Director to the Board and looks forward to updating shareholders with further details in due course.

In line with the Company's evolution, we are proposing to change the Company's name to Kazera Global plc and will seek to ratify this at the next AGM which will take place at [TIME] on 5 March 2018 at the offices of Camarco, 107 Cheapside, London, EC2V 6DN. The Board has also decided to adopt a new investing policy which better reflects the directors' focus on resource ventures in Africa. The Board has a wealth of experience across the continent and, following the successful ramp up of operations at NTI, is confident that the Company can access further opportunities in a range of commodities.

Larry Johnson, Chief Executive Officer of Kennedy, said:

"Aftan, with Kennedy's supervision, has taken significant positive strides during the Period. Developing the relationship with the leading global end user and subsequently signing a multiyear supply agreement is a major milestone and, this, accompanied by the successful upgrade of the plant, ensured that the Mine started to deliver some of the highest quality tantalum in the world.

Important work was also carried out with Namibian authorities, developing strong, long term relationships that has resulted in employing extended working shifts.

It is an exciting time for the Company as Aftan continues to ramp up production and meet the world class quality requirements of the Customer and the board and I would like to sincerely thank our shareholders for their patience and continued support. We look forward to the rest of 2018 with confidence."

Posting of accounts

The Report and Accounts for the period ended 30th June 2017 will shortly be available on the Group's website and will be sent to registered shareholders by post shortly together with notice of the Group's AGM.

For further information on the Company, visit: www.kvplc.com:

Kennedy Ventures plc (c/o Camarco)
Larry Johnson (CEO)	Tel: [phone]
finnCap (Nominated Adviser and Joint Broker) Christopher Raggett / Scott Mathieson / Anthony Adams (corporate finance) Simon Johnson (corporate broking)	Tel: [phone]
Shore Capital (Joint Broker) Mark Percy / Toby Gibbs (corporate finance) Jerry Keen (corporate broking)	Tel: [phone]
Camarco (PR) Gordon Poole / James Crothers / Monique Perks	Tel: [phone]

CEO STATEMENT

YEAR TO 30 June 2017

The Period, and the months following to date, have seen significant changes at the operational level at the Mine which have reshaped and refocussed deliverables of our world class, high grade product.

The potential of the Mine and wider licence package is significant, and was a fundamental reason for my joining Kennedy Ventures as CEO in January 2017. My initial focus was to realise this potential through significant plant upgrades; optimising the operation to enable the production of world class grade product that would facilitate the negotiation and execution of a multiyear supply agreement with an end user. Following a visit to the site in May 2017, a multiyear supply agreement was signed post period with a North American leading tantalum consumer and end user, guaranteeing ongoing production purchase and protecting against market volatility.

With the support of our shareholders we successfully raised funds of £3.25 million in two separate placings in July 2016 and January 2017 leading to a series of personnel and equipment site upgrades as well as the implementation of new controls and quality management systems, resulting in improved efficiencies at the plant and quality output of our product. These upgrades included installation and refurbishment of new crushers, new conveyors, multiple James tables, thickener installation and new water management systems. Aftan has also implemented a new explosives programme with more consistent blasting and the generation of new adits, which has resulted in improved mining face availability and flexibility. Moreover, Aftan has improved fixed costs and working capital by driving out upfront cash payments and sourcing fixed price agreements while working towards more localisation within Namibia.

These plant improvements have resulted in our shipments being of very high quality ensuring Aftan can consistently deliver shipments of the required high grade 48% Ta₂O₅, one of the highest grades reported from Tantalum mines globally.

The tantalum market, by its very nature, is opaque but what we are seeing is an increase in global demand for high quality, high grade, conflict free tantalum which Aftan supplies. Accordingly, Kennedy is in discussions with additional consumers, one of which has already conducted a physical audit of the Mine and discussions have begun on potentially supplying multiple minerals found in the mine.

Financials

The Company has cash and cash equivalents of approximately £364k at the end of the Period compared to £60k in 2016 and has net assets of £3,537k compared to £1,405k in 2016. The group recorded a loss before tax of £1,098k compared to £788k in 2016. The Company does not plan to pay a dividend for the twelve months to 30 June 2017. Post Period, the Company completed an additional fundraise, raising gross proceeds of £3.75 million in July 2017 which are being used for further plant upgrades and execution of a new drilling program.

Outlook

As the Company looks to the future, and reflecting upon its Namibian roots, the Board will be recommending to shareholders at the AGM to change the name of Kennedy Ventures PLC to Kazera Global PLC, subject to ratification, to underline a new chapter for the Company. In addition to this, the Company will be amending its investing policy to reflect the directors focus on resource ventures in Africa. 

Larry F. Johnson

Chief Executive Officer

9 February 2018

Chairman Statement

Since Kennedy Ventures' initial investment in African Tantalum (Pty) Limited ("Aftan"), the mine has seen significant progress. Initially focusing on recommissioning the mine, the Namibia Tantalite Investment Mine ("NTI" or "the Mine") is now attracting the attention from global end-users of Tantalum and producing world leading grades of Tantalum shipments.

During the Period, the platform has been established for the Company to extract the inherent value from its investment in Aftan. In 2015, the Company's main aim was to facilitate the re-opening of the NTI mine and recommission the processing plant to extract the inherent and significant value from the NTI mine and surrounding ore bodies. Having successfully achieved this, and, since the appointment of Larry Johnson as CEO, the Company has now shifted focus to increasing the quality of its shipments in line with a multi-year supply agreement being agreed with the Customer. This change in strategy has had a direct impact on the Company which, during the Period, saw the Company booking its first sales from its shipment to the Customer of its high grade 48% Ta₂O₅, one of the highest grades reported from Tantalum mines globally, with further purchase orders having followed the first.

Post Period, the plant and Aftan continue to work hard to meet the shipments and the required Tantalite quality which our Customer demands.  The NTI mine has now progressed to a condition where it is attracting more interest, with a second potential customer having begun a thorough audit of the NTI mine in September 2017. As Aftan continues to meet these orders and attract world class Customers, the Company looks forward to updating shareholders on further progress being delivered at the mine and on further investments in line with Kennedy Ventures investment strategy. 

On behalf of the Board, I thank our fellow employees for their unwavering hard work and all the staff of Aftan and our shareholders for their continued support.

Giles Clarke

Chairman

9 February 2018

GROUP INCOME STATEMENT

		Notes	Year ended 30 June 2017 £'000	Year ended 30 June 2016 £'000
Administrative expenses
Administrative expenses			(1,098)	(788)
Operating loss and loss before tax		6	(1,098)	(788)
Taxation		9	-	-
Loss for the year and total comprehensive loss			(1,098)	(788)
Loss attributable to owners of the Company			(901)	(676)
Loss attributable to non-controlling interests			(197)	(112)
			(1,098)	(788)
Earnings per share attributable to owners of the Company
From continuing operations:
Basic and diluted (pence)		10	(0.5)p	(0.6)p

The accounting policies and notes form an integral part of these financial statements.

GROUP STATEMENT OF COMPREHENSIVE INCOME

		Year ended 30 June 2017 £'000	Year ended 30 June 2016 £'000
Loss for the year attributable to owners of the Company		(901)	(676)
Other comprehensive income:
Items that may be subsequently reclassified to profit and loss:
Exchange differences on translation of foreign operations		235	21
Other comprehensive income/(expense) for the period		235	21
Total comprehensive loss for the year attributable to equity holders of the parent		(666)	(655)

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company profit and loss account. The loss for the Parent Company for the year was £308,000 (2016: £341,000).

The accounting policies and notes are an integral part of these financial statements.

GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION

		GROUP			COMPANY
	Notes	2017 £'000	2016 £'000		2017 £'000	2016 £'000
Non-Current assets
Goodwill	11	588	571		-	-
Other intangible assets	12	1,891	674		-	-
Property, plant and equipment	13	655	466		-	-
Investment in subsidiaries	14	-	-		4,434	2,184
		3,134	1,711		4,434	2,184
Current assets
Trade and other receivables	15	174	70		19	38
Cash and cash equivalents	16	364	60		249	27
		538	130		268	65
Current liabilities
Trade and other payables	17	135	286		128	212
Short term borrowings	18	-	150		-	150
		135	436		128	362
Net assets		3,537	1,405		4,574	1,887
Equity
Share capital	19	1,890	1,084		1,890	1,084
Share premium account	19	11,314	9,125		11,314	9,125
Capital redemption reserve		2,077	2,077		2,077	2,077
Currency translation reserve		252	17		-	-
Retained earnings		(11,674)	(10,773)		(10,707)	(10,399)
Equity attributable to owners of the Company		3,859	1,530		4,574	1,887
Non-controlling interests		(322)	(125)		-	-
Total equity		3,537	1,405		4,574	1,887

These financial statements were approved by the Board of Directors on 9 February 2018.

Signed on behalf of the Board by:

Larry Johnson                                                                            Giles Clarke      

Director                                                                                                                  Director

Company number: 005697574

The accounting policies and notes form an integral part of these financial statements

GROUP STATEMENT OF CHANGES IN EQUITY

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Currency translation reserve £'000	Retained earnings £'000	Equity shareholders' funds £'000	Non-controlling interests £'000	Total £'000
Balance at 1 July 2015	763	7,849	2,077	(4)	(10,182)	503	143	646
Comprehensive income Loss for the year	-	-	-	-	(676)	(676)	(112)	(788)
Other comprehensive income	-	-	-	21	-	21	-	21
Total comprehensive income	-	-	-	21	(676)	(655)	(112)	(767)
Issue of share capital	321	1,276	-	-	-	1,597	-	1,597
Acquisition of subsidiary undertakings	-	-	-	-	-	-	(156)	(156)
Share cased payment expense	-	-	-	-	85	85	-	85
Balance at 30 June 2016	1,084	9,125	2,077	17	(10,773)	1,530	(125)	1,405
Comprehensive income Loss for the year	-	-	-	-	(901)	(901)	(197)	(1,098)
Other comprehensive income	-	-	-	235	-	235	-	235
Total comprehensive expense			-	235	(901)	(666)	(197)	(863)
Issue of share capital	806	2,189	-	-	-	2,995	-	2,995
Balance at 30 June 2017	1,890	11,314	2,077	252	(11,674)	3,859	(322)	3,537

The accounting policies and notes form an integral part of these financial statements.

COMPANY STATEMENT OF CHANGES IN EQUITY

	Share  capital	Share  Premium	Capital redemption reserve	Retained earnings	Total
	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2015	763	7,849	2,077	(10,143)	546
Loss for the financial period	-	-	-	(341)	(341)
Issue of share capital	321	1,276	-	-	1,597
Share based payment expense	-	-	-	85	85
Balance at 30 June 2016	1,084	9,125	2,077	(10,399)	1,887
Total comprehensive expense for the year	-	-	-	(308)	(308)
Issue of share capital	806	2,189	-	-	2,995
Balance at 30 June 2017	1,890	11,314	2,077	(10,707)	4,574

The accounting policies and notes form an integral part of these financial statements.  

GROUP AND COMPANY STATEMENTS OF CASH FLOWS

		GROUP			COMPANY
		Year ended 30 June 2017	Year ended 30 June 2016		Year ended 30 June 2017	Year ended 30 June 2016
	Notes	£'000	£'000		£'000	£'000
OPERATING ACTIVITIES
Net cash used in operating activities	23	(1,291)	(423)		(615)	(147)
INVESTING ACTIVITIES
Purchases of property, plant and equipment		(251)	(88)		-	-
Development costs		(1,217)	(664)		-	-
Advances to subsidiary undertakings		-	-		(2,008)	(1,306)
Acquisition of non-controlling interests		-	(336)		-	-
Acquisition of subsidiary undertakings		-	-		-	-
Net cash used in investing activities		(1,468)	(1,088)		(2,008)	(1,306)
FINANCING ACTIVITIES
Net proceeds from share issues		2,995	1,365		2,995	1,365
Loans from associates		-	108		-	108
Repayment of loans		(150)	-		(150)	-
Net cash from financing activities		2,845	1,473		2,845	1,473
Net (decrease)/increase in cash and cash equivalents		86	(38)		222	20
Exchange rate translation adjustment		218	72		-	-
Cash and cash equivalents at beginning of year		60	26		27	7
Cash and cash equivalents at end of year	16	364	60		249	27

The accounting policies and notes are an integral part of these financial statements.

NOTES TO THE GROUP FINANCIAL STATEMENTS

1	GENERAL INFORMATION
	Kennedy Ventures Plc is a company incorporated in the United Kingdom under the Companies Act 2006. The nature of the Group's operations and its principal activities are set out in the Strategic Report and the Directors' Report.
2	STATEMENT OF COMPLIANCE
	The financial statements have been prepared and approved by the Directors in accordance with all relevant IFRSs as issued by the International Accounting Standards Board ("IASB"), and interpretations issued by the IFRS Interpretations Committee, endorsed by the European Union ("EU").
	At the date of authorisation of this document, the following Standards and Interpretations, which have not been applied in these financial statements, were in issue, but not yet effective: ·           IFRS 9 Financial Instruments ·           IFRS 15 Revenue from Contracts with Customers ·           IFRS 16 Leases ·           IAS 27 (amendments) Equity Method in Separate Financial Statements The Directors anticipate that the adoption of the above Standards and Interpretations in future periods will have little or no impact on the financial statements of the Company when the relevant Standards come into effect for future reporting periods, although they have yet to complete their full assessment in relation to the impact of IFRS 9 and IFRS 15.
3	Accounting Policies
	The principal accounting policies adopted and applied in the preparation of the Group and Company Financial statements are set out below. These have been consistently applied to all the years presented unless otherwise stated:
	BASIS OF ACCOUNTING The consolidated financial statements have been prepared in accordance with applicable International Financial Reporting Standards ("IFRS") including standards and interpretations issued by both the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretation Committee ("IFRIC") as adopted and endorsed by the European Union ("EU"), further to IAS Regulation (EC 1606/2002). The consolidated financial statements have been prepared on the basis of historical cost.  Cost is based on the fair values of the consideration given in exchange for assets. In the application of IFRS management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of IFRS that have significant effects on the financial statements and estimates with a significant risk of material adjustment in the next year are disclosed, where applicable, in the relevant notes to the financial statements.
	GOING CONCERN The financial statements have been prepared on the going concern basis. The Directors have prepared cash flow forecasts to 31 March 2019, which show that the Company will have sufficient available cash resources to provide for its future requirements.  In preparing their forecasts the Directors have given due regard to the risks and uncertainties affecting the business as set out in the Strategic report. On this basis, the Directors have a reasonable expectation that the Company has adequate resources to continue operating for the foreseeable future.  For this reason they continue to adopt the going concern basis in preparing the Company's financial statements.
	BASIS OF CONSOLIDATION The Group's consolidated financial statements incorporate the financial statements of Kennedy Ventures Plc (the "Company") and entities controlled by the Company (its subsidiaries). Subsidiaries are entities over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights.  The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.  Subsidiaries are fully consolidated from the date on which control is transferred to the Group.  They are de-consolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.  Profits and losses resulting from inter-company transactions that are recognised in assets are also eliminated.  Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.
	BUSINESS COMBINATIONS The acquisition of subsidiaries is accounted for using the acquisition method under IFRS 3.  The acquisition method involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition.  On initial recognition the assets and liabilities of the subsidiary are included in the consolidated statement of financial position at their fair values, which are also used as the bases for subsequent measurement in accordance with the Group accounting policies.  Goodwill is stated after separating out identifiable intangible assets.  Goodwill represents the excess of the fair value of the consideration transferred over the fair value of the Group's share of the identifiable net assets of the acquired subsidiary at the date of acquisition.  Acquisition costs are expensed as incurred.
	GOODWILL Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition and is included as a non-current asset. Goodwill is tested annually, or more regularly should the need arise, for impairment and is carried at cost less accumulated impairment losses. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Goodwill is allocated to cash generating units for the purpose of impairment testing. On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal. In accordance with IAS 36 the Group values Goodwill at the lower of its carrying value or its recoverable amount, where the recoverable amount is the higher of the value if sold and its value in use.
	FOREIGN CURRENCIES The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency).  For the purpose of the Group financial statements, the results and financial position of each group company are expressed in Pounds Sterling, which is the functional currency of the Company, and the presentation currency for the Group financial statements. In preparing the financial statement of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.  At each year end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year end date.  Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.  Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement.  Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity.  For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. For the purpose of presenting Group financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the year end date.  Income and expense items are translated at the average exchange rates for the period.  Exchange differences arising are classified as equity and transferred to the Group's translation reserve.  Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.
	TAXATION The tax currently payable is based on taxable profit or loss for the period. Taxable profit or loss differs from net profit or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally 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. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
	DEVELOPMENT COSTS Development costs relate to expenditure incurred on the development and evaluation of mineral resources. These costs are recorded as intangible assets until the mineral resource reaches the production stage. Upon completion of development and commencement of production, capitalised development costs as well as evaluation expenditures are transferred to mining assets in property, plant and equipment and depreciated over the expected life of the mineral resource. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied: ·       completion of the intangible asset is technically feasible so that it will be available for use or sale ·       the Group intends to complete the intangible asset and use or sell it ·       the Group has the ability to use or sell the intangible asset ·       the intangible asset will generate probable future economic benefits ·       there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset, and ·       the expenditure attributable to the intangible asset during its development can be measured reliably. Other development expenditure that does not meet these criteria is recognised as an expense as incurred.  Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
	PROPERTY, PLANT AND EQUIPMENT Property, Plant and equipment are recorded at cost, less depreciation, less any amount of adjustments for impairment, if any. Significant improvements are capitalised, provided they qualify for recognition as assets. The costs of maintenance, repairs and minor improvements are expensed when incurred. Tangible assets, retired or withdrawn from service, are removed from the balance sheet together with the related accumulated depreciation. Any profit or loss resulting from such an operation is included in the income statement. Tangible and intangible assets are depreciated on the straight-line method based on their estimated useful lives from the time they are put into operation, so that their net cost is diminished over the lifetime of consideration to estimated residual value as follows: Land and buildings - Over 20 years Plant and equipment- Between 5 and 10 years
	IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS EXCLUDING GOODWILL Assets that have an indefinite useful life are not subject to amortisation but are reviewed for impairment annually and where there are indications that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the carrying value exceeds the recoverable amount.
	TRADE RECEIVABLES, LOANS AND OTHER RECEIVABLES Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets and are measured at amortised cost less an allowance for any uncollectible amounts. The net of these balances are classified as "trade and other receivables" in the balance sheet. Trade and other receivables are assessed for indicators of impairment at each balance sheet date and are impaired where there is objective evidence that the recovery of the receivable is in doubt. Objective evidence of impairment could include significant financial difficulty of the customer, default on payment terms or the customer going into liquidation. The carrying amount of trade and other receivables is reduced through the use of an allowance account. When a trade or other receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the income statement. Loans and receivables, as categorised above, are measured at amortised cost using the effective interest method less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
	CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash at bank and in hand, deposits at call with banks, other short-term highly liquid investments with original maturity at acquisition of three months or less that are readily convertible to cash, net of bank overdrafts. For the purpose of the cash flow statement, cash and cash equivalents consist of the definition outlined above.
	FINANCIAL LIABILITIES All non-derivative financial liabilities are classified as other financial liabilities and are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Other financial liabilities consist of borrowings and trade and other payables. Financial liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
	OTHER FINANCIAL LIABILTIES, BANK AND SHORT TERM BORROWINGS Other financial liabilities, as categorised above, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.  Other financial liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
	EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL Equity instruments consist of the Company's ordinary share capital and are recorded at the proceeds received, net of direct issue costs.
	SEGMENTAL ANALYSIS Under IFRS 8 operating segments are considered to be components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. The Company's chief operating decision maker is the Board of Directors. At present, and for the period under review, the Company's sole reporting segment is the tantalite mining operation in Namibia.
4	CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
	In the application of the Group's accounting policies, which are described in Note 3, the Directors are required to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The valuation of the options involves making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates.  These assumptions have been described in more detail in Note 20.  The estimates and assumptions could materially affect the Income Statement.
5	SEGMENTAL REPORTING
	The business consists of a single investment activity being the tantalite mining operation in Namibia.  As a result the segmental financial information is the same as that set out in the Statement of Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity and the Statement of Cash Flows.

6	OPERATING LOSS
		Year ended 30 June 2017  £'000	Year ended  30 June 2016  £'000
	Loss for the period has been arrived at after charging:
	Staff costs as per Note 8 below	311	406
	Auditors remuneration	20	20
	Depreciation of property, plant and equipment	62	17

7	AUDITORS' REMUNERATION
	The analysis of auditors' remuneration is as follows:

		Year ended 30 June 2017 £'000	Year ended 30 June 2016 £'000
	Fees payable to the Group's auditors for the audit of the Group's annual accounts	20	20
	Total audit fees	20	20
	Fees payable to the Group auditor and their associates for other services to the Group:
	Tax services	1	1
		21	21

8	staff costs
	The average monthly number of employees (including executive directors) for the continuing operations was:

		Year ended 30 June 2017 Number	Year ended 30 June 2016 Number
	Group total staff	100	100
		£'000	£'000
	Wages and salaries	277	194
	Share based payment in respect of exercise of options	-	112
	Other share base payment expense	-	85
	Social security costs	34	15
		311	406

	DIRECTORS' EMOLUMENTS
	An analysis of the directors' emoluments and pension entitlements and their interest in the share capital of the Company is contained in the Report of the Board on remuneration accompanying these financial statements.

9	TAXATION
		Year ended 30 June 2017 £'000	Year ended 30 June 2016 £'000
	Loss on continuing operations before tax	(1,098)	(788)
	Tax at the UK corporation tax rate of 19.75% (2016: 20%)	(217)	(158)
	Effects of:
	Expenses not deductible for tax purposes	5	8
	Unutilised tax losses carried forward	212	150
	Tax charge for period	-	-

The total taxation charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which the Group operates.

10	LOSS PER SHARE
	The calculation of basic loss per share is based on the following data:
		Year ended  30 June 2017	Year ended  30 June 2016
		£'000	£'000
	Loss for the year attributable to owners of the Company	(901)	(676)
	Weighted average number of ordinary shares in issue for basic and fully diluted earnings	177,144,947	104,756,967

	LOSS PER SHARE (PENCE PER SHARE)
	BASIC AND FULLY DILUTED:
	- from continuing and total operations	(0.5)	(0.6)

The Company has outstanding warrants and options as disclosed under Note 20 which may be dilutive in future periods.  The effect in respect of the current year would have been anti-dilutive (reducing the loss per share) and accordingly is not presented.

In addition the effect of the issue of ordinary shares shortly after year end, would also have been anti-dilutive, and accordingly is not considered. The issue however, may be dilutive in future periods.

11	GOODWILL
			2017	2016
	GROUP		£'000	£'000
	Balance brought forward		571	442
	Arising on acquisition of non-controlling interest		-	180
	Exchange translation difference		17	(51)
	Balance carried forward		588	571

The Directors have reviewed the carrying value of Goodwill at 30 June 2017 and consider that no impairment provision is required. The Impairment review involved calculating the NPV of the Group's cash generating assets. The NPV calculation involved using the discounted cash flow forecast model based on current and expected production results. As a result of carrying out this impairment testing review the Directors considered that there was no need for any impairment of the carrying value of the goodwill.

The Directors continue to review goodwill on an on-going basis and where necessary in future periods will request external valuations to further support the valuation basis.

12	OTHER INTANGIBLE ASSETS
		Development costs	Mining licences	Total
	GROUP	£'000	£'000	£'000
	At 1 July 2016	664	10	674
	Additions in year	1,217	-	1,217
	At 30 June 2017	1,881	10	1,891

13	PROPERTY, PLANT AND EQUIPMENT
		Land & buildings	Plant & machinery	Furniture & equipment	Total
	GROUP	£'000	£'000	£'000	£'000
	Cost
	At 1 July 2015	125	270	-	395
	Additions	-	51	37	88
	Cost at 30 June 2016	125	321	37	483
	Adjustment	-	64	(4)	60
	Additions	-	251	-	251
	Cost at 30 June 2017	125	636	33	794
	Depreciation
	At 1 July 2015	-	-	-	-
	Charge for the year	6	7	4	17
	Depreciation at 30 June 2016	6	7	4	17
	Adjustment	-	63	(3)	60
	Charge for the year	9	49	4	62
	Depreciation at 30 June 2017	15	119	5	139
	Net book value at 30 June 2017	110	517	28	655
	Net book value at 30 June 2016	119	314	33	466

14	INVESTMENT IN subsidiarY UNDERTAKINGS

The Company invests in its subsidiary and associated undertakings

	COMPANY		2017 £'000	2016 £'000
	Cost and net book value
	At 1 July		2,184	758
	Additional advances to African Tantalum (Pty) Ltd		2,008	1,306
	Intercompany loan interest		242	120
	As at 30 June		4,434	2,184

The intercompany loan to Aftan bears interest at 12% p.a. All principal subsidiaries of the Group are consolidated into the financial statements.  At 30 June 2017 the subsidiaries were as follows:

	Subsidiary undertakings		Country of registration	Principal activity	Holding	%
	African Tantalum (Pty) Ltd		Namibia	Intermediate holding company	Ordinary shares	75
	Namibia Tantalite Investments (Pty) Ltd	Namibia		Tantalite mining	Ordinary shares	100
	Tameka Shelf Company Four (Pty) Ltd	Namibia		Mining licence holder	Ordinary shares	100

The following table summarises the movement in the investments made by the Company in subsidiary undertakings, as above:

	COMPANY		2017 £'000	2016 £'000
	At 1 July		2,184	758
	Part capitalisation of loan to Aftan		550	500
	Increase in loan to Aftan		1,700	926
	As at 30 June		4,434	2,184

During the year approximately 25% of the intercompany loan was converted into shares in Aftan.

15	TRADE AND OTHER RECEIVABLES
		GROUP		COMPANY
		2017	2016	2017	2016
		£'000	£'000	£'000	£'000
	Other receivables	166	64	11	32
	Prepayments and accrued income	8	6	8	6
		174	70	19	38

The Directors consider the carrying amount of intercompany loans and other receivables approximates to their fair value.

16	CASH AND CASH EQUIVALENTS
		GROUP		COMPANY
		2017	2016	2017	2016
		£'000	£'000	£'000	£'000
	Cash and cash equivalents	364	60	249	27

Cash and cash equivalents (which are presented as a single class of asset on the face of the balance sheet) comprise cash at bank and other short term, highly liquid investments with a maturity of three months or less.

The Directors consider the carrying amount of cash and cash equivalents approximates to their fair value.

17	TRADE AND OTHER PAYABLES
		GROUP		COMPANY
		2017	2016	2017	2016
		£'000	£'000	£'000	£'000
	Trade payables	33	56	33	56
	Other payables	-	129	-	63
	Accruals	102	101	95	93
		135	286	128	212
	The Directors consider the carrying amount of trade payables approximates to their fair value.

18	SHORT TERM BORROWINGS
		GROUP		COMPANY
		2017	2016	2017	2016
		£'000	£'000	£'000	£'000
	Westleigh Investments Holdings Ltd loan	-	150	-	150
		-	150	-	150
	See Note 25, Related party transactions, for further details.

19	share capital AND SHARE PREMIUM

		Number of shares	Nominal value £'000	Share premium £'000
	ISSUED AND FULLY PAID:
	At 30 June 2015, shares of 1p each	76,309,748	763	7,849
	Share issue	32,151,791	321	1,351
	Share issue expenses	-	-	(75)
	At 30 June 2016, shares of 1p each	108,461,539	1,084	9,125
	Share issues	80,555,554	806	2,444
	Share issue expenses	-	-	(255)
	At 30 June 2017	189,017,093	1,890	11,314

Share issues On 20 July 2016, the Company issued 66,666,665 ordinary shares of 1p at 3p per share for cash in respect of a private placing. On 1 February 2017, the Company issued 13,888,889 ordinary shares of 1p at 9p per share for cash in respect of a private placing.

20	Share-based payments
	Equity-settled share option scheme The Company operates share-based payment arrangements to incentivise directors by the grant of share options. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. On 25 March 2014, the Board resolved to grant options over up to 8,531,760 new ordinary shares exercisable at 1.25p per share and granted 1,599,705 such options each to G Clarke and N Harrison.  On 16 July 2015, a further 1,599,705 such options were granted each to G Clarke and N Harrison, and 2,132,940 options were granted to former directors on the same terms.  The options are exercisable at any time up to 25 March 2018.
	The significant inputs to the model in respect of the options granted in July 2015 were as follows:
	Share price at date of grant Exercise price No. of share options Expected volatility Option life Risk free rate Calculated fair value per share			4.85 pence 1.25 pence 5,332,350 50% 2.7 years 2% 3.70 pence
	The total share-based payment expense recognised in the income statement for the year ended 30 June 2017 in respect of the share options granted was £Nil (2016: £197,000).
	Number of options at 1 July 2016	Issued in  the year	Exercised in the year	Number of options at 30 June 2017	Exercise price	Vesting Date	Expiry date
	5,332,350	-	-	5,332,350	1.25p	16.07.2015	25.03.2018
	5,332,350	-	-	5,332,350	1.25p

21	FINANCIAL INSTRUMENTS
	The Group's financial instruments comprise borrowings, cash and various items, such as trade receivables and trade payables that arise directly from its operations.  The main purpose of these financial instruments is to raise finance for the Group's operations.  FINANCIAL ASSETS BY CATEGORY The IAS 39 categories of financial assets included in the Statement of financial position and the headings in which they are included are as follows:
			2017	2016
			£'000	£'000
	Financial assets:
	Cash and cash equivalents		364	60
	Loans and receivables		166	64
			530	124

	FINANCIAL LIABILITIES BY CATEGORY The IAS 39 categories of financial liability included in the Statement of financial position and the headings in which they are included are as follows:
			2017	2016
			£'000	£'000
	Financial liabilities at amortised cost:
	Trade and other payables		33	185
	Short term borrowings		-	150
			33	335

The following table details the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.  The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest repayment date on which the Company can be required to pay.  The table includes both interest and principal cash flows.  To the extent that interest flows are floating rate, the undiscounted amount is derived from the interest rate curves at the balance sheet date.  The contractual maturity is based on the earliest date on which the Company may be required to pay.

		Less than 1 month	1-3 months	3 months to 1 year	1-5 years	Over 5 years
		£'000	£'000	£'000	£'000	£'000
	30 June 2017 Non-interest bearing:
	Trade and other payables	-	33	-	-	-
	Short term borrowings	-	-	-	-	-
	30 June 2016
	Non-interest bearing:
	Trade and other payables	-	185	-	-	-
	Short term borrowings	-	150	-	-	-

22	RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks which result from both its operating and investing activities.  The Group's risk management is coordinated by the Board of Directors, and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets. The main risks the Group are exposed to through its financial instruments and the operations of the Group are credit risk, foreign currency risk, liquidity risk and market price risk. These risks are managed by the Group's finance function together with the Board of Directors. Capital risk management The Group's objectives when managing capital are:  ·     to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;  ·     to support the Group's growth; and  ·     to provide capital for the purpose of strengthening the Group's risk management capability. The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

Credit risk The Company's principal financial assets are bank balances and cash and other receivables, which represent the Company's maximum exposure to credit risk in relation to financial assets. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.  The Group's maximum exposure to credit risk is £364,000 (2016: £60,000) comprising cash and cash equivalents. Liquidity risk Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through maintaining a positive cash balance and controlling expenses and commitments. The Directors are confident that adequate resources exist to finance current operations. Foreign Currency risk The Group undertakes transactions denominated in foreign currencies.  Hence, exposures to exchange rate fluctuations arise. Following the acquisition of African Tantalum (Pty) Ltd. Ltd, the Group's major activity is now in Namibia, bringing exposure to the exchange rate fluctuations of GBP/£ Sterling with the Namibian Dollar and South African Rand, the currencies in which  most of the operating costs are denominated.  At the year end the value of assets denominated in these currencies was such that the resulting exposure to exchange rate fluctuations was not material to the Group's operations.  Going forwards the Group is exposed to the US$ as it has entered into an off-take agreement for the major part of its production, priced in US$.  Exchange rate exposures are managed within approved policy parameters. The Group has not entered into forward exchange contracts to mitigate the exposure to foreign currency risk.  The Directors consider the assets most susceptible to foreign currency movements to be the Investment in Subsidiaries.  Although these investments are denominated in Namibian Dollars their value is dependent on the global market value of the available Tantalite resources. Market Price risk Going forwards the Group's exposure to market price risk mainly arises from potential movements in the market price of Tantalite.  The Group is managing this price risk by completing a fixed price off-take agreement in respect of the major part of its planned production.

23	NOTES TO THE CASHFLOW STATEMENT
		GROUP		COMPANY
		2017	2016	2017	2016
		£'000	£'000	£'000	£'000
	Operating loss	(1,098)	(788)	(308)	(341)
	Depreciation and amortisation	62	17	-	-
	Share based payment expense	-	197	-	197
	Shares issued in settlement of fees	-	20	-	20
	Intercompany loan interest	-	-	(242)	(120)
	Operating cash flows before movement in working capital	(1,036)	(554)	(550)	(244)
	(Increase)/decrease in receivables	(104)	(57)	19	(28)
	(Decrease)/increase in payables	(151)	188	(84)	125
	Net cash used in operating activities	(1,291)	(423)	(615)	(147)

24

EVENTS AFTER THE REPORTING PERIOD

On 27 July 2017 the Company announced that it had conditionally raised £3.75m before expenses through the placing of 62,500,000 new ordinary shares in the Company at a price of 6p per share. The net proceeds of the placing will be used by African Tantalum (PTY) Limited ("Aftan"), Kennedy Ventures' investee company, for upgrades and expansion of the Namibia Tantalite Investments mine in order to fulfil increasing demand, in addition to drilling and bulk sampling to establish JORC lithium resource and extension to the life of the NTI mine. The upgrade and expansion of the mine will support the multiyear supply agreement signed with a global North American leading tantalum consumer and end user of the Company's tantalum ore. On 17 August 2017, the Company granted 10,000,000 options to L Johnson, exercisable at 6p per share and vesting over a 3 year period.

25

RELATED PARTY TRANSACTIONS

The remuneration of the Directors, who are the key management personnel of the Company, is set out in the report of the Board on remuneration accompanying these financial statements. During the year Westleigh Investment Holdings Ltd ("WIHL") received £48,000 (2016: £48,000) in respect of accounting, administration and office accommodation services provided to the Company.  WIHL is a substantial shareholder in the Company and is controlled by Giles Clarke and Nick Harrison through their holdings of 73.28% and 26.72% respectively. There have been no other material transactions with related parties.

26	OPERATING LEASES
	The Group has an operating lease over the land for which it has a mining licence which endures until the mining operations permanently cease.  The rent is approximately £150 per annum.

27	CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
	There were no capital commitments authorised by the Directors or contracted for at 30 June 2017 (2016: £nil).

28	ULTIMATE CONTROLLING PARTY
	The Directors do not consider there to be one single ultimate controlling party.

 

END

 

 

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