FY2022 Results, Corporate Update & AGM Notice
16 March 2023
Kazera Global plc ("Kazera" or "the Company")
2022 Full Year Results , Corporate Update and Notice of AGM
Kazera Global plc, the AIM-quoted investment company, is pleased to announce its results for the year ended 30 June 2022 (the "Results") ("Financial Year 2022" or "FY2022"), which will be sent to shareholders today and are available on the Company's website, at www.kazeraglobal.com . The Company is also pleased to provide an update on key corporate developments and Notice of its Annual General Meeting .
Trading in the Company's ordinary shares (the "Ordinary Shares") will resume on the AIM Market of the London Stock Exchange at 7 . 3 0 a.m. today.
The Company is currently preparing its unaudited interim results for the six months ended 31 December 2022 , which it expects to publish no later than 31 March 2023 .
CORPORATE UPDATE
Highlights
· New Strategic shareholder, African Mineral Sands Pte Ltd Singapore ("AMS"), with extensive experience in mining and infrastructure projects in Southern Africa to acquire up to 29.9% the Company's existing Ordinary Shares from an existing shareholder, at a 53% premium to the price per Ordinary Share immediately prior to the suspension of their trading on AIM
· Total received to date of US $ 2,347,834 , with a Proof of Payment for a further US$687,500, from Hebei Xinjian Construction ("Xinjian") re the sale of African Tantalum (Pty) Ltd in Namibia ("Aftan"), which is on track to complete December 2023
· New equipment ordered at Walviskop Heavy Mineral Sands Project to allow for ilmenite and garnet extraction/sale and license area moved 100 metres to incorporate self-replenishing surf-zone
· New plant completed at Deep Blue Minerals' diamond mining operation and new mining blocks granted to give access to a further 28,000 carats of diamonds
· Buru Hills acquisition ceased at nil cash cost to focus on Walviskop Heavy Mineral Sands Project
· The Company has today launched its new website
Dennis Edmonds, Kazera Chief Executive Officer, commented: "The last two months have been very productive operationally for Kazera. Our team in South Africa has made a fantastic effort in building, essentially from scratch and with initially limited financial resources, a diamond gravel processing plant that equals the capacity of our neighbour Alexkor. It is also fantastic to be able to make the commitment of buying equipment that sees the generation of real profits from the sale of Heavy Mineral Sands on the near horizon.
"Perhaps the most exciting development is the addition of AMS as a strategic shareholder in Kazera. AMS recognises the value of our current projects and has a number of ideas which could lead to major growth and investment opportunities within the next year. I am delighted to welcome AMS as the Company's single largest shareholder and look forward to working with its team as we drive the business forward."
New Strategic Shareholder
The Company has been advised that African Mineral Sands Pte Ltd Singapore ("AMS") has entered into a binding agreement to purchase the entire shareholding of Catalyse Research Ltd (formerly Align Research Investments Ltd) and its related parties , including R S & C A Jennings and Align Research Ltd . Pursuant to this transaction, AMS will purchase up to 280 million Ordinary Shares (representing up to 29.9 per cent . of the Ordinary Shares currently in issue), at a price of 1.5p per Ordinary Share; this is a premium of 53% to the price per Ordinary Share immediately prior to the suspension of their trading on AIM. The Company has been advised that the purchase will take place in a series of tranches during 2023, with all voting rights passing to the purchaser on payment of the first tranche.
AMS and its associated partners have extensive experience in mining and infrastructure projects in Southern Africa and the Company believes the addition of AMS as a strategic investor is a positive development , which will provide Kazera with new opportunities for growth and development. In particular, AMS and its partners have been investors and offtake partners in the Heavy Mineral Sands ("HMS") business over the past five years.
Further Payment from Xinjian
Since its announcement of 28 February 2023, the Company has received a series of payments totalling US $ 112,800 with a Proof of Payment for US$687,500 from Hebei Xinjian Construction ("Xinjian") towards its purchase of Kazera's interest in African Tantalum in Namibia; this brings the aggregate amount received to date to US $ 2,347,834 , with an additional USD687,500 about to be received .
Under the terms of the agreement announced on 20 December 2022, Xinjian was due to have paid an aggregate of US $ 3,642,207 by the end of January with the balance of US $ 9,357,793 payable in equal monthly instalments commencing in April 2023 and completing in December 2023.
The Company believes that Xinjian is doing all that it can to make payments and is acting in good faith but has been experiencing administrative issues from within China . The Company is therefore n ot currently exercising its contractual rights regarding Xinjian's non-compliance with the timeline set out in the agreement and, in so doing, is providing Xinjian further time with which to make the necessary payments . The outstanding balances are however accruing interest at a rate of 8% per annum.
Under the terms of the sale agreement with Xinjian, Kazera retains ownership of 100% of the shares in Aftan as security until all amounts owing by Xinjian have been paid in full. Furthermore, all ongoing operation costs in respect of the Aftan business since the beginning of the year are borne by Xinjan.
Whale Head Minerals ("WHM") (60% interest)
The Company is pleased to confirm that it has placed an order for the manufacture of equipment to undertake the separation of HMS at WHM's Walviskop Heavy Mineral Sands Project within the vicinity of Alexander Bay/Port Nolloth, South Africa. The equipment, expected to be delivered in approximately four months, will allow the Company to sell Ilmenite and Garnet as separate HMS components, which will attract higher value than a bulk product. It is anticipated that the introduction of this equipment will lead to the production of product exceeding a purity of 80%, for which there is a ready market. Consequently, the Company is in active discussions with several prospective purchasers for these products. In the interim, the Company is introducing a double-deck 500-micron screen with a view to accelerating production of the separated HMS product. The Company is currently building up stockpiles of HMS whilst identifying a site to dry material away from the moisture and dust of the coast.
The initial mine permit area applied for by WHM and accepted by the Department of Mineral Resources and Energy has been moved circa 100 m etres to the west due to conflicts identified with the original permit coordinates. This has resulted in the Mine Permit now being in the surf zone of the bay and not largely on the beach. The resource volume for the new offshore permit location estimated by CREO Design (PTY) LTD, which undertook the initial competent persons report and resource estimate, is determined to be comparable in volume to the initial volume estimate for the onshore area but at a grade of 49.9% total heavy minerals compared to the 62% total heavy minerals on the beach area. This can be explained by the wind playing a significant role in removing light sand grains from the beach and so enriching the heavy mineral deposited there. However, a major benefit of the permits being moved is that wave action is constantly renewing the resource and rehabilitating the mine site. This means that current volumes in situ are largely irrelevant as what is mined is naturally replenished. Furthermore, initial testing has confirmed that the planned separation plant will upgrade the material from 49.9% to in excess of 80%, which will be directly saleable and is believed to be one of the highest grades in the world.
The mining method used in the WHM permit area will remain a dredging operation as originally planned. With the entire resource being submerged, a further advantage of the movement of the permit area is that dredge mining can take place unhindered and at a higher rate, resulting in higher production levels at lower unit cost per ton mined. This means the new moved mine permits have the potential of outperforming the original heavy mineral production volumes of mining on the beach.
Deep Blue Minerals (60% interest)
The Company has completed development of the new plant at Deep Blue Minerals' diamond project in Alexander Bay and can independently process similar volumes of gravel as were previously being processed at the Muisvlak plant. The new plant is also capable of processing gravel containing high quantities of HMS, and stockpiles of mined gravel are now being processed.
Furthermore, through its close association with the Richtersveld community, the Company has gained access to new mining blocks, tripling the area available for mining and giving it access to a further 28,000 carats of diamonds.
Buru Hills
In light of delays in obtaining licenses at Buru Hills and a desire to focus on bringing WHM's Walviskop Heavy Mineral Sands Project into full production, the Company has elected to not proceed with the proposed acquisition of the 71% interest in Great Lakes Graphite (PTY) Ltd. There was nil cash cost to the Company in this regard.
NOTICE OF ANNUAL GENERAL MEETING
The Company has today published a notice convening an annual general meeting ("AGM") of the Company to be held at 12:30 on 26 April 2023, at the offices of finnCap, 1 Bartholomew Close, London EC1A 7BL. The notice of AGM is available on the Company's website, at www.kazeraglobal.com .
RESULTS FOR THE YEAR ENDED 30 JUNE 2022
Chairman's Statement
Review of the Period
Joining the team at Kazera Global this year has been an exciting prospect, with all the Company's assets on the verge of becoming cash flow positive. The Company has made significant progress over the past year in building the infrastructure on its various projects to move them to production. We are on track to both production and revenue, generating significant cash inflows during the year ending 30 June 2023; this work is described further in the Chief Executive Officers review on page 3.
Kazera has performed well in what has been a turbulent year globally, and over the period Kazera has delivered growth both organically and inorganically.
The potential acquisition of a 71% interest in Great Lakes Graphite, Kenya Rare Earth projects, announced in June, was a significant potential step forward into further diversifying the Company's portfolio, maximising shareholder value whilst minimising downside risk. Due to delays in obtaining the licence, and in light of the board's wish to focus on Whale Head Minerals' Heavy Mineral Sands project, the board has decided not to proceed with this transaction.
Post period end, the Company signed a definitive agreement to sell its 100% interest in African Tantalum (Pty) Limited to Hebei Xinjian Construction for cash consideration of US$13,000,000 in December 2022. Seizing opportunities such as this highlight the rigour and expertise of the team driving growth for the business and the profitable realisation of assets.
As well as realising capital value by the disposal of African Tantalum, Kazera has continued to drive organic growth through investment in its assets. The development of the diamond and HMS projects has been a clear example of the team's dedication to maximising growth through investment in a promising project, executing plans to develop the processing plant, driving potential production figures and cashflow for the mine and subsequently the Company.
In addition to my joining the Kazera Board, post-reporting period, the Company was also pleased to appoint Geoffrey Eyre as a Non-Executive Director in July 2022. Geoff, as an experienced finance professional with more than 17 years of experience in senior positions in the mining industry, is already making an impact as a great addition to the Board.
Outlook
We plan to continue to drive growth in the business both through organic and inorganic means, leaning on the expertise of the team to maximise the opportunities available to us. We will also be exploring ways in which to return to shareholders a substantial portion of the gains made.
As Kazera moves forward it is in a prime position to deliver a promising year for the business. With cash in hand and the growth in cashflow potential, the business will look to maximise shareholder value by continuing to reinvest, whether it be through further developing assets or through M&A transactions.
I would like to take this opportunity to thank the Kazera Board, management team, and all our employees as well as our advisors for their continued work and dedication.
Gerard Kisbey-Green
Chairman
Chief Executive Officer's Review
Overview
I am pleased to provide an update following a very strong period for Kazera Global Plc.
As the Company continues to progress towards generating significant cashflow I would like to thank all the team for their hard work throughout the year and in dealing with the aftershock of the COVID-19 pandemic.
Operations
Kazera has continued to build through organic growth, initially securing of a three-year tantalum off-take agreement that would support the Company's cashflow through until 31 December 2024. This deal was signed in September 2021 with Jiujiang Jinxin Nonferrous Metals Co Ltd at Tantalite Valley, Namibia. Post-period, in July 2022, the Company announced an agreement to secure a non-dilutive US$7.5 million investment in return for a 49% stake in the Company's marketing, sales and export subsidiary for all lithium production from the Tantalite Valley mine in Namibia. This deal was further improved when, in December 2022, the Company secured a deal to dispose of its entire interest in African Tantalum (Proprietary) Limited to Hebei Xinjian Construction for cash consideration of US$13,000,000. This second deal was the result of continued investment in the asset and its production capabilities including a processing plant refurbishment plan outlining a path to unlock significant cashflow potential from the asset once completed. Exploration work at the Tantalite Valley Mine also sampled high quality Lithium and Feldspar from the site which increased the attractiveness of the asset for potential buyers. The transaction is transformational for Kazera and represents a real milestone for the Company as the first realization of returns from an investment in line with our stated strategy as an investing company of building value in our investments whilst maintaining flexibility for opportunistic exit points. This strategic exit will also enable management to focus on our existing projects and further potential investments.
In September 2021, Kazera acquired 60% of Whale Head Minerals ("WHM"). This transaction offered Kazera exposure to the WHM application for a Mining Permit over a Heavy Mineral Sands ("HMS") project with a net present value ("NPV") of £150 million as calculated by independent consultancy company Creo Design (Pty) Limited based on expected production of circa 6,000 tons of HMS per month generating an estimated gross profit of in excess of $300,000 per month. Post-period, in August 2022, the Mining Permit was granted to WHM, enabling the Company to start building the HMS mine. This will place a substantial positive impact on the Company's profitability, and also holds potential to generate broader opportunities for Kazera in the Richtersveld where we are now focused on delivering production at Walviskop.
Following the WHM acquisition, the Group had a balance in respect of Mines Under Construction, which related to the acquisition of the subsidiaries, Aftan, Deep Blue and WHM, of £2,961k.
Throughout the period, the Group has been mining diamond gravel. Despite achieving over 1,000 carats in one cycle, the Group has, like all other contractors in the region, been hampered by the fact that the processing facility run by Alexkor at Muisvlak has not been operational. Without being able to process gravels, the Company was unable to sell diamonds. For a period, at Alexkor's request, the Group took over the running of the facility with operational success, but was forced to withdraw its assistance due to political and economic factors. Post-period the Group acquired the use of a pan plant and a jig which will enable it to bypass Muisvlak in its entirety and submit highly concentrated gravel only for final sorting. This is expected to have a major impact on cash flows before the end of the year.
Our path to profitability remains the Company's ultimate priority and in October 2021, Kazera established a new loan facility to allow the Company to draw down £250k to maximise the Company's growth potential. This facility provided the Company with a cash buffer to overcome any short-term cash issues which might otherwise have hindered its route to positive cash flow. In addition, the Company increased its borrowings from Westleigh Investment Holdings Limited ("WIHL"), a company controlled by Giles Clarke and Nick Harrison (who were at the time directors of the Company). At the end of the year, £199k remained outstanding to WIHL; this amount was repaid in full, in January 2023.
On 5 May 2022, the Company announced that it had raised £1 million by way of a placing of 100,000,000 new ordinary shares. Align Research Ltd converted £100,000 of its loan (as referred to in the previous paragraph) together with the interest thereon into 11,131,500 ordinary shares and Dennis Edmonds agreed to convert £50,000 of outstanding salary into 5,000,000 shares.
Outlook
As the business becomes cashflow positive, we intend to continue to deliver growth and value for our shareholders through reinvestment of the proceeds into resource definition and mining at our Deep Blue and WHM projects in South Africa.
In addition to our significant organic growth potential, the team at Kazera continues to seek to maximise value by evaluating potential M&A opportunities available to the business. In the event that a disposal of one of our assets took place we would look to making a distribution to shareholders. The Board is also actively investigating ways to distribute to shareholders a substantial portion of the proceeds received from the sale of assets.
Dennis Edmonds
Chief Executive Officer
Strategic Report
The Directors present their strategic report on the Group for the year ended 30 June 2022.
Principal Activity and Business Review
The principal activity of the Group is to act as an investor in the resources and energy sectors. The Group was focused on its Tantalite and Lithium projects in Namibia and its diamond and heavy Mineral Sands mine in South Africa; its projects in Namibia were disposed of post-period end. As of 30 June 2022, the Group was also in the process of undertaking due diligence into a Rare Earth Element exploration project in Kenya. The Group may be either an active investor and acquire control of a single company or it may acquire non-controlling shareholdings.
The Directors recommend that there is no dividend payment for the year ended 30 June 2022 (2021: nil).
The review of the period is contained within the Chairman's Statement.
The Chairman's Statement provides a balanced and comprehensive analysis of the future developments, performance and results of the Group during the period and of the balance sheet position of the Group at the end of that period in the context of the Group's current activities (which are set out in the CEO's report), taking into consideration the disposal of the Group's interest in Namibia post period end.
Investing Policy
Kazera Global plc (the "Company") seeks to achieve shareholder return primarily via capital appreciation through direct investments in companies and projects primarily in, but not limited to, Africa within the mining and resource sectors (the "Target Sectors") including traditional direct investments in securities and similar financial instruments including any combination of the following:
(a) equity securities (predominantly unlisted);
(b) isted and unlisted debt securities that may be rated or not rated (bonds, debt instruments, convertible bonds and bonds with warrants, fund-linked notes with a capital guarantee, loan facilities etc.); and
(c) hybrid instruments.
The Company may exploit a wide range of investment opportunities within the Target Sectors as they arise and, to this end, the Company has complete flexibility in selecting the specific investment and trading strategies that it sees fit in order to achieve its investment objective. In this regard, the Company may seek to gain Board representation and/or managerial control in its underlying investments if it deems to be the best way of generating value for shareholders.
Opportunities will be chosen through a careful selection process which will appraise both the fundamental factors specific to the opportunity as well as wider economic considerations. Typical factors that will be considered are the strength of management, the quality of the asset base, the investment's scale and growth potential, the commodity price outlook, any geopolitical concerns, the underlying financial position, future working capital requirements as well as potential exit routes. Investments may be in the form of buy-outs, controlling positions (whether initially or as a result of additional or follow-on investments) or strategic minority investments.
There is no fixed limit on the number of projects or companies into which the Company may invest, nor the proportion of the Company's gross assets that any investment may represent at any time.
No material change will be made to the Company's investing policy without the approval of shareholders.
Key Performance Indicators
The Group considers investment value and return on investment as its principal key performance indicators. This is monitored quarterly and reviewed at Board meetings. The Directors believe the return on investment to be a fair representation of business for the year. The Company has provided further finance to its subsidiaries.
|
Key Performance Indicator |
30 June 2022 £'000 |
30 June 2021 £'000 |
|
Investment 1 |
3,298 |
3,114 |
|
Return on investment 2 |
-61% |
-36% |
1 see investment in subsidiaries (Note 14)
2 Loss attributable to owners of the Company in the year divided by the Investment amount
Principal Risks and Uncertainties
The Group's business is to identify, make, manage and realise investments in accordance with the Group's stated investing policy. The Directors consider the following risks to be the most material or significant for the management of the business. These issues do not purport to be a complete list or explanation of all the risk factors facing the Group. In particular, the Group's performance may be affected by changes in the market and/or economic conditions and changes in legal, regulatory or tax requirement legislation. Additional risks and uncertainties not presently known by the Group or that the Group currently deems immaterial may also impact the business.
The Board of Directors monitors these risks and the Group's performance on a regular basis, considering investment proposals, the performance of investments made and opportunities for divestment as appropriate as well as considering the actual performance of the Group against budgets.
• Political and Country Risk
Substantially all of the Group's business and operations are conducted in Namibia and South Africa. The political, economic, legal and social situation in Namibia and South Africa introduces a certain degree of risk with respect to the Group's activities. The governments of Namibia and South Africa exercise control over such matters as exploration and mining license, permitting, exporting and taxation, which may adversely impact the Group's ability to carry out exploration, development and mining activities.
Government activity, which could include non-renewal of licenses, may result in any income receivable by the Group being adversely affected. In particular, changes in the application or interpretation of mining and exploration laws and/or taxation provisions in Namibia could adversely affect the value of the Group's interests.
The Group's risks are mitigated by liaison with the local governments and union representatives as well as continuous monitoring of local situations. The Group's exposure to Namibia in this regard has now been mitigated by the post-year-end disposal of the operations in Namibia, for which the acquirer is now responsible.
• Exploration and Development Risk
The exploration for and the development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored ultimately develop into producing mines. Major resources are required to establish ore reserves, to develop metallurgical processes and to construct mining and processing facilities. In respect of the Namibian site this risk has been substantially mitigated by the disposal transaction per period end that previously referred to above.
There is no certainty that the exploration and development expenditures made by the Group as described in these financial statements will result in a commercially feasible mining operation. There is aggressive competition within the mining industry for the discovery and acquisition of properties considered to have commercial potential. The Group will compete with other companies, many of which have greater financial resources, for the opportunity to participate in promising projects. Significant capital investment is required to achieve commercial production from successful exploration efforts.
The commercial viability of a deposit is dependent on a number of factors. These include deposit attributes such as size, grade and proximity to infrastructure; current and future market prices which can be cyclical; government regulations including those relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The effect of these factors, either alone or in combination, cannot be entirely predicted, and their impact may result in the Group not receiving an adequate return on invested capital.
There is no assurance the Group will be able to adhere to the current development and production schedule or that the required capital and operating expenditure will be accurate. The Group's development plans may be adversely affected by delays and the failure to obtain the necessary approvals, licenses or permits to commence production or technical or construction difficulties which are beyond the Group's control. Operational risks and hazards include: unexpected maintenance, technical problems or delays in obtaining machinery and equipment, interruptions from adverse weather conditions, industrial accidents, power or fuel supply interruptions and unexpected variations in geological conditions.
Exploration risk is mitigated by using independent third parties to determine the resource availability (JORC reports) and the operational risk is mitigated by using high-quality skilled drilling contractors.
• Unable to invest
The Directors may be unable to identify investments which are consistent with the Group's investment policy and which are available at a price which the Directors consider suitable, which would limit the potential for the Group's value to grow.
The Board is comprised of experienced mining executives with significant experience in sourcing investment opportunities, and has engaged professional advisers, each of whom has access to a broad network through which opportunities are frequently referred. Shareholders in the Company may also bring to the Board's attention, projects which they believe to be consistent with the Group's investment policy.
• Unavailability of finance
The Directors may identify suitable investments at what they believe to be a suitable price but which may require more funds than are available to the Group and the Group may then be unable to raise further funds at all or on terms which the Directors consider acceptable.
The Group is listed on the public markets providing enhanced access to capital in the event that this was required. The Company's disposal of its interests in Namibia in December 2022 and move towards cash generative production during the year ending 30 June 2023 also reduces the Company's funding requirements.
· Covid-19
The Group's operations are principally in Namibia and South Africa where Covid-19 has had a significant impact on the local economies. The following has been implemented by the Group:
Health and safety - The Group has published policies on operating within the current government and international guidelines to ensure our personnel remain safe. No significant outbreaks of Covid-19 have been identified within our operational vicinity, however should there be a significant outbreak, operations will be adversely affected. The current guidelines implemented by the Group have limited financial impact in the short term, and as government restrictions are being eased in these regions, the Group does predict a long-term effect on the results.
Localised and national lockdowns - To date, there have been limited lockdowns in the specific regions in which Kazera operate. Going forward there is a risk that should tighter restrictions be enforced leading to reduced activity, both future development as well as mining operations may be impacted.
• Investment risk
Once an investment has been made, the underlying business invested in may not perform as the Directors had expected and this may impair or eliminate the value of the Group's investment.
The management team closely monitors performance of each activity and takes corrective action where necessary.
• Realisation risk
Once an investment has been made, it may not prove possible to realise the investment at the time the Directors intend or only to realise it at a value which damages the Group's value.
The Management team are highly experienced at sourcing opportunities and adding value to assets until such time as an acceptable return on investment can be realised as demonstrated by the Group's disposal of its interest in Namibia.
Financial Risk Management Objectives and Policies
Note 24 to the financial statements sets out the financial risks to which the Group is exposed, together with its policies for managing these risks.
Promotion of The Company for the Benefit of the Members as a Whole
The Director's believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006.
The section specifies that the Directors must act in good faith, when promoting the success of the Company and in doing so have regard (amongst other things) to:
· Consider the likely consequences of any decision in the long term,
· Act fairly between the members of the Company,
· Maintain a reputation for high standards of business conduct,
· Consider the interests of the Company's employees,
· Foster the Company's relationships with suppliers, customers and others, and
· Consider the impact of the Company's operations on the community and the environment.
The Company is quoted on AIM and its members will be fully aware, through detailed announcements, shareholder meetings and financial communications, an updated website, of the Board's broad and specific intentions and the rationale for its decisions. The Company has complied with all its obligations under AIM rule 26. The Company went through a period of continued development and evolution during the period 2021-2022. The Directors worked during the year and after year end to increase its reach with regards to mining rights in various countries which sets the stage for further growth and development.
When selecting investments, issues such as the impact on the community and the environment have actively been taken into consideration. The Company strives to comply with all local environmental legislation, and takes its responsibility to the environment very seriously. Post year-end, the Company had focused on water recycling projects at its processing plant in the Tantalite Valley. This has also been timed with equity and investments designed to advance the business for the benefit of all stakeholders, including shareholders, employees and suppliers while minimising the effects of dilution and capital costs on the shareholders and the business.
The Company pays its employees and creditors promptly and keeps its costs to a minimum to protect shareholders funds. The Company recognises, communicates with workers' representation unions and complies with all local employment legislation. There were no outstanding employment disputes at 30 June 2022.
Decision Making and Implementation
The Board is collectively responsible for the decisions made towards the long-term success of the Company and how the strategic, operational and risk management decisions have been implemented throughout the business, this is detailed in this Strategic Review Report on pages 5 to 10.
Maintaining High Standards of Business Conduct
The Board places great importance on this aspect of corporate life, where failure could put the Company at risk, and seeks to ensure that this flows through all its business interactions and at all levels of the Company. The Board upholds the importance of sound ethical values and behaviour not only because it is important to the Company to successfully achieve its corporate objectives and to transmit this culture throughout the organisation but also to set a benchmark and send a signal of what it will and will not do in some of the jurisdictions in which the Company operates.
The Company is incorporated in the UK and governed by the Companies Act 2006, the Group's business operations are carried out within the UK and Internationally, which requires the Company to conform with the various statutory and regulatory provisions in the UK as well as in other locations in which it operates. The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (the 'QCA Code') and the Board recognises the need to maintain a high standard of corporate governance as well as to comply with AIM Rules to safeguard the interest of the Company's stakeholders. The corporate governance arrangements that the Board has adopted, together with a punctilious observance of applicable regulatory requirements also form part of the corporate culture, requiring a standard of behaviour when interacting with contractors, business partners, service providers, regulators and others. For example, the Company has adopted an Anti-Corruption and Bribery Policy, Whistleblowing Policy, HR and H&S Policies that dictate acceptable behaviour as well as the Share Dealing Code for Directors and employees, required for the AIM listed companies and in accordance with the requirements of the Market Abuse Regulation, which came into effect in 2016. Staff training on anti-corruption and anti-bribery is monitored and refresher courses are provided as when required to ensure that the issues of bribery and corruption remain at the forefront of peoples' mind.
Employee Engagement
The Board recognises that its employees are one its key resources, which enables delivering the Company's vision and goals. Annual pay and benefit reviews are carried out to determine whether all levels of employees are benefited equally and to retain and encourage skills vital for the business. The Board encourages management to improve employee engagement and to provide necessary training in order to use their skills in the relevant areas in the business. The Board periodically reviews the health and safety measures, implemented in the business premises and improvements are recommended for better practices.
Employees are informed of the results and important business decisions to stimulate their engagement and are encouraged to improve their skills and career potential.
Suppliers, Customers and Regulatory Authorities
The Board acknowledges that a strong business relationship with suppliers and customers is a vital part of the growth. Whilst day to day business operations are delegated to the executive management, the Board sets directions with regard to new business ventures. The Board upholds ethical behaviour across all sectors of the business and encourages management to seek comparable business practices from all suppliers and customers doing business with the Company. We value the feedback we receive from our stakeholders and we take every opportunity to ensure that, where possible, their wishes are duly considered.
Shareholder Engagement
The Board places equal importance on all shareholders and recognises the significance of transparent and effective communications with shareholders. As an AIM listed company, there is a need to provide fair and balanced information in a way that is understandable to all stakeholders and particularly our shareholders.
The Board recognises that it is accountable to shareholders for the performance and activities of the Company and is committed to providing effective communication with its shareholders. Significant developments are disseminated through stock exchange announcements. The changes to the Board and Board Committees, changes to major shareholder information, QCA Code disclosure updates are promptly published on the website to enable the shareholders to be kept abreast of the Company's affairs. The Company's Annual Report and Notice of Annual General Meetings (AGM) are available to all shareholders and the Interim Report and other investor presentations are also available for the last five years and can be downloaded from the Company's websitewww.kazeraglobal.com.
Shareholders can attend the Company's Annual General Meetings and any other shareholder meetings held during the year, where they can formally ask questions, raise issues and vote on the resolutions as well as engage in a more informal one-to-one dialogue with the executive Directors.
Community and Environment
The Board recognises that the long-term success of the Company will be enhanced by good relations with different internal and external groups and to understand their needs, interests and expectations.
Kazera is committed to sustainable natural resource investment and development worldwide and recognises a responsibility to protect the environments in which it operates. The Company seeks to manage and mitigate environmental risks as well as to minimise the overall impact of our operations on the people and countries in which we operate. The Board encourages that good relations are cultivated with local governments and communities, aiming to better understand various parties' aspirations and ensure that the Company's business activities are compliant not only with local and global laws, including environmental laws, but also where possible take account of local expectations and priorities.
Going Concern
The financial statements have been prepared assuming the Group and Company will continue as a going concern.
In assessing whether the going concern assumption is appropriate, the directors have taken into account all available information for the foreseeable future; in particular for the 12 months from the date of approval of these financial statements and performed sensitivity analysis thereon. This assessment includes consideration of the cash receipts arising from the disposal of the Group's operations in Namibia, future plans, expenditure commitments in place, cost reduction measures that can be implemented and permitting requirements. The Directors estimates are dependent upon the Group's mining operations coming into operation as planned. In the event that this does not occur the Directors are confident that further funds could be raised to meet any shortfall.
In May 2022, the Company raised £1 million before expenses by way of a share placing.
On 20 December 2022, the Company announced an agreement for the sale of Kazera's interest in 100% of the shares in African Tantalum to Xinjian for a headline sum of US$13 million (excluding interest at 8% on loans of c. US$9.3 million made by Kazera to African Tantalum). On signing of these agreements, Kazera received a payment of US$642k, and has since received further payments of approximately US$1,625k, far exceeding the contracted amount required under the agreement at this stage. Monthly receipts under the agreement are due to commence from April 2023.
This report was approved by the board of Directors on 15 March 2023 and signed on its behalf by
Dennis Edmonds
Chief Executive Officer
The financial statements below should be read in conjunction with the notes contained within the full financial report which will be available online at the Company's website at www.kazeraglobal.com .
Group Statement of Comprehensive Income
For the year ended 30 June 2022
|
Continuing operations |
Notes |
Year ended 30 June 2022 £'000 |
Year ended 30 June 2021 £'000 |
|
|
|
|
|
|
Revenue |
5 |
107 |
55 |
|
Cost of Sales |
|
(107) |
(55) |
|
Gross Profit / (loss) |
|
- |
- |
|
|
|
|
|
|
Pre-production expenses |
|
(333) |
(111) |
|
Administrative expenses |
|
(1,644) |
(1,053) |
|
Operating loss |
6 |
(1,977) |
(1,164) |
|
|
|
|
|
|
Finance charges |
7 |
(44) |
- |
|
Loss before taxation |
|
(2,021) |
(1,164) |
|
|
|
|
|
|
Taxation |
10 |
- |
- |
|
Loss for the year |
|
(2,021) |
(1,164) |
|
|
|
|
|
|
|
|
|
|
|
Loss attributable to owners of the Company |
|
(2,001) |
(1,146) |
|
Loss attributable to non-controlling interests |
|
(20) |
(18) |
|
|
|
(2,021) |
(1,164) |
|
Other comprehensive income: |
|
|
|
|
Items that may be subsequently reclassified to profit and loss: |
|
|
|
|
Exchange differences on translation of foreign operations |
|
(17) |
107 |
|
|
|
|
|
|
Total comprehensive loss for the year attributable to: |
|
|
|
|
The equity holders of the parent |
|
(2,018) |
(1,039) |
|
The non-controlling interests |
|
(20) |
(18) |
|
|
|
(2,038) |
(1,057) |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to owners of the Company |
|
|
|
|
|
|
|
|
|
From continuing operations: |
|
|
|
|
Basic and diluted (pence) |
11 |
(0.26) p |
(0.17) p |
|
|
|
|
|
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 £328,095 (2021: £423,521 loss).
The accounting policies and notes are an integral part of these financial statements.
Group and Company Statements of Financial Position
As at 30 June 2022
|
|
|
|
GROUP |
|
COMPANY |
||
|
|
Notes |
|
2022 £'000 |
2021 £'000 |
|
2022 £'000 |
2021 £'000 |
|
Non-Current assets |
|
|
|
|
|
|
|
|
Mines under construction |
12 |
|
2,961 |
2,897 |
|
- |
- |
|
Property, plant and equipment |
13 |
|
796 |
716 |
|
- |
- |
|
Investment in subsidiaries |
14 |
|
- |
- |
|
3,298 |
3,114 |
|
Long-term loan |
16 |
|
- |
- |
|
8,737 |
7,644 |
|
|
|
|
3,757 |
3,613 |
|
12,035 |
10,758 |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Trade and other receivables |
17 |
|
279 |
168 |
|
22 |
23 |
|
Cash and cash equivalents |
18 |
|
637 |
47 |
|
609 |
3 |
|
|
|
|
916 |
215 |
|
631 |
26 |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
19 |
|
652 |
209 |
|
645 |
180 |
|
|
|
|
652 |
209 |
|
645 |
180 |
|
|
|
|
|
|
|
|
|
|
Non-Current liabilities |
|
|
|
|
|
|
|
|
Other payables |
19 |
|
826 |
431 |
|
- |
301 |
|
Provisions |
20 |
|
54 |
55 |
|
- |
- |
|
|
|
|
880 |
486 |
|
- |
301 |
|
|
|
|
|
|
|
|
|
|
Net current assets / (liabilities) |
|
|
264 |
6 |
|
(14) |
(150) |
|
|
|
|
|
|
|
|
|
|
Net assets |
|
|
3,141 |
3,133 |
|
12,021 |
10,303 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Share capital |
21 |
|
3,516 |
3,279 |
|
3,516 |
3,279 |
|
Share premium account |
21 |
|
17,556 |
15,863 |
|
17,556 |
15,863 |
|
Capital redemption reserve |
|
|
2,077 |
2,077 |
|
2,077 |
2,077 |
|
Share option reserve |
|
|
443 |
337 |
|
443 |
337 |
|
Currency translation reserve |
|
|
(494) |
(477) |
|
- |
- |
|
Retained earnings |
|
|
(19,908) |
(17,917) |
|
(11,571) |
(11,253) |
|
Equity attributable to owners of the Company |
|
|
3,190 |
3,162 |
|
12,021 |
10,303 |
|
Non-controlling interests |
|
|
(49) |
(29) |
|
- |
- |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
3,141 |
3,133 |
|
12,021 |
10,303 |
Group Statement of Changes in Equity
For the year ended 30 June 2022
|
|
Shar e capital £'000 |
Shar e pr emium account £'000 |
Capital r edemption r eserve £'000 |
Share option reserve £'000 |
Currency translation reserve £'000 |
Retained earnings £'000 |
Equity shareholders' funds £'000 |
Non-controlling interests £'000 |
Total £'000 |
|
Balance at 30 June 2020 |
3,255 |
15,711 |
2,077 |
165 |
(584) |
(16,771) |
3,853 |
(11) |
3,842 |
|
Loss for the year |
- |
- |
- |
- |
- |
(1,146) |
(1,146) |
(18) |
(1,164) |
|
Other comprehensive income |
- |
- |
- |
- |
107 |
- |
107 |
- |
107 |
|
Total comprehensive income |
- |
- |
- |
- |
107 |
(1,146) |
(1,039) |
(18) |
(1,057) |
|
Non-controlling interest on acquisition of a subsidiary |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Transactions with Non-controlling interest |
- |
- |
- |
- |
- |
- |
- |
- |
- |
|
Issue of share capital |
24 |
152 |
- |
- |
- |
- |
176 |
- |
176 |
|
Share based payment expense |
- |
- |
- |
172 |
- |
- |
172 |
- |
172 |
|
Balance at 30 June 2021 |
3,279 |
15,863 |
2,077 |
337 |
(477) |
(17,917) |
3,162 |
(29) |
3,133 |
|
Loss for the year |
- |
- |
- |
- |
- |
(2,001) |
(2,001) |
(20) |
(2,021) |
|
Other comprehensive income |
- |
- |
- |
- |
(17) |
- |
(17) |
- |
(17) |
|
Total comprehensive income |
- |
- |
- |
- |
(17) |
(2,001) |
(2,018) |
(20) |
(2,038) |
|
Issue of share capital |
237 |
1,693 |
- |
- |
- |
- |
1,930 |
- |
1,930 |
|
Share options/warrants exercised |
- |
- |
- |
(10) |
- |
10 |
- |
- |
- |
|
Share based payment expense |
- |
- |
- |
116 |
- |
- |
116 |
- |
116 |
|
Balance at 30 June 2022 |
3,516 |
17,556 |
2,077 |
443 |
(494) |
(19,908) |
3,190 |
(49) |
3,141 |
Company Statement of Changes in Equity
For the year ended 30 June 2022
|
|
Share capital |
Share premium |
Capital redemption reserve |
Share option reserve |
Retained earnings |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Balance at 30 June 2020 |
3,255 |
15,711 |
2,077 |
165 |
(10,829) |
10,379 |
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
- |
- |
- |
- |
(424) |
(424) |
|
Issue of share capital, net of share issue costs |
24 |
152 |
- |
- |
- |
176 |
|
Share based payment expense |
- |
- |
- |
172 |
- |
172 |
|
|
|
|
|
|
|
|
|
Balance at 30 June 2021 |
3,279 |
15,863 |
2,077 |
337 |
(11,253) |
10,303 |
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
- |
- |
- |
- |
(328) |
(328) |
|
Issue of share capital, net of share issue costs |
237 |
1,693 |
- |
- |
- |
1,930 |
|
Share options/warrants exercised |
- |
- |
- |
(10) |
10 |
- |
|
Share based payment expense |
- |
- |
- |
116 |
- |
116 |
|
|
|
|
|
|
|
|
|
Balance at 30 June 2022 |
3,516 |
17,556 |
2,077 |
443 |
(11,571) |
12,021 |
Group and Company Statements of Cash Flows
For the year ended 30 June 2022
|
|
GROUP |
|
COMPANY |
||
|
|
Year ended 30 June 2022 |
Year ended 30 June 2021 |
|
Year ended 30 June 2022 |
Year ended 30 June 2021 |
|
|
£'000 |
£'000 |
|
£'000 |
£'000 |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
Operating loss |
(2,021) |
(1,164) |
|
(328) |
(424) |
|
Depreciation and amortisation |
52 |
126 |
|
- |
- |
|
Share based payment expense |
116 |
172 |
|
116 |
172 |
|
Finance charges |
44 |
- |
|
44 |
- |
|
Foreign exchange |
121 |
(39) |
|
- |
- |
|
Provisions for mine rehabilitation and decommissioning |
- |
55 |
|
- |
- |
|
Intercompany loan interest charged |
- |
- |
|
(336) |
(312) |
|
Operating cash flows before movement in working capital |
(1,688) |
(850) |
|
(504) |
(564) |
|
(Increase)/decrease in receivables |
(110) |
21 |
|
1 |
89 |
|
Increase in payables |
880 |
382 |
|
205 |
312 |
|
Net cash used in operating activities |
(918) |
(447) |
|
(298) |
(163) |
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
Purchases of property, plant and equipment |
(438) |
(197) |
|
- |
- |
|
Development costs |
(6) |
- |
|
- |
- |
|
Trial diamond mining |
107 |
- |
|
- |
- |
|
Advances to subsidiary undertakings |
- |
- |
|
(757) |
(501) |
|
Purchase/increase in subsidiary undertakings |
- |
- |
|
(184) |
- |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
(337) |
(197) |
|
(941) |
(501) |
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
Net proceeds from share issues |
1,498 |
176 |
|
1,498 |
176 |
|
Loans received |
347 |
90 |
|
347 |
90 |
|
Net cash from financing activities |
1,845 |
266 |
|
1,845 |
(266) |
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
590 |
(378) |
|
606 |
(398) |
|
Cash and cash equivalents at beginning of year |
47 |
425 |
|
3 |
401 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
637 |
47 |
|
609 |
3 |
Notes to the Group Financial Statements
For the year ended 30 June 2022
1. GENERAL INFORMATION
Kazera Global Plc is a public limited company which is listed on the Alternative Investment Market (AIM) and incorporated and domiciled in England and Wales, United Kingdom. The nature of the Group's operations and its principal activities are set out in the Strategic Report and the Directors' Report.
2. ACCOUNTING POLICIES
BASIS OF PREPARATION
These consolidated financial statements have been prepared and approved by the Directors in accordance with UK Adopted International Accounting Standards in accordance with the requirements of the Companies Act 2006.
The consolidated financial statements have been prepared under the historical cost convention, except as noted in the accompanying accounting policies.
The preparation of financial statements in conformity with UK Adopted International Accounting Standards ('IAS') requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.
The financial statements are presented in pounds sterling (£'000), which is also the functional currency of the Company and Group.
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
GOING CONCERN
The Company prepares and routinely maintains a cash flow forecast; the directors have, with reference to the cash flow forecast considered a number of potential scenarios under which the Company's ability to continue as a going concern.
During October 2021, the Company secured a loan facility of £450,000 with Westleigh Investments Holdings Limited, and throughout the year, received equity finance from the exercise of share options, warrants, and the conversion of contractor liabilities, salaries and loans, totalling £887,065.
The loan from Westleigh Investments Holdings Limited was subsequently repaid in full during January 2023 following the sale of the Company's Namibian business for US$13 million, which was as announced in December 2022.
The Group's South African diamond business investment is now also generating revenue.
The Directors are of the opinion that existing available cash resources together with deferred cash consideration from the disposal of the Namibian business and cash inflows from operations will be sufficient to meet operating cash outflows requirements for a period of 12 months from the date of approval of these financial statements. Future revenues will be dependent upon the Company's ability to extract and sell diamonds in line with budgets. In the event that the mining activities do not perform in line with budgets, the Directors are confident that the deferred consideration from the disposal of the Namibian business with be sufficient to meet any shortfall.
Taking the above factors into consideration, the financial statements have been prepared on the going concern basis.
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED BY THE GROUP
The following IFRS or IFRIC interpretations were effective for the first time for the financial year beginning 1 July 2020. Their adoption has not had any material impact on the disclosures or on the amounts reported in these financial statements.
|
Standard /interpretations |
Application |
|
Annual Improvements to IFRS Standards: 2018 - 2020 Cycle |
Effective 01 January 2022
|
|
Amendments to IAS1 |
Presentation of Financial Statements and IFRS |
|
Practice Statement 2: Disclosure of Accounting Policies |
Disclosure of Accounting Policies (effective 1 January 2023); |
|
Amendments to IAS 8 |
Accounting policies, Changes in Accounting Estimates and Errors - Definition of Accounting Estimates (effective 1 January 2023) |
|
Amendments to IAS 12 |
Income Taxes - Deferred Tax arising from a Single Transaction (effective 1 January 2023). |
|
Amendments to IFRS 10 and IAS 28 |
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective date postponed) Business Combinations - Reference to the Conceptual Framework (effective date 1 January 2022)
|
|
Amendments to IFRS 3 |
Amendments to IAS 1: Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies |
|
Amendments to IAS 16 |
Property, Plant and Equipment (effective date 1 January 2022)
|
|
Amendments to IAS 1
|
Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (effective date TBC) |
|
Amendments to IAS 1 |
Classification of Liabilities as Current or Non current (effective date TBC) |
NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ADOPTED BY THE GROUP
There are no IFRS's or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company or Group.
BASIS OF CONSOLIDATION
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.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated.
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the subsidiary 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 subsidiary on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of subsidiary's identifiable net assets.
Acquisition-related costs are expensed as incurred.
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 is 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.
foreign currencies
The individual financial statements of each group company are presented in South African Rands and Namibian Dollars, which is 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.
INTANGIBLE ASSETS - EXPLORATION AND EVALUATION EXPENDITURE
Exploration and evaluation activity involve the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Research expenditure is written off in the year in which it is incurred. The Group recognises expenditure as exploration and evaluation assets when it determines that the legal rights to said assets have been obtained. Costs incurred which relate wholly to exploration work only, are expensed through the statement of comprehensive income. When a decision is taken that a mining property becomes viable for commercial production, all further pre-production expenditure is capitalised.
Expenditure included in the initial measurement of exploration and evaluation assets and which is classified as intangible assets, relates to the acquisition of rights to undertake topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and other activities to evaluate the technical feasibility and commercial viability of extracting a mineral source.
MINES UNDER CONSTRUCTION
Expenditure is transferred from "Exploration and evaluation" assets to "Mines under construction" once the work completed to date supports the future development of the property and such development receives the requisite approvals. All subsequent expenditure on technically and commercially feasible sites is capitalised within mining rights.
All expenditure on the construction, installation or completion of infrastructure facilities is capitalised as construction in progress within "Mines under construction". Once production starts, all assets included in "Mines under construction" are transferred into "Property, Plant and Equipment" or "Producing Mines. It is at this point that depreciation/amortisation commences over its useful economic life. The asset will be depreciated using the Units of Production method (UOP).
Mines under construction are stated at cost. The initial cost comprises transferred exploration and evaluation assets, construction costs, infrastructure facilities, any costs directly attributable to bringing the asset into operation, the initial estimate of the rehabilitation obligation, and, for qualifying assets, borrowing costs. Costs are capitalised and categorised between mining rights and construction in progress respectively according to whether they are intangible or tangible in nature.
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:
Buildings - Over 20 years
Plant and machinery - Between 5 and 10 years
Furniture 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.
ASSET ACQUISITIONS - land
Acquisitions of mineral exploration licences through the acquisition of non-operational corporate structures that do not represent a business, and therefore do not meet the definition of a business combination, are accounted for as the acquisition of an asset. The consideration for the asset is allocated to the assets based on their relative fair values at the date of acquisition. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated.
Where the asset was acquired during the period however licensing becomes available post year end this is accounted for as an acquisition of Land.
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.
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.
FINANCIAL INSTRUMENTS - INITIAL RECOGNITION AND SUBSEQUENT MEASUREMENT
Classification
The Group classifies its financial assets into only one category, being those to be measured at amortised cost.
The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.
Recognition
Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset.
Debt instruments
Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.
Impairment
The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
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 LIABILITIES, 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.
TRIAL PRODUCTION REVENUE AND COSTS
Revenue
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. These steps are as follows: identification of the customer contract; identification of the contract performance obligations; determination of the transaction price; allocation of the transaction price to the performance obligations; and revenue recognition as performance obligations are satisfied.
Under IFRS 15, revenue is recognised when performance obligations are met. This is the point of delivery of goods to the customer. Revenue is measured at the fair value of consideration received or receivable from sales of diamonds and tantalite to an end user, net of buyer's discount, treatment charges, freight costs and value added tax. The application of the standard including the five-step approach has not resulted in any changes to the timing of recognition of revenue in the current or any prior period. Accordingly, the information for 2021 has not been restated.
Revenues from the sale of diamonds as a by-product of the evaluation or "testing" phase are offset against the cost of the Mines Under Construction (see Note 12).
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing:
· the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares;
· by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares (note 11).
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:
· the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
· the weighted average number of additional ordinary shares that would have been outstanding, assuming the conversion of all dilutive potential ordinary shares.
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 reporting segments are the holding company, tantalite and lithium mining operation in Namibia and the diamond mining operations in South Africa.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS
In the application of the Group's accounting policies, which are described in Note 2, 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.
Valuation of options
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 and valuation methodology adopted have been described in more detail in Note 22. The estimates and assumptions could materially affect the Income Statement.
Carrying value of mines under construction (Note 12)
The Group tests annually whether its mines under construction have suffered any impairment and management make judgements in this respect. The judgements are based on the recoverable amounts of cash generating units ("CGUs") which are determined based on value in use calculations which require the use estimates and assumptions such as long-term commodity prices and recovery rates, discount rates, operating costs and therefore expected margins and future capital requirements. These estimates and assumptions are subject to risk and uncertainty and therefore there is a possibility that changes in circumstances will impact the recoverable amount.
In assessing the carrying amounts of its tantalite mine under construction, the Directors have conducted a feasibility study in conjunction with an independently prepared mineral resource estimate. The period used in management's assessment is the anticipated life of the mine to the expiration of the licence. A discount rate of 10% has been applied. The mineral resource report concluded on an inferred 297,600 tonnes of tantalum pentoxide within the White City Tantalum Mineral Resource Area. These estimates are consistent with external sources of information. The three principal variables in the Company's forecasts are as follows: resources, pricing and operational efficiency. In reviewing sensitivities, the following should be considered: a further 622,200 tonnes of lithium and tantalite resources have been identified at Purple Haze and Homestead in addition to the resources at White City, the Company's financial forecasts assume a 65% operational efficiency and resources are forecast to be sold on long term contracts to end users reducing commodity risk.
In assessing the carrying amounts of its diamond operations, the Company has commissioned an independent feasibility study which has concluded that the market value of its operations is significantly greater than carrying value.
Investment in subsidiaries
The investments in subsidiaries are recognised at cost less accumulated impairments. Details of the investments are listed in Note 14.
Upon acquisition, the excess of the sum of the consideration transferred over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed, is recognised under mines under construction.
Any potential impairments to the investments in subsidiaries are measured in line with the impairment of mines under construction in the paragraph above.
The Directors are confident that the future operational cashflows forecast to be generated from the sale of diamonds, tantalum and HMS will be sufficient to repay the intergroup loans.
4. SEGMENTAL REPORTING
The Directors are of the opinion that under IFRS 8 - Operating Segments the Group operates in three primary business segments; being holding company expenses, tantalite mining and diamond mining activities. The secondary segment is geographic. Pre-production/ trial revenue earned during each of the years ended 30 June 2022 and 30 June 2021 were from immaterial sales to Alexkor and JAE Mining.
The Group's losses and net assets by primary business segments are shown below.
|
Segmentation by continuing business |
||
|
Profit/ (loss) before income tax |
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
Holding company |
(664) |
(424) |
|
Tantalite mining activity |
(1,170) |
(506) |
|
Diamond mining activity |
(187) |
(234) |
|
|
(2,021) |
(1,164) |
|
Net assets /(liabilities) |
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
Holding company |
12,021 |
10,303 |
|
Tantalite mining activity |
(6,722) |
(5,280) |
|
Diamond mining activity |
(504) |
(300) |
|
Segmentation by geographical area |
||
|
Loss before income tax |
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
United Kingdom |
(664) |
(424) |
|
Namibia |
(1,170) |
(506) |
|
South Africa |
(187) |
(234) |
|
|
(2,021) |
(1,164) |
|
Net assets /(liabilities) |
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
United Kingdom |
12,021 |
10,303 |
|
Namibia |
(6,722) |
(5,280) |
|
South Africa |
(504) |
(300) |
5. REVENUE
|
|
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
Revenue from external customers |
107 |
55 |
Revenues of £107k were derived from customers in South Africa, for the sale of the by-products of testing and evaluation activities in Deep Blue Minerals Limited. The revenues were derived from pre-production activities and have been considered against the Mines Under Construction intangible asset recognised in the Group (see note 12).
6. OPERATING LOSS
|
|
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
Loss for the period has been arrived at after charging: |
|
|
|
Staff costs as per Note 9 below |
520 |
577 |
|
Auditors' remuneration |
50 |
40 |
|
Depreciation of property, plant and equipment |
52 |
126 |
|
Share-based payment expense |
116 |
172 |
|
|
|
|
7. FINANCE CHARGES
|
|
Year ended 30 June 2022 '000 |
Year ended 30 June 2021 '000 |
|
Loan interest payable |
44 |
- |
|
|
44 |
- |
8. AUDITORS' REMUNERATION
The analysis of auditors' remuneration is as follows:
|
|
Year ended 30 June 2022 £'000 |
Year ended 30 June 2021 '000 |
|
|
|
|
|
Fees payable to the Group's auditors for the audit of the Group's annual accounts |
50 |
40 |
|
Total audit fees |
50 |
40 |
|
Fees payable to the Group auditor and their associates for other services to the Group: |
- |
- |
|
|
50 |
40 |
9. STAFF COSTS
The average monthly number of employees (including executive directors) for the continuing operations was:
|
|
Year ended 30 June 2022 Number |
Year ended 30 June 2021 Number |
|
Group total staff |
16 |
16 |
|
|
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
Wages and salaries |
400 |
367 |
|
Share based payment in respect of exercise of options |
118 |
172 |
|
Other benefits |
1 |
2 |
|
Social security costs |
1 |
36 |
|
|
520 |
577 |
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 Directors' Remuneration report on page 20 accompanying these financial statements. All emoluments are short term in nature and the Directors are considered to be key management personnel.
10. TAXATION
The weighted average applicable tax rate of 28.25% (2021: 28.25%) is a combination of the rates used in the UK, Namibia and South Africa.
|
|
Year ended 30 June 2022 £'000 |
Year ended 30 June 2021 £'000 |
|
Analysis of income tax expense: |
|
|
|
Current tax |
- |
- |
|
Deferred tax |
- |
- |
|
Total income tax expense |
- |
- |
|
|
|
|
|
Loss on continuing operations before tax |
(2,021) |
(1,164) |
|
Tax at the weighted average tax rate of 28.25% (2021 28.25%) |
(571) |
(329) |
|
Effects of: |
|
|
|
Expenses not deductible for tax purposes |
33 |
1 |
|
Unutilised tax losses carried forward |
538 |
328 |
|
|
|
|
|
Tax charge for period |
- |
- |
The 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. Losses from the previous period have been carried forward. A deferred tax asset has not been recognised in the financial statements due to the uncertainty of the recoverability of the amount.
At the balance sheet date the Group had unused tax losses of £7,401,000 (2021: £5,497,000)
11. EARNINGS PER SHARE
The calculation of basic earnings per share is based on the following data:
|
|
Year ended 30 June 2022 |
Year ended 30 June 2021 |
|
|
£'000 |
£'000 |
|
Loss for the year attributable to owners of the Company |
(2,021) |
(1,164) |
|
|
|
|
|
Weighted average number of ordinary shares in issue for basic and fully diluted earnings |
770,895,360 |
686,324,120 |
|
EARNINGS PER SHARE (PENCE PER SHARE) |
|
|
|
BASIC AND FULLY DILUTED: |
|
|
|
- from continuing and total operations |
(0.26) |
(0.17) |
The Company has outstanding warrants and options as disclosed under Note 22 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.
12. MINES UNDER CONSTRUCTION
|
|
Construction in progress |
Mining licences |
Total |
|
GROUP |
£'000 |
£'000 |
£'000 |
|
At 1 July 2020 |
2,784 |
33 |
2,817 |
|
Additions |
- |
- |
- |
|
Sale of by-products |
(55) |
- |
(55) |
|
Exchange translation difference |
132 |
3 |
135 |
|
At 30 June 2021 |
2,861 |
36 |
2,897 |
|
Additions |
- |
6 |
6 |
|
Trial production revenue |
(107) |
- |
(107) |
|
Exchange translation difference |
161 |
4 |
165 |
|
At 30 June 2022 |
2,915 |
46 |
2,961 |
Revenues from the sale of the by-product of testing and evaluation activities have been offset against the costs of the intangible asset. These totalled £107,281 in the year (2021: £54,952).
13. PROPERTY, PLANT AND EQUIPMENT
|
|
Land & buildings |
Plant & machinery |
Furniture & equipment |
Total |
|
GROUP |
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
At 1 July 2020 |
125 |
964 |
36 |
1,125 |
|
Exchange translation difference |
- |
24 |
3 |
27 |
|
Additions |
- |
197 |
- |
197 |
|
Cost at 30 June 2021 |
125 |
1,185 |
39 |
1,349 |
|
Exchange translation difference |
- |
(342) |
(8) |
(350) |
|
Additions |
184 |
196 |
58 |
438 |
|
Cost at 30 June 2022 |
309 |
1,039 |
89 |
1,437 |
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
At 1 July 2020 |
30 |
432 |
28 |
490 |
|
Exchange translation difference |
- |
16 |
1 |
17 |
|
Charge for the year |
5 |
116 |
5 |
126 |
|
Depreciation at 30 June 2021 |
35 |
564 |
34 |
633 |
|
Exchange translation difference |
- |
(24) |
(20) |
(44) |
|
Charge for the year |
5 |
44 |
3 |
52 |
|
Depreciation at 30 June 2022 |
40 |
584 |
17 |
641 |
|
|
|
|
|
|
|
Net book value at 30 June 2022 |
269 |
455 |
73 |
796 |
|
Net book value at 30 June 2021 |
90 |
621 |
5 |
716 |
14. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
The Company's investments in its subsidiary and associated undertakings
|
COMPANY |
Total £'000 |
|
Cost and net book value |
|
|
As at 1 July 2020 |
3,114 |
|
As at 30 June 2021 |
3,114 |
|
Acquisition: 60% of Whale Head Minerals (Pty) Ltd (Note 15) |
184 |
|
As at 30 June 2022 |
3,298 |
All principal subsidiaries of the Group are consolidated into the financial statements.
At 30 June 2022 the subsidiaries were as follows:
|
Subsidiary undertakings |
Country of registration |
Principal activity |
Holding |
% |
|
African Tantalum (Pty) Ltd |
Namibia |
Intermediate holding company |
Ordinary shares |
100% |
|
Namibia Tantalite Investments (Pty) Ltd |
Namibia |
Tantalite mining |
Ordinary shares |
100% |
|
Tameka Shelf Company Four (Pty) Ltd |
Namibia |
Mining licence holder |
Ordinary shares |
100% |
|
Whale Head Minerals (Pty) Ltd |
South Africa |
Mining License holder |
Ordinary shares |
60% |
|
Deep Blue Minerals (Pty) Ltd |
South Africa |
Mining License holder |
Ordinary shares |
90% |
|
Kazera Trading Limited |
UK |
Dormant |
Ordinary shares |
100% |
Whale Head Minerals (Pty) Ltd
On 30 September 2021, the Company announced an investment acquiring a 60% stake in Whale Head Minerals (Pty) Limited, a South Africa-based company as the mining license holder. The cost of the transaction was an initial investment and directly attributable acquisitions costs, totalling £183,079. Goodwill in the amount of £183,655 was recognised in relation to this acquisition and subsequently impaired to £nil as at 30 June 2022.
15. BUSINESS ACQUISITION - WHALE HEAD MINERALS (PTY) LTD
On 28 September 2021, the Company acquired 60% of the issued share capital of Whale Head Minerals (Pty) Ltd ("WHM") for consideration of £184,000. The consolidated income statement for the year ended 30 June 2022 includes the results of WHM from 28 September 2021, the date of the acquisition. The Company has determined the fair value of the assets and liabilities of WHM to be recognised in these consolidated financial statements as follows:
|
|
|
|
Fair Value recognised on acquisition |
|
|
|
|
£'000 |
|
Assets |
|
|
|
|
Exploration and evaluation assets |
|
|
10 |
|
Total Assets |
|
|
10 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
Non-current liabilities |
|
|
(10) |
|
Total Liabilities |
|
|
(10) |
|
|
|
|
|
|
Total identified assets at fair value |
|
|
- |
|
|
|
|
|
|
Purchase consideration |
|
|
184 |
Under IFRS 3, a business must have three elements: inputs, processes and outputs. Whale Head Minerals (Pty) Ltd is an early stage exploration company and as at 30 June 2022, had no near term plans to develop a mine. WHM possess titles to mineral properties but at 30 June 2022, these could not be considered inputs because of their early stage of development. WHM did not have a skilled workforce, nor did it hold any infrastructure or assets that could produce outputs. Therefore, the Directors' conclusion is that the transaction is an asset acquisition and not a business combination. As the mining licence only became available after 30 June 2022, the acquisition of WHM was initially accounted for as an acquisition of land.
16. LONG TERM LOAN (COMPANY)
|
COMPANY |
Loan to Aftan Tantalum £'000 |
Loan to Deep Blue Minerals £'000 |
Loan to Whale Head Minerals £'000 |
Total £'000 |
|
As at 1 July 2020 |
6,729 |
102 |
0 |
6,831 |
|
As at 30 June 2021 |
7,145 |
499 |
0 |
7,644 |
|
Increase in loan |
840 |
234 |
19 |
1,394 |
|
As at 30 June 2022 |
7,985 |
733 |
19 |
8,737 |
The Directors are confident that the future operational cashflows forecast to be generated from the sale of diamonds, tantalum and HMS will be sufficient to repay the intragroup loans.
17. TRADE AND OTHER RECEIVABLES
|
|
GROUP |
COMPANY |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Other receivables |
262 |
162 |
5 |
17 |
|
Prepayments and accrued income |
17 |
6 |
17 |
6 |
|
|
279 |
168 |
22 |
23 |
The Directors consider the carrying amount of intercompany loans and other receivables approximates to their fair value.
18. CASH AND CASH EQUIVALENTS
|
|
GROUP |
COMPANY |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Cash and cash equivalents |
637 |
47 |
609 |
3 |
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.
19. TRADE AND OTHER PAYABLES
|
|
GROUP |
COMPANY |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Current Liabilities |
|
|
|
|
|
Trade payables |
12 |
128 |
12 |
108 |
|
Other payables |
482 |
7 |
480 |
3 |
|
Accruals |
158 |
74 |
153 |
69 |
|
|
652 |
209 |
645 |
180 |
|
|
|
|
|
|
|
Non-Current Liabilities |
|
|
|
|
|
Other payables |
826 |
220 |
- |
90 |
|
Accruals |
- |
211 |
- |
211 |
|
|
826 |
431 |
- |
301 |
The Directors consider the carrying amount of trade payables approximates to their fair value.
The 'other payables' current liability amount includes several loans: £148k from third parties; £199k from WIHL, a related party (see note 26); loans relating to directors' deferred salaries of £71k relating to Giles Clarke, and £57k relating to Nick Harrison. The directors' loans were repaid during December 2022.
The 'other payables' non-current liability amount includes loans of £766k from third parties.
20. PROVISIONS
|
|
GROUP |
COMPANY |
||
|
|
2022 |
2021 |
2022 |
2021 |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
|
Mine rehabilitation provision |
44 |
45 |
- |
- |
|
Mine decommissioning provision |
10 |
10 |
- |
- |
|
|
54 |
55 |
- |
- |
The provisions for mine rehabilitation and decommissioning represents the management's best estimate of the costs which will be incurred in the future to meet the Group's obligations under existing Namibian law and the terms of the Group's mining and other licences and contractual arrangements. Estimates are based upon costs that are regularly reviewed and adjusted as new information becomes available. The current estimate was discounted at a rate of 7.50% and the liabilities become payable in the next five years being licence validity period.
21. SHARE CAPITAL AND SHARE PREMIUM
|
|
No. Ordinary shares of 0.1p each |
Deferred shares of 0.9p each |
Share Capital £'000 |
Share Premium £'000
|
|
Total as at 1 July 2020 |
675,927,855 |
286,561,208 |
3,255 |
14,307 |
|
Share issues |
23,839,780 |
- |
24 |
1,404 |
|
Total as at 30 June 2021 |
699,767,653 |
286,561,208 |
3,279 |
15,863 |
|
Share issues |
237,397,258 |
- |
237 |
1,693 |
|
Total as at 30 June 2022 |
937,164,911 |
286,561,208 |
3,516 |
17,556 |
Share issues
On 30 September 2021, 2,500,000 new ordinary shares were issued at 1 pence per share.
On 30 September 2021, 13,527,957 new ordinary shares were issued at 1.358 pence per share
On 1 October 2021, 5,000,000 new ordinary shares were issued at 1 pence per share
On 8 October 2021, 1,825,000 new ordinary shares were issued at 1 pence per share
On 15 October 2021, 1,666,667 now ordinary shares were issued at 0.6 pence per share
On 19 October 2021, 10,000,000 new ordinary shares were issued at 0.1 pence per share
On 27 October 2021, 3,500,000 new ordinary shares were issued at 0.5 pence per share
On 28 October 2021, 16,666,666 new ordinary shares were issued at 0.3 pence per share
On 29 October 2021, 3,500,000 new ordinary shares were issued at 1.0 pence per share
On 31 December 2021, 2,500,000 new ordinary shares were issued at a price of 1.0 pence per share
On 2 February 2022, 5,579,468 new ordinary shares at a price of 1.2546p per Ordinary Share
On 24 February 2022, 10,000,000 new ordinary shares were issued at a price of 1.0 pence per share
On 5 May 2022, 116,131,500 new ordinary shares were issued at a price of 1.0 pence per share
On 23 May 2022, 45,000,000 new ordinary shares were issued at a price of 0.3 pence per share
Reserves
The Group's reserves are made up as follows:
Share capital : Represents the nominal value of the issued share capital.
Share premium account : Represents amounts received in excess of the nominal value on the issue of share capital less any costs associated with the issue of shares.
Capital redemption reserve : Reserve created on the redemption of the Company's shares
Share option reserve: Reserve created for the equity settled share option scheme (see note 22)
Currency translation reserve: Reserve arising from the translation of foreign subsidiaries at consolidation. The total movement in the foreign currency translation reserve was presented in both the Statement of Changes in Equity and in Other Comprehensive Income in the current year. During the prior year, this movement was presented in the Statement of Changes in Equity.
Retained earnings : Represents accumulated comprehensive income for the year and prior periods.
22. SHARE-BASED PAYMENTS
Equity-settled share option scheme and share warrants
The Company operates share-based payment arrangements to incentivise directors by the grant of share options.
Equity-settled share-based payments within the scope of IFRS 2 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.
The fair value of the share-based payments has been calculated using the Black-Scholes valuation model. The assumptions used in the fair value calculation were as follows:
|
Date of grant |
21 Dec 2018 |
2 Oct 2019 |
23 Mar 2020 |
4 Jun 2020 |
|
Number of options/warrants |
10,000,000 |
3,333,333 |
66,666,667 |
26,500,000 |
|
Exercise price (pence) |
1.75p |
0.6p |
0.3p |
1p |
|
Risk free interest (%) |
0.5% |
0.5% |
0.5% |
0.5% |
|
Expected volatility (%) |
50% |
50% |
50% |
50% |
|
Expected life (years) |
3.66 |
2.9 |
2 |
5 |
The total share-based payment expense recognised in the income statement for the year ended 30 June 2022 in respect of the share options granted was £116,000 (2021: £172,000).
The total number of share options and share warrants in issue as at 30 June 2022 are as follows:
|
Share warrants |
|||||||||||
|
Exercise Price (p) |
Expiry Date |
At 1 July 2021 |
Issued |
Exercised |
Lapsed |
At 30 June 2022 |
|
||||
|
0.60 |
23/09/2022 |
1,666,667 |
- |
1,666,667 |
- |
0 |
|
||||
|
0.30 |
23/03/2022 |
61,666,666 |
- |
61,666,666 |
- |
0 |
|
||||
|
1.00 |
17/06/2022 |
64,700,000 |
- |
33,500,000 |
- |
0 |
|
||||
|
2.00 |
17/12/2022 |
325,000 |
- |
325,000 |
- |
0 |
|
||||
|
2.00 |
27/12/2022 |
- |
10,000,000 |
- |
- |
10,000,000 |
|
||||
|
2.00 |
04/01/2023 |
- |
2,500,000 |
- |
- |
2,500,000 |
|
||||
|
2.00 |
12/01/2023 |
- |
5,000,000 |
- |
- |
5,000,000 |
|
||||
|
1.00 |
30/10/2023 |
- |
39,722,643 |
- |
- |
171,854,143 |
|
||||
|
2.00 |
01/02/2023 |
- |
2,500,000 |
- |
- |
2,500,000 |
|
||||
|
2.00 |
31/01/2023 |
- |
10,000,000 |
- |
- |
10,000,000 |
|
||||
|
1.00 |
31/05/2023 |
- |
116,131,500 |
- |
- |
116,131,500 |
|
||||
|
2.00 |
01/02/2023 |
- |
3,500,000 |
- |
- |
3,500,000 |
|
||||
|
|
|
128,033,333 |
189,354,143 |
97,158,333 |
- |
189,354,143 |
|
||||
|
Share options |
|
||||||||||
|
Exercise Price (p) |
Expiry Date |
At 1 July 2021 |
Issued |
Exercised |
Lapsed |
At 30 June 2022 |
|
||||
|
1.75 |
17/08/2021 |
3,300,000 |
- |
- |
3,300,000 |
0 |
|
||||
|
1.75 |
17/08/2022 |
3,300,000 |
- |
- |
- |
3,300,000 |
|
||||
|
1.75 |
17/08/2023 |
3,400,000 |
- |
- |
- |
3,400,000 |
|
||||
|
1.00 |
03/06/2025 |
5,000,000 |
- |
- |
- |
5,000,000 |
|
||||
|
1.00 |
03/06/2025 |
5,000,000 |
- |
- |
- |
5,000,000 |
|
||||
|
1.00 |
03/06/2025 |
5,000,000 |
- |
- |
- |
5,000,000 |
|
||||
|
1.00 |
03/06/2025 |
10,000,000 |
- |
- |
- |
10,000,000 |
|
||||
|
1.00 |
03/06/2025 |
1,500,000 |
- |
1,500,000 |
- |
- |
|
||||
|
2.00 |
12/01/2023 |
- |
1,500,000 |
- |
- |
1,500,000 |
|
||||
|
1.00 |
06/05/2027 |
- |
1,500,000 |
- |
- |
1,500,000 |
|
||||
|
|
|
36,500,000 |
3,000,000 |
1,500,000 |
3,300,000 |
34,700,000 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
23. 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
Financial assets included in the Statement of financial position and the headings in which they are included are as follows:
|
|
|
2022 |
2021 |
|
|
|
£'000 |
£'000 |
|
Financial assets at amortised cost: |
|
|
|
|
Cash and cash equivalents |
|
637 |
47 |
|
Loans and receivables |
|
279 |
167 |
|
|
|
916 |
214 |
|
FINANCIAL LIABILITIES BY CATEGORY Financial liabilities included in the Statement of financial position and the headings in which they are included are as follows: |
|||
|
|
|
2022 |
2021 |
|
|
|
£'000 |
£'000 |
|
Financial liabilities at amortised cost: |
|
|
|
|
Trade and other payables |
|
652 |
209 |
|
|
|
652 |
209 |
The following table details the Group'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 Group 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 Group 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 2021 Non-interest bearing: |
|
|
|
|
|
|
Trade and other payables |
|
209 |
|
|
|
|
Short term borrowings |
|
|
|
|
|
|
30 June 2022 |
|
|
|
|
|
|
Non-interest bearing: |
|
|
|
|
|
|
Trade and other payables |
- |
826 |
- |
- |
- |
|
Short term borrowings |
- |
- |
- |
- |
- |
24. 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.
As at 30 June 2022, the Group's maximum exposure to credit risk was £636,854 (2021: £46,780) 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 has been 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. It is expected that the Group's future exposure will principally be to GBP South African Rand foreign exchange fluctuations following the Company's disposal of African Tantalum (Pty) Ltd. 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.
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 South African Rands their value is dependent on the global market value of the available Tantalite resources.
The table below details the split of the cash held as at 30 June 2022 between the various currencies. The impact due to movements in the exchange rates is considered to be immaterial.
|
Namibian Dollar (NAD) |
South African Rand (ZAR) |
GBP Sterling (£) |
Total GBP Sterling (£) |
|
173,234 |
220,360 |
608,504 |
636,854 |
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.
25. EVENTS AFTER THE REPORTING PERIOD
On 20 July 2022, the Company announced that Kazera Global plc signed an agreement to secure an investment of US$7.5 million in return for a 49% stake in the Company's marketing, sales and export subsidiary ("SPV") for all lithium production from the Company's wholly owned mine at Tantalite Valley, Namibia.
On 26 July 2022, the Company announced the transformational investment deal in lithium produced from the Company's wholly owned mine at Tantalite Valley, Namibia, the Company has now received the first payment of US$100,000 in accordance with the terms of the deal.
On 28 July 2022, the Company announced that Department of Mining and Mineral Resources has dismissed a third party's appeal against the grant of a mining permit to the Company's 60% owned subsidiary Whale Head Minerals (Pty) Ltd ("WHM"). WHM now expects to shortly receive final documentation allowing it to commence production operations of heavy mineral sands ("HMS") at the Walviskop mine in South Africa.
On 31 August 2022, the Company announced that that the mining permit has now been granted to the Company's 60% owned subsidiary Whale Head Minerals (Pty) Ltd ("WHM"), which will facilitate the start of heavy mineral sands ("HMS") production at the Walviskop mine in South Africa.
On 20 September 2022, the Company granted options to subscribe for up to 16,500,000 new ordinary shares (representing approximately 1.8% of the Company's issued ordinary share capital) to Dennis Edmonds, Chief Executive Officer of the Company, and certain members of staff. Such options will be exercisable at any time up until 6 May 2027 at a price of 1p per share.
On 20 December 2022, the Company announced the signing of a definitive agreement to sell its 100% interest in African Tantalum (Proprietary) Limited ("Aftan") to Hebei Xinjian Construction ("Xinjian") for cash consideration of US$13,000,000 .
26. 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 £49,000 (2021: £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.
On 7 July 2020, the Company issued 800,000 ordinary shares at a price of 0.5p per share to Westleigh Investment Holdings ("WIHL"), a company which is controlled by Giles Clarke and Nick Harrison.
In October 2021, Giles Clarke and Nick Harrison each exercised warrants over 8,333,333 at a price of 0.3 pence per share. The loan outstanding to WIHL was reduced by an aggregate of £50,000, in settlement of the exercise proceeds.
In May 2022, Align Research Ltd converted £100,000 of its outstanding loan (as referred to on the Chief Executive's Review on page 3) together with the interest thereon into 11,131,500 ordinary shares.
In May 2022, Dennis Edmonds converted £50,000 of outstanding salary into 5,000,000 shares.
As at 30 June 2022, the Company had an outstanding loan of £199,000 with WIHL. This loan was repaid in January 2023.
As at 30 June 2022, £71,000 and £57,000 was owed to Giles Clarke and Nick Harrison respectively in unpaid salaries. These amounts were settled in full in December 2022.
There have been no other material transactions with related parties.
27. ULTIMATE CONTROLLING PARTY
The Directors do not consider there to be one single ultimate controlling party.
ENDS
For further information on the Company, visit: www. kazeraglobal .com
|
Kazera Global plc (c/o St Brides) Dennis Edmonds (CEO) |
|
|
finnCap (Nominated Adviser and Broker) Christopher Raggett / Fergus Sullivan (Corporate Finance) |
Tel: +44 (0)207 220 0500 |
|
St Brides (PR) Paul Dulieu / Isabel de Salis / Susie Geliher |
|
Notes
Kazera is a global investment company focused on developing early-stage assets towards meaningful cashflow and production in the resource sector. Its current assets include a diamond mine and heavy mineral sands production in South Africa. The Company intends to leverage its unique board expertise, investment capability and operational proficiency, to facilitate exceptional cash generation and shareholder growth.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
Latest directors dealings
- 5 hours ago Urban Logistics Reit
- 5 hours ago Ocado Group
- 6 hours ago AJ Bell
- 6 hours ago Foresight Enterprise VCT
- 6 hours ago Mitie Group