Final Results
30 June 2022
Keras Resources plc ('Keras' or the 'Company')
Final Results
Keras Resources plc (AIM: KRS) announces its final results for the 15 months ending 31 December 2021.
Highlights
Utah - Diamond Creek Phosphate Mine ("Diamond Creek") - one of the highest-grade organic phosphate mines in the US, a fully integrated mine to market asset
· Spanish Fork milling plant commissioned during June 2021 to increase installed capacity and enable flexibility to produce a variety of sized organic rock phosphate products
· 8,520 tonnes of phosphate mined at Diamond Creek during the summer of 2021
· Total sales of 4,657 tons from June 2020 through to May 2022
· Increased ownership of Diamond Creek in March 2022 from 51% to 100% for a total consideration of US$3.2m
· 2022 summer mining season currently underway at Diamond Creek to produce milled product for the spring 2023 season
· Construction of a downstream granulator plant is planned for 2022 to further expand range of phosphate products to attract a price premium in markets not currently supplied
· Marketing and sales being strengthened and new offtake agreements with repeat customers negotiated
· Focus for 2022 and beyond is developing market share in US organic fertiliser industry and building Diamond Creek into the premier organic phosphate producer in the US
Corporate
· £550,000 and £1,000,000 fundraising completed December 2020 and January 2021
· Further £1,950,000 (before costs) raised at a premium and supported by a new cornerstone investor, First Uranium Resources Ltd, a Canadian public company active in the North American phosphate market, to facilitate growing a portfolio of North American phosphate projects
· Board Changes
o Graham Stacey appointed to the Board in November 2021 and assumed responsibility for the Diamond Creek mine in March 2022 - assumed the role as CEO on 1 June 2022
o Russell Lamming has stepped down as CEO and assumed the role as Non-Executive Director as of 1 June 2022, and will become Non-Executive Chairman as of 1 September 2022
o Brian Moritz stepping down as Non-Executive Chairman as of 1 September 2022, will assume the role as Non-Executive Director and remain as Company Secretary
Graham Stacey, Keras Resources Chief Executive Officer, commented, "2021 was not without its challenges, however, we were very pleased to have announced the acquisition of full ownership and to have assumed full operational and marketing control of Diamond Creek in March 2022. The completion of a £1.95m capital raise which saw First Uranium Resources Ltd come in as a cornerstone investor, and the acquisition of an additional 7% in the market by First Uranium associate AxCap Ventures was particularly encouraging .
"We will now focus on delivering on the current summer mining season at Diamond Creek to September 2022, continue to negotiate new offtake agreements with repeat customers and more importantly identify new outlets for our existing product mix. Near-term growth plans also include installing a downstream granulator plant which will allow us to further broaden our current product offering, attracting premium prices in the markets that those products bring.
"We believe the Company is excellently positioned to deliver into the growing organic agricultural sector underpinned by the macro-economic tailwinds of the global fertiliser markets. Ultimately our mission is to penetrate and increase our market share in the US organic fertiliser industry and to build Diamond Creek into the premier organic phosphate producer in the US .
"I look forward to working closely with our new cornerstone investor(s) to lever off synergies that their investment will bring and continuing to build production and sales at Diamond Creek, as we move forward in this exciting chapter in the Company's evolution and growth."
Posting of Annual Report and Notice of AGM and General Meeting
Copies of the Company's full Annual Report and Financial Statements (the "Annual Report") will be made available to download from the Company's w ebsite shortly at https://www.kerasplc.com/constitutional-documents/ and will also be posted to shareholders today along with the notice of its Annual General Meeting ("AGM") and General Meeting which are to be held at 11am and 11.15am respectively on the 25th July 2022.
Chairman's Statement
I am pleased to provide an update on our progress since my last report and set out our outlook for the business going forward.
The main activity of Keras is now in developing the Diamond Creek organic phosphate mine in Utah, USA, and we announced on 30 March 2022 that Keras had increased its ownership from 51% to 100%. Subsequently, Keras concluded a £1.95m (before costs) fund raising, underpinned by a new cornerstone investor who is focussed on growing a portfolio of North American phosphate projects.
The Diamond Creek phosphate mine
Despite facing challenges throughout the reporting period, we continued to make significant progress with our fully integrated mine to market operation at Diamond Creek in Utah which is believed to be one of the highest grade organic rock phosphate deposits in the US.
The Diamond Creek phosphate mine, which is situated on an 840 acre Federal Lease, and the Spanish Fork Processing Facility, are owned and operated by Falcon Isle Resources LLC and Falcon Isle Holdings LLC (collectively 'Falcon Isle'). Keras initially acquired a 51% equity interest in Falcon Isle in July 2020 for nominal consideration by agreeing to loan a total of $2.5m to Falcon Isle in tranches. The last tranche of the loan was advanced at the end of December 2020, so that Falcon Isle has been accounted for as a subsidiary of Keras for 2021. Post-period end, in March 2022, we were pleased to announce that Keras had agreed to acquire our partner's 49% equity interest in Falcon Isle, increasing our holding from 51% to 100%, for a total consideration of US$3.2m, which includes loans repaid to the vendor totalling US $1,816,527. This agreement made Falcon Isle a wholly owned subsidiary of Keras, allowing Graham Stacey, previously COO of Keras, to take over full management control of the operation, and become CEO of the Group. Importantly, the agreement avoided a lengthy and costly litigation process, operations recommenced immediately, and we continue to meet customers' demand for our phosphate product.
Located approximately 80km south-east of Salt Lake City, Diamond Creek is one of the highest-grade organic phosphate deposits in the US, and our mission going forward is to build the operation into the premier organic phosphate producer in the US. Our focus and market segment is in supporting sustainable agriculture and we are strong advocates for the benefits of enhancing soil health. Our organic phosphate fertiliser products can help farmers realise better crop growth and yields while reducing the soil degradation seen when farmers use chemically manufactured fertilisers.
The mine is fully permitted, and the Spanish Fork processing plant is close to infrastructure and ideally located to take advantage of Salt Lake City's resources including labour, supplies, industrial engineering and financial services. The integrated mining and processing operation has compelling economics with a low capex, simple low-intensity seasonal mining operation and our in-house processing plant has flexibility to beneficiate a variety of organic rock phosphate products throughout the period. The mined material only requires crushing, milling and bagging before being sold as high-grade organic rock phosphate fertiliser - a 23% total phosphorus pentoxide ('P205') premium product and importantly with minimum 12% available P205 which is significantly higher than our competitors.
The project has a pre-stripped area with production drilling information delineating approximately 2 years of planned production still in-situ. However, we believe there is significant scope to increase the current life of mine at Diamond Creek with historic "surface mineable resources" representing in excess of 60 years of production. Part of the funds raised recently will be used to establish a NI 43-101 compliant mineral resource at Diamond Creek.
Immediately post Keras' injection of funding into Falcon Isle, beneficiation was undertaken on a toll basis with a key contractor. The Company subsequently took the decision to move processing in-house and construct a new plant at Spanish Fork, 30km from Diamond Creek. This was to both increase the installed capacity and enable flexibility to beneficiate a variety or organic phosphate products to offer across our marketing campaign. The plant was fabricated and shipped from Shanghai, with construction commencing on site in Spanish Fork in February 2021 and commissioning was successfully completed at the end of June, 2021.
In November 2021 the Company announced it was in dispute with its 49% partner in Falcon Isle due to a capital shortfall resulting in all operations at Diamond Creek being temporarily halted and Keras engaging local US legal representatives to enforce its rights under the terms of the initial transaction. The 2021 mining season had already been completed prior to operations being suspended and sales continued to be made from processed material in stock over the winter period.
In 2021, 8,520 tons of phosphate were mined and delivered to the laydown area at Diamond Creek. Sales totalled 4,657 tons of phosphate from June 2020 through to May 2022. Since Keras took control of the marketing function and with both the mining and processing facilities now operating as planned developing market share will be our primary focus for the next two years. Production rhythm is key to the supply of both consistent quantity and quality products which Keras' operational control and our recent fund-raise has now enabled.
A key component of our marketing effort will be growth tests across a range of crops and soil types. This process is planned to run for the balance of 2022 and will provide focussed market feedback to support of our product use across crop types, regions and planting seasons.
We are now looking forward to commencing our mining season at Diamond Creek which takes place during the summer season from July to September, while the mine site is free of snow.
Nayéga manganese mine / Togo
On the 18 October 2019 the Council of Ministers of the Republic of Togo published a decree granting the right for large-scale exploitation of the manganese deposit at Nayéga to the Company's subsidiary, Société Générale des Mines ("SGM"). Since that date the Company has concentrated its efforts on obtaining the required Exploitation Permit. The terms of the permit and associated protocols have been agreed, and SGM has been converted from a private to a public company, as required by law and in compliance with the draft Mining Convention. However, the exploitation permit approval has not been forthcoming.
Financial review
The Consolidated Statement of Comprehensive Income for the 15-month period shows a loss of £1,948,000 (2020 - loss £1,257,000). The results of the two periods are not strictly comparable due to the different lengths of the periods reported on as a result of the change in year-end to 31 December. The loss for the period under review has suffered from delays in realising the value of the Diamond Creek mine which are referred to above.
Also included is a technical loss amounting to £398,000 due to the IFRS requirement to treat the previous minority interest in Falcon Isle as having been disposed of and the 51% majority acquired as a separate transaction.
During the period Keras undertook two fund raisings, in December 2020 and January 2021, raising £550,000 and £1,000,000 respectively (before costs), primarily to facilitate finance for the Diamond Creek mine, and also for working capital generally.
In May 2022 Keras raised a further £1,950,000 (before costs) at a premium to the previous share price, of which £960,000 was subscribed by a new cornerstone investor, First Uranium Resources Ltd, a Canadian public company active in the North American phosphate market. These funds will be used for the first tranche of US$800,000 of the cost of acquiring the former minority interest in Falcon Isle, the establishment of a NI 43-101 compliant Mineral Resource at Diamond Creek, expansion of the Falcon Isle business into other fields of activity and general working capital.
First Uranium initially acquired a 10.03% interest in the Company by participating in the above Capital raise and, subsequent to this, AxCap Ventures, an associated company of First Uranium, accumulated a further 7.04% interest in Keras through on-market trades. First Uranium's support for the Company is part of their focus on developing a portfolio of assets in the North American phosphate market as it sees this as a key growth commodity within the resource sector.
Directors and Management
Graham Stacey, who has been COO since 2020, was appointed to the Board in November 2021 and assumed responsibility for the Diamond Creek mine in March 2022. He is in the process of relocating from Johannesburg to Utah. On 1 June 2022 Graham took over the role of Chief Executive Officer from Russell Lamming, who has become a Non-Executive Director. I would like to welcome Graham to the Board and thank Russell for his untiring work during his tenure as CEO.
Later in the year, on 1 September 2022, Russell will take over from me as Non-Executive Chairman. I will remain a Non-Executive Director and Company Secretary, and I will continue to provide oversight of the Company's finances.
Outlook
With the closing of the £1.95m capital raise and securing 100% of our high-grade organic phosphate Diamond Creek mine, we believe the Company is excellently positioned to deliver into the growing organic agricultural sector. This sector is underpinned by the macro-economic tailwinds of the global fertiliser markets, and we remain bullish on our premium phosphate product and our position as we continue to build market share.
Plans for expansion to broaden our product mix are under way and we continue to negotiate new offtake agreements with our repeat customers. The construction of a downstream granulator plant is planned for 2022 to allow us to further expand the range of our products from five sized dry products to include two sized granulated products which will attract a price premium in markets that we are not currently supplying. Now that we are fully in charge of operations the Directors are confident that Falcon Isle will be a profitable and valuable asset for the Group, and we look forward to updating our shareholders on our progress as we continue to ramp up the production profile and build our position and market share of the fast-growing US organic phosphate market.
Finally, I would like to take this opportunity to thank my colleagues on the Board and our management team for their hard work, and shareholders for their continuing support.
Brian Moritz
Chairman
29 June 2022
Strategic Report
Having acquired 100% control of the Diamond Creek asset, the Group's strategy is to progressively enhance shareholder value through building market share for its products within the North American organic fertiliser market. At the same time ongoing value engineering initiatives will continue to streamline operations and rationalise costs to ensure consistent product quality and volumes, all aimed at increasing margins. In the longer-term, enhancing value of that asset will involve both organic expansion as well as identifying value-accretive projects/businesses with natural synergies to increase scale and to add value to the Company.
Diamond Creek is one of the highest-grade organic phosphate mines in the US, and the Company's purpose is to build the operation into the premier organic phosphate producer in the US. Keras supports sustainable, regenerative agriculture and is an advocate for the benefits of enhancing soil health. Diamond Creek's organic phosphate fertiliser products can help farmers realise better crop growth and yields, reduce soil degradation, build and maintain soil organic matter to improve overall soil health, and ultimately reduce CO2 levels in the atmosphere through carbon sequestration.
Organic fertilisers' significantly lower carbon footprint relative to traditional synthetic/chemical fertilisers and will continue to support demand and pricing for organic replacements including rock phosphate. Keras is therefore also looking at developing opportunities around carbon sequestration and the associated carbon credits to further augment its business and enhance shareholder value. Diamond Creek's organic phosphate products have the potential to tap directly into this rapidly growing market and the Company is looking at developing and enhancing the value of this aspect of its portfolio and in-turn generate greater returns for shareholders.
The Group's business model has established the Company as an efficient, high-quality and low-cost producer direct into the North American fertiliser market.
During the reporting period the Group was focussed largely on developing operations at Diamond Creek to maximise operational efficiencies, build market share and generate cashflow. The mine is owned by Falcon Isle, in which the Company held a 51% equity interest during the reporting period, subsequently increasing this to 100% in March 2022.
The Company is aware of a national geophysical survey being undertaken by the Togolese Ministry of Mines and Energy and we do not expect the permitting process at our Nayéga manganese project to be concluded prior to the survey being completed.
In exploring and developing mines to exploit mineral deposits, the Group accepts that not all its exploration will be successful but also that the rewards for success can be high. It therefore expects that its shareholders will be invested for potential capital growth, taking a long-term view of management's good track record in mineral discovery and development. The Directors have continued to invest in the Company and currently hold approximately 21.3% of the issued shares in Keras, after allowing for the substantial fund raisings since the period end. We believe this stake provides further evidence of the Board's belief in and commitment to its strategy.
To date, the Group has financed its activities through equity raisings. As the Group's projects become more advanced, the Board will seek mining and/or offtake finance and may also investigate strategic opportunities to obtain funding for projects from future customers via pre-payments, royalties, and other marketing arrangements.
Financial and Performance Review
Turnover in the period under review comprised sales of phosphate fertilisers by Falcon Isle. Turnover of £452,000 was constrained by construction of the processing plant, which was only operational for the final six months of the period, as well as the problems with working capital referred to previously.
The results of the Group are set out in detail in the financial statements. The Group reports a loss for the period of £1,948,000 (2020: loss £1,257,000).
Fixed assets total £5,375,000 (2020: £1,332,000), which includes the bulk sample plant and associated infrastructure at the Nayéga project, and the Falcon Isle processing plant totalling £544,000 (2020: £262,000).
The Directors have assessed the carrying values of Falcon Isle and SGM and no impairment has been deemed necessary.
Key Performance Indicators (KPIs)
During the period the Board monitored the following KPIs:
· Cash flow and working capital:
o Short (<3 months) and long-term cashflow models are prepared to monitor and forecast the Group's funding needs;
o Management accounts prepared on a monthly basis for the Group's key subsidiaries and quarterly on a consolidated basis.
Mining projects
North America
Keras acquired an interest in Falcon Isle, holder of the Diamond Creek phosphate mine, in July 2020, and increased its interest to 51% in December 2020. Keras acquired the outstanding 49% post the reporting period in March 2022. The mine is situated approximately 80km SSE of Salt Lake City, Utah. Diamond Creek is a fully permitted, high-grade direct shipping ore ("DSO"), low capex organic phosphate mine, which has significant historical estimated in-situ tonnage (mineral resources have not been classified according to modern International Reporting Standards) with sufficient phosphate ore exposed in-situ to provide for the 2022 and 2023 mining seasons before any overburden stripping is required. The phosphate mineralisation is concentrated in the shale beds of the Meade Peak Member of the Phosphoria Formation. The mineralised zone is c.3m thick at the base of the Meade Peake Member and averages 23% total P2O5 with guaranteed available P2O5 of 12%. Historic reports vary with "surface mineable resources" ranging from 3.10Mt to 4.60Mt. At an internally estimated peak production rate of 23.5ktpa, the opencast resources alone represent a significant mine life.
The 2021 mining campaign was completed in October 2021 with a total of 8,520 ore tons extracted from the mine. Beneficiation during the reporting period was undertaken through a combination of contractor toll-milling (producing 10mesh and -50mesh products) and Falcon Isle owned milling infrastructure. A new high-pressure rolls milling plant was successfully commissioned during June 2021 which has the capacity to produce steady-state product of 23,500 tons per month. The plant comprises front-end feed, primary crush, milling, dust extraction, 50lb and 1ton bagging circuits to produce a range of products including -50 mesh, -100 mesh and -350 mesh powders in either 50lb bags or 1ton bags (totes). A granulation plant was procured and delivered to our Spanish Fork site during September 2021 with construction and commissioning planned for the second half of 2022 which will further broaden our product range to include high margin granulated organic phosphate.
The product has received Organic Certification by all three key certification agencies in the USA - California (CDFA), Washington State (WSDA) and the federal Organic Materials Review Institute (OMRI). As a Direct Shipping Ore (DSO) it requires no chemical/synthetic upgrade processes. Our rock contains low heavy metal impurities, significantly higher available P2O5 than any other organic rock phosphate in North America, and a calcium content of >25%.
Africa
Keras currently holds an 85% interest in the Nayéga manganese project in Togo, which covers 19,903 hectares in northern Togo, held through Société Générale des Mines SA (SGM). As set out in the Chairman's Statement, SGM is still waiting for the issue of the exploitation permit.
Sustainability
Keras is committed to responsible mining and upholding ESG best practice across our business. We care about all our stakeholders and are focused on looking to create value and benefits for all whilst seeking to manage and mitigate the potential impacts that our operations may have. We are focussed on mining an essential resource that can contribute to a more sustainable future and importantly sustainable and regenerative agriculture. With the Diamond Creek mine we are running a simple operation with only crushing & milling requirements and will look to maintain our low carbon footprint. We are focused on meeting our commitments across the ESG space and will continue to be proactive in this area as we look to develop and sustain a positive legacy.
Risk Management
The Board regularly reviews the risks to which the Group is exposed and ensures through its meetings and regular reporting that these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this stage in its development are:
Market Risk
Unlike marketing globally traded, indexed commodities into international markets, growing market share within the niche organic fertiliser market within North America presents risk in terms of pricing and volume.
The Group has employed a head of marketing to develop and implement a marketing strategy which will be a key focus area to build market share. The business has a range of existing customers, three of which are anchor clients having provided commitments to purchase a pleasing base load of our planned annual production. Our marketing strategy rollout will include presence at industry trade exhibitions and conferences, as well as regular regional direct contact visits with a comprehensive schedule of contacts within the wholesale and distribution segments of the organic fertiliser market. Our business model will largely be driven by uptake from co-operative type clients with wide distribution networks, rather than selling directly to farmers themselves.
Exploration Risk
The Group's business has been primarily mineral exploration and evaluation which are speculative activities and whilst the Directors are satisfied that good progress is being made, there is no certainty that the Group will be successful in the definition of economic mineral deposits, or that it will proceed to the development of any of its projects or otherwise realise their value.
The Group aims to mitigate this risk when evaluating new business opportunities by targeting areas of potential where there is at least some historical drilling or geological data available.
Resource Risk
All mineral projects have risk associated with defined grade and continuity. Mineral reserves and resources are calculated by the Group in accordance with accepted industry standards and codes but are always subject to uncertainties in the underlying assumptions which include geological projection and commodity price assumptions.
The Group reports mineral resources and ore reserves in accordance with internationally approved codes where our operations/projects are located, which set minimum standards for public reporting of mineral exploration results, mineral resources and ore reserves.
Development Risk
Delays in permitting, financing and commissioning a project may result in delays to the Group meeting development and/or production targets. Changes in commodity prices can affect the economic viability of mining projects and affect decisions on continuing exploration activity.
Mining and Processing Technical Risk
Notwithstanding the completion of metallurgical testwork, trial mining and pilot studies indicating the technical viability of a mining operation, variations in mineralogy, mineral continuity, ground stability, ground water conditions and other geological conditions may still render a mining and processing operation economically or technically non-viable.
The Group has a small team of mining professionals experienced in geological evaluation, exploration, financing and development of mining projects. To mitigate development risk, the Group supplements this from time to time with engagement of external expert consultants and contractors.
Environmental Risk
Exploration and development of a project can be adversely affected by environmental legislation and the unforeseen results of environmental studies carried out during evaluation of a project. Once a project is in production unforeseen events can give rise to environmental liabilities.
As Keras undertakes mining operations, any disturbance to the environment during this phase is required to be rehabilitated in accordance with the prevailing regulations of the countries in which we operate as well as to international best-practice.
Given the Group's size and scale it is not considered practical or cost effective to collect and report data on carbon emissions.
Financing & Liquidity Risk
The Group has had an ongoing requirement to fund its activities through the equity markets and may in future need obtain finance for further project development. There is no certainty such funds will be available when needed. To date, Keras has managed to raise funds primarily through equity placements despite the very difficult markets that currently exist for raising funding in the junior mining industry.
Political Risk
All countries carry political risk that can lead to interruption of activity. Politically stable countries can have enhanced environmental and social permitting risks, risks of strikes and changes to taxation whereas less developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and government expropriation of assets.
Partner Risk
Whilst there has been no past evidence of this, the Group can be adversely affected if joint venture or equity partners are unable or unwilling to perform their obligations or fund their share of future developments. Keras no longer operates with either equity or joint venture partners having secured 100% of the Diamond Creek project.
Bribery Risk
The Group has adopted an anti-corruption and bribery policy and whistle blowing policy under the Bribery Act 2010. Notwithstanding this, the Group may be held liable for offences under that Act committed by its employees or subcontractors, whether or not the Group or the Directors had knowledge of the commission of such offences.
Financial Instruments
Details of risks associated with the Group's financial instruments are given in Note 26 to the financial statements. Keras does not utilise any complex or derivative financial instruments.
COVID-19
Travel and shipping restrictions in place globally during 2021 had a direct impact on timing and cost of delivery of plant and equipment to the USA. However, given recent developments the Directors do not believe that Covid 19 will have a material effect on the Company or its operations going forward.
Insurance Coverage
The Group maintains a suite of insurance coverage that is appropriate for the Group and Company. This is arranged via a specialist mining insurance broker and coverage includes public and products liability, travel, property and medical coverage and assistance while Group employees and consultants are travelling on Group business. This is reviewed at least annually and adapted as the Group's scale and nature of activities changes. Keras also has Directors and Officers insurance in place.
Internal Controls and Risk Management
The Directors are responsible for the Group's system of internal financial control. Although no system of internal financial control can provide absolute assurance against material misstatement or loss, the Group's system is designed to provide reasonable assurance that problems are identified on a timely basis and dealt with appropriately.
In carrying out their responsibilities, the Directors have put in place a framework of controls to ensure as far as possible that ongoing financial performance is monitored in a timely manner, that corrective action is taken and that risk is identified as early as practically possible. The Directors review the effectiveness of internal financial control at least annually.
The Board, subject to delegated authority, reviews capital investment, property sales and purchases, additional borrowing facilities, guarantees and insurance arrangements.
The Board takes account of the significance of social, environmental and ethical matters affecting the business of the Group. At this stage in the Group's development the Board has not adopted a specific policy on Corporate Social Responsibility as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect the interests of Keras' stakeholders through individual policies and through ethical and transparent actions.
The Group has adopted an anti-corruption and bribery policy and a whistle blowing policy as stated previously.
Shareholders
The Directors are always prepared, where practicable and subject to confidentiality under the AIM Rules, to enter into dialogue with shareholders to promote a mutual understanding of objectives. The Annual General Meeting provides the Board with an opportunity to informally meet and communicate directly with investors.
Employees
The Group operates primarily through contractors. Notwithstanding this, the Group engages its employees to understand all aspects of the Group's business and seeks to remunerate its employees fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Group takes account of employees' interests when making decisions and welcomes suggestions from employees aimed at improving the Group's performance.
The Group currently operates in the USA and Togo. It recruits locally as many of its employees and contractors as practicable.
The Company has four directors, all are male.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. Contractors are appointed based on a detailed assessment of their capabilities, capacity and track record.
Health and Safety
The Board recognises that it has a responsibility to provide strategic leadership and direction in the development of the Group's health and safety strategy in order to protect all of its stakeholders. The Group does not have a formal health and safety policy at this time. This is re-evaluated as and when the Group's nature and scale of activities expand.
Section 172 statement
The Directors 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 requirements of s172 are for the Directors 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's operations and strategic aims are set out throughout the Strategic Report and in the Chairman's Statement, and relationships with stakeholders are also dealt with in the Corporate Governance Statement.
Graham Stacey
Director
This Strategic Report was approved by the Board of Directors on 29 June 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 15 MONTHS ENDED 31 DECEMBER 2021
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Notes |
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15 months ended 31 December 2021 £'000 |
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Year ended 30 September 2020 £'000
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Continuing operations |
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Revenue |
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452 |
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- |
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Cost of sales |
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(496) |
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- |
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Gross profit |
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(44) |
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- |
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Administrative and exploration expenses |
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(1,448) |
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(1,235) |
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Loss from operating activities |
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(1492) |
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(1,235) |
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Finance costs |
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11 |
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(43) |
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(3) |
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Net finance costs |
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(43) |
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(3) |
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Share of net loss of associates accounted for using the equity method Loss on change of ownership |
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15 |
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(116)
(363) |
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(4)
- |
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Loss before taxation |
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(2,014) |
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(1,242) |
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Tax |
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12 |
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- |
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- |
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Loss for the period/year |
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(2,014) |
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(1,242) |
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Other comprehensive income - items that may be subsequently reclassified to profit or loss |
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Exchange translation on foreign operations |
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66 |
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(15) |
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Total comprehensive loss for the period/year |
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(1,948) |
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(1,257) |
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Loss attributable to: |
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Owners of the Company |
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(1,729) |
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(1,181) |
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Non-controlling interests |
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(285) |
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(61) |
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Loss for the period/year |
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(2,014) |
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(1,242) |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss attributable to: |
|
|
|
|
|
|
||
|
Owners of the Company |
|
|
|
|
|
(1,670) |
|
(1,194) |
|
Non-controlling interests |
|
|
|
|
|
(278) |
|
(63) |
|
Total comprehensive loss for the period/year |
|
|
|
|
(1,948) |
|
(1,257) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
||||
|
Basic and diluted loss per share (pence) |
|
22 |
|
(0.033) |
|
(0.040) |
||
|
|
|
|
|
|
|
|
||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
|
|
|
|
|
|
|
|
|
Notes |
|
31 December 2021 £'000 |
|
30 September 2020 £'000 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
||
|
Property, plant and equipment |
|
|
|
|
|
13 |
|
554 |
|
263 |
||
|
Intangible assets |
|
|
|
|
|
14 |
|
4,606 |
|
1,069 |
||
|
Right of use asset |
|
|
|
|
|
16 |
|
215 |
|
- |
||
|
Investments accounted for using the equity method |
|
|
|
|
|
15 |
|
- |
|
1,622 |
||
|
Non-current assets |
|
|
|
|
|
|
|
5,375 |
|
2,954 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Inventory |
|
|
|
|
|
18 |
|
273 |
|
|
||
|
Other investments |
|
|
|
|
|
16 |
|
- |
|
- |
||
|
Trade and other receivables |
|
|
|
|
|
19 |
|
94 |
|
83 |
||
|
Cash and cash equivalents |
|
|
|
|
|
20 |
|
166 |
|
438 |
||
|
Current assets |
|
|
|
|
|
|
|
533 |
|
521 |
||
|
Total assets |
|
|
|
|
|
|
|
5,908 |
|
3,475 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Equity |
|
|
|
|
|
|
|
|
|
|
||
|
Share capital |
|
|
|
|
|
21 |
|
630 |
|
487 |
||
|
Share premium |
|
|
|
|
|
|
|
4,033 |
|
2,637 |
||
|
Other reserves |
|
|
|
|
|
|
|
111 |
|
16 |
||
|
Retained (deficit)/earnings |
|
|
|
|
|
|
|
(1,721) |
|
8 |
||
|
Equity attributable to owners of the Company |
|
|
|
|
|
3,053 |
|
3,148 |
||||
|
Non-controlling interests |
|
|
|
|
|
|
|
229 |
|
(140) |
||
|
Total equity |
|
|
|
|
|
|
|
3,282 |
|
3,008 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
||
|
Trade and other payables Lease liabilities - current |
|
|
|
|
|
24 16 |
|
1,658 107 |
|
467 - |
||
|
Current liabilities |
|
|
|
|
|
|
|
1,765 |
|
467 |
||
|
Trade and other payables |
|
|
|
|
|
24 |
|
749 |
|
- |
||
|
Lease liabilities - non-current |
|
|
|
|
|
16 |
|
112 |
|
- |
||
|
Non-current liabilities |
|
|
|
|
|
|
|
861 |
|
- |
||
|
Total liabilities |
|
|
|
|
|
|
|
2,626 |
|
467 |
||
|
Total equity and liabilities |
|
|
|
|
|
|
|
5,908 |
|
3,475 |
||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 15 MONTHS ENDED 31 DECEMBER 2021
|
Attributable to owners of the Company |
|
|
|
|
|||||||||||||||||||
|
|
|
|
Share capital
£'000 |
Share premium
£'000 |
Share option /warrant reserve £'000 |
Exchange reserve
£'000 |
|
Financial assets at FVOCI
£'000 |
|
Retained earnings/(deficit)
£'000 |
Total
£'000 |
Non-controlling interests
£'000 |
|
Total equity
£'000 |
|||||||||
|
Balance at 1 October 2020 |
|
487 |
|
2,637 |
|
63 |
|
(47) |
|
- |
|
8 |
|
3,148 |
|
(140) |
|
3,008 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Loss for the period |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,729) |
|
(1,729) |
|
(285) |
|
(2,014) |
|||||
|
Other comprehensive income |
- |
|
- |
|
- |
|
58 |
|
- |
|
- |
|
58 |
|
8 |
|
66 |
||||||
|
Total comprehensive loss for the period |
- |
|
- |
|
- |
|
58 |
|
- |
|
(1,729) |
|
(1,671) |
|
(277) |
|
(1,948) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Issue of ordinary shares |
|
143 |
|
1,469 |
|
- |
|
- |
|
- |
|
- |
|
1,612 |
|
- |
|
1,612 |
|||||
|
Costs of share issue |
|
- |
|
(73) |
|
- |
|
- |
|
- |
|
- |
|
(73) |
|
- |
|
(73) |
|||||
|
Share-based payment transactions |
- |
|
- |
|
37 |
|
- |
|
- |
|
- |
|
37 |
|
- |
|
37 |
||||||
|
Non-controlling interest on acquisition of subsidiary |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
646
|
|
646
|
||||||
|
Transactions with owners, recognised directly in equity |
143 |
|
1,396 |
|
37 |
|
- |
|
- |
|
- |
|
1,576 |
|
646 |
|
2,222 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Balance at 31 December 2021 |
630 |
|
4,033 |
|
100 |
|
11 |
|
- |
|
(1,721) |
|
3,053 |
|
229 |
|
3,382 |
||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2020
|
|
|
Attributable to owners of the Company |
|
|
|
|||||||||||||||||
|
|
|
|
|
Share capital
£'000 |
Share premium
£'000 |
Share option reserve £'000 |
Exchange reserve
£'000 |
|
Financial assets at FVOCI £'000 |
|
Retained (deficit)/earnings
£'000 |
Total
£'000 |
Non-controlling interests £'000 |
|
Total equity
£'000 |
|||||||
|
Balance at 1 October 2019 |
|
|
7,266 |
|
10,938 |
|
- |
|
(33) |
|
3,459 |
|
(10,310) |
|
11,320 |
|
(76) |
|
11,244 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Loss for the year |
|
|
- |
|
- |
|
- |
|
- |
|
- |
|
(1,181) |
|
(1,181) |
|
(61) |
|
(1,242) |
|||
|
Other comprehensive income |
|
- |
|
- |
|
- |
|
(16) |
|
- |
|
4 |
|
(12) |
|
(3) |
|
(15) |
||||
|
Total comprehensive loss for the year |
- |
|
- |
|
- |
|
(16) |
|
- |
|
(1,177) |
|
(1,193) |
|
(64) |
|
(1,257) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Capital reduction |
|
|
(7,023) |
|
(10,938) |
|
- |
|
- |
|
- |
|
17,961 |
|
- |
|
- |
|
- |
|||
|
Demerger and recycling of OCI reserve |
|
|
- |
|
- |
|
- |
|
- |
|
(3,459) |
|
(6,464) |
|
(9,923) |
|
- |
|
(9,923) |
|||
|
Issue of ordinary shares |
|
|
244 |
|
2,718 |
|
- |
|
- |
|
- |
|
- |
|
2,962 |
|
- |
|
2,962 |
|||
|
Costs of share issue |
|
|
- |
|
(81) |
|
- |
|
- |
|
- |
|
- |
|
(81) |
|
- |
|
(81) |
|||
|
Share-based payment transactions |
|
- |
|
- |
|
63 |
|
- |
|
- |
|
- |
|
63 |
|
- |
|
63 |
||||
|
Transfer |
- |
|
- |
|
- |
|
2 |
|
- |
|
(2) |
|
- |
|
- |
|
- |
|||||
|
Total transactions with owners, recognised directly in equity |
|
(6,779) |
|
(8,301) |
|
63 |
|
2 |
|
(3,459) |
|
11,495 |
|
(6,979) |
|
- |
|
(6,979) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance at 30 September 2020 |
|
487 |
|
2,637 |
|
63 |
|
(47) |
|
- |
|
8 |
|
3,148 |
|
(140) |
|
3,008 |
||||
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 15 MONTHS ENDED 31 DECEMBER 2021
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
|
Year ended 30 September 2020 £'000 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
|||
|
Loss from operating activities |
|
|
|
|
|
|
|
(2,014) |
|
(1,242) |
|||
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|||
|
Depreciation and amortisation |
|
|
|
|
|
172 |
|
76 |
|||||
|
Share of loss of equity accounted associate |
|
|
|
116 |
|
4 |
|||||||
|
Compensation on cancellation of SARS scheme |
|
|
|
- |
|
120 |
|||||||
|
Equity-settled share-based payments |
|
|
|
37 |
|
63 |
|||||||
|
Foreign exchange differences |
|
|
|
|
|
|
|
73 |
|
(39) |
|||
|
|
|
|
|
|
|
|
|
(1,616) |
|
(1,018) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
|||
|
- inventory |
|
|
|
|
|
|
|
(216) |
|
- |
|||
|
- trade and other receivables |
|
|
|
|
|
|
|
111 |
|
2 |
|||
|
- trade and other payables |
|
|
|
|
|
|
|
540 |
|
278 |
|||
|
Cash generated by/(used in) operating activities |
|
|
|
|
|
(1,181) |
|
(738) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Finance costs |
|
|
|
|
|
|
|
- |
|
- |
|||
|
Taxes paid |
|
|
|
|
|
|
|
- |
|
- |
|||
|
Net cash generated by/(used in) operating activities |
|
|
|
(1,181) |
|
(738) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
|||
|
Cash acquired on acquisition (note 15) |
|
|
|
|
|
158 |
|
|
|||||
|
Acquisition of property, plant and equipment |
|
|
|
|
|
(188) |
|
- |
|||||
|
Exploration and licence expenditure |
|
|
|
|
|
(538) |
|
(1) |
|||||
|
Investment in associate |
|
|
|
|
|
- |
|
(938) |
|||||
|
Net cash used in investing activities |
|
|
|
|
|
|
|
(568) |
|
(939) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
|||
|
Net proceeds from issue of share capital |
|
|
|
|
|
1,477 |
|
1,931 |
|||||
|
Net cash flows from financing activities |
|
|
|
|
|
|
|
1,477 |
|
1,931 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Net (decrease)/increase in cash and cash equivalents |
|
|
(272) |
|
254 |
||||||||
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash and cash equivalents at beginning of period/year |
|
|
|
|
|
438 |
|
184 |
|||||
|
Cash and cash equivalents at 31 December/30 September |
|
|
|
166 |
|
438 |
|||||||
The following significant non-cash transactions took place in the period ended 31 December 2021:
· Shares were issued to settle a total of £55,000 due to creditors.
· The investment in Falcon Isle became a subsidiary as detailed in note 15 and the assets and liabilities were acquired.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
|
|
|
|
|
|
|
|
|
Notes |
|
31 December 2021 £'000 |
|
30 September 2020 £'000 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
||
|
Property, plant and equipment |
|
|
|
|
|
13 |
|
2 |
|
- |
||
|
Investments |
|
|
|
|
|
15 |
|
1,959 |
|
1,622 |
||
|
Non-current assets |
|
|
|
|
|
|
|
1,961 |
|
1,622 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Other investments |
|
|
|
|
|
16 |
|
- |
|
- |
||
|
Loans |
|
|
|
|
|
17 |
|
2,081 |
|
1,534 |
||
|
Trade and other receivables |
|
|
|
|
|
19 |
|
20 |
|
70 |
||
|
Cash and cash equivalents |
|
|
|
|
|
20 |
|
122 |
|
428 |
||
|
Current assets |
|
|
|
|
|
|
|
2,223 |
|
2,032 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total assets |
|
|
|
|
|
|
|
4,184 |
|
3,654 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Equity |
|
|
|
|
|
|
|
|
|
|
||
|
Share capital |
|
|
|
|
|
21 |
|
630 |
|
487 |
||
|
Share premium |
|
|
|
|
|
|
|
4,033 |
|
2,637 |
||
|
Other reserves |
|
|
|
|
|
|
|
100 |
|
63 |
||
|
Retained earnings/(deficit) |
|
|
|
|
|
|
|
(729) |
|
285 |
||
|
Total equity attributable to owners of the Company |
|
|
|
4,034 |
|
3,472 |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
||
|
Trade and other payables |
|
|
|
|
|
24 |
|
150 |
|
182 |
||
|
Current liabilities |
|
|
|
|
|
|
|
150 |
|
182 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total liabilities |
|
|
|
|
|
|
|
150 |
|
182 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total equity and liabilities |
|
|
|
|
|
|
|
4,184 |
|
3,654 |
||
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 from presenting the Parent Company profit and loss account. The Parent Company loss for the period was £1,014,000 (year to 30 September 2020: loss of £811,000).
The financial statements of Keras Resources PLC, company number 07353748, were approved by the Board of Directors and authorised for issue on 29 June 2022. They were signed on its behalf by:
Brian Moritz, Director
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 31 DECEMBER 2021
|
|
|
Share capital
£'000 |
|
Share premium
£'000 |
Share option /warrant reserve £'000 |
|
Financial assets at FVOCI £'000 |
|
Retained earnings/ (deficit) £'000 |
|
Total equity
£'000 |
||
|
Balance at 1 October 2019 |
|
7,266 |
|
10,938 |
- |
|
3,459 |
|
(10,401) |
|
11,262 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Loss for the year |
|
- |
|
- |
- |
|
- |
|
(811) |
|
(811) |
||
|
Other comprehensive income |
|
- |
|
- |
- |
|
- |
|
- |
|
- |
||
|
Total comprehensive loss for the year |
|
- |
|
- |
|
- |
|
- |
|
(811) |
|
(811) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital reduction |
|
(7,023) |
|
(10,938) |
|
- |
|
- |
|
17,961 |
|
- |
|
|
Demerger and recycling of OCI reserve |
|
- |
|
- |
|
- |
|
(3,459) |
|
(6,464) |
|
(9,923) |
|
|
Issue of ordinary shares |
|
244 |
|
2,718 |
|
- |
|
- |
|
- |
|
2,962 |
|
|
Costs of share issue |
|
- |
|
(81) |
|
- |
|
- |
|
- |
|
(81) |
|
|
Share-based payment transactions |
|
- |
|
- |
|
63 |
|
- |
|
- |
|
63 |
|
|
Transactions with owners, recognised directly in equity |
|
(6,779) |
|
(8,301) |
|
63 |
|
(3,459) |
|
11,497 |
|
(6,979) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance at 30 September 2020 |
|
487 |
|
2,637 |
|
63 |
|
- |
|
285 |
|
3,472 |
|
|
Balance at 1 October 2020 |
|
487 |
|
2,637 |
63 |
|
- |
|
285 |
|
3,472 |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Loss for the period |
|
- |
|
- |
- |
|
- |
|
(1,014) |
|
(1,014) |
||
|
Other comprehensive income |
- |
|
- |
- |
|
- |
|
- |
|
- |
|||
|
Total comprehensive loss for the period |
|
- |
|
- |
|
- |
|
- |
|
(1,014) |
|
(1,014) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of ordinary shares |
|
143 |
|
1,469 |
|
- |
|
- |
|
- |
|
1,612 |
|
|
Costs of share issue |
|
- |
|
(73) |
|
- |
|
- |
|
- |
|
(73) |
|
|
Share-based payment transactions |
|
- |
|
- |
|
37 |
|
- |
|
- |
|
37 |
|
|
Transactions with owners, recognised directly in equity |
|
143 |
|
1,396 |
|
37 |
|
- |
|
- |
|
1,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance at 31 December 2021 |
|
630 |
|
4,033 |
|
100 |
|
- |
|
(729) |
|
4,034 |
|
COMPANY STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 31 DECEMBER 2021
|
|
|
|
|
|
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
|
Year ended 30 September 2020 £'000 |
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
|
||
|
Loss from operating activities |
|
|
|
|
|
|
|
(1,014) |
|
(811) |
||
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
||
|
Depreciation |
|
|
|
|
|
|
|
1 |
|
- |
||
|
Share of loss of associate |
|
|
|
|
|
|
|
116 |
|
4 |
||
|
Impairment/write off of loan |
|
|
|
|
|
|
|
- |
|
4 |
||
|
Compensation on cancellation of SARS scheme |
|
|
|
- |
|
120 |
||||||
|
Equity-settled share-based payments |
|
|
|
|
|
|
|
37 |
|
63 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
||
|
- trade and other receivables |
|
|
|
|
|
|
|
50 |
|
14 |
||
|
- trade and other payables |
|
|
|
|
|
|
|
23 |
|
25 |
||
|
Cash generated by/(used in) operating activities |
|
|
|
|
|
(787) |
|
(581) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Finance costs |
|
|
|
|
|
|
|
- |
|
- |
||
|
Net cash generated by (used in) operating activities |
|
|
|
|
(787) |
|
(581) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
|
|
||
|
Acquisition of property, plant and equipment |
|
|
|
|
|
|
|
(3) |
|
- |
||
|
Investment in associate/subsidiary |
|
|
|
|
|
|
|
(446) |
|
(938) |
||
|
Net cash used in investing activities |
|
|
|
|
|
|
|
(449) |
|
(938) |
||
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
|
|
||
|
Net proceeds from issue of share capital |
|
|
|
|
|
|
1,477 |
|
1,931 |
|||
|
Loans (to)/repaid by subsidiaries |
|
|
|
|
|
|
|
(547) |
|
(159) |
||
|
Net cash flows from financing activities |
|
|
|
|
930 |
|
1,772 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Net increase/(decrease) in cash and cash equivalents |
|
|
|
(306) |
|
253 |
||||||
|
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents at beginning of period/year |
|
|
|
|
|
428 |
|
175 |
||||
|
Cash and cash equivalents at 31 December/30 September |
|
|
|
122 |
|
428 |
||||||
The following significant non-cash transactions took place in the period ended 31 December 2021:
· Shares were issued to settle a total of £55,000 due to creditors.
1. Reporting entity
Keras Resources PLC is a company domiciled in England and Wales. The address of the Company's registered office is Coveham House, Downside Bridge Road, Cobham KT11 3EP. The Group currently operates as a miner of and explorer for mineral resources. The accounting reference date has changed to 31 December to be coterminous with the main trading subsidiaries.
2. Going concern
The Directors have adopted the going concern basis in preparing the Group and Company financial statements. The Group's and Company's business activities together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and Strategic Report. In addition, note 25 to the Financial Statements includes the Group's policies and processes for managing its financial risk management objectives.
Since the end of the period, the Company has agreed to acquire the minority 49% interest in Falcon Isle, and to repay loans made by the vendor to Falcon Isle, for a total consideration of $3.2 million. This amount is payable in four annual instalments of $800,000 commencing on 1 July 2022.
Also since the end of the period, the Company has raised a further £1.95 million, before costs, by the issue of New Ordinary Shares. Part of this will be used to pay the first instalment of $800,000 to the vendor of Falcon Isle.
The Nayéga mine in Togo is in a position to commence operations when the exploitation licence is granted. Capital expenditure to expand production and working capital will be primarily provided in the short term by a loan in association with an offtake agreement which has been agreed in principle. Should the Company divest its interest in the Nayéga mine, this is expected to be a cash flow positive transaction.
The Directors do not believe that Covid 19 has had a material effect on the Company or its operations other than travel restrictions which have restricted the ability of management to visit operations. This has been mitigated by increased home working and use of electronic communications. Such travel restrictions have now been removed in most instances.
On this basis, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. As such, the Directors continue to adopt the going concern basis of accounting.
3. Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the Companies Act 2006("IFRSs"), and the Companies Act 2006 as applicable to entities reporting in accordance with IFRS.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis unless otherwise stated.
(c) Functional and presentation currency
These consolidated financial statements are presented in Pounds Sterling ('GBP' or '£'), which is the Group's functional currency and is considered by the Directors to be the most appropriate presentation currency to assist the users of the financial statements. All financial information presented in GBP has been rounded to the nearest thousand, except when otherwise indicated.
(d) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, 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 judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised if the revision affects only that period, or in the period of revision and future periods of the revision if it affects both current and future periods.
Critical estimates and assumptions that have the most significant effect on the amounts recognised in the consolidated financial statements and/or have a significant risk of resulting in a material adjustment within the next financial year are as follows:
· Carrying value of intangible assets - Notes 4(e)(i) and 14
· Intercompany receivables (Company only) - Note 19
· Carrying value of investment in associate - Note 15
· Fair value of share options and warrants - Note 21
4. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.
(a) Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it 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. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. On disposal of subsidiaries, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This might mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
(iii) Associates
Investments in associates are accounted for using the equity method of accounting after initially being recognised at cost. Loans to associates denominated in US$ are recognised in sterling in the financial statements at the period end exchange rate.
(iv) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
(b) Foreign currency
Transactions in foreign currencies are translated into the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction.
(i) Foreign operations
The assets and liabilities of foreign operations, including goodwill and the fair value adjustments arising on acquisition, are translated to GBP at exchange rates at the reporting date. The income and expenses of foreign operations are translated to GBP at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and accumulated in the translation reserve except to the extent that the translation difference is allocated to non-controlling interests. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
(c) Financial instruments
(i) Financial assets
The Group's financial assets measured at amortised cost comprise trade and other receivables, cash and cash equivalents and financial assets at fair value through other comprehensive income in the consolidated statement of financial position.
Trade receivables and intra group balances are initially recognised at fair value. New impairment requirements use an expected credit loss model to recognise an allowance. For receivables a simplified approach to measure expected credit losses during a lifetime expected loss allowance is available and has been adopted by the Group. During this process the probability of non-payment of the receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being reported within the consolidated statement of comprehensive income. On confirmation that the trade and intra group receivable will not be collectable, the gross carrying value of the asset is written off against the provision.
Financial assets at fair value through other comprehensive income
These assets are initially measured at fair value. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and interest income, are recognised in OCI and accumulated in the fair value reserve. When these assets are derecognised, any related balance within the FVOCI reserve is reclassified to retained earnings.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise trade and other payables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity, net of any tax effects.
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. Ongoing repairs and maintenance is expensed as incurred.
(iii) Depreciation
Items of property, plant and equipment are depreciated on a straight-line basis in the statement of comprehensive income over the estimated useful lives of each component.
Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use.
The estimated useful lives of significant items of property, plant and equipment are as follows:
· plant and equipment 10 years
· office equipment 2 years
· computer equipment 2 years
· motor vehicles 5 years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
(e) Intangible assets
(i) Prospecting and exploration rights
Rights acquired with subsidiaries are recognised at fair value at the date of acquisition. Other rights acquired and evaluation expenditure are recognised at cost.
(ii) Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.
(iii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred.
(iv) Amortisation
Intangible assets are amortised in profit or loss over their estimated useful lives, from the date that they are available for use.
The estimated useful lives are as follows:
· Prospecting and exploration rights - Life of mine based on units of production
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Amortisation is included within administrative expenses in the statement of comprehensive income.
(f) Impairment
(i) Non-derivative financial assets
A financial asset not classified as at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, and had an impact on the estimated future cash flows from that asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.
Financial assets measured at amortised cost
The Group considers evidence of impairment for financial assets measured at amortised cost (loans and receivables) at both a specific asset and collective level. All individually significant assets are assessed for specific impairment. Those found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.
In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management's judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance against loans and receivables. Interest on the impaired asset continues to be recognised. When an event occurring after the impairment was recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Financial assets at fair value through other comprehensive income
Impairment losses on financial assets at FVOCI are recognised by reclassifying the losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment previously recognised in profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as FVOCI are not reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. Indefinite-lived intangible assets are tested annually for impairment or when there is an indication of impairment. An impairment loss is recognised if the carrying amount of an asset or Cash Generating Unit ('CGU') exceeds its recoverable amount.
The recoverable amount of an asset of CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro rata basis.
An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
(g) Employee benefits
Share-based payments
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is no adjustment for differences between expected and actual outcomes.
(i) Revenue
Revenue from the sale of processed products is recognised when ownership of the product passes to the purchaser in accordance with the relevant sales contract. Ownership passes either upon delivery or once the product is collected where customers arrange delivery.
(j) Finance income and finance costs
Finance income comprises interest income on bank funds. Interest income is recognised as it accrues in profit or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings. Borrowing costs are recognised in profit or loss in the period in which they are incurred.
(k) Taxation
Tax expense comprises current and deferred tax. Current and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
· temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;
· temporary differences related to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future; and
· taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
(l) Leases
The Group leases certain property, plant and equipment. Leases of plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases under IFRS 16. Finance leases are capitalised on the lease's commencement at the lower of the fair value of the leased assets and the present value of the minimum lease payments. Other leases are either small in value or cover a period of less than 12 months.
The lease liability is initially measured at the present value of the lease payments that are not paid. Lease payments generally include fixed payments less any lease incentives receivable. The lease liability is discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. The Group estimates the incremental borrowing rate based on the lease term, collateral assumptions, and the economic environment in which the lease is denominated. The lease liability is subsequently measured at amortized cost using the effective interest method. The lease liability is remeasured when the expected lease payments change as a result of new assessments of contractual options and residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at the commencement date of the lease less any incentives received from the lessor. Added to the right-of-use asset are initial direct costs, payments made before the commencement date, and estimated restoration costs. The right-of-use asset is subsequently depreciated on a straight-line basis from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in lease liabilities, split between current and non-current depending on when the liabilities are due. The interest element of the finance cost is charged to the Statement of Profit and Loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Assets obtained under finance leases are depreciated over their useful lives. The lease liabilities are shown in Note 6
(m) Inventories
Inventories for processed material and ore stockpiles are valued at the lower of cost and net realisable value. Costs allocated to processed material are based on average costs and include all costs of purchase, conversion and other costs in bringing these inventories to their existing location and condition. Costs allocated to ore stockpiles are based on average costs, which include an appropriate share of direct mining costs, direct labour and material costs, mine site overhead, depreciation and amortisation. If carrying value exceeds net realisable amount, a write down is recognised. The write down may be reversed in a subsequent period if the circumstances which caused it no longer exist.
(n) Segment reporting
Segment results that are reported to management include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
(o) Equity reserves
Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issue of shares are deducted from share premium.
The share option/warrant reserve is used to recognise the fair value of equity-settled share based payment transactions.
The exchange reserve is used to record exchange differences arising from the translation of foreign subsidiaries into the presentation currency.
The financial assets at FVOCI reserve is used to record unrealised accumulated changes in fair value on financial assets.
5. New standards and interpretations
There are no amendments to International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS) that have been implemented by the Group in the period ended 31 December 2021 and have changed the Group's accounting policies.
Standards, Amendments to published Standards and Interpretations issued but not yet effective
Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.
6. Determination of fair values
A number of the Group's accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(i) Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a business combination is the estimated amount for which a property could be exchanged on the date of acquisition between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably. The fair value of items of plant and equipment is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.
(ii) Intangible assets
The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.
(iii) Trade and other receivables
The fair value of trade and other receivables is estimated at the present value of future cash flows, discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure purposes or when such assets are acquired in a business combination.
(iv) Share-based payments
The fair value of the employee share options is measured using the Black-Scholes formula. Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility (based on an evaluation of the Company's historic volatility, particularly over the historic period commensurate with the expected term), expected term of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account in determining fair value.
(v) Investments - other
When one is available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. A discount is applied to the value of any Performance shares to reflect the possibility that the milestones for conversion into ordinary shares may not be met.
7. Operating segments
The Group considers that it operated during the period in two distinct business areas, being that of manganese production and exploration in West Africa and phosphate mining in Utah, USA. These business areas form the basis of the Group's operating segments. For each segment, the Group's Managing Director (the chief operating decision maker) reviews internal management reports on at least a quarterly basis.
Other operations relate to the Group's administrative functions conducted at its head office and by its intermediate holding company together with consolidation adjustments.
Information regarding the results of each reportable segment is included below. Performance is measured based on segment result before tax, as included in the internal management reports that are reviewed by the Group's Managing Director. Segment results are used to measure performance as management believes that such information is the most relevant in evaluating the performance of certain segments relative to other entities that operate within the exploration industry.
Information about reportable segments
15 months ended 31 December 2021
|
|
|
|
|
Manganese £'000 |
Phosphate £'000 |
|
Other operations £'000 |
|
Total £'000
|
|
||||||
|
External revenue |
|
|
|
- |
451 |
|
- |
|
451 |
|||||||
|
Cost of sales |
|
|
|
- |
495 |
|
|
|
495 |
|
||||||
|
Interest expense |
|
|
|
- |
- |
|
- |
|
- |
|
||||||
|
Depreciation, amortisation and impairment |
|
|
|
43 |
143 |
|
1 |
|
187 |
|
||||||
|
Share of associate loss to date of becoming subsidiary |
|
|
- |
116 |
|
- |
|
116 |
|
|||||||
|
(Loss)/profit before tax |
|
|
(60) |
(569) |
|
(1,385) |
|
(2,014) |
|
|||||||
|
Assets |
|
|
|
1,535 |
4,229 |
|
144 |
|
5,908 |
|
||||||
|
Exploration and capital expenditure |
|
|
|
1,332 |
3,274 |
|
- |
|
4,606 |
|
||||||
|
Liabilities |
|
|
|
360 |
2,113 |
|
155 |
|
2,628 |
|
||||||
Year ended 30 September 2020
|
|
|
|
Manganese £'000 |
|
Phosphate £'000 |
|
Other operations £'000 |
|
Total £'000
|
||||
|
External revenue |
|
|
- |
|
- |
|
- |
|
- |
||||
|
Interest expense |
|
|
- |
|
- |
|
- |
|
- |
||||
|
Depreciation, amortisation and impairment |
|
|
76 |
|
- |
|
- |
|
76 |
||||
|
Share of associate loss |
|
- |
|
(4) |
|
|
|
(4) |
|||||
|
(Loss)/profit before tax |
|
(405) |
|
(4) |
|
(833) |
|
(1,242) |
|||||
|
Assets |
|
|
1,011 |
|
1,622 |
|
842 |
|
3,475 |
||||
|
Exploration and capital expenditure |
|
|
1 |
|
- |
|
- |
|
1 |
||||
|
Liabilities |
|
|
285 |
|
- |
|
182 |
|
467 |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Information about geographical segments
15 months ended 31 December 2021
|
|
|
|
West Africa £'000 |
|
US £'000 |
|
Other £'000 |
|
Total £'000
|
|
External revenue |
|
|
- |
|
451 |
|
- |
|
451 |
|
Cost of sales |
|
|
- |
|
496 |
|
- |
|
496 |
|
Interest expense |
|
|
- |
|
- |
|
- |
|
- |
|
Depreciation, amortisation and impairment |
|
|
43 |
|
143 |
|
1 |
|
187 |
|
Share of associate loss to date of becoming subsidiary |
|
|
- |
|
(116) |
|
- |
|
(116) |
|
(Loss)/profit before tax |
|
|
(44) |
|
(569) |
|
(1,385) |
|
(2,014) |
|
Assets |
|
|
1,541 |
|
4,229 |
|
138 |
|
5,908 |
|
Exploration and capital expenditure |
|
|
1,332 |
|
3,274 |
|
- |
|
4,606 |
|
Liabilities |
|
|
360 |
|
2,113 |
|
155 |
|
2,628 |
Year ended 30 September 2020
|
|
|
|
West Africa £'000 |
|
US £'000 |
|
Other £'000 |
|
Total £'000
|
|
External revenue |
|
|
- |
|
- |
|
- |
|
- |
|
Interest expense |
|
|
- |
|
- |
|
- |
|
- |
|
Depreciation, amortisation and impairment |
|
|
76 |
|
- |
|
- |
|
76 |
|
Share of associate loss |
|
|
- |
|
(4) |
|
- |
|
(4) |
|
(Loss)/profit before tax |
|
|
(405) |
|
(4) |
|
(833) |
|
(1,242) |
|
Assets |
|
|
1,011 |
|
1,622 |
|
842 |
|
3,475 |
|
Exploration and capital expenditure |
|
|
1 |
|
- |
|
- |
|
1 |
|
Liabilities |
|
|
285 |
|
- |
|
182 |
|
467 |
8. Expenses
|
Expenses include:
|
|
|
|
15 months ended 31 December 2021 £'000 |
Year ended 30 September 2020 '000 |
||
|
Depreciation and amortisation expense |
|
|
44 |
|
76 |
||
|
Auditor's remuneration |
|
|
|
|
|
|
|
|
- Audit fee |
|
|
|
|
33 |
|
23 |
|
Foreign exchange differences |
|
|
|
|
12 |
|
4 |
Auditor's remuneration for the period in respect of the Company amounted to £11,000 (year ended 30 September 2020: £10,000).
9. Personnel expenses
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
Year ended 30 September 2020 £'000 |
||
|
Wages and salaries |
|
672 |
|
446 |
|||
|
Fees |
|
100 |
|
158 |
|||
|
Equity-settled share-based payments (see note 23) |
|
37 |
|
183 |
|||
|
|
|
|
|
|
809 |
|
787 |
Fees in respect of the services of D Reeves are payable to a third party, Wilgus Investments (Pty) Limited.
Fees in respect of the services of R Lamming are payable to a third party, Parallel Resources Limited for part of the previous period.
The average number of employees (including directors) during the period was:
|
|
|
|
|
15 months ended 31 December 2021 |
Year ended 30 September 2020 |
||
|
Directors |
|
|
|
|
4 |
|
3 |
|
Key management personnel Other |
|
|
|
|
- 3 |
|
1 3 |
|
|
|
|
|
|
7 |
|
7 |
10. Directors' emoluments
15 months ended 31 December 2021
|
|
|
Executive directors
£'000
|
Non-executive directors £'000 |
Total
'000 |
|||
|
Wages and salaries (incl. fees) |
|
|
234 |
82 |
316 |
||
|
|
|
|
234 |
|
82 |
|
316 |
Year ended 30 September 2020
|
|
|
Executive directors
£'000
|
Non-executive directors £'000 |
Total
'000 |
|||
|
Wages and salaries (incl. fees) |
|
|
152 |
66 |
218 |
||
|
Compensation payment resulting from SARS cancellation |
|
|
120 |
- |
120 |
||
|
|
|
|
272 |
|
66 |
|
338 |
These amounts are disclosed by director in the Directors' report on page 15.
Emoluments disclosed above include the following amounts payable to the highest paid director:
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
Year ended 30 September 2020 £'000 |
||
|
Emoluments for qualifying services |
|
|
|
|
219 |
|
272 |
Key management personnel
Included in note 10 are emoluments paid to key management personnel in the period which amounted to £70,000 (year ended 30 September 2020: £71,000).
11. Finance costs
Recognised in loss for period
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
Year ended 30 September 2020 £'000 |
|
Other |
|
|
43 |
|
3 |
|
|
|
|
43 |
|
3 |
12. Taxation
Current tax
|
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
|
Year ended 30 September 2020 £'000 |
|
Tax recognised in profit or loss |
|
|
|
|
|
|
|
|
Current tax |
|
|
|
|
|
|
|
|
Current period |
|
- |
|
- |
|||
|
|
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
|
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
Total tax |
|
|
|
|
- |
|
- |
Reconciliation of effective tax rate
|
|
|
|
|
|
|
|
15 months ended 31 December 2021 £'000 |
|
Year ended 30 September 2020 £'000
|
|
Loss before tax (continuing operations) |
|
|
|
(2,014) |
|
(1,242) |
|||
|
|
|
|
|
|
|
|
|
|
|
|
Tax using the Company's domestic tax rate of 19.0% (2020: 19.0%) |
|
(383) |
|
(236) |
|||||
|
|
|
|
|
|
|
|
|
||
|
Effects of: |
|
|
|
|
|
|
|
||
|
Expenses not deductible for tax purposes |
|
|
|
2 |
|
3 |
|||
|
Overseas (profits)/losses |
|
|
|
116 |
|
93 |
|||
|
Equity-settled share-based payments |
|
|
|
7 |
|
12 |
|||
|
Tax losses carried forward not recognised as a deferred tax asset |
|
258 |
|
128 |
|||||
|
|
|
- |
|
- |
|||||
None of the components of other comprehensive income have a tax impact.
Factors that may affect future tax charges
At the period end, the Group had unused tax losses available for offset against suitable future profits of approximately £7,128,000 (year ended 30 September 2020: £5,771,000). A deferred tax asset has not been recognised in respect of such losses due to uncertainty of future profit streams.
13. Property, plant and equipment
Group
|
|
|
|
Plant and equipment
£'000 |
Office and computer equipment £'000 |
Motor vehicles
£'000 |
|
Total
£'000 |
||||
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 October 2019 |
|
|
|
360 |
|
31 |
|
19 |
|
410 |
|
|
Additions |
|
|
|
- |
|
- |
|
- |
|
- |
|
|
Disposals |
|
(39) |
|
(6) |
|
(19) |
|
(64) |
|||
|
Effect of movements in exchange rates |
|
8 |
|
- |
|
- |
|
8 |
|||
|
Balance at 30 September 2020 |
|
329 |
|
25 |
|
- |
|
354 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 October 2020 |
|
|
|
329 |
|
25 |
|
- |
|
354 |
|
|
Acquisition of Falcon Isle |
|
|
|
172 |
|
|
|
|
|
172 |
|
|
Additions |
|
|
|
185 |
|
3 |
|
- |
|
188 |
|
|
Disposals |
|
- |
|
- |
|
- |
|
- |
|||
|
Effect of movements in exchange rates |
|
(25) |
|
- |
|
- |
|
(25) |
|||
|
Balance at 31 December 2021 |
|
661 |
|
28 |
|
- |
|
689 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and impairment provisions |
|
|
|
|
|
|
|
|
|||
|
Balance at 1 October 2019 |
|
|
|
29 |
|
30 |
|
19 |
|
78 |
|
|
Depreciation for the year |
|
|
|
76 |
|
- |
|
- |
|
76 |
|
|
Depreciation on disposals |
|
(39) |
|
(6) |
|
(19) |
|
(64) |
|||
|
Effect of movements in exchange rates |
|
1 |
|
- |
|
- |
|
1 |
|||
|
Balance at 30 September 2020 |
|
67 |
|
24 |
|
- |
|
91 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 October 2020 |
|
|
|
67 |
|
24 |
|
- |
|
91 |
|
|
Depreciation for the period |
|
|
|
34 |
|
2 |
|
- |
|
36 |
|
|
Depreciation on disposals |
|
|
|
- |
|
- |
|
- |
|
- |
|
|
Effect of movements in exchange rates |
|
8 |
|
- |
|
- |
|
8 |
|||
|
Balance at 31 December 2021 |
|
109 |
|
26 |
|
- |
|
135 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|
|
At 30 September 2019 |
|
|
|
331 |
|
1 |
|
- |
|
332 |
|
|
At 30 September 2020 |
|
|
|
262 |
|
1 |
|
- |
|
263 |
|
|
At 31 December 2021 |
|
|
|
552 |
|
2 |
|
- |
|
554 |
|
Company
|
|
|
|
|
Plant and equipment £'000 |
Computer equipment £'000 |
|
Total £'000 |
||||||
|
Cost |
|
|
|
|
|
|
|
|
|
|
|||
|
Balance at 1 October 2019 |
|
|
|
|
|
- |
|
5 |
|
5 |
|||
|
Transfers |
|
|
|
|
|
- |
|
- |
|
- |
|||
|
Balance at 30 September 2020 |
|
- |
|
5 |
|
5 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance at 1 October 2020 |
|
|
|
|
|
- |
|
5 |
|
5 |
|||
|
Additions |
|
|
|
|
|
- |
|
3 |
|
3 |
|||
|
Balance at 31 December 2021 |
|
|
|
- |
|
8 |
|
8 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Depreciation and impairment provisions |
|
|
|
|
|
|
|||||||
|
Balance at 1 October 2019 |
|
|
|
- |
|
5 |
|
5 |
|||||
|
Depreciation for the year |
|
|
|
- |
|
- |
|
- |
|||||
|
Balance at 30 September 2020 |
|
- |
|
5 |
|
5 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Balance at 1 October 2020 |
|
|
|
|
|
- |
|
5 |
|
5 |
|||
|
Depreciation for the period |
|
|
|
|
|
- |
|
1 |
|
1 |
|||
|
Balance at 31 December 2021 |
|
|
|
- |
|
6 |
|
6 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
|||
|
At 30 September 2019 |
|
|
|
|
|
- |
|
- |
|
- |
|||
|
At 30 September 2020 |
|
|
|
|
|
- |
|
- |
|
- |
|||
|
At 31 December 2021 |
|
|
|
|
|
- |
|
2 |
|
2 |
|||
14. Intangible assets - Group
|
|
|
|
|
|
|
|
|
Prospecting and exploration rights £'000 |
|||
|
Cost |
|
|
|
|
|
|
|
|
|||
|
Balance at 1 October 2019 |
|
|
|
|
|
|
|
1,206 |
|||
|
Additions |
|
|
|
|
|
|
|
|
|
1 |
|
|
Disposals |
|
|
|
|
|
|
|
- |
|||
|
Effect of movement in exchange rates |
|
|
|
|
|
|
|
20 |
|||
|
Balance at 30 September 2020 |
|
|
|
|
|
|
|
1,227 |
|||
|
Balance at 1 October 2020 |
|
|
|
|
|
|
|
1,227 |
|
Acquisition of Falcon Isle (note 15) |
|
|
|
|
|
|
|
3,046 |
|
Additions |
|
|
|
|
|
|
|
538 |
|
Disposals |
|
|
|
|
|
|
|
(158) |
|
Effect of movements in exchange rates |
|
|
|
|
|
|
|
(10) |
|
Balance at 31 December 2021 |
|
|
|
|
|
|
|
4,643 |
|
Amortisation and impairment losses |
|
|
|
|
|
|
|
|
|
|
Balance at 1 October 2019 |
|
|
|
|
|
|
155 |
||
|
Impairment |
|
|
|
|
|
|
- |
||
|
Amortisation |
|
|
|
|
|
|
- |
||
|
Disposals Effect of movements in exchange rates |
|
|
|
|
|
|
- 3 |
||
|
Balance at 30 September 2020 |
|
|
|
|
|
|
158 |
||
|
Balance at 1 October 2020 |
|
|
|
|
|
|
|
158 |
|
Impairment |
|
|
|
|
|
|
|
- |
|
Amortisation |
|
|
|
|
|
|
|
37 |
|
Disposals |
|
|
|
|
|
|
|
(158) |
|
Effect of movements in exchange rates |
|
|
|
|
|
|
|
- |
|
Balance at 31 December 2021 |
|
|
|
|
|
|
|
37 |
|
Carrying amounts |
|
|
|
|
|
|
|
|
|
|
Balance at 30 September 2019 |
|
|
|
|
|
|
|
1,051 |
|
|
Balance at 30 September 2020 |
|
|
|
|
|
|
|
|
1,069 |
|
Balance at 31 December 2021 |
|
|
|
|
|
|
|
|
4,606 |
The carrying value of the prospecting and exploration rights is supported by the estimated resource and current market values.
15. Investments in subsidiaries and associates
|
Company - subsidiaries
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
||||
|
Equity investments |
|
|
|
|
|
|
||||||
|
Balance at beginning of period |
|
|
|
- |
|
- |
||||||
|
Additions - from associates |
|
|
|
1,959 |
|
- |
||||||
|
Disposals |
|
|
|
- |
|
- |
||||||
|
Balance at 31 December/30 September |
|
|
|
1,959 |
|
- |
||||||
|
|
|
|
|
|
|
|
|
Country of |
|
Ownership interest |
|||
|
|
|
|
|
|
|
Activity |
incorporation |
|
2021 |
|
2020 |
||
|
Directly |
|
|
|
|
|
|
|
|
|||||
|
Southern Iron Limited |
Investment |
|
Guernsey |
|
100% |
|
100% |
||||||
|
Falcon Isle Resources LLC |
Mining |
|
USA |
|
51% |
|
40% |
||||||
|
Indirectly |
|
|
|
|
|
|
|
||||||
|
Société Générale des Mines SA |
Exploration |
|
Togo |
|
85% |
|
85% |
||||||
|
|
|
|
|
|
|
|
|
||||||
Registered offices of subsidiary companies are:
Southern Iron Limited, 1st Floor, Elizabeth House, Les Ruettes Brayes, St Peter Port, Guernsey
Société Générale des Mines, Quartier Adidogome Apedokoe 02, BP 20022, Lome, Togo
Falcon Isle Resources LLC, 8 The Green, Suite B8, Dover, Kent, Delaware 19901, USA
Group and Company - associates
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Accounted for using the equity method
At 1 October |
|
1,622 |
|
- |
|||
|
Additions - including acquisition costs |
|
453 |
|
1,626 |
|||
|
Share of loss for the period |
|
(116) |
|
(4) |
|||
|
Transfer to investment in subsidiary |
|
(1,959) |
|
- |
|||
|
At 31 December/30 September |
|
- |
|
1,622 |
|||
The interest in Falcon Isle was acquired for nominal consideration under a binding heads of terms dated 28 July 2020. Under this agreement the Company agreed to provide US$2.5m in loans to Falcon Isle payable in agreed tranches. Falcon Isle is the 100% owner of the Diamond Creek phosphate mine located in in Utah (USA) which is a fully permitted, high grade direct shipping ore organic phosphate operating mine.
At 30 September 2020 the Company had advanced US$ 1.9m to Falcon Isle, resulting in an equity interest of 40% and bringing the cost of the investment in the associate to £1,626,000.
On 31 December 2020 the Company advanced the balance of $0.6m and its equity interest has increased to a controlling interest of 51%.
The initial acquisitions were accounted for under the equity method of accounting but upon achieving control on 31 December 2020, the acquisition method of accounting has been applied.
Since 31 December 2021, on 29 March 2022, the Company agreed to acquire the outstanding 49% equity interest in Falcon Isle and loans totalling $1,816,527 made by the vendor to Falcon Isle, for total consideration of $3.2 million, payable in four annual tranches commencing on 1 July 2022.
From the date of the acquisition on 31 December 2020 to 31 December 2021, Falcon Isle Resources recognized revenue of £452,000 and incurred a loss of £569,000. If the acquisition had occurred on 1 October 2020 the Group's revenue and loss for the 15-month period ended 31 December 2021 would have been £548,000 and £2,261,000 respectively.
|
|
|
|
The fair value of assets and liabilities acquired on acquisitions are as follows:
|
|
|
|
|
|
Fair value £'000 |
|
|
|
|
|
|
|
|
|
|
Intangibles |
|
|
|
|
|
3,046 |
|
Fixed assets |
|
|
|
|
|
172 |
|
Inventory |
|
|
|
|
|
57 |
|
Receivables |
|
|
|
|
|
122 |
|
Bank balances and cash |
|
|
|
|
|
158 |
|
Trade and other payables |
|
|
|
|
|
(17) |
|
Loans |
|
|
|
|
|
(1,330) |
|
|
|
|
|
|
|
2,208 |
The investment in associate was revalued prior to acquisition to fair value based on the price paid to acquire the additional 11% shareholding. Under IFRS 3, on acquisition of the controlling stake, the Group remeasured its original 40% investment in Falcon Isle. This led to a loss on change of ownership of £363,000 being recognised in the Consolidated Statement of Comprehensive Income.
On acquisition the non-controlling interest, valued based upon net assets at acquisition, was valued at £645,000. No goodwill has arisen from the acquisition.
16. Leases
The following lease liabilities arose in respect of the recognition of right of use assets with a net book value of £219,000. The Group holds one lease that it accounts for under IFRS 16.
The right of use assets are as follows:
|
|
|
|
|
||
|
|
|
|
£000 |
||
|
Balance at 30 September 2020 |
|
|
- |
||
|
Additions |
|
|
314 |
||
|
Depreciation |
|
|
(99) |
||
|
Balance at 31 December 2021 |
|
|
215 |
||
|
The lease liability is as follows: |
|
||||
|
|
£000 |
||||
|
Balance at 30 September 2020 |
- |
||||
|
Addition |
314 |
||||
|
Principal reduction |
(105) |
||||
|
Finance cost |
10 |
||||
|
Balance at 31 December 2021 |
219 |
||||
|
Less: Current portion |
(107) |
||||
|
Non-current portion |
112 |
||||
A maturity analysis of the undiscounted minimum lease payments due are as follows:
|
|
|
|
|
£000 |
|
Lease liabilities - minimum lease payments |
|
|
No later than one year |
116 |
|
Later than one year and no later than five years |
116 |
|
Later than five years |
- |
|
Total |
232 |
17. Loans
Company - current
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Balance at beginning of period |
|
1,534 |
|
1,379 |
|||
|
Funds advanced to subsidiaries |
|
547 |
|
159 |
|||
|
Repaid/impaired |
|
- |
|
(4) |
|||
|
Balance at 31 December/30 September |
|
2,081 |
|
1,534 |
|||
All loans to subsidiaries are currently unsecured and interest free and repayable on demand. All loans are denominated in GBP.
18. Inventories
|
|
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Phosphate, including processed material held for sale |
|
|
|
|
|
273 |
|
- |
|
|
|
|
|
|
|
|
273 |
|
- |
|
19. Trade and other receivables
Group
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Trade receivables |
|
7 |
|
- |
|||
|
Other receivables |
|
87 |
|
71 |
|||
|
Prepayments |
|
- |
|
12 |
|||
|
|
|
94 |
|
83 |
|||
|
|
|
|
|
|
|||
Company
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Other receivables |
|
20 |
|
58 |
|||
|
Prepayments |
|
- |
|
12 |
|||
|
|
|
20 |
|
70 |
|||
Other receivables are stated at their nominal value less allowances for non-recoverability.
The Group and Company's exposure to credit and currency risk is disclosed in note 24 and 25. Trade receivables are net of a provision for bad debts of £nil (2020: £nil)
20. Cash and cash equivalents
Group
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Bank balances |
|
166 |
|
438 |
|||
|
Cash and cash equivalents |
|
166 |
|
438 |
|||
Company
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Bank balances |
|
122 |
|
428 |
|||
|
Cash and cash equivalents |
|
122 |
|
428 |
|||
There is no material difference between the fair value of cash and cash equivalents and their book value.
21. Capital and reserves
Share capital
|
|
|
|
|
|
Number of old ordinary shares £0.001 each
|
|||||||||||
|
|
|
|
|
|
31 December 2021 |
|
30 September 2020 |
|||||||||
|
In issue at beginning of year |
|
|
|
|
- |
|
2,491,358,439 |
|||||||||
|
Issued for cash |
|
|
|
|
- |
|
7,000,000 |
|||||||||
|
Issued in settlement of debt |
|
- |
|
- |
||||||||||||
|
Cancelled under capital reduction |
|
- |
|
(2,498,358,439) |
||||||||||||
|
In issue at 31 December/30 September - fully paid |
|
|
- |
|
- |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
Number of new ordinary shares £0.0001 each
|
|||||||||||||
|
|
|
31 December 2021 4,866,007,851 - 1,369,565,217 |
|
30 September 2020
- 2,498,358,439 1,646,678,326 |
|||||||||||
|
Issued in settlement of debt |
|
|
60,500,000 |
|
720,971,086 |
|||||||||||
|
In issue at 31 December/30 September - fully paid |
|
|
6,296,073,068 |
|
4,866,007,851 |
|||||||||||
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
Number of deferred shares of £0.004 each |
|||||||||||||
|
|
|
|
31 December 2021 |
|
30 September 2020 |
|||||||||||
|
In issue at beginning of year |
|
|
- |
|
1,193,794,390 |
|||||||||||
|
Cancelled under capital reduction |
|
|
- |
|
(1,193,794,390) |
|||||||||||
|
In issue at 31 December/30 September - fully paid |
|
|
- |
|
- |
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
||||||||||||||||
|
|
|
|
|
|
Ordinary and deferred share capital
|
|||||||||||
|
|
|
|
|
|
31 December 2021 £'000 |
|
30 September 2020 £'000 |
|||||||||
|
Balance at beginning of year |
|
|
|
|
487 |
|
7,266 |
|||||||||
|
Share issues |
|
|
|
|
143 |
|
244 |
|||||||||
|
Deferred shares cancelled |
|
|
|
|
- |
|
(4,775) |
|||||||||
|
Capital reduction |
|
|
|
|
- |
|
(2,248) |
|||||||||
|
Balance at 31 December/30 September |
|
630 |
|
487 |
||||||||||||
All ordinary shares rank equally with regard to the Company's residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at general meetings of the Company.
Issues of ordinary shares
On 18 December 2020, 400,000,000 ordinary shares were issued for cash at £0.0011 per share.
On 18 December 2020 B Moritz and D Reeves, conditionally agreed to subscribe for 36,363,636 and 63,636,364 shares each at £0.0011 per share, these were issued on 18 January 2021 following a General Meeting to grant increased authority to issue shares.
On 18 January 2021, 869,565,217 ordinary shares were agreed to be issued at £0.00115 per share, of these, B Moritz conditionally agreed to subscribe for 17,391,304 shares and R Lamming conditionally agreed to subscribe for 26,086,957 shares in lieu of part of his salary. Of these shares, 600,000,000 were issued on 18 January 2021 and the balance of 269,565,217 were issued on 15 February 2021 following a General Meeting to grant increased authority to issue shares.
On 18 January 2021, the company conditionally agreed to issue 48,000,000 ordinary shares at £0.00115 per share in settlement of amounts owing to advisors. These were issued on 15 February 2021 following a General Meeting to grant increased authority to issue shares.
On 8 November 2021 G Stacey agreed to convert £7,500 of his outstanding fees into 12,500,000 new ordinary shares of 0.01pence each at a price of 0.06p per share.
|
Warrants |
|
|
|||||
|
|
|
31 December 2021 |
30 September 2020 |
||||
|
|
|
|
|||||
|
|
|
Average exercise price |
Number |
Average exercise price |
Number |
|
|
|
|
|
|
|
|
|
|
|
|
|
In issue at beginning of period |
0.24p |
984,357,334 |
0.36p |
7,000,000 |
|
|
|
|
Lapsed |
0.24p |
(984,357,334) |
- |
- |
|
|
|
|
Issued in period |
0.22p |
250,000,000 |
0.24p |
984,357,334 |
|
|
|
|
Lapsed |
0.22p |
(250,000,000) |
- |
- |
|
|
|
|
Issued in period |
0.18p |
434,785,608 |
- |
- |
|
|
|
|
Exercised in period |
- |
- |
0.36p |
(7,000,000) |
|
|
|
|
In issue at 31 December/30 September |
0.18p |
434,785,608 |
0.24p |
984,357,334 |
|
|
On 18 December 2020 250,000,000 warrants were agreed to be issued to subscribers for the New Ordinary Shares agreed to be issued for cash on 18 December 2020 on the basis of 1 warrant for every 2 shares subscribed. The warrants are exercisable at price of 0.22p at any time up to 31 December 2021.
On 18 January 2021 434,785,608 warrants were agreed to be issued to subscribers for the New Ordinary Shares agreed to be issued for cash on 18 January 2021 on the basis of 1 warrant for every 2 shares subscribed. The warrants are exercisable at price of 0.18p at any time up to 28 February 2022.
The weighted average remaining contractual life of the warrants outstanding is 59 days.
Other reserves
Share option/warrant reserve
The share option/warrant reserve comprises the cumulative entries made to the consolidated statement of comprehensive income in respect of equity-settled share-based payments as adjusted for share options cancelled.
Exchange reserve
The exchange reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
Fair value reserve
The fair value reserve comprised the cumulative net change in the fair value of available-for-sale financial assets until the assets were derecognised or impaired.
22. Earnings per share
Basic and diluted earnings/(loss) per share
The calculation of basic earnings/(loss) per share at 31 December 2021 is based on the following (loss)/profit attributable to ordinary shareholders and a weighted average number of ordinary shares in issue.
Loss attributable to ordinary shareholders (£)
|
|
|
|
|
|
15 months ended 31 December 2021 |
|
Year ended 30 September 2020 |
|
Continuing operations |
|
|
|
|
(1,948,000) |
|
(1,181,000) |
|
Loss attributable to ordinary shareholders |
|
(1,948,000) |
|
(1,181,000) |
|||
Weighted average number of ordinary shares
|
|
|
|
|
|
15 months ended 31 December 2021 |
|
Year ended 30 September 2020 |
|
Issued ordinary shares at beginning of year |
|
|
|
|
4,866,007,851 |
|
2,491,358,439 |
|
Effect of shares issued |
|
|
|
|
1,085,483,160 |
|
444,668,141 |
|
Weighted average number of ordinary shares |
|
5,951,491,011 |
|
2,936,026,580 |
|||
The warrants in issue are considered to be antidilutive and as a result, basic and diluted loss per share are the same.
23. Share-based payments
The Company established an Enterprise Management Incentive Scheme to incentivise Directors and senior executives. On 17 January 2020, 120,000,000 options were granted at £0.001639 with 10,000,000 vesting immediately, 30,000,000 vesting on 9 March 2020, 30,000,000 vesting on 17 January 2021,
30,000,000 vesting on 17 January 2022 and 20,000,000 vesting on 17 January 2023. The options lapse if not exercised within 5 years. Of the total, 90,000,000 options were granted to R Lamming, a Director.
The Black Scholes pricing model was used to calculate the share based payment charge incorporating an annual volatility rate of 55%, expected life of between 2 and 5 years and risk free investment rate of between 0.23% and 0.39%. The charge for the year ended 30 September 2020 for these rights which was included in administrative and exploration expenses amounted to £63,000.
On 7 April 2021, 10,000,000 options were granted at £0.001183 with 3,333,333 vesting on 1 April 2022, 3,333,333 vesting on 1 April 2023 and 3,333,334 vesting on 1 April 2024. The options lapse if not exercised within 5 years.
The Black Scholes pricing model was used to calculate the share based payment charge incorporating an annual volatility rate of 57%, expected life of between 4 and 6 years and risk free investment rate of between 0.6% and 0.93%. The charge for the period ended 31 December 2021 for these rights which was included in administrative and exploration expenses amounted to £5,000.
On 27 May 2021, 15,000,000 options were granted at £0.001121 with 5,000,000 vesting on 17 May 2022, 5,000,000 vesting on 17 May 2023 and 5,000,000 vesting on 17 May 2024. The options lapse if not exercised within 3 years of the vesting dates.
The Black Scholes pricing model was used to calculate the share based payment charge incorporating an annual volatility rate of 57%, expected life of between 4 and 6 years and risk free investment rate of between 0.6% and 0.93%. The charge for the period ended 31 December 2021 for these rights which was included in administrative and exploration expenses amounted to £7,000.
24. Trade and other payables
Group - Current
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Trade payables |
|
|
|
|
962 |
|
104 |
|
Accrued expenses |
|
|
|
|
93 |
|
228 |
|
Amounts due to Falcon Isle Resources' minority interest |
|
|
|
|
593 |
|
- |
|
Other payables |
|
|
|
|
11 |
|
135 |
|
|
|
|
|
|
1,658 |
|
467 |
|
Group - Non-Current
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Amounts due to Falcon Isle Resources' minority interest |
|
|
|
|
749 |
|
- |
|
|
|
|
|
|
749 |
|
- |
Company - Current
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Trade payables |
|
|
|
|
46 |
|
21 |
|
Accrued expenses |
|
|
|
|
91 |
|
97 |
|
Other payables |
|
|
|
|
13 |
|
64 |
|
|
|
|
|
|
150 |
|
182 |
There is no material difference between the fair value of trade and other payables and accruals and their book value. The Group's and Company's exposure to currency and liquidity risk related to trade and other payables is disclosed in note 25.
25. Financial instruments
Financial risk management
The Group's operations expose it to a variety of financial risks that include liquidity risk. The Group has in place a risk management programme that seeks to limit the adverse effect of such risks on its financial performance.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was as follows.
Group
|
|
|
|
|
|
Financial assets at amortised cost |
||
|
|
|
|
|
|
Carrying amount
|
||
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Trade and other receivables |
|
|
|
|
94 |
|
67 |
|
Cash and cash equivalents |
|
|
|
|
166 |
|
438 |
|
|
|
|
|
|
260 |
|
505 |
Company
|
|
|
|
|
|
Financial assets at amortised cost |
||
|
|
|
|
|
|
Carrying amount
|
||
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
Loans |
|
|
|
|
2,081 |
|
1,534 |
|
Trade and other receivables |
|
|
|
|
20 |
|
56 |
|
Cash and cash equivalents |
|
|
|
|
122 |
|
428 |
|
|
|
|
|
|
2,223 |
|
2,018 |
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.
The Group reviews its facilities regularly to ensure it has adequate funds for operations and expansion plans.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.
Group
2021
|
|
|
|
Carrying amount £'000 |
|
Contractual cash flows £'000 |
|
2 months or less £'000 |
|
2-12 months £'000 |
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
1,658 |
|
(1,658) |
|
(168) |
|
(1,490) |
|
Lease liabilities |
|
|
107 |
|
(107) |
|
(19) |
|
(88) |
|
|
|
|
1,765 |
|
(1,765) |
|
(187) |
|
(1,578) |
Group
2020
|
|
|
|
Carrying amount £'000 |
|
Contractual cash flows £'000 |
|
2 months or less £'000 |
|
2-12 months £'000 |
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
Trade and other payables |
|
|
467 |
|
(467) |
|
(78) |
|
(389) |
|
|
|
|
467 |
|
(467) |
|
(78) |
|
(389) |
Company
2021
|
|
Carrying amount £'000 |
|
Contractual cash flows £'000 |
|
2 months or less £'000 |
|
2-12 months £'000 |
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
150 |
|
(150) |
|
(25) |
|
(125) |
|
|
150 |
|
(150) |
|
(25) |
|
(125) |
Company
2020
|
|
Carrying amount £'000 |
|
Contractual cash flows £'000 |
|
2 months or less £'000 |
|
2-12 months £'000 |
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
Trade and other payables |
182 |
|
(182) |
|
(30) |
|
(152) |
|
|
182 |
|
(182) |
|
(30) |
|
(152) |
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to foreign currency risk on purchases that are denominated in currencies other than GBP. The currencies giving rise to this risk are primarily the CFA Franc and the US dollar.
Fair values
The fair values of financial instruments such as trade and other receivables/payables are substantially equivalent to carrying amounts reflected in the balance sheet.
Capital management
The Group's objective when managing capital is to safeguard its accumulated capital in order to provide an adequate return to shareholders by maintaining a sufficient level of funds, in order to support continued operations.
The Group considers its capital to be total shareholders' equity which at 31 December 2021 for the Group totalled £3,053,000 (30 September 2020: £3,148,000) and for the Company totalled £4,034,000 (30 September 2020: £3,472,000).
26. Related parties
The Group's related parties include its key management personnel and others as described below.
No guarantees have been given or received and all outstanding balances are usually settled in cash.
Of the remuneration payable to D Reeves, £25,000 remains unpaid as at 31 December 2021(30 September 2020 - £31,000).
Other related party transactions
Transactions with Group companies
The Company had the following related party balances from financing activities:
|
|
|
|
|
|
|
2021 £'000 |
|
2020 £'000 |
|
|
Southern Iron Limited |
|
|
|
||||||
|
- Loans and receivables (interest free) |
|
1,622 |
|
1,534 |
|||||
|
Falcon Isle Resources LLC |
|
|
|
|
|||||
|
459 |
|
- |
||||||
Southern Iron Limited had the following related party balances from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Société Générale des Mines SA |
|
|
|
|
||||
|
- Loans and receivables (interest free) |
|
1,777 |
|
1,694 |
||||
|
|
|
|
|
|||||
27. Subsequent events
Issues of New Ordinary Shares
On 26 April 2022 the Company announced the raising of a total of 1,950,000 (before expenses) by the issue of up to 1,625,000,000 new Ordinary Shares at a price of 0.12p per share. 1,000,000,000 new Ordinary Shares were placed for cash consideration to raise 1,200,000 and the balance of 625,000,000 new Ordinary Shares were issued through a Broker Option following approval at a General Meeting of the company held on 16 May 2022.
Each new Ordinary Share subscribed received a warrant to subscribe for 1 new Ordinary Share at any time up to 31 May 2024, at an exercise price of 0.18p per share.
Falcon Isle
On 29 March 2022, the Company agreed to acquire the outstanding 49% equity interest in Falcon Isle and loans totalling $1,816,527 made by the vendor to Falcon Isle, for total consideration of $3.2 million, payable in four annual tranches of $800,000 commencing on 1 July 2022.
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