Kropz PLC

Interim Results for the Period ended 30 June 2019

RNS Number : 7067N
Kropz PLC
26 September 2019
 

26 September 2019

Kropz plc

 

("Kropz" or the "Company")

 

Interim Results for the Period ended 30 June 2019

 

 

Kropz plc (AIM: KRPZ), an emerging African explorer and developer of plant nutrient feed minerals, announces its results for the six months ended 30 June 2019.

 

The full financial report is available online at the Company's website www.kropz.com.

 

Key financial indicators

 

·      Impairment in the value of property, plant, equipment, mine development costs and exploration assets at Kropz Elandsfontein (Pty) Ltd ("Elandsfontein") of US$49 million;

·      Cash at 30 June 2019 of US$17 million (as at 31 December 2018 US$30 million); and

·      Trade and other payables at 30 June 2019 of US$3 million (as at 31 December 2018 US$12 million).

 

Key corporate and operational developments during the period

 

Corporate

 

On 1 February 2019, the Company issued 1,357,080 new ordinary shares of £0.001 each in the capital of the Company at a price of 40 pence per share for a total consideration of £542,832 (equivalent to approximately US$710,000) and 1,116,544 warrants at an exercise price of 40 pence per warrant to certain advisers in lieu of cash fees arising from their involvement with the Company's admission to AIM on 30 November 2018 and the acquisition of Cominco Resources Limited ("Cominco"). The new ordinary shares were admitted to trading on AIM on 6 February 2019.

 

On 19 February 2019, the Company applied the provisions of section 176 of the BVI Business Companies Act 2004 to compulsorily redeem any outstanding ordinary shares of Cominco held by the remaining Cominco shareholders. Pursuant to the compulsory redemption, Kropz acquired the remaining 482,927 Cominco shares for which a further 803,315 ordinary shares were issued at a price of 40 pence per share for a total consideration of £321,326 (equivalent to approximately US$419,000). The new ordinary shares were admitted to trading on AIM on 22 February 2019. Following the compulsory redemption, the Company holds 100% of the issued share capital of Cominco.

 

Elandsfontein

 

During the period under review, Elandsfontein continued to work with Mintek, South Africa, and Eriez, USA, to undertake confirmatory pilot scale and other processing test work ("Test Work") to confirm the final processing design at Elandsfontein. DRA Mineral Projects ("DRA") was appointed to complete the engineering design.

 

Indications at 30 June 2019 were that the commissioning of the Elandsfontein plant was expected to be delayed at an anticipated additional cost of approximately US$20 million (inclusive of working capital costs, debt repayments and capital expenditure). 

 

Hinda

 

The completed DRA Option Study has confirmed the potential to export circa 1.8Mtpa phosphate rock from the Hinda project out of the port of Pointe-Noire, as well as the potential viability of both the starter and optimised projects.

 

The Port Authority at Pointe-Noire have agreed to allocate a port site of increased dimensions to the Hinda project.

 

The ratification process for the signed Hinda Mining Investment Agreement ("MIA") has been advanced to the level of the Republic of Congo ("RoC") Supreme Court.

 

 

Aflao

 

A second phase of Mobile Metal Iron sampling was initiated in April 2019 at Aflao in Ghana. Samples were taken from the most prospective target area on a 100m by 500m grid. The samples were sent to SGS in Toronto for multi element analyses.

 

Key corporate and operational developments post period end

 

Corporate

 

On 27 June 2019, Kropz announced that it had raised US$4.34 million (£3.41 million), before expenses, by way of a placing of 19,364,659 ordinary shares of 0.1 pence each at a price of 17.6 per ordinary share, increasing the issued share capital to 283,406,307 ordinary shares. The net proceeds of the placing will be used to provide additional working capital and more specifically to further advance the programme of works being carried out at its Hinda and Aflao projects. The placing shares were issued and admitted to trading on AIM on 3 July 2019.

 

Elandsfontein

 

As announced on 12 September 2019 in an Elandsfontein update, the Test Work has indicated that a reverse flotation modification to the current circuit will produce a saleable product at lower grade than originally targeted. As a direct consequence of the prevailing depressed phosphate rock prices, an alternate process modification is being considered to deliver the required process efficiencies at viable economic returns.  Further Test Work will be required to at least the end of 2019 to confirm this.

 

As a result of the above delay in recommissioning and current depressed phosphate rock prices, an impairment of US$ 49 million was made to the carrying value of property, plant, equipment, mine development costs and exploration assets in Elandsfontein.

 

The appeal against Elandsfontein's existing and valid integrated water use licence was set to be heard by the Water Tribunal on 11 September 2019, however the appellant requested that this be postponed. At the date of this report no date has been fixed for the hearing.

 

Hinda

 

On the Hinda project, four engineering companies have been approached, all of whom have expressed interest in participating in the tender process for the updated definitive feasibility study for the optimised project.

 

An amended Environmental Social Impact Assessment will be required in the RoC as a result of the addition of a gas pipeline and the inclusion of a dryer on site.

 

Aflao

 

Radiometric and drone surveys were also completed within the Aflao license area, with the results of all three stages of survey work being reviewed and compiled.

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) no 596/2014.

 

For further information visit www.kropz.com or contact:

 

Kropz Plc

 

Ian Harebottle (CEO)

 +44 (0) 1892 516 232

 

 

Grant Thornton UK LLP

Nominated Adviser

Richard Tonthat

Samantha Harrison

+44 (0) 20 7383 5100

 

 

Hannam & Partners

Joint Broker

Andrew Chubb

Ernest Bell

 +44 (0)20 7907 8500

 

Mirabaud Securities Ltd

Joint Broker

Rory Scott

Edward Haig-Thomas

+44 (0)20 3167 7220

+44 (0)20 3167 7222

 

 

Tavistock

Financial PR & IR (UK)

Emily Moss

Jos Simson

Oliver Lamb

+44 (0) 207 920 3150

[email protected]

 

Russell & Associates

PR (South Africa)

Charmane Russell

James Duncan

+27 (0)11 880 3924

[email protected]

 

About Kropz plc

 

Kropz is an emerging African explorer and developer of plant nutrient feed minerals with phosphate projects in South Africa and the RoC and an exploration asset in Ghana. The vision of the Group is to become a leading independent phosphate rock producer and to develop into an integrated, mine-to-market plant nutrient company focusing on sub-Saharan Africa.

 

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

 

 

 

 

 

 

Notes

30 June

2019

Unaudited

US$'000

31 December

2018

Audited

US$'000

Non-current assets

Property, plant, equipment and mine development

 

6

56,284

101,826

Exploration assets

7

38,398

40,772

Other financial assets

 

1,661

1,623

 

 

96,343

144,221

Current assets

 

 

 

Inventories

 

880

861

Amounts due from a director

17

28

33

Trade and other receivables

 

1,135

331

Cash and cash equivalents

 

16,561

30,457

 

 

18,604

31,682

 

TOTAL ASSETS

 

 

114,947

 

175,903

 

Current liabilities

 

 

 

Trade and other payables

 

3,156

11,956

Other financial liabilities

11

530

518

Current taxation

 

51

-

 

 

3,737

12,474

Non-current liabilities

 

 

 

Shareholder loans

10

14,779

14,386

Other financial liabilities

11

29,537

29,551

Tax payable

 

246

66

Provisions

 

4,024

3,931

 

 

48,586

47,934

 

TOTAL LIABILITIES

 

 

52,323

 

60,408

 

 

 

 

NET ASSETS

 

62,624

115,495

 

 

 

 

Shareholders' equity

 

 

 

Share capital         

8

363

335

Share premium

8

143,127

142,026

Merger reserve

 

(20,523)

(20,523)

Accumulated losses

 

(46,819)

(6,255)

Foreign exchange translation reserve

 

(180)

(1,226)

 

Total equity attributable to the owners of the Company

 

75,968

114,357

Non-controlling interests

 

(13,344)

1,138

 

 

62,624

115,495

 

  The accompanying notes form part of the Condensed Consolidated Financial Statements.

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

 

 

Six months ended

30 June

 

Period from 10 January to 31 December

 

 

 

Notes

2019

Unaudited

US$'000

2018

Audited

US$'000

 

 

 

 

Revenue

 

-

-

Other income

 

3

2

 

 

 

 

Operating expenses

 

(4,475)

(5,674)

 

 

 

 

Operating loss

 

(4,472)

(5,672)

 

 

 

 

Finance income

12

882

382

Finance expense

13

(2,186)

(2,321)

Impairment losses

14

(48,900)

-

 

 

 

 

Loss before taxation

 

(54,676)

(7,611)

 

 

 

 

Taxation

15

(246)

(66)

 

 

 

 

Loss after taxation

 

(54,922)

(7,677)

 

 

 

 

Loss attributable to:

 

 

 

Owners of the Company

 

(40,573)

(6,255)

Non-controlling interests

 

(14,349)

(1,422)

 

 

(54,922)

(7,677)

 

 

 

 

Loss for the period

 

(54,922)

(7,677)

 

 

 

 

Other comprehensive income:

 

 

 

Items that may be subsequently reclassified to profit or loss

 

 

 

-       Exchange differences on translation of parent company financial statements from functional to presentation currency

 

70

(956)

-       Exchange differences on translating foreign operations

 

1,268

(270)

Total comprehensive loss

 

(53,584)

(8,903)

 

 

 

 

Attributable to:

 

 

 

Owners of the Company

 

(39,527)

(7,481)

Non-controlling interests

 

(14,057)

(1,422)

 

 

(53,584)

(8,903)

 

 

 

 

Earnings per share attributable to owners of the Company:

 

 

 

 

Basic and diluted (US cents)

16

(15.39)

(25.45)

         

 

 

The accompanying notes form part of the Condensed Consolidated Financial Statements.

 

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

 

   Share

capital

Share premium

Merger

reserve

Foreign currency translation

reserve

Retained earnings

 

Total attributable

to owners

Non-controlling interest

Total

equity

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

Balance at 10 January 2018

-

-

-

-

-

-

-

-

Total comprehensive loss for the period

-

-

-

(1,226)

(6,255)

(7,481)

(1,422)

(8,903)

 

 

 

 

 

 

 

 

 

Issue of shares

335

143,297

14,878

-

-

158,510

-

158,510

Costs of issuing shares

-

(1,271)

-

-

-

(1,271)

-

(1,271)

Adjustments on acquisition of subsidiaries

-

-

(35,401)

-

-

(35,401)

2,560

(32,841)

Transactions with owners

335

142,026

(20,523)

-

-

121,838

2,560

124,398

Balance at 31 December 2018

335

142,026

(20,523)

(1,226)

(6,255)

 

114,357

1,138

115,495

 

Total comprehensive profit / (loss) for the period

-

-

-

1,046

(40,573)

(39,527)

(14,057)

(53,584)

 

 

 

 

 

 

 

 

 

Issue of shares

28

1,101

-

-

-

1,129

-

1,129

Acquisition of non-controlling

interests

-

-

-

-

9

9

(425)

(416)

Share based payment charges

-

-

-

-

-

-

-

-

Transactions with owners

28

1,101

-

-

9

1,138

(425)

713

Balance at 30 June 2019

363

143,127

(20,523)

(180)

(46,819)

75,968

(13,344)

62,624

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

 

 

 

 

Six months ended

30 June

 

Period from 10 January to

31 December

 

 

2019

Unaudited

2018

Audited

 

 

US$'000

US$'000

Cash flows from operating activities

 

 

 

Loss before taxation

 

(54,676)

(7,611)

Adjustments for:

 

 

 

Depreciation of property, plant and equipment

 

463

457

Impairment losses

 

48,900

-

Finance income

 

(214)

(55)

Finance costs

 

2,186

771

Fair value gains on game animals

 

-

32

Operating cash flows before working capital changes

 

(3,341)

(6,406)

Increase in trade and other receivables

 

(814)

(240)

Decrease in inventories

 

1

-

(Decrease) / increase in payables

 

(8,386)

1,989

Decrease in amounts due from / (to) related parties

 

5

(47)

Increase in provisions

 

-

534

Foreign currency exchange differences

 

24

(2,611)

 

 

(12,511)

(6,781)

Income taxes paid

 

(17)

-

Net cash flows used in operating activities

 

(12,528)

(6,781)

Cash flows used in investing activities

 

 

 

Purchase of property, plant and equipment

 

(5)

(505)

Exploration and evaluation expenditure

 

(49)

-

Decrease in loans receivable

 

-

293

Acquisition of subsidiaries, net of cash acquired

 

-

303

Finance income received

 

214

54

Net cash flows from investing activities

 

160

145

 

Cash flows from financing activities

 

 

 

Finance costs paid

 

(2,186)

(771)

Shareholder loan received

 

696

Other financial liabilities

 

(708)

867

Issue of ordinary share capital net of share issue costs

 

710

36,364

Net cash flows (used by) / from financing activities

 

(2,184)

37,156

 

Net (decrease) / increase in cash and cash equivalents

 

(14,552)

30,520

Cash and cash equivalents at beginning of the period

 

30,457

-

Foreign currency exchange gains / (losses) on cash

 

656

(63)

Cash and cash equivalents at end of the period

 

 

16,561

30,457

 

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

FOR THE SIX MONTHS ENDED 30 JUNE 2019

 

1.       General information

 

Kropz plc (the "Company'') and its subsidiaries (together, the "Group'') is an emerging African explorer and developer of plant nutrient feed phosphate projects in South Africa and the Republic of Congo (" RoC")  and exploration assets in Ghana. The principal activity of the Company is that of a holding company for the Group, as well as performing all administrative, corporate finance, strategic and governance functions of the Group.

 

             The Company was incorporated on 10 January 2018 and is a public limited company, with its ordinary shares admitted to the AIM Market of the London Stock Exchange on 30 November 2018 trading under the symbol, "KRPZ". The Company is domiciled in England and incorporated and registered in England and Wales. The address of its registered office is Suite 4F Easistore Building, Longfield Road, North Farm Estate, Tunbridge Wells TN2 3EY. The registered number of the Company is 11143400. 

 

             The Company entered into a number of agreements during 2018 to acquire phosphate assets and in turn become the holding company of the Group with interests in Ghana, South Africa and the RoC.

 

2.       Basis of preparation

 

These interim consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and in accordance with the accounting policies of the consolidated financial statements for the period ended 31 December 2018. They do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2018 annual report. The statutory financial statements for the period ended 31 December 2018 were prepared under IFRS and IFRIC interpretations as adopted by the European Union and in accordance with the requirements of the Companies Act 2006. They have been filed with the Registrar of Companies. The auditors reported on those financial statements; their Audit Report was unqualified but included a material uncertainty related to going concern.

 

The interim consolidated financial statements have been prepared under the historical cost convention, as modified for any financial assets which are stated at fair value through profit or loss. They are presented in United States Dollars, the presentation currency of the Company and figures have been rounded to the nearest thousand.

 

The interim financial information is unaudited and does not constitute statutory accounts as defined in the Companies Act 2006.

 

The interim financial information was approved and authorised for issue by the Board of Directors on 25 September 2019.

 

3.       Going concern

 

Cash and cash equivalents totalled US$16.5 million as at 30 June 2019, of which US$15.8 million is committed to Kropz Elandsfontein. The Group has no current source of operating revenue and is therefore dependent on existing cash resources and future fund raisings to meet overheads and future exploration requirements as they fall due.

 

In July 2019, the Company raised US$4.34 million (£3.41 million) before expenses by way of a placing of ordinary shares to enable the Group to continue to fund its Hinda and Aflao exploration and development programme and fulfil its working capital requirements.

 

The directors have prepared a cash flow forecast which indicates that the Group will have sufficient liquidity to meet its forecast working capital requirements for at least 12 months from the date of this Interim Report, primarily being corporate costs and costs related to the Aflao and Hinda projects in order for the Group to meet its targeted objectives for these projects and cost of Elandsfontein test work currently underway.

 

Additional funding will be required at Elandsfontein prior to initiating the targeted upgrades to the processing plant, which are currently expected to require additional funding of approximately US$20 million with various options being considered by the Board on how and when best to source this additional funding. 

 

The directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due for at least 12 months from the date of approval of these interim financial statements.  Consequently, the Directors have concluded that it is appropriate to prepare the Group's Interim Consolidated Financial Statements on a going concern basis.

 

 

Other than as noted below, the Company has applied the same accounting policies, presentation, methods of computation, significant judgements and the key sources of estimation of uncertainties in its interim consolidated financial statements as in its audited financial statements for the period ended 31 December 2018, which have been prepared in accordance with IFRS as adopted for use by the European Union.

 

These accounting policies will be adopted in the Group's full financial statements for the year ending 31 December 2019.

 

Changes in accounting policy

 

IFRS 16

The Group has adopted IFRS 16 which became effective on 1 January 2019.  The standard replaces IAS 17 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities.

 

Impact of adoption

The adoption of the standard did not have any impact on the Group.

 

5.      Segment information

 

Operating segments

Up to the date of approval of the financial information for the period ended 30 June 2019, the Board of Directors considered that the Group had one operating segment, being that of phosphate mining. Accordingly, all revenues, operating results, assets and liabilities are allocated to this activity.

 

Geographical segments

Since the acquisition of First Gear Exploration Limited in June 2018, and the acquisitions of Kropz SA (Pty) Limited, Kropz Elandsfontein (Pty) Ltd, Elandsfontein Land Holdings (Pty) Ltd and Cominco Resources Limited in November 2018, the Group has operated in three principal geographical areas - South Africa, Ghana and the RoC.

 

The Group's non-current assets by location of assets are detailed below.

 

30 June 2019

South Africa

US$'000

Ghana

US$'000

 

RoC

US$'000

Group

US$'000

 

 

 

 

 

Total non-current assets

56,536

 

62

39,745

96,343

 

 

31 December 2018

South Africa

US$'000

Ghana

US$'000

 

RoC

US$'000

Group

US$'000

 

 

 

 

 

Total non-current assets

103,441

62

40,718

144,221

 

 

6.      Tangible assets - Property, plant, equipment and mine development

          

 

30 June 2019

30 June

2019

30 June

2019

31 Dec 2018

31 Dec

2018

31 Dec

2018

 

Cost

Accumulated

Depreciation and impairment

Carrying value

Cost

Accumulated

Depreciation

Carrying value

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Buildings and infrastructure

 

 

 

 

 

 

Land

2,157

-

2,157

  2,108

                 -

 2,108

Buildings

11,484

(5,519)

5,965

11,217

(7)

11,210

Capitalised road costs

9,209

(5,528)

3,681

8,996

      (1,499)

7,497

Capitalised electrical sub-station costs

 

3,995

 

(2,352)

 

1,643

3,903

(564)

3,339

 

 

 

 

 

 

 

Machinery, plant & equipment

 

 

 

 

 

 

Critical spare parts

1,212

-

1,212

1,185

-

1,185

Plant and machinery

55,615

(25,952)

29,663

54,329

(67)

54,262

Furniture & fittings

45

(41)

4

44

(40)

4

Geological equipment

49

(49)

-

48

(47)

1

Office equipment

36

(10)

26

35

(8)

27

Other fixed assets

1

(1)

-

1

-

1

Motor vehicles

133

(121)

12

130

(106)

24

Computer equipment

44

(37)

7

38

(33)

5

 

 

 

 

 

 

 

Mine development

19,167

(9,206)

9,961

18,724

-

18,724

Stripping activity costs

 

3,264

 

(1,568)

 

1,696

3,188

-

3,188

 

 

 

 

 

 

 

Game animals

257

-

257

251

-

251

 

 

 

 

 

 

 

Total

106,668

(50,384)

56,284

104,197

(2,371)

101,826

 

 

 

Reconciliation of property, plant, equipment and mine development - Period ended 30 June 2019

 

 

Opening

Balance

US$'000

Additions

US$'000

Impairment provision

US$'000

Depreciation charge

US$'000

Foreign exchange gain/loss

US$'000

Closing balance

US$'000

Buildings and infrastructure

 

 

 

 

 

 

Land

2,108

-

-

-

49

2,157

Buildings

11,210

-

(5,511)

(1)

267

5,965

Capitalised road costs

7,497

-

(3,686)

(308)

178

3,681

Capitalised electrical sub- station costs

3,339

-

(1,642)

(133)

79

1,643

 

 

 

 

 

 

 

Machinery, plant & equipment

 

 

 

 

 

 

 

Critical spare parts

1,185

-

-

-

27

1,212

Plant and machinery

54,262

-

(25,884)

(2)

1,287

29,663

Furniture & fittings

4

-

-

-

-

4

Geological equipment

1

-

-

(1)

-

-

Office equipment

27

-

-

(2)

1

26

Other fixed assets

1

-

-

-

(1)

-

 

 

 

 

 

 

 

Motor vehicles

24

-

-

(12)

-

12

Computer equipment

5

5

-

(4)

1

7

 

 

 

 

 

 

 

Mine development

18,724

-

(9,206)

-

443

9,961

 

 

 

 

 

 

 

Stripping activity costs

3,188

-

(1,568)

-

76

1,696

 

 

 

 

 

 

 

Game animals

251

-

-

-

6

257

 

 

 

 

 

 

 

Total

101,826

5

(47,497)

(463)

2,413

56,284

 

 

Reconciliation of property, plant, equipment and mine development - Period ended 31 December 2018

 

 

Opening

Balance

US$'000

Additions

US$'000

Disposals

US$'000

Depreciation charge

US$'000

Foreign exchange gain/loss

US$'000

Closing balance

US$'000

Buildings and infrastructure

 

 

 

 

 

 

Land

-

2,182

-

-

(74)

2,108

Buildings

 

11,608

 

(2)

(396)

11,210

Capitalised road costs

-

8,072

-

(302)

(273)

7,497

Capitalised electrical sub-station costs

-

3,592

-

(131)

(122)

3,339

 

 

 

 

 

 

 

Machinery, plant & equipment

 

 

 

 

 

 

Critical spare parts

-

1,256

(28)

-

(43)

1,185

Plant and machinery

-

56,057

-

-

(1,795)

54,262

Furniture & fittings

-

5

-

(1)

-

4

Geological equipment

-

3

-

(2)

-

1

Office equipment

-

30

-

(2)

(1)

27

Other fixed assets

-

1

-

-

-

1

 

 

 

 

 

 

 

Motor vehicles

-

37

-

(12)

(1)

24

Computer equipment

-

11

-

(5)

(1)

5

 

Mine development

-

19,384

-

-

(660)

18,724

 

 

 

 

 

 

 

Stripping activity costs

-

3,300

-

-

(112)

3,188

 

 

 

 

 

 

 

Game animals

-

293

-

-

(42)

251

Total

-

105,831

(28)

(457)

(3,520)

101,826

 

 

Kropz Elandsfontein has a fully drawn down project financing facility with BNP Paribas for USD30 million. BNP Paribas has an extensive security package over all the assets of Kropz Elandsfontein and Elandsfontein Land Holdings as well as the share investments in those respective companies owned by Kropz SA.

 

 

 

30 June

2019

30 June

2019

30 June

2019

31 Dec

2018

31 Dec

2018

31 Dec

2018

 

 

 

Cost

Amort-

isation and impairment

 

Carrying value

 

 

Cost

 

Amort-

isation

 

Carrying value

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

Capitalised costs

 

39,801

 

(1,403)

 

38,398

 

40,772

 

-

 

40,772

 

 

         Reconciliation of exploration assets

 

Opening

Balance

US$'000

Additions

US$'000

 

Impairment provision

US$'000

Foreign exchange loss

US$'000

Closing balance

US$'000

Period ended 30 June 2019

 

 

 

 

 

Capitalised costs

40,772

49

 

(1,403)

(1,020)

38,398

 

 

Opening

Balance

US$'000

Additions

US$'000

Amounts transferred on acquisition of subsidiaries

US$'000

Foreign exchange loss

US$'000

Closing balance

US$'000

Period ended 31 December 2018

 

 

 

 

 

 

Capitalised costs

-

42,083

 

(1,267)

(44)

40,772

 

 

 

 

 

 

 

 

Shares were issued during the period as set out below:

 

 

 

Number of

 shares

Share capital

Share premium

Merger reserve

Total

 

 

 

US$'000

US$'000

US$'000

US$'000

 

 

 

 

 

 

On incorporation

1

-

-

-

-

Issued to Kropz International S.a.r.l. ("Kropz International")

49,999

-

70

-

70

Subdivision of shares

450,000

-

-

-

-

Issued to Kropz International

163,221

-

117

-

117

Issued to Kropz International

1

-

-

-

-

Issued to Kropz International

93,260,034

120

69,320

3,809

73,249

Issued to ARC Fund

5,499,124

7

2,811

-

2,818

Capitalisation of debt

9,875,698

13

5,049

-

5,062

Conversion of Loan Note

6,902,148

9

2,520

-

2,529

Offer for Cominco

55,669,176

71

28,461

-

28,532

Placing and Subscription shares

68,359,376

88

34,949

-

35,037

Further acceptances of Offer for Cominco

21,652,475

27

-

11,069

11,096

Cost of issuing shares

-

-

(1,271)

-

(1,271)

Adjustments on acquisition of subsidiaries

-

-

-

(35,401)

(35,401)

 

At 31 December 2018

 

261,881,253

 

335

 

142,026

 

(20,523)

 

121,838

             

 

Issue of shares to advisers

1,357,080

18

692

-

710

Issue of shares on compulsory redemption of Cominco minorities

 

 

803,315

 

 

10

 

 

409

 

 

-

 

 

419

 

At 30 June 2019

 

264,041,648

 

363

 

143,127

 

(20,523)

 

122,967

 

 

 

On 1 February 2019, the Company issued 1,357,080 new ordinary shares of £0.001 each in the capital of the Company at a price of 40 pence per share for a total consideration of £542,832 (equivalent to approximately US$710,000) and 1,116,544 warrants at an exercise price of 40 pence per warrant to certain advisers in lieu of cash fees arising from their involvement with the Company's admission to AIM on 30 November 2018 and the acquisition of Cominco. The new ordinary shares were admitted to trading on AIM on 6 February 2019.

On 19 February 2019, the Company applied the provisions of section 176 of the BVI Business Companies Act 2004 to compulsorily redeem any outstanding ordinary shares of Cominco ("Cominco Shares") held by the remaining Cominco shareholders ("Compulsory Redemption"). Pursuant to the Compulsory Redemption, Kropz acquired the remaining 482,927 Cominco Shares for which a further 803,315 ordinary shares were issued at a price of 40 pence per share for a total consideration of £321,326 (equivalent to approximately US$419,000). The new ordinary shares were admitted to trading on AIM on 22 February 2019. Following the Compulsory Redemption, the Company holds 100% of the issued share capital of Cominco.

A difference of approximately US$9,000 arose between the consideration paid and the amount by which the non-controlling interests have been adjusted. This has been recognised directly in equity and attributed to the owners of the parent. 

Subsequent to 30 June 2019, the Company issued further shares as follows:

On 3 July 2019, the Company raised US$4.34 million (£3.41 million) before expenses by way of a placing (the "Placing") for 19,364,659 ordinary shares of 0.1 pence each at a price of 17.6 pence per ordinary share (the "Placing Shares").

The net proceeds of the Placing will be used to provide additional working capital and more specifically to further advance the programme of works being carried out at its Hinda and Aflao projects.

The Placing Shares were admitted to trading on AIM on 3 July 2019. The Placing Shares were issued as fully paid and rank pari passu in all respects with the existing ordinary shares.

Following the issue of the Placing Shares and their admission to AIM, the Company has 283,406,307 ordinary shares in issue.

Share based payment arrangements

 

          Equity warrants

 

The Company issued 1,116,544 equity warrants over ordinary shares in the Company during the period, as more fully described above (period ended 31 December 2018: 83,456 equity warrants). No equity warrants have been exercised or forfeited. Accordingly, 1,200,000 equity warrants remained in place at 30 June 2019 (31 December 2018: 83,456 equity warrants).

The warrants were valued at the period end using a Black-Scholes valuation model. The charge to profit and loss during the year was US$nil due to the immateriality of the value of the warrants for the period ended 30 June 2019 (31 December 2018: US$nil).

 

 

 

The remuneration for each Director and Key Management Personnel of the Group during the period was as follows:

 

 

 

Short-Term Benefits

 

 

Total

US$

Period ended 30 June 2019

Base Salary

US$

 

Bonus

US$

 

Options 

US$    

Executive directors

 

 

 

 

Ian Harebottle

205,326

-

-

205,326

Mark Summers

139,011

-

-

139,011

 

344,337

-

-

344,337

Non-executive directors

 

 

 

 

Lord Robin Renwick

29,649

-

-

29,649

Linda Beal

24,121

-

-

24,121

Mike Daigle

31,677

-

-

31,677

Machiel Reyneke

-

-

-

-

Michael Nunn

-

-

-

-

 

85,447

-

-

85,447

 

 

 

 

 

Total directors' remuneration

 

429,784

 

-

 

-

 

429,784

 

 

 

 

 

Executives

 

 

 

 

Michelle Lawrence

83,749

-

-

83,749

 

83,749

-

-

83,749

 

 

 

Short-Term Benefits

 

Total

US$

Period ended 31 December 2018

Base Salary

US$

Bonus

US$

Options 

US$     

Executive directors

 

 

 

 

Ian Harebottle

341,589

-

-

341,589

Mark Summers

39,035

10,430

-

49,465

 

380,624

10,430

-

391,054

Non-executive directors

 

 

 

 

Lord Robin Renwick 

7,961

-

-

7,961

Linda Beal

3,185

-

-

3,185

Mike Daigle

3,185

-

-

3,185

Machiel Reyneke

-

-

-

-

Michael Nunn

-

-

-

-

 

14,331

-

-

14,331

 

 

 

 

 

Total directors' remuneration

 

394,955

 

10,430

 

-

 

405,385

 

 

 

 

 

Executives

 

 

 

 

Michelle Lawrence

22,273

10,430

-

32,703

Nicola Taylor

  42,043

-

-

  42,043

 

64,316

10,430

-

74,746

 

The following ESOP options, which were issued at the time of admission to AIM as share-based payment arrangements, were outstanding at the period ended 30 June 2019:

Name

Expiry Date

Exercise Price (pence)

Number of Options

Ian Harebottle

28 November 2028

0.1

3,362,609

Mark Summers

28 November 2028

0.1

3,362,609

Michelle Lawrence

28 November 2028

0.1

1,465,137

 

 

 

8,190,355

 

 

 

 

 

30 June

2019

US$'000

31 December

2018

US$'000

ARC Fund

14,779

14,386

 

The loans: (i) are US$ denominated but any payments will be made in ZAR at the then current exchange rate; (ii) carry interest at monthly US LIBOR plus 3 per cent; and (iii) are repayable by no later than 1 January 2035 (or such earlier date as agreed between the parties to the shareholder agreements).

 

11.     Other financial liabilities

 

 

30 June

2019

US$'000

31 December

2018

US$'000

BNP Paribas

29,537

29,551

Greenheart Foundation

530

517

Other loans

-

1

Total

30,067

30,069

 

Non-current financial liabilities

29,537

29,551

Current financial liabilities

530

518

Total

30,067

30,069

 

Kropz Elandsfontein has a fully drawn down project financing facility with BNP Paribas for USD30 million. BNP Paribas has an extensive security package over all the assets of Kropz Elandsfontein and Elandsfontein Land Holdings as well as the share investments in those respective companies owned by Kropz SA.

 

12.     Finance income

 

Six months ended

30 June

2019

US$'000

Period

ended

31 December

2018

US$'000

Interest income

214

382

Foreign exchange gains

668

-

Total

882

382

 

13.     Finance expense

 

Six months ended

30 June

2019

US$'000

Period

ended

31 December

2018

US$'000

Shareholder loans

395

409

Foreign exchange losses

-

1,555

Bank debt

1,791

357

Total

2,186

2,321

 

14.     Impairment losses

 

As announced on 12 September 2019 in an Elandsfontein update, Test Work confirmed that a reverse flotation modification to the current circuit would produce a saleable product at lower grade than originally targeted. As a direct consequence of the prevailing depressed phosphate rock prices, an alternate process modification is being considered to deliver the required process efficiencies at viable economic returns and further test work will be required to at least the end of 2019 to confirm this.

 

As a result of the above delay in recommissioning and current depressed phosphate rock prices, an impairment of US$49 million was made to the carrying value of property, plant, equipment, mine development costs and exploration assets in Elandsfontein.

 

The impairment was allocated as follows:

 

 

 

US$'000

Property, plant, equipment and mine development assets

 

47,497

Exploration assets

 

1,403

Total

 

48,900

 

15.     Taxation

 

 

Major components of tax charge

Six months ended

30 June

2019

US$'000

Period

ended

31 December

2018

US$'000

Deferred

 

 

Originating and reversing temporary differences

-

-

Current tax

 

 

UK tax in respect of current period

246

-

Local income tax recognised in respect of prior periods

-

66

Total

246

66

 

The Group had losses for tax purposes of approximately US$33.5 million (US$27.8 million as at 31 December 2018) which, subject to agreement with taxation authorities, are available to carry forward against future profits.

 

 

The calculations of basic and diluted earnings per share have been based on the following loss attributable to ordinary shareholders and weighted average number of ordinary shares outstanding:

 

 

Six months ended

30 June

2019

US$'000

Period

ended

31 December

2018

US$'000

 

Loss attributable to ordinary shareholders

 

(40,573)

 

(6,255)

 

Weighted average number of ordinary shares in Kropz plc

 

263,591,748

 

24,575,156

 

 

 

Basic and diluted earnings per share (US cents)

(15.39)

(25.45)

 

 

 

 

 

 

Details of the Key Management Personnel remuneration and shareholder loans are explained in Notes 9 and 10. In addition, the following transactions were carried out with related parties:

 

Related party balances

Loan accounts - Owed (to) / by related parties

 

 

30 June

2019

US$'000

31 December

2018

US$'000

ARC Fund

(14,779)

(14,386)

M Nunn

28

33

Others

-

(1)

Total

(14,751)

(14,354)

 

M Nunn repaid the loan owing in September 2019.

 

Related party balances

Interest paid to / (received from) related parties

 

 

Period ended 30 June

2019

US$'000

Period ended 31 December

2018

US$'000

Kropz International

-

345

ARC Fund

395

64

Total

395

409

 

The ARC Fund, a substantial shareholder, agreed to subscribe for 14,497,848 new ordinary shares in the placing referred to in Note 8, bringing its aggregate holding to 139,600,912 ordinary shares (representing 49.3 per cent. of the so enlarged issued share capital).

Kropz International, a substantial shareholder of Kropz, agreed to subscribe for 3,345,657 new ordinary shares in the placing, bringing its aggregate holding to 54,933,474 ordinary shares (representing 19.4 per cent. of the so enlarged issued share capital).

Consequently, the subscriptions of the ARC Fund and Kropz International are related party transactions pursuant to Rule 13 of the AIM Rules. Mike Nunn, a director of the Company, is the beneficial owner of Kropz International and Machiel Reyneke, a director of the Company, is the representative of the ARC Fund.  Accordingly, neither was involved in the approval of the placing by the Company's board.

 

There are no seasonal factors which materially affect the operations of any company in the Group.

 

 

Other than the placing in July 2019, described in Note 8, the impairment of the property, plant, equipment, mine development costs and exploration assets in Kropz Elandsfontein (Pty) Ltd as set out in Note 14 and M Nunn repaying the loan owing to the Group as set out in Note 17, there were no other events occurring since 30 June 2019 requiring disclosure herein.

 

 

 

 


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END
 
 
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