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Kazera Global PLC (KZG)

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Monday 23 December, 2019

Kazera Global PLC

Final Results for the Year Ended 30 June 2019

RNS Number : 7471X
Kazera Global PLC
23 December 2019
 

23 December 2019

 

 

Kazera Global plc

 

Final Results for the Year Ended 30 June 2019

 

Kazera Global plc ("Kazera Global" or "the Company"), the AIM quoted investment company who, through its stake in African Tantalum (Pty) Limited ("Aftan"), has an interest in the Namibia Tantalite Investment Mine ("Tantalite Valley" or the "Mine") in Namibia, is pleased to announce its audited final results for the full year ended 30 June 2019 ("the Period").

 

Highlights

 

Operational

·      Continued drilling campaign to define JORC compliant resources at Mine and enable a comprehensive understanding of the mineralisation on the property and to assess fully the fundamental and future value of the operation

·      Completed the borehole drilling campaign at both the Homestead and Purple Haze deposits

 

Financial

·      At 30 June 2019, cash at bank amounted to £421k

·      Group Total Current Assets at 30 June 2019 amounted to £484k

·      Group Overall Net Assets at 30 June 2019 amounted to £420k

·      Successful placing to raise gross proceeds of £0.5 million through the issue of 29,411,765 new ordinary shares of 1p each at a price of 1.70p each

 

Post Period

·      Exploration at Homestead and Purple Haze deposits has been successful in expanding the footprint with material increases on initial estimates and a Maiden JORC (2012) compliant combined total Indicated and Inferred tantalite and lithium Mineral Resource at these deposits of 324.6 thousand tonnes ("kt"), with further resource upside expected to be identified.

·      Successful placing to raise £400,000 (before expenses) through the issue of the 66,666,667 Placing Shares

·      Maiden Inferred Tantalite Resource at White City Deposit of 297,600 tonnes, in line with the Company's pre-exploration programme expectations

·      Company has registered a subsidiary named Kazera Trading, which will operate in conjunction with Kazera Global. Kazera Trading will function as an ore trading arm of the Company

 

Outlook

·      Phase 1 drill programme to be completed by the end of 2019 calendar year

·      Commence phase 2 drill programme across the property

·      Expectation of completing the Phase 2 drilling programme by the end of first half of 2020

 

 

Larry Johnson, Chief Executive Officer of Kazera Global, said:

 

"The first phase of our exploration programme has proven to be a success and has given the Company impetus to continue to realise this value through further drilling. At the same time, the Group continues to look at future cashflow opportunities such as Kazera Trading from which the Company can leverage management expertise to deliver value.

 

We see the Tantalite Valley Mine as being a highly material project and we will continue to focus on high-grading the Mine licence while facilitating processes to create meaningful production from the mine in the future."

 

Posting of accounts

The Report and Accounts for the period ended 30th June 2019 will shortly be available on the Group's website and will be sent to registered shareholders by post shortly together with notice of the Group's AGM.

 

For further information on the Company, visit: https://kazeraglobal.com/ 

 


**ENDS**

Kazera Global plc (c/o Camarco)

Larry Johnson (CEO)

Tel: +44 (0)203 757 4980

 

finnCap (Nominated Adviser and Joint broker)

Scott Mathieson / Anthony Adams (corporate finance) 

Tel: +44 (0)207 220 0500

 

Shore Capital (Joint broker)

Jerry Keen (corporate broking)

 Tel: +44 (0)207 408 4090

 

Peterhouse Corporate Finance Limited

Duncan Vasey / Lucy Williams            

Tel: +44 (0)207 220 9797  

 

Camarco (PR)

Gordon Poole / James Crothers / Monique Perks

 

 

Competent Person's Statement

The technical information contained in this disclosure has been read and approved by Mr Jeremy Witley (Pr. Sci. Nat., FGSSA), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies. Jeremy Witley has visited the Mine site and reviewed MSA's drilling and sampling protocols and procedures. Mr Witley is a Principal Mineral Resource Consultant working for the MSA Group Pty Ltd, which has been engaged by Kazera Global to provide technical support.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

 

 

 

 

 

CHAIRMAN'S STATEMENT

For the year ended 30 June 2019

 

Review of the Period

2019 has been a year of strategic change for Kazera Global and I am pleased with the position the Company is in and excited for what the future holds.

During the year, we shifted our strategic focus to define JORC compliant resources at Mine and enable a comprehensive understanding of the mineralisation on the property and to assess fully the fundamental and future value of the operation.

The Company successfully raised raised £0.5 million before expenses through a placing of 29,411,765 new ordinary shares of 1p each at a price of 1.70p each. The net proceeds were used to progress its drilling campaign of resource identification at Purple Haze, Homestead, Signaalberg and White City deposits, cover overheads and to advance discussions with funders for the Orange River Pipeline to the Mine as well as potential offtake proposals. Additionally, post period, the Company raised £400,000 (before expenses) through the issue of the 66,666,667 Placing Shares. The proceeds of this placing will be used to provide additional working capital for the Company and in particular, to complete Phase 1 drilling and begin the Phase 2 exploration step-out drilling which we expect to identify further Mineral Resources, and to allow the Board the ability to evaluate additional acquisition and investment opportunities to enhance the long-term value of the Company for shareholders.

Post period, we were pleased to announce maiden JORC (2012) compliant Mineral Resource estimates over the Homestead and Purple Haze deposits at the NTI mine. The maiden JORC compliant combined total Indicated and Inferred tantalite and lithium Mineral Resource at Homestead and Purple Haze deposits of 324.6 thousand tonnes ("kt"), with further resource upside expected to be identified. Strong grades of tantalite shown across both deposits and higher than anticipated grades of Lithium across both deposits. We are delighted with these initial results which clearly demonstrate the potential at these two deposits. With an enhanced understanding of the mineralisation, further drilling is expected at both deposits to enhance the resources and we continue a wider exploration programme.

In August, post period, we were able to announce initial drilling results for the White City Pegmatite and additional results from channel sampling at Purple Haze. The Purple Haze channel sample grades confirmed high concentrations of lepidolite mineralisation, and the White City intersections also confirmed mineralisation. Additionally, in December, we were pleased to announce the completion of a maiden JORC Compliant Mineral Resources Estimate for the White City Pegmatite as part of the ongoing exploration programme at the Mine. Maiden Inferred Tantalite Resource at White City Deposit of 297,600 tonnes which is in line with the Company's pre-exploration programme expectations.

Financials

The Group recorded a loss before tax of £1,340k (2018: £2,538k) and had cash balances of £421k (2018: £1,125k) at the end of the year.

The Group does not plan to pay a dividend for the year (2018: £Nil).

A prior year adjustment is reported in the current year financials with regards to the exploration assets as follows:

·      On acquisition of the Tantalite Asset, the amount paid over and above the fair value of the net assets acquired was attributed to Goodwill rather than to the value of the exploration asset purchased.

·      In the prior year, the Company announced that the project in Namibia had entered into a trial production phase, and therefore moving out of the exploration phase. As a result, the classification of the exploration asset has been revised as a Mine under Construction.

There is no impact on the Group's retained earnings arising from these adjustments.

Outlook

As we progress and complete Phase 1 of our exploration drilling campaign and embark on Phase 2 exploration step-out drilling in calendar year 2020, we expect to delineate further Mineral Resources across the entire property and aim to identify additional mineralisation across the mine.

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

 

Giles Clarke

Chairman

20 December 2019

 

 

CHIEF EXECUTIVE OFFICER'S REVIEW

For the year ended 30 June 2019

 

Overview

During the period to date, the Company has been entirely focused on its strategy of a targeted exploration programme at the NTI mine while also reducing ongoing costs. Our exploration programme was designed to test and define total tantalum and lithium mineralisation across the NTI licence area and was started in July 2018. Results so far have been very positive, with JORC Compliant Maiden Mineral Resource statements confirming our pre-drill expectations of good mineralisation across multiple bodies at NTI mine. 

 

As the results are received, we have been able to feed into a wider interpretation of the Mine which will enable a comprehensive understanding of the mineralisation on the property and to truly assess the fundamental and future value of the operation.

 

Operations

With the year focused on the exploration programme the Company ceased ore processing our workforce was re-deployed. During these initial stages of the exploration program, we received a number of approaches from additional potential customers of our product which we continue to explore and we also continued to develop development options for our water licence to acquire water from the Orange River for future mining operations. We were pleased to welcome 7 companies to inspect the property as part of a tender process for the Orange River pipeline. We see this as a very important workflow to continue to progress as we high-grade the licence.

 

By November 2018, our exploration programme had progressed rapidly and we had drilled and assayed 360 cores. Initial results were promising from both Homestead and Purple Haze, intercepting both tantalum and lithium mineralisation and showing strong grades at both deposits. These results prompted the Company to consider drilling further boreholes at the Homestead and Purple Haze locations to give further clarity to the deposits. This additional drilling at the deposits was completed in March 2019 and once again produced highly encouraging results, encountering mineralisation indicative of the potential to produce both lithium and tantalum commercially, in line with the 2015 Venmyn Report.

 

During this period, the Company was approached by two parties interested in becoming strategic funding partners for the Orange River Project and for further development of the Mine. This was a material development for the project and demonstrated wider appreciation of the value the Company is realising at the Mine.

 

Post Period, in July 2019, we were delighted to announce a maiden JORC (2012) compliant Mineral Resource estimates over the Homestead and Purple Haze deposits at the Mine. This resource estimate indicated a maiden JORC (2012) compliant combined total Indicated and Inferred tantalite and lithium Mineral Resource at Homestead and Purple Haze deposits of 324.6 thousand tonnes ("kt"), with further resource upside expected to be identified. Grades were also promising with strong grades of tantalite shown across both deposits, with an average grade of 323 parts per million ("ppm") Ta2O5 including 911 ppm Ta2O5 in the Indicated Tantalum Mineral Resource at Purple Haze. Excitingly we also were able to demonstrate higher than anticipated grades of Lithium across both deposits, with an average grade of 4,410 ppm Li2O, including 10,800 ppm Li2O in portion of the Homestead Mine Mineral Resource.

 

Also post-period, in August, we were pleased to announce further drilling results which demonstrated particularly high concentrations of lepidolite mineralisation at the site. The results were an important step and has enabled us to set out our Phase 2 exploration step-out drilling programme which we expect to delineate further Mineral Resources across the property. These results were then followed by a further JORC compliant maiden Mineral Resource estimate for the White City Pegmatite. This Mineral Resource Estimate indicated an inferred tantalite resource at White City of 297,600 tonnes, consistent with the Company's pre-exploration programme expectations. Across the deposit, strong grades were shown, with an average grade of 105 parts per million ("ppm") Ta2O5.

 

Further to the encouraging ongoing exploration activity at NTI, the Company also registered a subsidiary named Kazera Trading, which will operate in conjunction with Kazera Global. Kazera Trading will function as an ore trading arm of the Company facilitating the global movement of resources such as tantalum, through leveraging the experience of Kazera's management. Initial trades have already been agreed and the Company will provide further updates shortly.

 

Outlook

The first phase of our exploration programme has proven to be a success and has given the Company impetus to continue to realise this value through further drilling. At the same time, the Group continues to look at future cashflow opportunities such as Kazera Trading from which the Company can leverage management expertise to deliver value.

 

We see NTI Mine as being a highly material project and we will continue to focus on high-grading the Mine licence while facilitating processes to create meaningful production from the mine in the future.

 

 

Larry Johnson

Chief Executive Officer

20 December 2019

 

 

 

 

GROUP STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2019

 

Continuing operations

 

Notes

Year ended

30 June

2019

£'000

Year ended

30 June

2018

£'000

 

 

 

 

 

Exploration expenses

 

 

(469)

(1,308)

 

 

 

 

 

Administrative expenses

 

 

(883)

(1,230)

Other operating income

 

 

12

 

Operating loss and loss before tax

 

6

(1,340)

(2,538)

 

 

 

 

 

Taxation

 

9

-

-

 

 

 

 

 

 

 

 

 

 

Loss for the year

 

 

(1,340)

(2,538)

 

 

 

 

 

 

 

 

 

 

Loss attributable to owners of the Company

 

 

(1,049)

(1,977)

Loss attributable to non-controlling interests

 

 

(291)

(561)

 

 

 

(1,340)

(2,538)

Other comprehensive income:

 

 

 

 

Items that may be subsequently reclassified to profit and loss:

 

 

 

 

Exchange differences on translation of foreign operations

 

 

56

(342)

 

 

 

 

 

Total comprehensive loss for the year attributable to

 

 

 

 

The equity holders of the parent

 

 

(993)

(2,319)

The non-controlling interests

 

 

(291)

(561)

 

 

 

(1,284)

(2,880)

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to owners of the Company

 

 

 

 

 

 

 

 

 

From continuing operations:

 

 

 

 

 

 

 

 

 

Basic and diluted (pence)

 

10

(0.39)p

(0.81)p

 

 

 

 

 

 

 

 

 

 

 

The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent Company profit and loss account. The profit for the Parent Company for the year was £83,007 (2018: £295,000 loss).

 

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

 

 

 

 

GROUP AND COMPANY STATEMENTS OF FINANCIAL POSITION

As at 30 June 2019

 

 

 

 

GROUP

 

COMPANY

 

Notes

 

2019

£'000

2018

£'000

restated

2017

£'000

Restated (Note 4)

 

2019

£'000

2018

£'000

Non-Current assets

 

 

 

 

 

 

 

 

Goodwill

 

 

-

-

-

 

-

-

Other intangible assets

 

 

-

-

2,479

 

-

-

Mines under construction

12

 

2,412

2,399

-

 

-

-

Property, plant and equipment

13

 

709

771

655

 

-

-

Investment in subsidiaries

14

 

-

-

-

 

2,207

1,872

Long-term loan

15

 

-

-

-

 

5,984

5,154

 

 

 

3,121

3,170

3,134

 

8,191

7,026

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Trade and other receivables

16

 

63

213

174

 

19

37

Cash and cash equivalents

17

 

421

1,125

365

 

363

907

 

 

 

484

1,338

538

 

382

944

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Trade and other payables

18

 

64

208

135

 

43

48

 

 

 

64

208

135

 

43

48

 

 

 

 

 

 

 

 

 

Net current assets

 

 

420

1,130

403

 

339

896

 

 

 

 

 

 

 

 

 

Net assets

 

 

3,541

4,300

3,537

 

8,530

7,922

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Share capital

19

 

2,866

2,568

1,890

 

2,866

2,568

Share premium account

19

 

14,307

14,131

11,314

 

14,307

14,131

Capital redemption reserve

 

 

2,077

2,077

2,077

 

2,077

2,077

Share option reserve

 

 

51

-

-

 

51

-

Currency translation reserve

 

 

(34)

(90)

252

 

-

-

Retained earnings

 

 

(14,552)

(13,503)

(11,674)

 

(10,771)

(10,854)

Equity attributable to owners of the Company

 

 

4,715

5,183

3,859

 

8,530

7,922

Non-controlling interests

 

 

(1,174)

(883)

(322)

 

-

-

 

 

 

 

 

 

 

 

 

Total equity

 

 

3,541

4,300

3,537

 

8,530

7,922

These financial statements were approved by the Board of Directors on 20 December 2019.

Signed on behalf of the Board by:

 

Larry Johnson                                                    

Director                                                                               

Company number: 05697574

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

 

 

GROUP STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2019

 

 

 

Share capital

£'000

Share

premium account

£'000

Capital redemption reserve

£'000

Share

option

reserve

£'000

Currency translation reserve

£'000

Retained earnings

£'000

Equity shareholders' funds

£'000

Non-controlling interests

£'000

Total

£'000

Balance at 1 July 2017 (restated)

1,890

11,314

2,077

-

252

(11,674)

3,859

(322)

3,537

Comprehensive loss for the year

-

-

-

-

-

(1,977)

(1,977)

(561)

(2,538)

Other comprehensive expense

-

-

-

-

(342)

-

(342)

-

(342)

Total comprehensive expense

 

 

-

-

(342)

(1,977)

(2,319)

(561)

(2,880)

Issue of share capital

678

2,817

-

-

-

-

3,495

-

3,495

Share based payment expense

-

-

-

-

-

148

148

-

148

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2018 (restated)

2,568

14,131

2,077

-

(90)

(13,503)

5,183

(883)

4,300

 

 

 

 

 

 

 

 

 

 

Comprehensive loss for the year

-

-

-

-

-

(1,049)

(1,049)

(291)

(1,340)

Other comprehensive income

-

-

-

-

56

-

56

-

56

Total comprehensive expense

 

 

-

-

56

(1,049)

(993)

(291)

(1,284)

Issue of share capital, net of share issue costs

298

176

-

-

-

-

474

-

474

Share based payment expense

-

-

-

51

-

-

51

-

51

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2019

2,866

14,307

2,077

51

(34)

(14,552)

4,715

(1,174)

3,541

 

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

 

COMPANY STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2019

 

 

Share

 capital

Share

 premium

Capital redemption reserve

Share option reserve

Retained

earnings

Total

 

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Balance at 1 July 2017 (restated)

1,890

11,314

2,077

-

(10,792)

4,574

 

 

 

 

 

 

 

Total comprehensive expense for the year

-

-

-

-

(295)

(295)

Issue of share capital

678

2,817

-

-

148

3,495

 

 

 

 

 

 

 

Balance at 30 June 2018 (restated)

2,568

14,131

2,077

-

(10,854)

7,922

 

 

 

 

 

 

 

Total comprehensive expense for the year

-

-

-

-

83

83

Issue of share capital

298

206

-

-

-

504

Share issue costs

-

(30)

-

-

-

(30)

Share based payment expense

-

-

-

51

-

51

 

 

 

 

 

 

 

Balance at 30 June 2019

2,866

14,307

2,077

51

(10,771)

8,530

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

 

 

 

 

GROUP AND COMPANY STATEMENTS OF CASH FLOWS

For the year ended 30 June 2019

 

 

 

GROUP

 

COMPANY

 

 

Year ended

30 June

2019

Year ended

30 June

2018

 

Year ended

30 June

2019

Year ended

30 June

2018

 

 

£'000

£'000

 

£'000

£'000

OPERATING ACTIVITIES

 

 

 

 

 

 

Operating loss 

 

(1,340)

(2,538)

 

83

(295)

Depreciation and amortisation

 

202

119

 

-

-

Share based payment expense

 

51

148

 

51

148

Shares issued in settlement of fees

 

3

-

 

3

-

Intercompany loan interest

 

-

-

 

(653)

(470)

Operating cash flows before movement in working capital

 

(1,084)

(2,271)

 

(516)

(617)

(Increase)/decrease in receivables

 

160

(39)

 

18

(18)

(Decrease)/increase in payables

 

(144)

73

 

(5)

(80)

Net cash used in operating activities

 

(1,068)

(2,237)

 

(503)

(715)

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

Purchases of property, plant and equipment

 

(141)

(275)

 

-

-

Development costs

 

-

(41)

 

-

-

Advances to subsidiary undertakings

 

-

-

 

(515)

(2,122)

 

 

 

 

 

 

 

Net cash used in investing activities

 

(141)

(316)

 

(515)

(2,122)

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

Net proceeds from share issues

 

474

3,495

 

474

3,495

 

 

 

 

 

 

 

Net cash from financing activities

 

474

3,495

 

474

3,495

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

(735)

942

 

(544)

658

Exchange rate translation adjustment

 

31

(181)

 

-

-

Cash and cash equivalents at beginning of year

 

1,125

364

 

907

249

 

 

 

 

 

 

 

Cash and cash equivalents at end of year

 

 

363

907

 

 

 

 

 

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

 

NOTES TO THE GROUP FINANCIAL STATEMENTS

For the year ended 30 June 2019

1          GENERAL INFORMATION

Kazera Global Plc is a public limited company which is listed on the Alternative Investment Market (AIM) and incorporated and domiciled in England. The nature of the Group's operations and its principal activities are set out in the Strategic Report and the Directors' Report.

2          ACCOUNTING POLICIES

BASIS OF PREPARATION

These consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations (IFRS IC) as adopted by the European Union and the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the accounting policies.  The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

The financial statements are presented in pounds sterling (£'000), which is also the functional currency of the Company

The principal accounting policies applied in the preparation of these financial statements are set out below.  These policies have been consistently applied to all the years presented, unless otherwise stated.

 

GOING CONCERN

The financial statements have been prepared on a going concern basis.  The Group's assets are not generating revenues, operating cash outflows have been incurred in the year and an operating loss and cash outflow from operations is expected in the 12 months subsequent to the date of these financial statements being signed and, as a result, the Group will need to raise funding to finance their ongoing activities of mine development and non-discretionary expenditures. 

Based on the Board's assessment that the necessary funds will be raised, cash flow budgets can be achieved and the Directors have a reasonable expectation that the Group has access to adequate resources to continue in operational existence for the foreseeable future.  Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements for the year ended 30 June 2019.

Should the Group be unable to continue trading, adjustments would have to be made to reduce the value of the assets to their recoverable amounts, to provide for further liabilities which might arise and to classify fixed assets as current.

The auditors make reference to a material uncertainty in relation to going concern within their audit report.

 

NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED BY THE GROUP

The Group and parent Company have adopted all of the new and amended standards and interpretations issued by the International Accounting Standards Board that are relevant to its operations and effective for accounting periods commencing 1 July 2018.

 

IFRS 9 'Financial Instruments'

Effective 1 January 2018, Kazera Global plc has applied IFRS 9 which is effective for annual periods that begins on or after 1 January 2018. The standard replaces all phases of the financial instruments project and IAS 39 'Financial Instruments: Recognition and Measurement'. The standard introduces:

• new requirements for the classification and measurement of financial assets and financial liabilities;

• a new model for recognising provisions based on expected credit losses; and,

• simplified hedge accounting by aligning hedge accounting more closely with an entities risk management methodology.

The adoption of IFRS 9 has not had any significant impact on recognition and measurement of financial instruments in the Group's consolidated financial statements for 2019. Comparative figures are not restated as the effect is immaterial.

 

IFRS 15 'Revenue from Contracts with Customers'

Effective 1 January 2018, Kazera Global plc has applied IFRS 15 Revenue from Contracts with Customers. This standard introduces a new revenue recognition model and replaces IAS 18 'Revenue', IAS 11 'Construction Contracts', IFRIC 13 'Customer Loyalty Programmes', IFRIC 15 'Agreements for the Construction of Real Estate', IFRIC 18 'Transfer of Assets from Customers' and SIC-31 "Revenue - Barter Transactions Involving Advertising Services.' As the Group has no revenue the introduction of IFRS 15 has had no impact in the financial statements.

 

NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ADOPTED BY THE GROUP (continued)

None of these standards are considered to have a material effect on the Group financial statements.

NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET ADOPTED

The International Accounting Standards Board (IASB) has issued the following new and revised standards, amendments and Interpretations to existing standards that are not effective for the financial year ended 30 June 2019 and have not been adopted early.

New Standards

Effective Date

IFRS 16 - Leases

1 January 2019

IFRS 17 - Insurance Contracts

1 January 2021

Amendments to Existing Standards

 

IFRSIC 23 Uncertainty over Income Tac Treatments*

1 January 2019

Annual Improvements to IFRSs (2015-2017 Cycle)*

1 January 2019

Amendments to IFRS 9 Prepayment Features with Negative Compensation

1 January 2019

Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures

1 January 2019

Amendments to IAS 19 Plan Amendment, Curtailment or Settlement

1 January 2019

Not yet adopted by European Union*

 

IFRS 16 'Leases'

IFRS 16 'Leases' address the definition of a lease, recognition and measurement of leases and it establishes principles for reporting useful information to users of financial statements about the leasing activities of both lessees and lessors. A key change arising from IFRS 16 is that most operating leases will be accounted for on the balance sheet. The standard replaces IAS 17, 'Leases' and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2019, with earlier adoption permitted. At present the Directors do not consider adoption of this standard would have an impact on the financial statements of Kazera Global plc. However, they note that should the Group enter into lease arrangements for mining equipment or development this may change.

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

 

BASIS OF CONSOLIDATION

Subsidiaries are all entities (including structured entities) over which the Group has control.  The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the subsidiary and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the subsidiary on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of subsidiary's identifiable net assets.

Acquisition-related costs are expensed as incurred. 

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

 

FOREIGN CURRENCIES

The individual financial statements of each group company are presented in Namibian Dollars, which is the currency of the primary economic environment in which it operates (its functional currency).  For the purpose of the Group financial statements, the results and financial position of each group company are expressed in Pounds Sterling, which is the functional currency of the Company, and the presentation currency for the Group financial statements.

In preparing the financial statement of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions.  At each year end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the year end date.  Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined.  Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement.  Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity.  For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity.

For the purpose of presenting Group financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the year end date.  Income and expense items are translated at the average exchange rates for the period.  Exchange differences arising are classified as equity and transferred to the Group's translation reserve.  Such translation differences are recognised as income or as expenses in the period in which the operation is disposed of.

 

TAXATION

The tax currently payable is based on taxable profit or loss for the period. Taxable profit or loss differs from net profit or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax laws and rates that have been enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

 

INTANGIBLE ASSETS - EXPLORATION AND EVALUATION EXPENDITURE

Exploration and evaluation activity involves the search for mineral resources, the determination of technical feasibility and the assessment of commercial viability of an identified resource. Research expenditure is written off in the year in which it is incurred. The Group recognises expenditure as exploration and evaluation assets when it determines that the legal rights to said assets have been obtained. Costs incurred which relate wholly to exploration work only, are expensed through the statement of comprehensive income. When a decision is taken that a mining property becomes viable for commercial production, all further pre-production expenditure is capitalised. Expenditure included in the initial measurement of exploration and evaluation assets and which is classified as intangible assets, relates to the acquisition of rights to undertake topographical, geological, geochemical and geophysical studies, exploratory drilling, trenching, sampling and other activities to evaluate the technical feasibility and commercial viability of extracting a mineral source. Once transferred to mines under construction the costs are expensed as incurred unless they relate to a separate license area.

 

MINES UNDER CONSTRUCTION

Expenditure is transferred from "Exploration and evaluation" assets to mining rights within "Mines under construction" once the work completed to date supports the future development of the property and such development receives the requisite approvals. All subsequent expenditure on technically and commercially feasible sites is capitalised within mining rights.

All expenditure on the construction, installation or completion of infrastructure facilities is capitalised as construction in progress within "Mines under construction". Once production starts, all assets included in "Mines under construction" will be transferred into "Property, Plant and Equipment" or "Producing Mines". It is at this point that depreciation/amortisation commences over its useful economic life.

Mines under construction are stated at cost. The initial cost comprises transferred exploration and evaluation assets, construction costs, infrastructure facilities, any costs directly attributable to bringing the asset into operation, the initial estimate of the rehabilitation obligation, and, for qualifying assets, borrowing costs. Costs are capitalised and categorised between mining rights and construction in progress respectively according to whether they are intangible or tangible in nature.

 

PROPERTY, PLANT AND EQUIPMENT

Property, Plant and equipment are recorded at cost, less depreciation, less any amount of adjustments for impairment, if any.

Significant improvements are capitalised, provided they qualify for recognition as assets. The costs of maintenance, repairs and minor improvements are expensed when incurred.

Tangible assets, retired or withdrawn from service, are removed from the balance sheet together with the related accumulated depreciation. Any profit or loss resulting from such an operation is included in the income statement.

Tangible and intangible assets are depreciated on the straight-line method based on their estimated useful lives from the time they are put into operation, so that their net cost is diminished over the lifetime of consideration to estimated residual value as follows:

Land and buildings - Over 20 years

Plant and equipment- Between 5 and 10 years

 

IMPAIRMENT OF PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS EXCLUDING GOODWILL

Assets that have an indefinite useful life are not subject to amortisation but are reviewed for impairment annually and where there are indications that the carrying value may not be recoverable. An impairment loss is recognised for the amount by which the carrying value exceeds the recoverable amount.

 

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash at bank and in hand, deposits at call with banks, other short-term highly liquid investments with original maturity at acquisition of three months or less that are readily convertible to cash, net of bank overdrafts. For the purpose of the cash flow statement, cash and cash equivalents consist of the definition outlined above.

 

EQUITY INSTRUMENTS INCLUDING SHARE CAPITAL

Equity instruments consist of the Company's ordinary share capital and are recorded at the proceeds received, net of direct issue costs.

FINANCIAL INSTRUMENTS - INTITIAL RECOGNITION AND SUBSEQUENT MEASUREMENT 

Classification

From 1 July 2018, the Group classifies its financial assets into only one category, being those to be measured at amortised cost.

 

The classification depends on the Group's business model for managing the financial assets and the contractual terms of the cash flows.

 

Recognition

Purchases and sales of financial assets are recognised on trade date (that is, the date on which the Group commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

 

Measurement

At initial recognition, the Group measures a financial asset at its fair value plus transaction costs that are directly attributable to the acquisition of the financial asset. 

 

Debt instruments  

Amortised cost: Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as a separate line item in the statement of profit or loss.

 

Impairment

From 1 July 2018 the Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

 

FINANCIAL LIABILITIES

All non-derivative financial liabilities are classified as other financial liabilities and are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Other financial liabilities consist of borrowings and trade and other payables.

Financial liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

 

OTHER FINANCIAL LIABILTIES, BANK AND SHORT-TERM BORROWINGS

Other financial liabilities, as categorised above, are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.  Other financial liabilities are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

 

SEGMENTAL ANALYSIS

Under IFRS 8 operating segments are considered to be components of an entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker, being the board, in deciding how to allocate resources and assessing performance. The Company's chief operating decision maker is the Board of Directors. At present, and for the period under review, the Company's reporting segments are the Holding Company and the tantalite mining operation in Namibia.

 

3          CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATIONS

In the application of the Group's accounting policies, which are described in Note 2, the Directors are required to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimated impairment of mines under construction (note 12)

The Group tests annually whether exploration, evaluation and licencing assets and mines under construction have suffered any impairment. The recoverable amounts of cash generating units ("CGUs") have been determined based on value in use calculations which require the use estimates and assumptions such as long-term commodity prices and recovery rates, discount rates, operating costs and therefore expected margins and future capital requirements. These estimates and assumptions are subject to risk and uncertainty and therefore there is a possibility that changes in circumstances will impact the recoverable amount.

In assessing the carrying amounts of its exploration, evaluation and licensing assets and mines under construction, the Directors have conducted a feasibility study in conjunction with an independently prepared mineral resource estimate. The period used in management's assessment is the anticipated life of the mine to the expiration of the licence. A discount rate of 15% has been applied. The mineral resource report concluded on an inferred 297,600 tonnes of tantalum pentoxide within the White City Tantalum Mineral Resource Area. These estimates are consistent with external sources of information.

The calculations have been tested for sensitivity in the key assumptions. Change in exchange rate of N$1, increase in variable and fixed costs of 10% and increase in contingency costs of 10%. No impairment would be recognised if any of these factors came into effect.

Mineral resource and reserve estimates

Reserves are estimates of the amount of resources that can be economically and legally extracted from the Group's mining properties. The Group estimates its mineral resources based on information compiled by appropriately qualified persons relating to the geological and technical data on the size, depth, shape and grade of the ore body and suitable production techniques and recovery rates. This analysis requires complex geological judgments to interpret the data. The estimation of the recoverable amount is based upon factors such as estimates of commodity prices, future capital expenditure and production costs along with geological assumptions made in estimating the size and grade of the resources. Details of the mineral resources and reserve estimates can be found on https://kazeraglobal.com/. 

The Group estimates and reports mineral resource estimates in line with the principles contained in the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (December 2004), which is prepared by the Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia, known as the "JORC Code". The determination of a JORC resource is itself an estimation process that involves varying degrees of uncertainty depending on how the resources are classified (i.e. measured, indicated or inferred).

As additional geological information is produced during the operation of a mine and through additional exploration activity, mineral resource estimates may change. Such changes may impact on the Group's reported financial position which includes the carrying value of mines under construction, property, plant and equipment and inventories.

4

PRIOR YEAR ADJUSTMENT

 

GROUP

 

Signed 2018 accounts

 

Adjustments

 

Restated as at 30 June 2018

 

 

£'000

 

£'000

 

£'000

Non-current assets

 

 

 

 

 

 

 

Goodwill

 

586

 

(586)

 

-

 

Other intangible assets

 

1,813

 

(1,813)

 

-

 

Mines under construction

 

-

 

2,399

 

2,399

 

Property, plant and equipment

 

771

 

-

 

771

 

Investment in subsidiaries

 

-

 

-

 

-

 

Long-term loan

 

-

 

-

 

-

 

Total Non-current assets

 

3,170

 

-

 

3,170

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Trade and other receivables

 

213

 

-

 

213

 

Cash and cash equivalents

 

1,125

 

-

 

1,125

 

Total current assets

 

1,338

 

-

 

1,338

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

208

 

-

 

208

 

Total current liabilities

 

208

 

-

 

208

 

 

 

 

 

 

 

 

 

Net current assets

 

1,130

 

-

 

1,130

 

 

 

 

 

 

 

 

 

Net assets

 

4,300

 

-

 

4,300

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

Share capital

 

2,568

 

-

 

2,568

 

Share premium account

 

14,131

 

-

 

14,131

 

Capital redemption reserve

 

2,077

 

-

 

2,077

 

Currency translation reserve

 

(90)

 

-

 

(90)

 

Retained earnings

 

(13,503)

 

-

 

(13,503)

 

Equity attributable to the owners of the Company

 

5,183

 

-

 

5,183

 

Non-controlling interests

 

(883)

 

-

 

(883)

 

Total equity

 

4,300

 

-

 

4,300

 

 

 

 

 

 

 

 

 

The 2018 balances have been restated in the 2019 financial statements because of the following reasons:

 

1.   On acquisition of the Tantalite Asset, the amount paid over and above the fair value of the net assets acquired was attributed to Goodwill rather than to the value of the exploration asset purchased. The result of this prior period adjustment has no impact on the retained earnings of the Group as detailed above.

 

2.   In the prior year, the Company announced that the project in Namibia had entered into a trial production phase, and therefore moving out of the exploration phase. As a result, the classification of the exploration asset has been revised as a Mine under Construction. The result of this prior year adjustment has no impact on the retained earnings of the Group as detailed above.

 

 

5          SEGMENTAL REPORTING

The Directors are of the opinion that under IFRS 8 - "Operating Segments" the Group operates in two primary business segments; being holding company expenses and tantalite mining activities. The secondary segment is geographic.  The Group's losses and net assets by primary business segments are shown below.

 

Segmentation by continuing business

 

Profit/ (loss) before income tax

Year ended

30 June 2019

 £'000

Year ended

 30 June 2018

 £'000

 

Holding company

83

(295)

 

Tantalite mining activity

(1,423)

(2,243)

 

 

(1,340)

(2,538)

 

 

Net assets

Year ended

30 June 2019

 £'000

Year ended

 30 June 2018

 £'000

 

Holding company

8,530

7,922

 

Tantalite mining activity

3,029

2,054

 

 

Segmentation by geographical area

 

Loss before income tax

Year ended

30 June 2019

 £'000

Year ended

 30 June 2018

 £'000

 

United Kingdom 

83

(295)

 

Namibia            

(1,423)

(2,243)

 

 

(1,340)

(2,538)

 

 

Net assets

Year ended

30 June 2019

 £'000

Year ended

 30 June 2018

 £'000

 

United Kingdom 

8,530

7,922

 

Namibia            

3,029

2,054

 

 

6

OPERATING LOSS

 

 

Year ended

30 June 2019

 £'000

Year ended

 30 June 2018

 £'000

 

Loss for the period has been arrived at after charging:

 

 

 

Staff costs as per Note 8 below

470

1,067

 

Auditors remuneration

28

21

 

Depreciation of property, plant and equipment

202

119

 

 

 

 

 

7

AUDITORS' REMUNERATION

 

The analysis of auditors' remuneration is as follows:

 

 

Year ended

30 June 2019

£'000

Year ended 30 June 2018

£'000

 

 

 

 

 

Fees payable to the Group's auditors for the audit of the Group's annual accounts

25

20

 

Total audit fees

25

20

 

Fees payable to the Group auditor and their associates for other services to the Group:

 

 

 

Tax services

3

1

 

 

 

 

 

 

28

21

 

8

STAFF COSTS

 

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

 

 

 

 

Year ended

30 June 2019

Number

Year ended

30 June 2018

Number

 

 

 

 

 

Group total staff

32

115

 

 

 

 

 

 

 

 

 

 

£'000

£'000

 

 

 

 

 

Wages and salaries

380

822

 

Share based payment in respect of exercise of options

54

148

 

Other benefits

5

4

 

Social security costs

31

93

 

 

 

 

 

 

470

1,067

 

 

 

 

 

Directors' emoluments

 

 

An analysis of the directors' emoluments and pension entitlements and their interest in the share capital of the Company is contained in the Directors' Remuneration report accompanying these financial statements.

 

 

9

TAXATION

The weighted average applicable tax rate of 28.25% (2018: 28.25%) is a combination of the rates used in the UK and Namibia.

 

 

 

 

Year ended

30 June 2019

£'000

Year ended

30 June 2018

£'000

 

 

 

 

 

Loss on continuing operations before tax

(1,340)

(2,538)

 

Tax at the weighted average tax rate of 28.25% (2018: 28.25%)

(379)

(482)

 

Effects of:

 

 

 

Expenses not deductible for tax purposes

5

22

 

Unutilised tax losses carried forward

374

460

 

 

 

 

 

Tax charge for period

-

-

 

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

There is an estimated  unrecognised deferred tax asset of £4,882,000 (2018: £4,499,000) on the accumulated tax losses which is not recognised due to the uncertainty as to when the operations will generate sufficient profits against which to offset such assets.

10

LOSS PER SHARE

 

The calculation of basic loss per share is based on the following data:

 

 

Year ended

 30 June 2019

Year ended

 30 June 2018

 

 

£'000

£'000

 

 

 

 

 

Loss for the year attributable to owners of the Company

(1,049)

(1,977)

 

 

 

 

 

Weighted average number of ordinary shares in issue for basic and fully diluted earnings

264,777,533

245,076,157

 

LOSS PER SHARE (PENCE PER SHARE)

 

 

 

BASIC AND FULLY DILUTED:

 

 

 

- from continuing and total operations

(0.39)

(0.81)

         

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

 

 

 

11

INTANGIBLE ASSETS

 

 

Exploration and Evaluation costs

Goodwill

Total

 

GROUP

£'000

£'000

£'000

 

At 1 July 2017

1,891

588

2,479

 

Additions

41

-

41

 

Exchange translation difference

(119)

(2)

(121)

 

Transfer to Mines under construction (Note 4 and 12)

(1,813)

(586)

(2,399)

 

At 30 June 2018

-

-

-

 

Additions

-

-

-

 

Exchange translation difference

-

-

-

 

At 30 June 2019

-

-

-

 

 

 

12

MINES UNDER CONSTRUCTION

 

 

Construction in progress

Mining

licences

Total

 

GROUP

£'000

£'000

£'000

 

At 1 July 2017

-

-

-

 

Transfer from Intangible Assets (Note 4 and 11)

2,389

10

2,399

 

At 30 June 2018

2,389

10

2,399

 

Additions

-

-

-

 

Exchange translation difference

13

-

13

 

At 30 June 2019

2,402

10

2,412

 

 

 

13

PROPERTY, PLANT AND EQUIPMENT

 

 

Leasehold land & buildings

Plant & machinery

Furniture & equipment

Total

 

GROUP

£'000

£'000

£'000

£'000

 

Cost

 

 

 

 

 

At 1 July 2018

125

858

35

1,018

 

Exchange translation difference

1

10

-

11

 

Additions

-

136

5

141

 

Cost at 30 June 2019

126

1,004

40

1,170

 

Depreciation

 

 

 

 

 

At 1 July 2018

20

211

16

247

 

Exchange translation difference

-

8

4

12

 

Charge for the year

5

193

4

202

 

Depreciation at 30 June 2019

25

412

24

461

 

Net book value at 30 June 2019

101

592

16

709

 

Net book value at 30 June 2018

105

647

19

771

 

 

  14

INVESTMENT IN SUBSIDIARY UNDERTAKINGS

 

The Company's investments in its subsidiary and associated undertakings

 

COMPANY

 

 

 

Total

£'000

 

Cost and net book value

 

 

 

 

At 1 July 2017

 

 

1,272 

 

 Capitalisation of loan to Aftan

 

 

600

 

As at 30 June 2018 restated

 

 

1,872

 

 Capitalisation of loan to Aftan

 

 

335

 

As at 30 June 2019

 

 

2,207

 

All principal subsidiaries of the Group are consolidated into the financial statements. 

At 30 June 2019 the subsidiaries were as follows:

 

 

Subsidiary undertakings

Country of registration

Principal activity

Holding

%

 

 

African Tantalum (Pty) Ltd

Namibia

Intermediate holding company

Ordinary shares

75

 

Namibia Tantalite Investments (Pty) Ltd

Namibia

Tantalite mining

Ordinary shares

100

 

Tameka Shelf Company Four (Pty) Ltd

Namibia

Mining licence holder

Ordinary shares

100

                   

 

 

  15

LONG-TERM LOAN

 c

COMPANY

 

 

Total

£'000

 

 

 

 

 

 

At 1 July 2017

 

 

3,162

 

Part capitalisation of loan to Aftan (note 13)

 

 

(600)

 

Increase in loan to Aftan

 

 

2,592

 

As at 30 June 2018 restated

 

 

5,154

 

Part capitalisation of loan to Aftan (note 13)

 

 

(335)

 

Increase in loan to Aftan

 

 

1,165

 

As at 30 June 2019

 

 

5,984

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

The intercompany loan to Aftan bears interest at 12% p.a.

 

16

TRADE AND OTHER RECEIVABLES

 

 

GROUP

COMPANY

 

 

2019

2018

2019

2018

 

 

£'000

£'000

£'000

£'000

 

Other receivables

57

206

13

30

 

Prepayments and accrued income

6

7

6

7

 

 

63

213

19

37

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

 

 

 

17

CASH AND CASH EQUIVALENTS

 

 

GROUP

COMPANY

 

 

2019

2018

2019

2018

 

 

£'000

£'000

£'000

£'000

 

Cash and cash equivalents

421

1,125

363

907

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

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

 

 

 

18

TRADE AND OTHER PAYABLES

 

 

GROUP

COMPANY

 

 

2019

2018

2019

2018

 

 

£'000

£'000

£'000

£'000

 

Trade payables

15

59

4

8

 

Other payables

4

4

4

4

 

Accruals

45

145

35

36

 

 

64

208

43

48

 

The Directors consider the carrying amount of trade payables approximates to their fair value.

 

 

 

19

SHARE CAPITAL AND SHARE PREMIUM

 

 

Number of shares

Nominal value

£'000

Share premium

£'000

 

ISSUED AND FULLY PAID:

 

 

 

 

At 1 July 2018, shares of 1p each

256,849,443

2,568

14,131

 

Share issues

29,711,765

298

206

 

Share issue expenses

-

-

(30)

 

At 30 June 2019

286,561,208

2,866

14,307

 

Share issues

On 25 March 2019, the Company issued 29,411,765 ordinary shares at par value of 1p for 1.7p per share for cash in respect of a private placing.

On 24 May 2019, the Company issued 300,000 ordinary shares at par value of 1p for 1p per share as a share-based payment to a director.

Reserves

The Group's reserves are made up as follows:

Share capital: Represents the nominal value of the issued share capital.

Share premium account: Represents amounts received in excess of the nominal value on the issue of share capital less any costs associated with the issue of shares.

Capital redemption reserve: Reserve created on the redemption of the Company's shares

Share option reserve: Reserve created for the equity settled share option scheme (note 19)

Currency translation reserve: Reserve arising from the translation of foreign subsidiaries at consolidation.

Retained earnings: Represents accumulated comprehensive income for the year and prior periods.

 

 

20 SHARE-BASED PAYMENTS

Equity-settled share option scheme

 

The Company operates share-based payment arrangements to incentivise directors by the grant of share options. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions.

 

On 17 August 2017, 10,000,000 options were granted to L Johnson, vesting in 3 tranches, 3,300,000 options on the first anniversary, 3,300,000 options on the second anniversary, and 3,400,000 options on the third anniversary of the date of grant and exercisable at 6p per share for 3 years from the vesting date.  The options are subject to certain performance related conditions. These options were cancelled on 21 December 2018.

 

On 21 December 2018, 10,000,000 options were granted to L. Johnson, vesting on 21 December 2021 at an exercisable at 1.75p per share.

 

The total share-based payment expense recognised in the income statement for the year ended 30 June 2019 in respect of the share options granted was £51,000 (2018: £148,000). The share options are only exercisable when NTI have entered full production for at least six months.

 

 

 

 

20

SHARE-BASED PAYMENTS (continued)

 

The total share options at 30 June 2019 is as follows:

 

Number of

options at

1 July 2018

Granted in

 the year

Cancelled in the year

Number of options at

30 June 2019

Exercise price

Vesting Date

Expiry date

 

3,300,000

-

3,300,000

-

6.00p

17.08.2018

17.08.21

 

3,300,000

-

3,300,000

-

6.00p

17.08.2019

17.08.22

 

3,400,000

-

3,400,000

-

6.00p

17.08.2020

17.08.23

 

-

10,000,000

-

10,000,000

1.75p

21.12.2021

21.12.23

 

10,000,000

10,000,000

10,000,000

10,000,000

1.75p

 

 

 

 

 

21

FINANCIAL INSTRUMENTS

 

The Group's financial instruments comprise borrowings, cash and various items, such as trade receivables and trade payables that arise directly from its operations.  The main purpose of these financial instruments is to raise finance for the Group's operations. 

FINANCIAL ASSETS BY CATEGORY

Financial assets included in the Statement of financial position and the headings in which they are included are as follows:

 

 

 

2019

2018

 

 

 

£'000

£'000

 

Financial assets:

 

 

 

 

Cash and cash equivalents

 

421

1,125

 

Loans and receivables

 

57

206

 

 

 

478

1,331

 

 

FINANCIAL LIABILITIES BY CATEGORY

Financial liabilities included in the Statement of financial position and the headings in which they are included are as follows:

 

 

 

2019

2018

 

 

 

£'000

£'000

 

Financial liabilities at amortised cost:

 

 

 

 

Trade and other payables

 

64

43

 

 

 

64

43

 

 

 

21

FINANCIAL INSTRUMENTS (continued)

 

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

 

 

Less than

1 month

1-3 months

3 months

to 1 year

1-5 years

Over 5 years

 

 

£'000

£'000

£'000

£'000

£'000

 

30 June 2019

Non-interest bearing:

 

 

 

 

 

 

Trade and other payables

-

64

-

-

-

 

Short term borrowings

-

-

-

-

-

 

30 June 2018

 

 

 

 

 

 

Non-interest bearing:

 

 

 

 

 

 

Trade and other payables

-

43

-

-

-

 

Short term borrowings

-

-

-

-

-

 

22         RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to a variety of financial risks which result from both its operating and investing activities.  The Group's risk management is coordinated by the Board of Directors, and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets.

 

The main risks the Group are exposed to through its financial instruments and the operations of the Group are credit risk, foreign currency risk, liquidity risk and market price risk. These risks are managed by the Group's finance function together with the Board of Directors.

 

Capital risk management

The Group's objectives when managing capital are:

•           to safeguard the Group's ability to continue as a going concern, so that it continues to provide returns and benefits for shareholders;

•           to support the Group's growth; and

•           to provide capital for the purpose of strengthening the Group's risk management capability.

•          

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Management regards total equity as capital and reserves, for capital management purposes.

 

Credit risk

The Company's principal financial assets are bank balances and cash and other receivables, which represent the Company's maximum exposure to credit risk in relation to financial assets. The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies.

The Group's maximum exposure to credit risk is £421,000 (2018: £1,125,000) comprising cash and cash equivalents.

 

Liquidity risk

Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through maintaining a positive cash balance and controlling expenses and commitments. The Directors are confident that adequate resources exist to finance current operations.

 

 

22         RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Foreign Currency risk

The Group undertakes transactions denominated in foreign currencies.  Hence, exposures to exchange rate fluctuations arise. Following the acquisition of African Tantalum (Pty) Ltd. Ltd, the Group's major activity is now in Namibia, bringing exposure to the exchange rate fluctuations of GBP/£ Sterling with the Namibian Dollar and South African Rand, the currencies in which most of the operating costs are denominated.  At the year end the value of assets denominated in these currencies was such that the resulting exposure to exchange rate fluctuations was not material to the Group's operations.  Going forwards the Group is exposed to the US$ as it has entered into an off-take agreement for the major part of its production, priced in US$. 

Exchange rate exposures are managed within approved policy parameters. The Group has not entered into forward exchange contracts to mitigate the exposure to foreign currency risk. 

The Directors consider the assets most susceptible to foreign currency movements to be the Investment in Subsidiaries.  Although these investments are denominated in Namibian Dollars their value is dependent on the global market value of the available Tantalite resources.

The table below details the split of the cash held as at 30 June 2019 between the various currencies:

Namibian Dollar (NAD)

GBP Sterling (£)

Total GBP Sterling (£)

1,024,147

363,451

420,699

 

Market Price risk

Going forwards the Group's exposure to market price risk mainly arises from potential movements in the market price of Tantalite.  The Group is managing this price risk by completing a fixed price off-take agreement in respect of the major part of its planned production.

 

23         EVENTS AFTER THE REPORTING PERIOD

There have been no material events since the reporting date.

24         RELATED PARTY TRANSACTIONS

The remuneration of the Directors, who are the key management personnel of the Company, is set out in the report of the Board on remuneration accompanying these financial statements.

During the year, Westleigh Investment Holdings Ltd ("WIHL") received £48,000 (2018: £48,000) in respect of accounting, administration and office accommodation services provided to the Company.  WIHL is a substantial shareholder in the Company and is controlled by Giles Clarke and Nick Harrison through their holdings of 73.28% and 26.72% respectively.

During the year, the Company paid £1,920 (2018: £nil) to Amerisur Resources plc, a company in which Giles Clarke and Nick Harrison also hold directorships.

There have been no other material transactions with related parties.

 

25         ULTIMATE CONTROLLING PARTY

The Directors do not consider there to be one single ultimate controlling party.

 

 

 

 

 

 


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