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Kefi Gold and Copper (KEFI)

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Tuesday 22 September, 2020

Kefi Gold and Copper

Interim Results

RNS Number : 6464Z
Kefi Gold and Copper PLC
22 September 2020
 

22 September 2020

 

KEFI Gold and Copper plc

 

("KEFI" or the "Company")

 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020

 

KEFI Gold and Copper plc (AIM: KEFI), the gold exploration and development company with projects in the Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to announce its unaudited interim results for the six months ended 30 June 2020.

 

The statement below encompasses the activities of the Company's subsidiary, KEFI Minerals (Ethiopia) Limited ("KME"), in Ethiopia, and KEFI's joint venture, Gold & Minerals Limited ("G&M"), in the Kingdom of Saudi Arabia.

 

Overview

 

The current climate of increased gold and copper prices means that the project economics for the Company's Tulu Kapi gold project in Ethiopia ("Tulu Kapi" or the "Project") have become even more attractive, as have the potential values of our discoveries in Saudi Arabia, with maiden resources now reported mainly for copper/gold at Hawiah, as well as for zinc/silver and also for gold at Jibal Qutman.

 

The Company has continued to advance its projects in the highly prospective Arabian Nubian Shield notwithstanding the logistical restrictions imposed to protect personnel and the wider community due to COVID-19.

 

As reported post period end in July 2020 Tulu Kapi project company Tulu Kapi Gold Mines Share Company ("TKGM") is in detailed discussions with specialist mining financiers to complete the Project finance consortium alongside the mandated senior bank lenders to the Project. TKGM is working closely with all these parties to refine the detailed terms and to complete their reviews of the recently completed independent technical expert reports. The focus remains on continuing offsite development activities, the closing of the full Project funding package in October 2020, resettlement  commencing in Q4 2020, site construction in early 2021 and for gold production to commence in 2022, in line with recent guidance.

 

It is notable that both Ethiopia and Saudi Arabia have prioritised development of the mining sector and both countries are implementing reforms to further develop and open up their economies.

 

The company continues to receive the support of its shareholders and welcomes to its investor base RAB Capital who now hold 12% of the issued capital of the Company and have Board representation.

 

Tulu Kapi Gold Project, Ethiopia

 

As previously reported, despite COVID-19, the implementation of the Project development activities during the first half has continued as planned:

· Infrastructure for connection of roads & power and security upgrade: This long-lead activity is on schedule, so that it does not hold up on-site construction over the next two years when new roads and electricity will be required;

· A road now has been built into new host lands for Tulu Kapi residents to be resettled;

· Security has been significantly expanded in the Mine License Area and surrounding district; and

· Infrastructure for ore processing: Process plant Front-End-Engineering-and-Design was completed by principal contractors Lycopodium Limited, after updating pricing from the plant fabricators and integrating the results of recent geotechnical drilling into final designs of foundations for plant and dams.

 

Gold & Minerals Limited Joint Venture (G&M), Saudi Arabia

 

As announced post period end on 19 August 2020, a maiden resource at Hawiah has been delineated:

· Maiden Hawiah Inferred Mineral Resource Estimate ("MRE") of 19.3 million tonnes ("Mt") at 0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3g/t silver;

· Mineralisation remains open at depth; and

· High grade zones outside of current Mineral Resource, expected to be targeted in next drilling phase.

 

The Hawiah Internal Preliminary Economic Assessment ("PEA") has also been announced today.

 

KEFI welcomed the approval by the Saudi Arabian Cabinet in June 2020 of a new Mining Investment Law which is aimed at boosting the country's mining industry and is part of Saudi Arabia's plan to diversify its economy away from hydrocarbons. The Company also welcomes the expanded role of the Saudi Investment Development Fund specifically to support mining project finance, which may be pertinent to the Hawiah Project once prepared for development. 

 

This new regulatory impetus is expected to also help clarify the path forward to unlock value from KEFI's Saudi gold discovery at Jibal Qutman, which has been on hold awaiting Mining Licence tenure confirmation. An Internal Preliminary Economic Assessment in 2015 suggesting estimated operating costs of c. US$600/oz and estimated capital expenditure of US$30 million demonstrates that Jibal Qutman's Mineral Resources, totalling 733,000 ounces of near-surface gold, should be highly profitable in the current gold price environment.

 

Financial

 

During the period the Company raised gross proceeds of £5.6 million through two placings. The placing completed on 6 January 2020 raised gross proceeds of £1.9 million to reduce creditors and the placing completed on 28 May 2020 provided additional funding to the Company of £3.7 million (gross) to continue the Tulu Kapi preparations, notwithstanding the challenges created by COVID-19.

 

In order to reduce short term expenditure whilst project preparations continued, KEFI initiated a number of changes during the period:

· adjusting parts of the TKGM budget, whilst preserving key business targets;

· ongoing salary reductions by senior management of 25% pending progress reviews; and

· one-time dilution of Saudi joint-venture interest from 40% to 34% by not contributing pro rata share of expenses to G&M in the two years to 30 June 2020. It should be noted that KEFI expects to fund its pro rata share going forward.

The Company continues to consider a range of financing options to provide and maintain appropriate levels of working capital and funding for the long term development of the Tulu Kapi Gold project and the advancement of the Saudi initiatives.(see also "Note 2" to the financial statements)

 

Corporate - post period end

· Mr Adam Taylor was appointed as a Non-executive Director on 20 July 2020 following the investment by international investment company RAB Capital, a specialist in the mining sector. RAB Capital's welcome involvement is viewed as a long-term participation and they now hold approximately 12% of KEFI's issued share capital.

· On 18 August 2020 the company changed its name to KEFI Gold and Copper plc to better characterise and communicate its objectives and activities, reflecting its now established significant position in gold and copper.

 

Commenting, Mr Harry Anagnostaras-Adams, Executive Chairman of KEFI said , " During the first half and subsequently, the Company has continued to advance and is now extremely well positioned. The value-enhancing milestones ahead bode well for the Company's prospects and we seem fortunate that this coincides with a rising gold and copper prices in particular and aggressively pro-development Government initiatives in our host countries, Ethiopia and Saudi Arabia. The remainder of 2020 is expected to be a very exciting period for the Company and we look forward to providing regular updates as matters progress."

 

 

I nvestor Webinar

 

· The Company will host its live quarterly webinar at 2pm London time on Monday 26 October 2020 which will be accessed via: www.brrmedia.co.uk

· Listeners are encouraged to submit questions by emailing: [email protected]. The webinar will subsequently be available on the Company's website at  http://www.kefi-minerals.com/news/webcasts .

 

 

Market Abuse Regulation (MAR) Disclosure

 

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

Enquiries

 

KEFI Gold and Copper plc

 

Harry Anagnostaras-Adams (Executive Chairman)

+357 99457843

John Leach (Finance Director)

+357 99208130

 

 

SP Angel Corporate Finance LLP (Nominated Adviser and Joint Broker)

+44 20 3470 0470

Jeff Keating, Soltan Tagiev

 

 

 

Brandon Hill Capital Ltd (Joint Broker)

+44 20 7936 5200

Oliver Stansfield, Jonathan Evans

 

 

 

IFC Advisory Ltd (Financial PR and IR)

+44 20 3934 6630

Tim Metcalfe, Florence Chandler

 

 

 

 

 

 

Condensed interim consolidated statements of comprehensive income

(unaudited) (All amounts in GBP thousands unless otherwise stated)

 

 

 

 

 

 

 

 

Notes

 

Six months ended  30 June 2020

Unaudited

 

Six months ended  30 June 2019

Unaudited

 

 

 

 

 

 

Revenue

 

 

-

 

-

Exploration expenses

 

 

(18)

 

(21)

Gross loss

 

 

(18)

 

(21)

Administration expenses

 

 

(1,580)

 

(1,066)

Share-based payments

 

 

(76)

 

(73)

Share of loss from jointly controlled entity

 

 

(587)

 

(186)

Gain from dilution of equity interest in joint venture

11

 

1,037

 

-

Operating loss

 

 

(1,224)

 

(1,346)

Foreign exchange loss

 

 

362

 

(4)

Finance expense

 

 

(192)

 

(345)

Loss before tax

 

 

(1,054)

 

(1,695)

Tax

 

 

-

 

-

Loss for the period

 

 

(1,054)

 

(1,695)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

 

(1,054)

 

(1,695)

Other comprehensive loss:

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

(-)

 

(7)

Total comprehensive loss for the period

 

 

(1,054)

 

(1,702)

 

 

 

 

 

 

 

Basic loss per share (pence)

4

  (0.08)

 

  (0.27)

Basic diluted loss per share (pence)

4

  (0.07)

 

  (0.26)

 

 

The notes are an integral part of these unaudited condensed interim consolidated financial statements.

 

 

 

 

 

Condensed interim consolidated statements of financial position 

(unaudited)(All amounts in GBP thousands unless otherwise stated)

 

 

 

 

 

Notes

 

Unaudited

30 June 2020

 

Audited

31 Dec 2019

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

 

 

41

 

39

Intangible assets

6

 

22,978

 

21,200

Investments in JV

 

 

-

 

-

Receivables

 

 

-

 

-

 

 

 

23,019

 

21,239

Current assets

 

 

 

 

 

Financial assets at fair value through OCI

 

 

67

 

70

Trade and other receivables

5

 

310

 

1,234

Deferred financing expenses

 

 

-

 

-

Cash and cash equivalents

 

 

2,135

 

150

 

 

 

2,512

 

1,454

 

 

 

 

 

 

Total assets

 

 

25,531

 

22,693

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

Issued capital and reserves attributable to owners of the parent

 

 

 

 

 

Share capital

7

 

1,868

 

1,149

Deferred Shares

7

 

23,328

 

23,328

Share premium

7

 

29,448

 

25,452

Share options reserve

8

 

1,250

 

1,118

Foreign exchange reserve

 

 

-

 

-

Accumulated losses

 

 

(35,167)

 

(34,640)

 

 

 

20,727

 

16,407

Non-controlling interest

 

 

1,154

 

1,075

Total equity

 

 

21,881

 

17,482

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

9

 

3,650

 

4,247

Loans and borrowings

10

 

-

 

964

 

 

 

3,650

 

5,211

 

 

 

 

 

 

Total liabilities

 

 

3,650

 

5,211

 

 

 

 

 

 

Total equity and liabilities

 

 

25,531

 

22,693

 

 

 

 

 

 

 

The notes are an integral part of these unaudited condensed interim consolidated financial statements. 

 

 

On 21 September 2020, the Board of Directors of KEFI Gold and Copper Plc authorised these unaudited condensed interim financial statements for issue.

 

John Leach

Finance Director

 

 

Condensed interim consolidated statement of changes in equity 

(unaudited)(All amounts in GBP thousands unless otherwise stated)

 

Attributable to the equity holders of parent

 

Share

capital

Deferred shares

Share premium

Share options and warrants reserve

Foreign exchange reserve

Accumulated losses

Total

NCI

Total equity

At 1 January 2019 (Note 2)

9,719

12,436

21,581

1,032

(215)

(30,276)

14,277

1,075

15,352

Loss for the period

-

-

-

-

-

(1,695)

(1,695)

-

(1,695)

Other comprehensive income

-

-

-

-

(7)

-

(7)

-

(7)

Total Comprehensive Income

-

-

-

-

(7)

(1,695)

(1,702)

-

 

(1,702)

Recognition of share based payments

-

-

-

73

-

-

73

-

73

Cancellation & Expiry of options/warrants

-

-

-

(42)

-

42

-

-

-

Issue of share capital

1,855

-

129

-

-

-

1,984

-

1,984

Share issue costs

-

-

(92)

-

-

-

(92)

-

(92)

Non-controlling interest

-

-

-

-

-

1

1

(1)

-

At 30 June 2019 (Note 2 Prior year adjustment)

11,574

12,436

21,618

1,063

(222)

(31,928)

14,541

1,074

15,615

Loss for the period

 -

 -

 -

 -

 -

  (3,878)

  (3,878)

 

 (3,878)

Other comprehensive income

 -

 -

 -

 -

222

 -

222

222

Total Comprehensive Income

 -

 -

 -

 -

222

  (3,878)

  (3,656)

 (3,656)

Recognition of share based payments

 -

 -

 -

  177

 -

 -

  177

 

  177

Cancellation & Expiry of options/warrants

 -

 -

 -

  (122)

 -

  122

  - 

 

  - 

Issue of share capital

  467

 -

  3,927

 -

 -

  1,045

  5,439

 

  5,439

Deferred Shares

(10,892)

  10,892

-

-

-

  - 

 

  - 

Share issue costs

 -

 -

  (93)

 -

 -

 -

  (93)

 

  (93)

Non-controlling interest

 -

 -

 -

 -

 -

  (1)

  (1)

  1

  - 

At 1 January 2020 Audited

  1,149

  23,328

  25,452

  1,118

  - 

(34,640)

  16,407

  1,075

  17,482

Loss for the period

 

 

 

 

 

 

 

 

 

Other comprehensive income

 -

 -

 -

 -

 -

  (1,054)

  (1,054)

 -

 (1,054)

Total Comprehensive Income

 -

 -

 -

 -

 -

 -

 -

 -

  - 

Recognition of share based payments

 -

 -

 -

336

 -

 -

336

 -

  336

Cancellation & Expiry of options/warrants

 -

 -

 -

  (606)

 -

  606

-

 -

-

Issue of share capital and warrants

  719

 -

  4,441

402

 -

 -

  5,562

 -

  5,562

Share issue costs

-

-

  (445)

 -

 -

 -

(445)

 

  (445)

Non-controlling interest

 -

 -

 -

 -

 -

  (79)

(79)

79

  - 

At 30 June 2020 Unaudited

1,868

23,328

29,448

1,250

-

(35,167)

20,727

1,154

21,881

 

The following describes the nature and purpose of each reserve within owner's equity:

Reserve

Description and purpose

Share capital

amount subscribed for share capital at nominal value.

Deferred shares

under the restructuring of share capital, ordinary shares of in the capital of the Company were sub-divided into deferred share.

Share premium

amount subscribed for share capital in excess of nominal value, net of issue costs.

Share options and warrants reserve

reserve for share options and warrants granted but not exercised or lapsed.

Foreign exchange reserve

cumulative foreign exchange net gains and losses recognized on consolidation.

Accumulated losses

cumulative net gains and losses recognized in the statement of comprehensive income, excluding foreign exchange gains within other comprehensive income.

NCI (Non-controlling interest)

the portion of equity ownership in a subsidiary not attributable to the parent company.

 

The notes are an integral part of these unaudited condensed interim consolidated financial statements.

 

 

Condensed interim consolidated statements of cash flows

(unaudited)(All amounts in GBP thousands unless otherwise stated)

 

 

 

 

Notes

 

Six months ended  30 June 2020

 

Six months ended 30 June 2019

Cash flows from operating activities

 

 

 

 

 

Loss before tax

 

 

(1,054)

 

(1,695)

Adjustments for:

 

 

 

 

 

Share-based benefits

 

 

76

 

73

Share-based payments

 

 

-

 

7

Issue of warrants

 

 

-

 

-

Fair value loss to derivative financial asset

 

 

3

 

-

Gain from dilution of equity interest in joint venture

11

 

(1,037)

 

-

Share of loss in joint venture

 

 

587

 

186

Depreciation

 

 

1

 

1

Finance expense

 

 

192

 

345

Realised Loss on derivative financial asset

 

 

-

 

-

Foreign exchange losses on financing activities

 

 

(380)

 

35

Foreign exchange gains on operating activities

 

 

11

 

-

Cash outflows from operating activities before working capital changes

 

 

(1, 601)

 

(1,048)

 

 

 

 

 

 

Interest paid

 

 

(192)

 

(76)

 

 

 

 

 

 

Changes in working capital:

 

 

 

 

 

Trade and other receivables

 

 

(216)

 

(5)

Trade and other payables

 

 

1,337

 

566

 

 

 

 

 

 

Net cash used in operating activities

 

 

(480)

 

(563)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchases of plant and equipment

 

 

(3)

 

-

Deferred exploration costs

 

 

-

 

(493)

Project evaluation costs

6

 

(1,778)

 

(433)

Advances to joint venture

 

 

(207)

 

(159)

Net cash used in investing activities

 

 

(1,988)

 

(1,085)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Proceeds from issue of share capital

7

 

4,841

 

969

Listing and issue costs

7

 

(185)

 

(92)

Financing transaction costs paid

 

 

(192)

 

-

Proceeds from convertible notes

 

 

-

 

525

Proceeds from bridge loans

 

 

-

 

587

Repayment short term working capital bridging finance

 

 

-

 

(270)

Net cash from financing activities

 

 

4,464

 

1,719

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

1,996

 

71

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

At beginning of period

 

 

150

 

88

Exchange differences

 

 

(11)

 

1

At end of period

 

 

2,135

 

160

 

 

The notes are an integral part of these unaudited condensed interim consolidated financial statements

Notes to the condensed interim consolidated financial statements

For the six months to 30 June 2020(unaudited) and 2019   (All amounts in GBP thousands unless otherwise stated)

 

1.  Incorporation and principal activities

Country of incorporation

The Company was incorporated in United Kingdom as a public limited company on 24 October 2006.  Its registered office is at 27/28 Eastcastle Street, London W1W 8DH.

 

Principal activities

The principal activities of the Group for the period are:

· To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling.

· To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and market and finance studies.

· To develop, operate mineral deposits and market the metals produced.

2.  Summary of significant accounting policies

The principal accounting policies applied in the preparation of these condensed interim consolidated financial statements are set out below. These policies have been applied consistently throughout the period presented in these condensed interim consolidated financial statements unless otherwise stated.

Basis of preparation and consolidation

The condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standards (IFRS).

These condensed interim consolidated financial statements ('the statements") are unaudited and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the financial statements of the Company and the Group for the year ended 31 December 2019. These statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the financial statements and other information set out in the Company's 31 December 2019 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.

Going concern

The assessment of the Group's ability to continue as a going concern involves judgment regarding future funding available for the development of the Tulu Kapi Gold project, exploration of the Saudi Arabia exploration properties and for working capital requirements. In considering the Group's ability to continue as a Going Concern, management have considered funds on hand at the date of approval of the financial statements, planned expenditures covering a period of at least 12 months from the date of approving these financial statements and the Group's strategic objectives as part of this assessment. The Group has also considered the potential impact of COVID 19 in respect of its forecasts. 

 

The ability of the Company to carry out its planned business objectives is dependent on its ability to continue to raise adequate financing from lenders, shareholders and other investors to meet its working capital and other funding requirements. Financing will also be required to continue the development of the Tulu Kapi Gold Project through to production.

 

The Company is in discussions with a number of fund providers to the mining industry who have an interest in the full range of financing instruments from conventional equity to debt to quasi equity.  In addition, the company enlists the help of external professionals such as stock brokers and specialist financial advisors to assist in identifying and successfully concluding investment arrangements with third parties.

 

The Group is currently evaluating a number of proposed sources of financing for the Tulu Kapi Gold Project, the main focus of which is securing and optimising the full project funding package of c. US221 million comprising senior debt and a combination of pure equity and offtake-linked subordinated debt. The Ethiopian Government is in the process of contributing project equity of no less than US$20 million (Ethiopian Birr equivalent) and KEFI wholly-owned subsidiary KEFI Minerals (Ethiopia) Limited (formerly Nyota Minerals (Ethiopia) Limited up until its acquisition in 2013) has invested over US$60 million to date. 

 

Furthermore, the Group has mandated two African based banks to provide long term project financing to the project subject to the completion of the bank's due diligence processes.

 

It should be noted that there are currently no unconditional, binding agreements in place in respect of any additional funding and there is no guarantee that any course of funding will proceed. Also, COVID-19 has had a significant negative impact on the global economy which may mean it is harder to secure additional funding than has historically been the case. Notwithstanding this as a result of historical and ongoing proactive discussions with stakeholders, the Board has a reasonable expectation that the Group will be able to raise further funds in order to meet its obligations. Subject to the above, the Directors have concluded that it is appropriate to prepare the financial statements on a going concern basis.

 

Prior year adjustment

 

In 2017 and 2018 amounts of £1,340,000 and £938,000 relating to the issue of shares were, respectively, transferred from share premium to accumulated losses. In accordance with the UK Companies Act 2006, the share premium should not have included these adjustments and accordingly they have been restated in the opening balance sheet and the prior year comparatives. The impact of the adjustment is to increase share premium by £1,340,000 and decrease accumulated losses by the same amount at 1 January 2018, and to increase share premium by a further £938,000 and decrease accumulated losses by the same amount in the prior year. The adjustment has no impact on losses or assets or liabilities in any year

New and amended standards adopted by the Company

The same accounting policies, presentation and methods of computation are followed in the interim consolidated financial information as were applied in the Group's latest annual audited financial statements except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2020, and will be adopted in the 2020 annual financial statements. The following new standards and interpretations became effective on 1 January 2020 and have been adopted by the Group. None of these amendments are considered to have had a material effect in the Period.

 

  · IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)

  · IFRS 3 Business Combinations (Amendment - Definition of Business)

  · IBOR Reform and its Effects on Financial Reporting - Phase 1

  ·   Revised Conceptual Framework for Financial Reporting

 

3.  Operating segments

The Group has only one distinct operating segment, being that of mineral exploration. The Group's exploration activities are located in Ethiopia, Saudi Arabia through the jointly controlled entity and its administration and management is based in Cyprus.

Unaudited Six months ended 30 June 2020

Cyprus

Ethiopia

Saudi Arabia

 

 

Total

 

£'000

£'000

£'000

 

£'000

Operating loss (Excluding loss from jointly controlled entity)

(1,666)

(8)

-

 

(1,674)

Interest paid

-

-

-

 

-

Other finance costs

(192)

-

-

 

(192)

Foreign exchange profit

259

103

-

 

362

Share of loss from jointly controlled entity

-

-

(587)

 

(587)

Gain from dilution of equity interest in joint venture

1,037

-

-

 

1,037

Loss before tax

(562)

95

(587)

 

(1,054)

Tax

 

 

 

 

-

Loss for the period

 

 

 

 

(1,054)

 

 

 

 

 

 

Total assets

5,404

14,770

-

 

20,174

Total liabilities

(3,340)

(231)

(43)

 

(3,614)

Depreciation of property, plant and equipment

-

(1)

-

 

(1)

 

 

Unaudited Six months ended 30 June 2019

Cyprus

Ethiopia

Saudi Arabia

 

 

Total

 

£'000

£'000

£'000

 

£'000

Operating loss (Excluding loss from jointly controlled entity)

(1,154)

(6)

-

 

(1,160)

Interest paid

(244)

-

-

 

(244)

Other finance costs

(101)

-

-

 

(101)

Foreign exchange loss

(4)

-

-

 

(4)

Share of loss from jointly controlled entity

 

 

(186)

 

(186)

Loss before tax

(1,503)

(6)

(186)

 

(1,695)

Tax

 

 

 

 

-

Loss for the period

 

 

 

 

(1,695)

 

 

 

 

 

 

Total assets

7,344

12,830

-

 

20,174

Total liabilities

(3,985)

(422)

(152)

 

(4,559)

Depreciation of property, plant and equipment

-

(1)

-

 

(1)

 

4.  Loss per share 

The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the parent is based on the following data:

 

Six months ended 30 June 2020

 

Six months ended 30 June 2019

 

Unaudited

Unaudited

 

£'000

£'000

 

Net loss attributable to equity shareholders

(1,054)

 

(1,695)

 

Net loss for basic and diluted loss attributable to equity shareholders

(1,054)

 

(1,695)

 

Weighted average number of ordinary shares for basic loss per share (000's)

1,401,656

 

620,691

 

Weighted average number of ordinary shares for diluted loss per share (000's)

1,462,687

 

653,297

 

Loss per share:

 

 

 

Basic loss per share (pence)

  (0.08)

 

  (0.27)

 

Basic diluted loss per share (pence)

  (0.07)

 

  (0.26)

 

               

The effect of share options and warrants on the loss per share is anti-dilutive.

5.  Trade and other receivables

 

 

 

30 June 2020

 

31 Dec 2019

 

 

 

Unaudited

 

Audited

 

 

 

£'000

 

£'000

Share Placement

Other receivables

 

 

14

8

 

1,154

-

VAT

 

 

82

 

80

Advance to Gold and Minerals

 

 

206

 

-

 

 

 

 

310

 

 

1,234

 

6.  Intangible assets

 

 

 

 

 

 

 

 

 

 

Total exploration and project evaluation costs

£ '000

Cost

 

 

 

 

 

 

 

 

 

At 1 January 2019 (Audited)

 

 

 

 

 

 

 

 

19,023

Additions

 

 

 

 

 

 

 

 

1,020

At 30 June 2019 (Unaudited)

 

 

 

 

 

 

 

 

20,043

Additions

 

 

 

 

 

 

 

 

1,423

At 31 December 2019 (Audited)

 

 

 

 

 

 

 

 

21,466

Additions

 

 

 

 

 

 

 

 

1,778

At 30 June 2020 (Unaudited)

 

 

 

 

 

 

 

 

23,244

 

 

 

 

 

 

 

 

 

 

Accumulated Impairment

 

 

 

 

 

 

 

 

 

At 1 January 2019 (Audited)

 

 

 

 

 

 

 

 

(266)

Impairment charge for the period

 

 

 

 

 

 

 

 

-

At 30 June 2019 (Unaudited)

 

 

 

 

 

 

 

 

(266)

Impairment charge for the period

 

 

 

 

 

 

 

 

-

At 31 December 2019 (Audited)

 

 

 

 

 

 

 

 

(266)

Impairment charge for the period

 

 

 

 

 

 

 

 

-

At 30 June 2020 (Unaudited)

 

 

 

 

 

 

 

 

(266)

 

 

 

 

 

 

 

 

 

 

Net Book Value at 30 June 2020 (Unaudited)

 

 

 

 

 

 

 

 

22,978

Net Book Value at 31 December 2019 (Audited)

 

 

 

 

 

 

 

 

21,200

 

 

7.  Share capital

 

 

Number of shares

000's

 

Share

Capital

£'000

Deferred shares

 '000

Share premium

£'000

 

Total

£'000

Issued and fully paid

 

 

 

 

 

 

At 1 January 2020 (Audited)

1,148,874

 

1,149

23,328

25,452

49,929

Share Equity Placement 10 Jan 2020

149,000

 

149

-

1,714

1,863

Share Equity Placement 14 May 2020

113,846

 

114

-

626

740

Share Equity Placement 28 May 2020

455,385

 

456

-

2,503

2,959

Share issue costs

-

 

-

-

(185)

(185)

Broker warrants: issue costs

-

 

-

-

(260)

(260)

Warrants: fair value split of warrants issued to shareholders.

 

 

 

 

(402)

(402)

At 30 June 2020 (Unaudited )

1,867,105

 

1,868

23,328

29,448

54,644

 

Issued capital

 

During January 2020, the Company completed a £1,862,500 placing by issuing 149,000,000 new ordinary shares of 0.1p each in the capital of the Company at a price of 1.25p per share.

 

During May 2020, the Company raised a further £3.7 million via a placing of 569,230,761 new Ordinary Shares of 0.1p each in two tranches at an issue price of 0.65 pence per share. Brandon Hill Capital Ltd acted as broker for the placing. The first 113,845,837 share tranche was conditional only upon admission of the shares to AIM, while the second tranche of 455,384,924 shares required shareholder approval at a General Meeting held on the 28 May 2020.  The Company finalised this placing of £3,700,000 and issued 569,230,761 new ordinary shares of 0.1p each in the capital of the Company. All Shares rank pari passu in all respects with the existing ordinary shares of the Company.

 

8.  Share Based Payments

 

8.1.  Warrants

 

Details of warrants outstanding as at 30 June 2020:

Grant date

Expiry date

Exercise price

 

Unaudited Number of warrants*

 

 

 

 

000's

 

 

 

 

 

19 Sep 2018

20 Sep 2023

2.5p

 

2,000

02 Aug 2019

02 Aug 2022

2.5p

 

19,500

  10 Jan 2020

10 Jan 2020

1.25p

 

7,450

14 May 2020

  14 May 2023

0.65p

 

5,692

29 May 2020

  29 May 2023

0.65p

 

22,770

 

 

 

 

 

 

 

 

 

57,412

 

 

 

Weighted average ex. price

Unaudited Number of warrants*

000's

 

 

 

Outstanding warrants at 1 January 2020

2.50p

21,500

- granted

1.76p

¹184,912

- cancelled/expired/forfeited

2.00p

²(149,000)

Outstanding warrants at 30 June 2020

1.42p

57,412

These warrants were issued to advisers and shareholders of the Group.

¹&² The Company issued 149,000,000 short term warrants to subscribe for new ordinary shares of 0.1p each at 2p per share in accordance with the December 2019 and January 2020 share placement and as approved by shareholders on 6 January 2020. The warrants expired on 30 April 2020. The Company performed a fair value split by fair valuing the warrants using Black Scholes and assumed that this value is the residual share amount. 

¹On 16 December 2019, the Company issued 7,450,000 warrants to subscribe for new ordinary shares of 0.1p each at 2p per share. to Brandon Hill pursuant to the Placing Agreement. The warrants expire 2 years from the date of issue (10 January 2020).

¹During May 2020, the Company issued 28,461,538 broker warrants to subscribe for new ordinary shares of 0.1p each at 0.65p per share to Brandon Hill pursuant to the Placing Agreement. The warrants expire within three years of the date of First Admission.

8.2  Share options reserve  

Details of share options outstanding as at 30 June 2020:

Grant date

Expiry date

Exercise price

 

Unaudited

Number of shares* 000's

12-Sep-14

11-Sep-20

29.92p

 

132

20-Mar-15

19-Mar-21

22.44p

 

1,529

16-Jun-15

15-Jun-21

22.44p

 

382

12-Jan-16

11-Jan-22

7.14p

 

4,088

23-Feb-16

22-Feb-22

12.58p

 

176

05-Aug-16

05-Aug-22

10.20p

 

1,471

21-Mar-17

20-Mar-23

7.50p

 

7,907

01-Feb-18

31-Jan-24

4.50p

 

11,400

 

 

 

 

27,085

 

 

 

 

 

 

 

 

 

 

 

 

30 June 2020

 

31 Dec 2019

 

 

 

 

Unaudited

 

Audited

 

Opening amount

 

 

1,118

 

1,032

 

Warrants issued costs

 

 

662

 

94

 

Share options issued to employees

 

 

33

 

34

 

Share options issued to directors and key management

 

 

43

 

122

 

Forfeited Options

 

 

-

 

-

 

Expired Options

 

 

(204)

 

-

 

Expired Warrants

 

 

(402)

 

(164)

 

 

 

 

1,250

 

1,118

                               

 

 

 

Weighted average ex. price

Unaudited

Number of shares*

 000's

 

 

 

 

Outstanding options at 1 January 2020

8.95p

28,365

-  granted

-

-

-  cancelled/expired/forfeited

39.07

(1,280)

Outstanding options at 30 June 2020

7.52p

27,085

 

 

8.3.  Share Payments for services rendered.

 

January 2020 placement of 149,000,000 shares

 

On 6 January 2020, following approval by shareholders, the Company issued 49,419,600 new ordinary shares ("Remuneration Shares") and 99,580,400 new ordinary shares ("Settlement Shares") of 0.1p each in the capital of the Company at an issue price of 1.25p. The Remuneration Shares representing an aggregate value of £617,750 were granted to certain directors and management of the Company to satisfy accrued fees and salaries. The Settlement Shares were issued to Project contractors and other third parties in settlement of outstanding invoices and debt and represented an aggregate value of £1,244,750. During January 2020, the Company completed finalised this placing of £1,862,500 by issuing 149,000,000 new ordinary shares of 0.1p each in the capital of the Company. All Shares rank pari passu in all respects with the existing ordinary shares of the Company.

 

The Remuneration Shares, Settlement Shares and Placing Shares approved on the 6 January 2020 carried a short-term warrant entitlement of one warrant for every two such shares (the "Warrants"). The Warrants had an exercise price of 2p per Ordinary Share and expired on 30 April 2020.

 

The January 2020 placement provided working capital to the Company, allowed repayment and cancellation of existing debt and reduced other current obligations thus strengthening the financial position and capability of the Company.

 

All Remuneration Shares, Settlement Shares and Placing Shares were issued at a value of 1.25 pence per share. The net raise amounted to £1,862,500, with liabilities and other obligations listed below settled in shares.

Amount in settlement of outstanding obligations:

 

The total shares issued during period for services rendered was as follows:

 

Name

 

Number of Remuneration and Settlement Shares

 

Amount

 

 

000

 

£'000

H Anagnostaras-Adams

 

11,812

 

  148

J Leach

 

8,924

 

  112

Norman Arthur Ling

 

2,000

 

  25

Mark Tyler

 

2,000

 

  25

Richard Lewin Robinson

 

1,000

 

  13

Other employees and PDMRs

 

23,685

 

  296

Amount to settle other Obligations

 

22,450

 

  281

Amount to settle loans:

 

 

 

 

Unsecured Convertible loan facility

 

6,000

 

  75

Unsecured working capital bridging finance

 

71,130 

 

  889

 

 

149,001

 

1,864

 

 

9  Trade and other payables

 

 

 

 

30 June 2020

Unaudited

 

31 Dec 2019

Audited

 

 

 

£'000

 

£'000

Accruals and other payables

 

 

1,606

 

1,829

Other loans

 

 

156

 

169

Payable to joint venture partner (Note 11 and Note 12.3)

 

 

247

 

456

Payable to Key Management and Shareholder (Note 12.3)

 

 

1,641

 

1,793

 

 

 

3,650

 

4,247

 

10  Loans and Borrowings

10.1.1 Short Term Working Capital Bridging Finance  

 

 

Currency

 

Interest

 

Maturity

 

Repayment

Unsecured working capital bridging finance

GBP

See Table below

On Demand

See Table below

 

The Group has the option to access working capital from certain existing stakeholders for up to GBP £1.5 million. This unsecured working capital bridging finance is short term debt which is unsecured and ranked below other loans. In the event the Group was unable to pay this finance it would be repaid after other debt securities have been paid, if any. Management expects that the company would meets its contractual obligation on any such bridging finance on a timely basis going forward.

 

 

Unsecured working capital bridging finance

Balance 1 Jan 2020

Audited

Drawdown Amount

Unaudited

Transaction Costs

Unaudited

Interest

 

Unaudited

Repayment

Shares

Unaudited

Repayment

Cash

Unaudited

Period Ended

30 June 2020

Unaudited

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Repayable in cash in less than a year

889

-

-

-

(889)

-

-

 

                             

10.1.2 Reconciliation of liabilities arising from financing activities

 

 

Cash Flows

 

 

 

Balance 1 Jan 2020

Inflow

(Outflow)

Finance Costs

Shares

Balance 30 June 2020

 

Audited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 

£'000

£'000

£'000

£'000

£'000

£'000

Unsecured working capital bridging finance

 

 

 

 

 

Short term loans

  889

  -

  -

-

  (889)

  -

 

  889

-

-

-

  (889)

-

Convertible notes

 

 

 

 

 

 

Sanderson unsecured convertible loan facility

75

-

-

-

(75)

-

 

75

-

-

-

(75)

-

 

 

 

 

 

 

 

 

964

-

-

-

(964)

-

                     

 

11  Joint venture agreements

 

KEFI is the operating partner with a 34% shareholding in G&M with ARTAR holding the other 66%. KEFI provides G&M with technical advice and assistance, including personnel to manage and supervise all exploration and technical studies. ARTAR provides administrative advice and assistance to ensure that G&M remains in compliance with all governmental and other procedures. G&M has five Directors, of whom two are nominated by KEFI However, decisions about the relevant activities of G&M require the unanimous consent of the five directors. G&M is treated as a jointly controlled entity and has been equity accounted and has reconciled its share in G&M's losses.

 

During the period, the Company has diluted its interest in the Saudi joint-venture company Gold and Minerals from 40% to 34% by not contributing its pro rata share of expenses to G&M. Given that the carrying value of the G&M assets in the Company accounts at the date of dilution was nil because the Company's has a policy of expensing all the costs related to G&M to date.  By diluting its interest to G&M to 34% the Company was released from this liability. This resulted in a gain of £1,037,000. In accordance with the group's accounting policy gain of £1,037,000 was reported in the profit or loss during the period.

 

Six months ended 30 June 2020

 

Unaudited

  £' 000

 

 

Consideration for dilution: Value of the liability extinguished

1,037

Carrying value of the G&M Assets

-

Gain from dilution of equity interest in joint venture recognised in income statement

1,037

 

A loss of £587,000 was recognized by the Group for the period ended 30 June 2020 (2019: £186,000) representing the Group's share of losses for the period. As at 30 June 2020, KEFI owed ARTAR an amount of £247,000 (2019: £456,000). Shortly after 30 June 2020 KEFI transferred cash advance to Gold and Minerals of £204,000.

 

12  Related party transactions

 

The following transactions were carried out with related parties:

 

12.1   Compensation of key management personnel

 

The total remuneration of the Directors and other key management personnel was as follows:

 

Six months ended 30 June 2020

 

Six months ended 30 June 2019

 

 

Unaudited £'000

 

Unaudited £'000

 

Directors' fees

212

 

253

 

Directors' other benefits

26

 

23

 

Share-based benefits to directors

35

 

35

 

Directors bonus

106

 

-

 

Key management fees

481

 

417

 

Key management other benefits

11

 

21

 

Share-based benefits to key management

22

 

22

 

Key management bonus paid in shares

-

 

-

 

 

893

 

771

 

 

Share-based benefits

The Company has issued share options to directors and key management.  On 27 March 2014 , the Board approved a new share option scheme ("the Scheme") for directors, senior managers and employees. The Scheme formalised the existing policy that options may be granted over ordinary shares representing up to a maximum of 10 per cent of the Group's issued share capital..

 

12.2 Transactions with shareholders and related parties

 

 

 

 

Transaction to period end

30 June 2020

 

Transaction to period end

30 June 2019

 

 

 

Unaudited

 

Unaudited

Name

Nature of transactions

Relationship

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

Winchombe Venture Limited 

Receiving of management and other professional services

Key Management and Shareholder

323

 

268

Members of International Mining Performance

Interest paid on loans advanced

Key Management and Shareholder

-

 

 

15

Nanancito Limited

Receiving of management and other professional services

Key Management and Shareholder

169

 

100

 

 

 

492

 

888

 

12.3 Payable to related parties

 

 

 

 

 

 

The Group

 

 

30 June 2020

 

30 Dec 2019

 

 

 

Unaudited

 

Audited

Name

Nature of transactions

Relationship

£'000

 

£'000

Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR")

Finance

Jointly controlled entity partner

247

 

456

Winchombe Ventures Limited 

Fees for services

Key Management and Shareholder

613

 

632

Nanancito Limited

Fees for services

Key Management and Shareholder

877

 

720

Directors

Fees for services

Key Management and Shareholder

151

 

441

 

 

 

 

 

 

 

 

 

1,888

 

2,249

 

 

13  Capital commitments

 

 

30 June 2020

Unaudited

¹'000

 

31 Dec 2019

Audited

£'000

 

 

Tulu Kapi Project costs

 

 

 

1,440

 

 

895

 

 

Saudi Arabia Exploration costs committed to field work that has been recommenced

 

 

1,216

 

1,264

 

Summary of estimated future but not yet contractually committed project development cost:

Once the Company and its partners in Tulu Kapi Gold Mine Share Company Limited start development at the Tulu Kapi Gold Project (the "Project") the Company will have project capital commitments. The following table summarizes the 24-month development Project estimated future capital commitments shown on an undiscounted basis.

 

 

 

 

 

30 June 2020

 

30 June 2020

 

 

 

Unaudited

£'000

 

Unaudited

USD'000

 

On site Infrastructure

 

88,709

 

110,000

 

Mining

 

21,775

 

27,000

 

Off-site Infrastructure

 

16,129

 

20,000

 

Owner's Costs (community, working capital, management, spares, contingency reserves)

 

36,290

 

45,000

 

Interest during grace and other finance effects

 

15,322

 

19,000

 

¹Total of not Contracted Project Capital Costs

 

178,225

 

221,000

 

             

¹The disclosed project capital costs above are based on estimates available at the date of the report. These estimated project capital costs are subject to change.

 

 

14  Events after the reporting date

 

Change of Name

With effect from 18 August 2020, the name of the Company was changed from KEFI Minerals plc to KEFI Gold and Copper plc.

 

 

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