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Kore Potash PLC (KP2)

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Wednesday 31 March, 2021

Kore Potash PLC

FINANCIAL REPORT FOR YEAR ENDED 31 DECEMBER 2020

RNS Number : 0335U
Kore Potash PLC
31 March 2021
 

31 March 2021

 

Kore Potash Plc

("Kore Potash" or the "Company")

 

AUDITED FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

 

The Board of Kore Potash plc the potash development company with 97%-ownership of the Kola and DX Potash Projects in the Sintoukola Basin, located within the Republic of Congo ("RoC"), is pleased to announce the publication of the annual financial report of the Company for the year ended 31 December 20 20 ("FY 20") .

 

The full financial report is available online at the Company's website ( www.korepotash.com ). The Company also advises that an ASX Appendix 4G (Key to Disclosures: Corporate Governance Council Principles and Recommendations) and its current Corporate Governance Statement have been released today and will shortly be available on the Company's website.

 

Summary of key developments

 

· The Company completed a Pre-Feasibility Study (PFS) on the 400 ktpa Dougou Extension (DX) Sylvinite solution mining project and released a summary of results on 13 May 2020. On 9 November 2020, the Company further updated the DX PFS production target. This included the reporting of:

Maiden Probable Sylvinite Ore Reserves 17.7 Mt at a grade of 41.7% KCl.

A revised Sylvinite Mineral Resource of 145 Mt at a grade of 39.7% KCl.

Attractive life-of-mine cost of sales, free on board (FOB) of approximately USD 86.61/t MoP

Mine life of approximately 30 years based on a production of 400 kt/year.

Estimated base case initial capital cost of approximately USD 286 million (real 2020)

Estimated 21-month construction period which provides the Company with near term production options

Base case real ungeared IRR of approximately 23.4% and base case post-tax ungeared NPV10 (real) of approximately USD 421 million on an attributable basis at life-of-mine average Muriate of Potash ("MoP") price for granular product of USD 422/t

Average base case annual post construction, post-tax, free cash flow of approximately USD 95 million and approximately 4.3 years post-tax payback period from first production.

The execution and interpretation of a 60-line km 2D seismic survey over the area that coincided with the Indicated Mineral Resource which incorporated into the PFS geological model.

The drilling and analysis of 2 new drill holes within the Inferred Mineral Resource boundary; this data was incorporated into the PFS geological model.

 

Further details of the summary of the DX PFS are available on the Company's website.

 

· The Company raised USD 8 million to undertake the first phase of a Definitive Feasibility study (DFS) on the DX Sylvinite solution mining project through the placing and direct subscription of new ordinary shares in the Company which was approved by shareholders on 26 August 2020.

· Work commenced on the DX DFS in September 2020.

· Discussions continued during the year with a number of potential funding partners who have indicated potential interest in financing the Kola project.

· In addition, the Company continued dialogue with engineering and construction companies with the capability to conduct further optimisation of the Kola design and capital cost.

· Ms Trinidad Maris Reyes Perez joined the Board of the Company on 20 November 2020, replacing Mr Jose Antonio Merino as the nominee director of Sociedad Quimica y Minera de Chine S.A.

· On 14 December 2020, the Company reported receipt of correspondence received from the Minister of Mines expressing dissatisfaction with the pace of development of the Kola Potash project. Since then, the Company has continued to communicate constructively and openly with the Minister of Mines to ensure the parties remain fully engaged as Kore Potash progresses the development of its projects.

 

Summary of financials

 

· During the year ended 31 December 2020, the Group's total comprehensive loss was USD 8.2 million (2019: USD 7.3 million) and the Group experienced net cash outflows from operating and investing activities of USD 9.3 million (2019: USD 11.3 million). Cash and cash equivalents totalled USD 5.6 million as at 31 December 2020 (2019: USD 7.6 million).

 

· Group net assets increased in the year to USD 178 million from USD 162 million. This was primarily driven by the fund raise of USD 7.5 million during the year. 

 

· The Directors prepared a cash flow forecast for the period ending 31 December 2022, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period (31 March 2022), primarily being corporate costs, exploration expenditure, and DFS costs related to the Kola and Dougou Projects. Please refer to Note 1 to the financial statements for more detail on the going concern statement.

 

· Accordingly, the Directors resolved to undertake certain mitigating actions including a capital raise in Q2 - Q3 2021. The Company has begun discussions with its major shareholders with regards to its near and mid-term funding requirements.

 

· The ability of the Group to continue as a going concern is dependent on achieving the matters set out above. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

 

Brad Sampson, Chief Executive of Kore Potash, commented: " We have made good progress during the course of 2020. Despite the difficult circumstances facing the global economy Kore has been able deliver on planned workstreams and advance the projects.

 

"Current rising food prices show the importance of fertilisers, including potash to the global economy. With high-grades and beneficial location the Sintoukola Basin is one of most promising potash deposits in the world. It has the potential to produce the MoP needed by farmers around the world for generations.

 

"In addition, the potential scale and long life of the projects mean that when in production Kore's mines can form a key plank of the Republic of Congo's export economy.

 

"With this in mind we are all the more determined to maintain our momentum into 2021 and beyond. We look forward to informing shareholders and all stakeholders of continued developments soon."

 

 

 

For further information, please visit www.korepotash.com or contact:

 

Kore Potash

Brad Sampson - CEO

 


Tel: +27 11 469 9140

Tavistock Communications

Jos Simson

Edward Lee

 


Tel: +44 (0) 20 7920 3150

Canaccord Genuity - Nomad and Broker

James Asensio

Henry Fitzgerald-O'Connor

 


Tel: +44 (0) 20 7523 4600

Shore Capital - Joint Broker

Jerry Keen

Toby Gibbs

James Thomas


Tel: +44 (0) 20 7408 4090




Questco Corporate Advisory - JSE Sponsor


Tel: +27 (11) 011 9208

Mandy Ramsden



 

 

REVIEW OF OPERATIONS AND STRATEGIC REPORT

 

Corporate activities

 

· On 21 January 2020, a total of 3,811,398 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash fees for the quarter ended 31 December 2019.

 

· On 7 April 2020, a total of 7,770,939 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of  cash fees for the quarter ended 31 March 2020. In addition, a total of 1,250,000 ordinary shares were issued to David Hathorn, David Netherway, Jonathan Trollip and Tim Keating following the unconditional vesting of Performance Rights on 29 March 2020, at a subscription price of USD 0.001 per ordinary share.

 

· On 25 June 2020, a total of 2,258,333 ordinary shares were issued to certain current and former employees to satisfy the conversion of vested Performance Rights in ordinary shares, at a subscription price of USD 0.001 per ordinary share.

 

· In addition, 4,000,000 ordinary shares were issued to Align Research Limited as consideration for equity research services.

 

· On 27 June 2020, 4,000,000 unlisted Options exercisable at GBP 0.11 each expired unexercised.

 

· On 21 September 2020, a total of USD 7,481,937 was raised from existing and new investors through the placing and direct subscription of 882,688,876 ordinary shares in the Company at a placing price of GBP0.0065 per ordinary share.

 

· On 13 October 2020, a total of 2,755,838 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash fees for the quarter ended 30 June 2020.In addition, a total of 3,810,983 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash fees for the quarter ended 30 September 2020.

 

· On 20 November 2020, Trinidad Reyes Perez was appointed a non-executive director of the Company nominated by SQM to replace Jose Antonio Merino who had resigned with effect from that date.

 

· Subsequent to the year-end, on 15 January 2021, a total of 2,909,381 ordinary shares were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash fees for the quarter ended 31 December 2020. In addition, a total of 3,071,251 ordinary shares were issued to certain employees and ex-employees following the vesting of Performance Rights awarded under the Company's Employee Performance Incentive Plans, at a subscription price of USD 0.001 per ordinary share and 9,297,751 Performance Rights, Performance Shares and unlisted Options were cancelled. 

 

· Subsequent to the year-end, on 10 March 2021, the Company's Chief Financial Officer, Mr Andrey Maruta, informed the Board of his intention to leave Kore Potash in order to accept a position at another company. Andrey will continue to work as the Company's Chief Financial Officer through his contractual notice period of 3 months. His last day of employment will be 10 June 2021. During Andrey's notice period the Company will commence the process to select his replacement and will update shareholders on the new appointment in due course.

 

O perational and exploration activity

 

Dougou Extension (DX) Pre-Feasibility Study (PFS) Status Update

 

The Company reports the following status of the DX definitive feasibility study:

 

· The planned diamond drilling was completed within the schedule and the company is awaiting assay results.

· Geo-mechanical testing of samples by Agapito Associates Inc. ("AAI") is complete and the test report is expected in Q2 2021.

· Creep tests at the Institut fur Gebirgsmechanik laboratory in Germany are completed and results have been received in March 2021.

 

Kola Sylvinite Project

 

· Discussions continued with a number of potential funding partners who have indicated potential interest in financing the Kola project.

· In addition, the Company continued dialogue with engineering and construction companies with the capability to conduct further optimisation of the Kola design and capital cost.

 

Mining Convention

· The Mining Convention covering the proposed staged development of the Kola and Dougou Mining Licences was gazetted into law on 29 November 2018 following ratification by the Parliament of the RoC. The gazetting of the Mining Convention provides security of title and the right to develop and operate the Kola Project as well as the adjacent Dougou and Dougou Extension deposits. Under the Mining Convention the RoC government will be granted a 10% carried equity interest in the project companies (DPM and KPM, which are wholly owned by SPSA). The Company currently awaits completion of formalities by the Government to enable transfer of the 10% equity interest to the State.

· The Mining Convention concludes the framework envisaged in the 25-year renewable Kola and Dougou Mining Licences granted in August 2013 and May 2017, respectively. The Mining Convention provides certainty and enforceability of the key fiscal arrangements for the development and operation of Kola and Dougou Mining Licences, which amongst other items include import duty and VAT exemptions and agreed tax rates during mine operations. See Note 7 to the financial statements for further details on the terms and conditions of the Mining Convention.

· The Mining Convention provides strengthened legal protection of the Company's investments in the RoC through the settlement of disputes by international arbitration.

· On 14 December 2020, the Company reported receipt of correspondence received from the Minister of Mines expressing dissatisfaction with the pace of development of the Kola Potash project. Since then, the Company continued to communicate constructively and openly with the Minister of Mines to ensure the parties remain fully engaged as Kore Potash progresses the development of its projects.

 

Authorisation obtained from RoC authorities

· The Minister of Tourism and Environment of the Republic of Congo issued certificates on 31 March 2020 granting 25-year approvals to the ESIAs for both the Dougou and the Kola Mining Licences

· On 1 October 2020, an authorisation was obtained from the Ministry of Environment for SPSA to import and store the chemicals needed for the drilling campaign on the DX project, a further confirmation letter was received 30 November 2020.

· Ministry of Tourism and Environment authorised the environmental management plan for the DFS drilling on Kore's DX Project on 14 October 2020, a further formal confirmation letter was received on 27 November 2020.

 

Workstreams initiated with RoC authorities

· On 21 January 2020, Kore Potash through its subsidiary SPSA submitted to the Ministry of Mines a draft Shareholders agreement for comment.

 

· On 27 March 2020, Kore Potash through its subsidiary SPSA submitted to the Ministry of Mines the annual mining activity report for information, as required by the Mining Convention.

 

· On 30 April 2020, Kore Potash through its subsidiary SPSA submitted to the Ministry of Mines the French translation of the Kore quarterly report and project update for information.

 

· On 13 May 2020, Kore Potash through its subsidiary SPSA submitted to the Ministry of Mines the French translation of the Kore announcement of the DX PFS results for information.

 

· On 23 June 2020 Kore Potash through its subsidiary SPSA sent a new set a of formal letters to the Ministry of Mines asking for governmental actions in relation with its permits and is closely monitoring progress:

Correction to the GPS coordinates appearing in the granting decree of Dougou exploitation permit,

Transfer of the Dougou exploitation permit from SPSA to DPM,

Rectify the granting decree of the Kola exploitation Licence to ensure the permit is firstly being attributed to Sintoukola Potash and then transfer to Kola Potash

Change to the duration of the Sintoukola 2 exploration permit as it appears on the granting decree, from 2 years to 3 years.

 

· On 12 November 2020 Kore Potash through its subsidiary SPSA received a response to its letter dated 23 June 2020. This letter responded to the following:

 

The GPS coordinates appearing in the granting decree of Dougou exploitation permit are regarded as correct and no correction will be required,

The transfer of the Dougou exploitation permit from SPSA to DPM is accepted in principle and the Government will initiate the process

In order to rectify the granting decree of the Kola exploitation Licence to ensure the permit is firstly being attributed to Sintoukola Potash and then transfer to Kola Potash, the Government has requested additional supporting documentation

The change to the duration of the Sintoukola 2 exploration permit as it appears on the granting decree, from 2 years to 3 years, was rejected. The Sintoukola 2 exploration permit has now expired at the end of February 2021 but the Company is considering reapplying for extension of the permit.

 

Tenement Details and Ownership  

The Company is incorporated and registered in England and Wales and wholly owns Kore Potash Limited of Australia. The Company has a 97% shareholding in SPSA in the RoC (see Note 11(f)). SPSA is currently the 100% owner of Kola Potash Mining S.A. which is the sole owner of the Kola Mining Lease and currently 100% owner of Dougou Potash Mining S.A. which is the sole owner of the Dougou Mining Lease (Figure 2). SPSA also owns the Sintoukola 2 Exploration Permit. The Sintoukola 2 exploration permit has now expired at the end of February 2021 and the Company is considering applying for extension of the permit.

 

Project & Type

Tenement Issued

Company Interest

Title Registered to

Kola Mining

Decree 2013-412 of 9 August 2013

100% potassium rights only

Kola Potash Mining S.A.

Dougou Mining

Decree 2017-139 of 9 May 2017

100% potassium rights only

Sintoukola Potash S.A.

Sintoukola2 Exploration

Decree 2018-34 of 9 February 2018

100% potassium rights only

Sintoukola Potash S.A.

Table 1: Schedule of mining tenements (Republic of Congo)

 

Changes to Potash Mineral Resources and Ore Reserves between 2019 and 2020

 

Tables 1 and 2 provide a comparison of the Company's Mineral Resources and Ore Reserves, year-on-year between 2019 and 2020, as per ASX Listing rule 5.21.4.

 

The Dougou Extension Sylvinite deposit has a revised Mineral Resource Estimate which was published on the completion of the DX PFS, released on 13 May 2020.  In this revised Mineral Resource Estimate there was a reduction of 24% in the Indicated Mineral Resource and a 42% reduction in the Inferred Mineral Resource. This change was as a result of additional information becoming available as a result of drilling of 2 holes and completion of the 60-line km 2D seismic survey within the boundary of Indicated Mineral Resource.

 

There are no changes to the other Mineral Resources as reported in 2019.

 

Table 1. Comparison of Potash Mineral Resources year-on-year between 2019 and 2020.

 

MINERAL RESOURCES

2019


2020


Category

Million Tonnes

Grade KCl %

Contained KCl (Mt)


Million Tonnes

Grade KCl %

Contained KCl (Mt)

Kola Sylvinite deposit

Measured

216

34.9

75


216

34.9

75

Indicated

292

35.7

104


292

35.7

104

Measured + Indicated

508

35.4

180


508

35.4

180









Inferred

340

34.0

116


340

34.0

116

TOTAL

848

34.8

295


848

34.8

295










Dougou Extension Sylvinite deposit

Measured

0

0.0

0


0

0.0

0

Indicated

111

37.2

41


79

39.1

31

Measured + Indicated

111

37.2

41


79

39.1

31









Inferred

121

38.9

47


66

40.4

27

TOTAL

232

38.1

88


145

39.7

58










Kola Carnallite deposit

Measured

341

17.4

59


341

17.4

59

Indicated

441

18.7

83


441

18.7

83

Measured + Indicated

783

18.1

142


783

18.1

142









Inferred

1,266

18.7

236


1,266

18.7

236

TOTAL

2,049

18.5

378


2,049

18.5

378










Dougou Carnallite deposit

Measured

148

20.1

30


148

20.1

30

Indicated

920

20.7

190


920

20.7

190

Measured + Indicated

1,068

20.6

220


1,068

20.6

220









Inferred

1,988

20.8

414


1,988

20.8

414

TOTAL

3,056

20.7

634


3,056

20.7

634










TOTAL MINERAL RESOURCES

Measured

705

23.3

165


705

23.3

165

Indicated

1,764

23.7

419


1,732

23.6

408

Measured + Indicated

2,469

23.6

583


2,437

23.5

572









Inferred

3,715

21.9

813


3,660

21.7

793

TOTAL

6,185

22.6

1,396


6,097

22.4

1,365

 

Table 2. Comparison of Ore Reserves year-on-year between 2019 and 2020.

 

Ore Reserves

 

A maiden Ore Reserve was declared during 2020 for the Dougou Extension Sylvinite deposit on the back of the release of the results of the Pre-feasibility study on 13 May 2020. There were no changes to the Kola Ore Reserves in 2020.

 

ORE RESERVES


2019


2020


Category

Million Tonnes

Grade KCl %

Contained KCl (Mt)


Million Tonnes

Grade KCl %

Contained KCl (Mt)

Kola Sylvinite deposit

Proved

61.8

32.1

19.8


61.8

32.1

19.8

Probable

90.6

32.8

29.7


90.6

32.8

29.7

TOTAL

152.4

32.5

49.5


152.4

32.5

49.5

 

ORE RESERVES


2019


2020


Category

Million Tonnes

Grade KCl %

Contained KCl (Mt)


Million Tonnes

Grade KCl %

Contained KCl (Mt)

Dougou Extension Sylvinite deposit

Proved

0

0

0


0

0

0

Probable

0

0

0


17.7

41.7

7.4

TOTAL

0

0

0


17.7

41.7

7.4

Notes:

All Mineral Resource and Ore Reserves are reported in accordance with the JORC Code (2012 edition). Numbers are rounded to the appropriate decimal place. Rounding 'errors' may be reflected in the "totals".

The Kola Mineral Resource Estimate was reported 6 July 2017 in an announcement titled 'Updated Mineral Resource for the High -Grade Kola Deposit'. It was prepared by Competent Person Mr Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia.

The Kola Ore Reserves are based on information compiled or reviewed by, Mo Molavi, P. Eng., who has read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition). Mr Molavi is a Competent Person as defined by the JORC Code 2012 Edition, having a minimum of five years of experience that is relevant to the style of mineralization and type of deposit described in this report, and to the activity for which he is accepting responsibility. Mr Molavi is member of good standing of Engineers and Geoscientists of British Columbia (Registration Number 37594) which is an ASX-Recognized Professional Organization (RPO). Mr Molavi is a consultant working as a sub-contractor to Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group and have been engaged by Met-Chem to review the documentation for Kola Deposit.

The Dougou Carnallite Mineral Resource estimate was reported on 9 February 2015 in an announcement titled 'Elemental Minerals Announces Large Mineral Resource Expansion and Upgrade for the Dougou Potash Deposit'. It was prepared by Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the European Federation of Geologists.

The Dougou Extension Sylvinite Mineral Resource Estimate is reported herein. Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc., for the Exploration Results and Mineral Resources. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318).

The Dougou Extension Ore Reserves are based on information compiled or reviewed by, Dr. Michael Hardy, a Competent Person who is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an RPO included in a list that is posted on the ASX website from time to time. Dr. Michael Hardy has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code). Dr. Michael Hardy president of Agapito Associates Inc is not associated or affiliated with Kore Potash or any of its affiliates.

The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

 

Figure 1. Location of the Sintoukola Project showing the Kola, Dougou and Dougou Extension Projects

(available at www.korepotash.com )

 

 

BUSINESS MODEL

 

The Company's business strategy for the financial year ahead and in the foreseeable future is to continue exploration and development activities on the Company's existing potash mineral projects in the RoC. The Company's current activities do not generate any revenues or positive operating cash flow. Future development necessary to commence production will require significant capital expenditures.

 

PRINCIPAL RISKS

 

The Company's business strategy is subject to numerous risks, some outside the Board and management's control. These risks can be specific to the Company, generic to the mining industry and generic to the stock market as a whole. The key risks, expressed in summary form, affecting the Group and its future performance include but are not limited to:

 

· capital requirement and ability to attract future funding;

 

The Group will have sizeable capital requirements as it proceeds to develop its projects. The future development of these projects will depend on the Group's ability to obtain additional required financing. The Group may not be able to obtain financing on favourable terms or at all. If financing is not available, it could result in a delay or indefinite postponement of development or production at the Group's projects, or in a loss of project ownership or earning opportunities by the Group. The Group currently has no source of funding for the financing of the capital needs of its business and future activities, other than by the issuance of additional securities of the Group.

 

The Group continues to actively engage and develop relationships with potential lenders, export credit agencies and equity investors. The Group also has two large long-term strategic investors, SQM and OIA, with extensive capital resources.

 

Factors beyond the Company's control, including pandemic diseases such as COVID-19 (coronavirus), can affect the stock markets and in doing so impair the Company's ability to attract investors and lenders. This in turn could have an impact on any fund raising or financing arrangements that the Company may require to pursue.

 

· country risk in the RoC

 

The operations of the Group are conducted in the RoC and as such are exposed to various levels of political, economic and other natural and man-made risks and uncertainties over which the Group has no or limited control. Changes, if any, in mining, environmental or investment policies or shifts in political attitude in the RoC may have a material adverse effect on the Group's business, financial condition and results of operations.

 

The Group's local management has regular consultations with the local community and actively seeks to employ locally, where possible. Additionally, the CEO and other relevant senior management have established good relationships with the official local and country establishments e.g. the Ministry of Mines and Geology and the Ministry of Environment with whom regular contact and consultation is maintained. In addition, the Group benefits from the UK-Congo bilateral investment treaty, which provides strengthened legal protection to the Group's investments in the RoC.

 

On 14 December 2020, the Company reported receipt of correspondence received from the Minister of Mines expressing dissatisfaction with the pace of development of the Kola Potash project. Since then, the Company continued to communicate constructively and openly with the Minister of Mines to ensure the parties remain fully engaged as Kore Potash progresses the development of its projects.

 

· change in potash commodity prices and market conditions;

 

The operations of the Group are conducted in the ROC, and as such are exposed to various levels of political, economic and other natural and man-made risks and uncertainties over which the Group has no or limited control. Changes, if any, in mining, environmental or investment policies or shifts in political attitude in the ROC may have a material adverse effect on the Group's business, financial condition and results of operations.

 

· geological and technical risk posed to exploration and commercial exploitation success;

 

Mining complexities arising from geotechnical, hydro-geological conditions and undetected geological phenomena may adversely impact the efficiency of the operation to the extent that the operation becomes financially unviable. Additionally, human error by the miners, equipment failure, mistakes in planning the operations, and encountering unforeseen obstacles could each affect the profitability of the Group.

 

The Group has appointed reputable third-party technical consultants with specific skills to undertake the feasibility and engineering studies. The Group intends to appoint well regarded, highly reputable ECM contractors to develop the Group's projects.

 

· environmental and occupational health and safety risks;

 

Environmental, safety and health incidents including pandemic diseases like COVID-19 (coronavirus) could result in harm to the Group's employees, contractors or local communities and adversely affect the Group's relationship with local stakeholders. Ensuring safety and wellbeing is critical to the Group and part of the Group's core values. An environmental incident, poor safety record or serious accidents could have a long-term impact on the Group's morale, reputation, project development and production.

 

The Group seeks to continuously improve its health, safety and environmental risk management procedures, with particular focus on the early identification of risks and the prevention of incidents, injuries and fatalities.

 

In order to maintain a COVID-19 free bubble during the drilling campaign a COVID-19 testing, and control procedure were introduced for all people going to the exploration camp. All new employees were housed in the camp, they were placed in a quarantine area in the camp and tested for COVID-19. They were kept in the quarantine for 7 days and only allowed to commence work once a negative test and 7-day quarantine was completed. No one was allowed to leave the confines of the camp and work site until there period of employment was completed. Monthly testing of all people within the camp was also implemented to ensure ongoing maintenance of a "COVID-19 free bubble".  This procedure also dealt with the actions required to deal with positive cases to ensure safe treatment of the affected party and to maintain a safe environment for remaining staff. The procedure identified a separate confinement area for people that tested positive and working with the Congo Department of Health also identified the procedure to follow with Department of health to obtain treatment for infected parties. The drilling campaign was completed with 5 positive cases being identified, all of which were safely isolated and treated. The Group's operations are subject to Environmental and Social Assessment permits, which are granted by the RoC government, for a period of 25 years.

 

· government policy changes;

 

The mineral exploration and development activities and future operations of the Group are subject to various laws and regulations governing mineral concession acquisition, prospecting, development, mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.

 

New rules and regulations could be enacted, or existing rules and regulations could be applied or amended in a manner that could have a material and adverse effect on the business, financial condition and results of operations of the Group.

 

The Group monitors changes in legislation for relevant jurisdictions to enable rapid and effective response. The Group also consults with tax, legal, accounting and regulatory experts as required to ensure that any upcoming changes in legislations are proactively accounted for.

 

· retention of key staff.

 

The attraction and retention of persons skilled in the development, operation, exploration and acquisition of mining properties are important factors in enabling the Group to fulfil its strategic ambitions and to build further expertise, knowledge and capabilities within the Group. Being unable to do so would compromise the Group's ability to deliver on its strategic objectives.

 

The Group's performance management system and incentive schemes are designed to attract and retain key employees by creating suitable reward and remuneration structures linked to key performance milestones and provide personal development opportunities.

 

For more details of the financial risk management objectives and policies of the Group, please refer to Note 14 to the financial statements.

 

This is not an exhaustive list of risks faced by the Company or an investment in it. There are other risks generic to the stock market and the world economy as a whole and other risks generic to the mining industry, all of which can impact on the Company. The management of risks is integrated into the development of the Company's strategic and business plans and is reviewed and monitored regularly by the Board. Further details on how the Company monitors, manages and mitigates these risks are included as part of the Audit and Risk Committee Report contained within the Corporate Governance Report.

 

On 14 December 2020, the Company reported receipt of correspondence received from the Minister of Mines expressing dissatisfaction with the pace of development of the Kola Potash project. Since then, the Company continued to communicate constructively and openly with the Minister of Mines to ensure the parties remain fully engaged as Kore Potash progresses the development of its projects.

 

DIRECTORS' SECTION 172 STATEMENT

 

The following disclosure describes how the Directors have had regard to the matters set out in section 172(1)(a) to (f) and forms the Directors' statement required under section 414CZA of The Companies Act 2006.

 

The matters set out in section 172(1) (a) to (f) are that a Director must act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

 

(a) the likely consequences of any decision in the long term;

(b) the interests of the Company's employees;

(c) the need to foster the Company's business relationships with suppliers, customers and others;

(d) the impact of the Company's operations on the community and the environment;

(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and

(f) the need to act fairly between members of the Company.

 

Stakeholder Engagement

 

Kore Potash adheres to sound corporate governance policies and attaches considerable importance to and strives to engage transparently and effectively on a continuous basis with a variety of stakeholders, including shareholders, employees, contractors, suppliers, government bodies and local communities and environment in which it operates.

 

Shareholders:

The Company's 2 largest shareholders, SQM and OIA, by virtue of their respective Investment Agreements, has each appointed a director to the board. As such they are involved in all principal decisions taken by the board, other than in cases where conflicts of interests may arise. All other existing substantial shareholders have regular meetings throughout the year with the Chairman, CEO and CFO, although due to the COVID-19 pandemic these have mainly been conducted by teleconference calls. Prior consultation with significant shareholders is undertaken in respect of all issues requiring the approval of shareholders in general meeting. In addition, all significant matters raised, or areas of concern specified by such shareholders during such meetings in respect of the Company's operations, strategy and other significant business matters are taken into account by the board when taking principal decisions.

 

In September 2020, the Company completed an equity placing to raise approximately USD 7.5 million, in which both SQM and OIA participated. 

 

At the Company's AGM held on 26 June 2020, all resolutions were passed with at least 97% of the votes cast in favour. The CEO, CFO and non-executive directors, including the chair of each Committee, are usually available at and following general meetings of the Company when shareholders have the opportunity to ask questions on the business of the meeting and more generally on Company matters. However, as shareholders were unable to attend this year's AGM in person due to COVID-19 restrictions, they were afforded the opportunity to dial-in to listen to the business of the meeting and to raise questions with the Board in advance of the meeting by e-mail. Additionally, following the conclusion of the formal business of the AGM, the CEO provided an update on the Company's DX PFS.

 

All substantial shareholders that own more than 3% of the Company's shares are listed in the relevant section of this Report.

 

Further details of engagement with shareholders can be found within the Corporate Governance Report.

 

Employees:

Kore Potash attaches great importance to its employees and their professional development and provides fair remuneration with incentives for its senior personnel through share option schemes that are performance related.  Further details of these are included in the Remuneration Report on pages 57 to 70. Further, the Company gives full and fair consideration to applications for employment irrespective of age, gender, colour, ethnicity, disability, nationality, religious beliefs or sexual orientation.

 

The Company maintains an open line of communication between its employees, senior management and the board of directors. Specifically, during the year the COO and CFO held weekly virtual meetings with key employees where open questioning and sharing of concerns was encouraged. No significant issues were raised during such meetings.

 

The Board has had oversight on issues raised by the employees and management actions throughout the year via monthly management reports to the Board which detail any personnel complaints or grievances and action management have committed to in order to resolve issues.

 

In normal circumstances, members of the Board periodically visit all parts of the business and interact with employees. However, due to COVID-19 restrictions this was not possible during the course of this year. It is intended that such practice will resume once the restrictions are lifted, and it is safe to do so. Nonetheless, the COO made regular visits to the operation in the RoC during the year and actively engaged with all RoC employees. In addition, David Hathorn visited the RoC operations in December 2020 and post year-end in February 2021.

 

David Netherway, a non-executive director, is the appointed designated director responsible for workplace engagement in accordance with the 2018 Corporate Governance Code. However, no such engagement has been possible by him during the year due to the restrictions imposed as a result of the COVID-19 pandemic.

 

Contractors and Suppliers:

The Group has a prompt payment policy and seeks to ensure that all liabilities are settled within each supplier's terms. Through fair dealings the Group aims to cultivate the goodwill of its contractors, consultants and suppliers.

 

Corporate and local management work closely with contractors and suppliers in the UK and the RoC to ensure they work within the parameters of their respective terms of engagement and do not have a detrimental effect on the Company's business and project timeline. See pages 7 to 22 in the Review of Operations for latest progress on exploration activities.

 

Governmental Bodies, local communities and environment:

The Group takes significant cognisance of the importance to the communities in which it operates and is grateful for their support and involvement in the Company's exploration and development activities.

 

The Group has had ongoing engagements with the local community in order to ensure there are open lines of communication for any concerns to be raised and to ensure there is two-way communication between the Group and the local communities. The company has a full-time community liaison officer that has direct contact with all 11 local chiefs via company supplied cell phones in order to facilitate quick and harmonious communications between the company and the communities. In particular, in order to keep the local communities up to date with regards to the progress of the projects and also to maintain good communication with the local stakeholders, a number of community meetings were held with the population of each of the 11 villages in the projects impact zone.

 

The CEO and the COO and other relevant senior management have established good relationships with the official local and country establishments e.g. the Ministry of Mines and Geology and the Ministry of Environment with whom regular contact and consultation is maintained. The restriction of travel in 2020 has meant that direct communications have been less than previous years. However, ongoing discussions between the Company and the various Ministries has been maintained through written communications.

 

The Kola DFS design had incorporated a number of value-adding design changes since the approval of the ESIA and the Company had undertaken to amend the ESIA accordingly. The Minister of Tourism and Environment of the Republic of Congo issued certificates on 31 March 2020 granting 25-year approvals to the ESIAs for both the Dougou and the Kola Mining Licences.

 

Principal decisions taken by the board during the period

 

Principal decisions are defined as those that have long-term strategic impact and are material to the Group and those that are significant to the Group's key stakeholder groups. In making the principal decisions, the board considered the alignment with its stated strategy, the outcome from its stakeholder engagement, the need to maintain a reputation for high standards of business conduct and the need to act fairly between the members of the Company.

 

Details of the principal decisions taken by the board during the period in respect of the completion of the DX PFS, the raising of approximately USD 7.5 million to complete the first phase of the DX DFS and for general working capital requirements and the commencement of the drilling programme on the DX Project are contained under the Summary of Key Developments within the Strategic Report.

 

Competent Person Statement

 

The information relating to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves in this report is based on, or extracted from previous reports referred to herein, and is available to view on the Company's website www.korepotash.com

 

The Kola Mineral Resource Estimate was reported on 6 July 2017 in an announcement titled 'Updated Mineral Resource for the High-Grade Kola Deposit'. It was prepared by Competent Person Mr Garth Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a subsidiary of the DRA Group, and a member of the Association of Professional Engineers and Geoscientists of British Columbia.

 

The Ore Reserve Estimate for Sylvinite at Kola was first reported on 29 January 2019 in an announcement titled 'Kola Definitive Feasibility Study' and was prepared by Met-Chem; the Competent Person for the estimate is Mr Molavi, member of good standing of Engineers and Geoscientists of British Columbia.

 

The Dougou Carnallite Mineral Resource Estimate was reported on 9 February 2015 in an announcement titled 'Elemental Minerals Announces Large Mineral Resource Expansion and Upgrade for the Dougou Potash Deposit'. It was prepared by Competent Persons Dr. Sebastiaan van der Klauw and Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of good standing of the European Federation of Geologists.

 

The Dougou Extension Sylvinite Mineral Resource Estimate was reported on 13 May 2020 in an announcement titled 'Dougou Extension (DX) Project Pre-Feasibility Study' . It was prepared by Competent Person Ms. Vanessa Santos, P.Geo. of Agapito Associates Inc. Ms. Santos is a licensed professional geologist in South Carolina (Member 2403) and Georgia (Member 1664), USA, and is a registered member (RM) of the Society of Mining, Metallurgy and Exploration, Inc. (SME, Member 04058318), a Recognized Professional Organization' (RPO) included in a list that is posted on the ASX website from time to time. 

 

The Ore Reserve Estimate for Sylvinite at Dougou Extension was reported on 13 May 2020 in an announcement titled 'Dougou Extension (DX) Project Pre-Feasibility Study and was prepared Dr. Michael Hardy, a Competent Person who is a registered member in good standing (Member #01328850) of Society for Mining, Metallurgy and Exploration (SME) which is an RPO included in a list that is posted on the ASX website from time to time.

 

The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement.

 

FORWARD-LOOKING STATEMENTS

 

This report contains statements that are "forward-looking". Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-looking statements. By their very nature and whilst there is a reasonable basis for making such statements regarding the proposed placement described herein; forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-looking statements, which are not guarantees of future performance. Statements in this report regarding the Company's business or proposed business, which are not historical facts, are "forward looking" statements that involve risks and uncertainties, such as resource estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

 

Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.

 

 

This Review of Operations and Strategic Report was approved by the board of directors on 30 March 2021 and is signed on its behalf by:

____________________________  _________________________________


 

 

Non-Executive Chairman  Chief Executive Officer

David Hathorn    Brad Sampson

30 March 2021    30 March 2021

 



 

 

DIRECTORS' REPORT

 

The Directors present their annual report on Kore Potash and the Group for the financial year ended 31 December 2020.

 

The Corporate Governance statement set out in pages 34 to 72 forms part of this Directors' Report.

 

Directors

The names of directors of the Company in office at any time during or since the end of the year are:

 

David Hathorn    Non-Executive Chairman

Brad Sampson    Chief Executive Officer

Jonathan Trollip    Non-Executive Director

Timothy Keating  Non-Executive Director

David Netherway  Non-Executive Director

Jose Antonio Merino  Non-Executive Director (resigned with effect from 20 November 2020)

Trinidad Reyes Perez  Non-Executive Director (appointed with effect from 20 November 2020)

 

 

Directors have been in office of the Company since the start of the financial year to the date of this report unless otherwise stated.

 

Joint Company Secretary

Mr Henko Vos

St James's Corporate Services Limited

 

Principal Activities and Significant Changes in Nature of Activities

The principal activity of the Group during the financial year was exploration for potash minerals prospects and project development at the Company's Sintoukola Potash Permit in the RoC. There were no significant changes in the nature of activities of the Group during the year.

 

Operating Results

The net loss after tax of the Group for the year ended 31 December 2020 amounted to USD 3,144,172 (31 December 2019: USD 4,202,752).

 

Dividends Paid or Recommended

No dividends were paid during the year and the directors do not intend to recommend the payment of a final dividend for the financial year under review (2019: nil).

 

Review of Operations and Strategic Report

Please refer to pages 7 to 22 of the Annual Report.

 

Significant Changes in State of Affairs

 

Board Changes

On 20 November 2020, Trinidad Reyes Perez was appointed a non-executive director of the Company nominated by SQM to replace Jose Antonio Merino who resigned with effect from that date.

Capital Raise

On 21 September 2020, a total of USD 7,481,937 was raised to undergo work on the Dougou Extension PFS and general working capital requirements in connection with the AIM and JSE listings. This was raised from existing and new investors through the placing and direct subscription of 882,688,876 new ordinary shares in the Company at a placing price and subscription price of GBP 0.0065 per new ordinary share.

 

Other capital movements:

 

On 21 January 2020, 3,811,398 ordinary shares of USD 0.001 each were issued in lieu of cash remuneration or part remuneration for the quarter ended 31 December 2019 to David Hathorn, David Netherway and Jonathan Trollip in line with the cost reduction strategy announced on 29 June 2019. The par value of this issue was USD3,811.

 

On 7 April 2020, 7,770,939 ordinary shares of USD 0.001 each were issued to David Hathorn, David Netherway and Jonathan Trollip in lieu of cash remuneration or part remuneration for the quarter ended 31 March 2020.

 

On 25 June 2020, a total of 2,258,333 ordinary shares of USD0.001 each were issued to certain current and former employees of the Company to satisfy the conversion of vested Performance Rights in ordinary shares. Of these, 1,410,000, were issued to Gavin Chamberlain, the Company's Chief Operating Officer.

 

On 25 June 2020, Align Research Limited, an unrelated party to the Company, has initiated coverage on the Company and will provide on-going equity research services to the Company. As consideration for these services, 4,000,000 ordinary shares of USD0.001 each in the Company were issued to Align Research Limited at an agreed price of 0.75p per share, being the prevailing price at the date of signing the agreement.

 

On 13 October 2020, the Company issued in lieu of payment, 6,566,821 ordinary shares to David Hathorn, David Netherway and Jonathan Trollip. The par value of this issue was USD 6,567.

 

On 15 January 2020, the Company issued in lieu of payment, 5,980,640 ordinary shares to David Hathorn, David Netherway and Jonathan Trollip. The par value of this issue was USD 5,981.

 

CDI Movement

During the year the number of CDIs quoted on the ASX increased by 41,359,992 as a result of transfers between CDIs quoted on the ASX and ordinary shares quoted on AIM and the JSE.

 

Significant Events Subsequent to Reporting Date

Details of the Group's significant events subsequent to the reporting date are included in Note 16 to the financial statements.

 

Political Contributions and Charitable Donations

During the current and previous years, the Group did not make any political contributions and charitable donations.

 

Employee Engagement

Details of how the directors have engaged with the employees and how the directors have had regard to employee interests and the effect of that regard, including on the principal decisions taken by the company during the financial year, are included in the Section 172 Statement contained within the Strategic Report. 

 

Business Relationships

Details of the how the directors have had regard to the need to foster the Company's business relationships with suppliers, customers and others and the effect of that regard, including on the principal decisions taken by the Company during the financial year are included in the Section 172 Statement contained within the Strategic Report.

 

AGM

This report and financial statements will be presented to shareholders for their approval at the next AGM. The Notice of the AGM will be distributed to shareholders together with the Annual Report.

 

Auditors

Following the appointment of BDO LLP as the Company auditors on 28 June 2019, a resolution to reappoint BDO LLP as the Company auditors was proposed at the AGM and passed by the requisite majority. A resolution for BDO LLP's reappointment will be proposed at the forthcoming AGM.

 

The Use of Financial Instruments by the Group

The Group has exposure to the following risks from their use of financial instruments:

· market risk,

· credit risk, and

· liquidity risks.

 

For more details of the financial risk management objectives and policies of the Group, please refer to Note 14 4 to the financial statements.

 

Employment Policies

The Group is committed to promoting policies which ensure that high calibre employees are attracted, retained and motivated, to ensure the ongoing success for the business. Employees and those who seek to work within the Group are treated equally regardless of gender, age, marital status, creed, colour, race or ethnic origin.

 

Health and Safety

The Group's aim is to achieve and maintain a high standard of workplace safety. In order to achieve this objective, a Health, Safety and Environmental Committee has been established to review the health and safety policy and risks of the Group and make recommendations to the Board. The Group provides training and support to employees and sets demanding standards for workplace safety. The Group recorded no lost time injuries in 2020 and completed the year with a LTIFR of nil.

 

Payment to Suppliers

The Group's policy is to agree terms and conditions with suppliers in advance; payment is then made in accordance with the agreement provided the supplier has met the terms and conditions. Under normal operating conditions, suppliers are paid within 30 days of receipt of invoice.

 

Future Developments

The Group will continue its mineral exploration activities with the objective of finding further mineralised resources, particularly potash and the development of the Kola and the Dougou deposits. The Company will also consider the acquisition of further prospective exploration interests.

 

 

Environmental Issues

The Group operates within the resources sector and conducts its business activities with respect for the environment while continuing to meet the expectations of shareholders, employees and suppliers. In respect of the current year under review, the Directors are not aware of any particular or significant environmental issues which have been raised in relation to the Group's operations. The Group holds exploration permits and mining licences in the RoC. The Group's operations are subject to environmental legislation in this jurisdiction in relation to its exploration activities.

 

Unissued Shares under Options and Equity Warrants

Share options outstanding at the date of this report:

 

Exercise

Period

Exercise Price

Number of Options

Options expiring on or before 19 July 2024

GBP 0.022

26,900,000

Options expiring on or before 1 January 2024

GBP 0.022

27,000,000

Equity warrants expiring on or before 29 March 2021

AUD 0.30

13,144,659



67,044,659

 

The holders of these options and equity warrants do not have the right, by the virtue of the option or equity warrant, to participate in any share issue or interest issue of the Company. There was no exercise of unlisted options or equity warrants during the year.  However, 4,000,000 unlisted options exercisable at GBP 0.11 expired on 27 July 2020.

 

Performance Rights

Performance rights outstanding at the date of this report:

 

Class

Expiry

Number of Rights

Director Performance Rights

01/03/2021

4,500,000

Employee Performance Shares (Long Term)

31/05/2022

1,760,000

Non-Executive Director Performance Rights

22/05/2022

1,250,000

Employee Performance Shares (Short Term)

17/03/2025

1,466,666



8,976,666

 

 

The performance rights holders do not hold any voting rights or rights to participate in dividends unless the rights have vested and were converted to fully paid ordinary shares. There were two exercises of performance rights during the year, with 1,250,000 exercised on 7 April 2020, and 2,258,333 exercised on 25 June 2020. During the year 11,579,107 performance rights were cancelled. See Note 11 (a) to the financial statements for further details on the performance rights issued and cancelled during the year.

 

 

Information on Directors

 

David Hathorn

Non-Executive Chairman

BCom, CA

 

Mr Hathorn joined the Group in November 2015. Mr Hathorn retired in 2017 from the Mondi group where he had been CEO for 17 years. The Mondi group is an international packaging and paper group, employing around 25,000 people across more than 30 countries, listed on the LSE and the JSE. Prior to the demerger of the Mondi group from Anglo American plc, Mr Hathorn was a member of the Anglo-American group executive committee from 2003 and an executive director of Anglo-American plc from 2005, serving on several boards of the group's major mining operations.



Interest in Shares and Options as at 31 December 2020

 

116,177,565 Fully Paid Ordinary Shares

500,000 Performance Rights each expiring 22 May 2022

250,000 Equity warrants exercisable at AUD 0.30 each expiring 29 March 2021



Directorships held in other listed entities

None



Former directorships of listed companies in last three years

None

 



 

Brad Sampson

Chief Executive Officer

B Eng (Mining) Hons, MBA, AMP, GAICD, MAusIMM

 

 

 

Mr Sampson is a mining engineer and joined the Group in June 2018. He has more than 30 years' resources industry experience across numerous locations including West and Southern Africa. In addition to significant mine development and operating experience, Brad has held leadership positions at several publicly listed companies.

 

Brad was most recently CEO of ASX listed Tiger Resources Limited, a copper producer in the Democratic Republic of the Congo which in January 2018 entered into a binding agreement to sell its assets to a Chinese group for USD 250 million. Prior to this, Brad held senior positions at Newcrest Mining Ltd, one of the world's largest gold mining companies, including General Manager of Newcrest's West African operations. From 2008 to 2013, Brad was the CEO of AIM/ASX listed Discovery Metals Ltd, where he was hired to lead the project financing, construction and subsequent production of the Company's flagship copper asset in Botswana. Other notable positions include General Manager at Goldfields' operations in South Africa and Australia.



Interest in Shares and Options as at 31 December 2020

2,464,705 Fully Paid Ordinary Shares

26,900,000 Unlisted Options exercisable at GBP 0.202 each expiring 19 July 2024



Directorships held in other listed entities

Agrimin Limited (from 22 April 2016)



Former directorships of listed companies in last three years

None

 

Jonathan Trollip

Non-Executive Director

B.A (Hons) LLM, FAICD

 

 

Mr Trollip joined the Group in April 2016 and is a globally experienced Director (both executive and non-executive) with over 30 years of commercial, corporate, governance and legal and transactional expertise. He is currently Non-Executive Chairman of ASX listed Global Value Fund Ltd, Future Generation Investment Company Ltd, Plato Income Maximiser Ltd, Spheria Emerging Companies Ltd and Antipodes Global Investment Company Ltd and a non-executive director of Propel Funeral Partners Limited. He also holds various private company directorships in the commercial and not-for-profit sectors.



Interest in Shares & Options as at 31 December 2020

 5,116,190 Fully Paid Ordinary Shares

250,000 Performance Rights each expiring 22 May 2022



Directorships held in other listed entities

 

Future Generation Investment Company Limited (from 8 October 2013)

Global Value Fund Limited (from 20 March 2014)

Antipodes Global Investment Company Limited (from 13 July 2016)

Plato Income Maximiser Limited (from 20 February 2017)

Spheria Emerging Companies Limited (from 12 September 2017)

Propel Funeral Partners Limited (from 19 September 2017)

 



Former directorships of listed companies in last three years

None



 

Trinidad Maria Reyes Perez

Non-Executive Director

 

 

Ms Reyes Perez joined SQM as a graduate in 2012 and is currently M&A Director, prior to which she worked in a variety of roles across SQM. Trinidad is a qualified Civil Engineer having graduated from Pontificia Universidad Católica de Chile.



Interest in Shares & Options as at 31 December 2020

None



Directorships held in other listed entities

None



Former directorships of listed companies in last three years

 

None

Timothy Keating

Non-Executive Director

BSc

 

 

Mr Keating joined the Group in November 2016 following the completion of the strategic investment in the Group by OIA. Mr Keating is Head of Mining Investment Private Equity at OIA, a sovereign wealth fund of the Sultanate of Oman. Prior to joining SGRF in 2015, Mr Keating was CEO of African Nickel Limited, a nickel sulphide development company where he grew the business through several acquisitions, project development and fund raisings. He also worked at Investec Bank for the Commodities and Resource Finance Team (2004 - 2010) and at Black Mountain Mine owned by Anglo American plc, in South Africa. He is a Non-Executive Director of Kenmare Resources plc.



Interest in Shares & Options as at 31 December 2020

500,000 Fully Paid Ordinary Shares

250,000 Performance Rights each expiring 22 May 2022



Directorships held in other listed entities

Kenmare Resources plc (14 October 2016 - 17 March 2021)

 



Former directorships of listed companies in last three years

None





 

David Netherway

Non-Executive Director

B.Eng (Mining), CDipAF, F.Aus.IMM, F.IoM3, C.E.

 

 

Mr Netherway joined the Group in December 2017 and is a mining engineer with over 40 years of experience in the mining industry. He was involved in the construction and development of the New Liberty, Iduapriem, Siguiri, Samira Hill and Kiniero gold mines in West Africa and has mining experience in Africa, Australia, China, Canada, India and the Former Soviet Union. Mr Netherway served as the CEO of Shield Mining until its takeover by Gryphon Minerals. Prior to that, he was the CEO of Toronto listed Afcan Mining Corporation, a China focused gold mining company that was sold to Eldorado Gold in 2005. He was also the Chairman of Afferro Mining which was acquired by IMIC in 2013. Mr Netherway has held senior management positions in a number of mining companies including Golden Shamrock Mines, Ashanti Goldfields and Semafo Inc and is currently the Chairman of AIM and TSX-V listed Altus Strategies plc, and a non-executive Director of ASX-listed Canyon Resources Ltd. He also holds various private company directorships.

 



Interest in Shares & Options as at 31 December 2020

5,845,744 Fully Paid Ordinary Shares

250,000 Performance Rights each expiring 22 May 2022



Directorships held in other listed entities

Altus Strategies plc (ALS:AIM & ALTS:TSX-V) (from 9 May 2017)

Canyon Resources Ltd (CAY:ASX) (from 17 March 2014)



Former directorships of listed companies in last three years

Avesoro Resources Inc. (ASO: TSX & AIM) (from 1 February 2011 to 8 January 2020)

Kilo Goldmines Ltd (KGL:TSX-V) (from 7 July 2011 to 16 March 2020)





José Antonio Merino

Non-Executive Director

B.Eng Civil Engineer

 

(Resigned on 20 November 2020)

Mr Merino joined the Group in May 2019 and is currently the Mergers and Acquisitions Director at SQM. He joined SQM in 2016, prior to which he worked at EPG Partners as head of a mining private equity fund, at ASSET Chile, a Chilean boutique investment bank, and at Santander Investment. He is a qualified Civil Engineer having graduated from Pontificia Universidad Católica de Chile.



Interest in Shares & Options as at date of resignation

None



Directorships held in other listed entities

None



Former directorships of listed companies in last three years

None

 

Joint Company Secretaries

 

Henko Vos

B.Compt, CA, ACIS, RCA

 

 

Mr Vos is a member of the Governance Institute of Australia, the Australian Institute of Company Directors and Chartered Accountants Australia and New Zealand with more than 20 years' experience working within public practice, specifically within the area of corporate and accounting services both in Australia and South Africa.  He holds similar secretarial roles in various other listed public companies in both industrial and resource sectors. Mr Vos is an employee of Nexia Perth, a mid-tier corporate advisory and accounting practice.



St James's Corporate Services Limited ("SJCS")

 

 

SJCS is operated by co-owners, Phil Dexter and Jane Kirton (ACIS), both of whom acquired SJCS in September 2014 after having worked for SJCS since its inception in June 1998 and its former parent company in excess of 20 years.

 

Mr Dexter has over 40 years' experience in the company secretarial environment and has worked in the natural resources sector since 1977. During that time Mr Dexter has worked with most of the leading South African mining companies and assisted on numerous corporate transactions involving acquisitions, reorganisations and restructurings, rights offers and fund raisings.

 

Ms Kirton has over 20 years' experience in the company secretarial environment and qualified as a Chartered Secretary in 2007. Ms Kirton has worked with most of the leading South African mining companies and assisted on numerous corporate transactions involving acquisitions, reorganisations and restructurings, rights offers and fund raisings. Ms Kirton is an Associate of the Institute of Chartered Secretaries and Administrators.

 

Board and Committee Meetings Attendance

Attendance of directors and committee members at board and committee meetings held during the year is set out in the table below.

 


Board Meetings

Audit and Risk Committee Meetings

Remuneration and Nomination Committee Meetings

Health, Safety and Environment Meetings (iii)

David Hathorn

7/7


1/1

-

Brad Sampson

7/7

-

-

-

Jonathan Trollip

7/7

3/3

1/1

-

Timothy Keating

6/7

-

-

-

David Netherway

7/7

3/3

1/1

-

José Antonio Merino (i)

2/4

-

-

-

Trinidad Reyes Perez (ii)

3/3

-

-

-

 

(i)  Meetings attended prior to ceasing to be a director on 20 November 2020.

(ii)  Meetings attended since appointment as a director on 20 November 2020.

(iii)  Health, safety and environmental matters are reported on each month in management reporting to the Board and are part of each Board meeting agenda. With limited operational activity during the feasibility study phases, creating a low-risk environment no separate Health, Safety and Environment Committee meetings were held during the period. 

 

Directors' Conflicts of Interest

The Board has formal procedures to deal with Directors' conflicts of interest. In the instance where there is a transactional conflict of interest identified, the Director would not take part in the discussion or determination of any matter in respect of which he had disclosed a transactional conflict of interest. There were no transactional conflicts of interest concerning any Director that arose during the year.

 

Directors' Service Contracts

The Chief Executive Officer is employed on an ongoing basis, which may be terminated by either party giving 6 months' notice.

Each non-executive director has a letter of appointment for an initial term of 3 years. The appointment of the non-executive director may be terminated by the Company giving 1 month notice, by the non-executive director by immediate notice and also in accordance with the Company's articles of association.

 

 

Indemnifying Officers and Directors and Officers Liability Insurance

The Group has agreed to indemnify the Directors of the Company, against all liabilities to another person that may arise from their position as directors of the Company and the Group, except where the liability arises out of conduct involving a lack of good faith.

 

Appropriate insurance cover is maintained by the Company in respect of its Directors and Officers. During the financial year the Group agreed to pay an annual insurance premium of USD 96,330 (2019: USD 79,413) in respect of directors' and officers' liability and legal expenses' insurance contracts, for directors, officers and employees of the Company.  The insurance premium relates to:

· costs and expenses incurred by the relevant officers in defending proceedings, whether civil or criminal and whatever the outcome; and

· other liabilities that may arise from their position, with the exception of conduct involving a wilful breach of duty.

 

Share Dealing Code

The Company has adopted a share dealing code for directors and applicable employees (within the meaning given in the AIM Rules for Companies) in order to ensure compliance with Rule 21 of the AIM Rules for Companies and the provisions of the Market Abuse Regulations relating to dealings in the Company's securities. The Board considers that the Share Dealing Code is appropriate for a company whose shares are admitted to trading on AIM, the ASX and the JSE.

 

Proceedings on Behalf of Group

No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings.

 

The Group was not a party to any such proceedings during the year.

 

Statement of disclosure of information to auditors

As at the date of this report the serving Directors confirm that:

 

(a)  so far as each Director is aware, there is no relevant audit information of which the Company's auditors are unaware, and

(b)  they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information.

 

Going Concern

 

During the year ended 31 December 2020, the Group incurred a loss of USD 3,144,172 (year ended 31 December 2019: USD 4,202,752) and experienced net cash outflows from operating and investing activities of USD 9,277,027 (year ended 31 December 2019: USD 11,257,647). Cash and cash equivalents totalled USD 5,555,000 at 31 December 2020 (at 31 December 2019: USD 7,578,727).

 

The Directors have prepared a cash flow forecast for the period ending 31 December 2022, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period (31 March 2022), primarily being corporate costs and some work on the 1st Phase of the Definitive Feasibility Study ("DFS") related to the DX Project.

 

The Group anticipates a deficit of c.USD 1.3 million towards the end of Q1 2022.

 

The Directors have considered various mitigating actions, which include raising additional capital in Q2 - Q3 2021 to enable the Group to continue to fund its working capital requirements through the going concern period. The Directors have identified a number of funding options available to the Group. The Directors note the Group has a history of successfully raising capital on the AIM and JSE, and in the past on the ASX. However, factors beyond the Company's control, including pandemic diseases such as COVID-19, which affect the stock markets, may in turn have a negative impact on any fund raising

 

The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that there are reasonable grounds to believe that funding will be secured and therefore that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due. The Directors will continue to pursue further capital raising initiatives in order to have sufficient funds to continue the development of the DX Project and for general corporate purposes.

 

The ability of the Group to continue as a going concern is dependent on achieving the matters set out above. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

 

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

 

Statement of Directors' Responsibilities

 

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the directors to prepare financial statements for each financial year.  Under that law the directors have prepared the Group and Company financial statements in accordance with international accounting standards in conformity with the requirements of the  Companies Act 2006.  Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the Group and Company for that period.  The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on AIM. 

 

In preparing these financial statements, the directors are required to:

 

· select suitable accounting policies and then apply them consistently;

· make judgements and accounting estimates that are reasonable and prudent;

· state whether they prepared in accordance with international accounting standards in conformity with the requirements of the  Companies Act 2006 subject to any material departures disclosed and explained in the financial statements;

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

 

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006.  They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Responsibility statement

 

We confirm that to the best of our knowledge:

 

· the financial statements, prepared in accordance with international accounting standards in conformity with the requirements of the  Companies Act 2006 give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the Group and the undertakings included in the consolidation taken as a whole;

· the review and operations and strategic report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face; and

· the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's position and performance, business model and strategy.

 

This responsibility statement and the Directors' Report was approved by the Board of Directors on 30 March 2021 and is signed on its behalf by:

 


 

 

____________________________  _________________________________

Non-Executive Chairman  Chief Executive Officer

David Hathorn    Brad Sampson

30 March 2021      30 March 2021

 



 

CORPORATE GOVERNANCE REPORT

 

INTRODUCTION

 

The Board is committed to the principles of good corporate governance and to maintaining the highest standards and best practice of corporate governance. In this regard the Board has given consideration to the provisions set out in the 2018 UK Code and has taken due regard of the principles of good governance set out therein in relation to the size and stage of development of the Company. The Board has also given consideration to the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (4th Edition).

 

The Board is conscious that the corporate governance environment is constantly evolving and the charters and policies under which it operates its business are monitored and amended as required.

 

The Board currently comprises one executive director and five non-executive directors, including the Chairman.

 

Since inception, the Company has the following appropriately constituted committees, each with formally delegated duties and responsibilities set out in respective written Terms of Reference:

· Audit and Risk Committee

· Remuneration and Nomination Committee

· Health, Safety and Environmental Committee

 

The Company also has in place appropriate guidance, training, policies and procedures to ensure compliance with the Bribery Act 2010 and Australian and South African laws governing anti-bribery and anti-corruption.

 

COMPLIANCE WITH THE UK CORPORATE GOVERNANCE CODE

 

The Board recognizes the value and importance of maintaining the highest standards of corporate governance and aims to comply with the provisions set out in the 2018 UK Code. Although compliance with the 2018 UK Code is not compulsory for AIM companies, the Directors intend to apply the provisions, where practicable, so as to adhere to the highest standards of governance.  Accordingly, the sections below detail how the Group has complied with the 2018 UK Code and explains the reasons for any non-compliance.

 

BOARD LEADERSHIP AND COMPANY PURPOSE

 

Principles

A.  A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.

B.  The board should establish the company's purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture.

C.  The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.

D.  In order for the company to meet its responsibilities to shareholders and stakeholders, the board should ensure effective engagement with, and encourage participation from, these parties.

E.  The board should ensure that workforce policies and practices are consistent with the company's values and support its long-term sustainable success. The workforce should be able to raise any matters of concern.

 

Provisions

 

1.

The board should assess the basis on which the company generates and preserves value over the long-term. It should describe in the annual report how opportunities and risks to the future success of the business have been considered and addressed, the sustainability of the company's business model and how its governance contributes to the delivery of its strategy.

The Kore strategy remains to develop a cash generative potash project in the RoC. Financing project development relies on the ongoing support of existing shareholders and ability to attract new equity finance.

2.

The board should assess and monitor culture. Where it is not satisfied that policy, practices or behaviour throughout the business are aligned with the company's purpose, values and strategy, it should seek assurance that management has taken corrective action. The annual report should explain the board's activities and any action taken. In addition, it should include an explanation of the company's approach to investing in and rewarding its workforce.

Kore has 46 employees. In normal circumstances members of the Board periodically visit all parts of the business and interact with employees. However, due to COVID-19 restrictions this has not been possible during the year.

 

The CEO meets with all employees on a regular basis. However, due to COVID-19 restrictions, no direct engagement with the workforce has taken place since March 2020.

 

During the year the COO and CFO held weekly virtual meetings with key employees where open questioning and sharing of concerns was encouraged.

 

The Board has oversight on issues raised and management actions via monthly management reports to the Board which detail any community or personnel complaints, or grievances and action management have committed to in order to resolve issues.

 

Each employee's performance is reviewed annually and employee development planning within the Congolese workforce is being developed.

3.

In addition to formal general meetings, the chair should seek regular engagement with major shareholders in order to understand their views on governance and performance against the strategy. Committee chairs should seek engagement with shareholders on significant matters related to their areas of responsibility. The chair should ensure that the board as a whole has a clear understanding of the views of shareholders.

 

 

 

 

 

 

 

 

 

 

 

 

 

The Group's communication strategy requires communication with shareholders and stakeholders in an open, regular and timely manner.

 

The Company's 2 largest shareholders, OIA and SQM, are represented on the Board. In addition, face-to face meetings are usually undertaken throughout the year with some of the major shareholders, as well as with analysts and brokers but due to COVID-19 restrictions consultations with major shareholders and discussions with analysts and brokers have generally been conducted via teleconference calls.

 

As shareholders were this year unable to attend the Annual General Meeting in person, a dial-in facility was made available to shareholders to listen to business of the meeting and shareholders were also afforded the opportunity to submit questions to the Board in advance of the AGM by e-mail. Following the conclusion of the formal business of the AGM the CEO provided an update on the Company's DX PFS.


4.

When 20 per cent or more of votes have been cast against the board recommendation for a resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders in order to understand the reasons behind the result. An update on the views received from shareholders and actions taken should be published no later than six months after the shareholder meeting. The board should then provide a final summary in the annual report and, if applicable, in the explanatory notes to resolutions at the next shareholder meeting, on what impact the feedback has had on the decisions the board has taken and any actions or resolutions now proposed.

At the Company's AGM held on 26 June 2020, all resolutions were passed on a poll by more than 97% of the votes cast.

 

 

 

 

 

 

 

 

 

 

5.

The board should understand the views of the company's other key stakeholders and describe in the annual report how their interests and the matters set out in section 172 of the Companies Act 2006 have been considered in board discussions and decision-making. The board should keep engagement mechanisms under review so that they remain effective.

 

For engagement with the workforce, one or a combination of the following methods should be used:

• a director appointed from the workforce;

• a formal workforce advisory panel;

• a designated non-executive director.

If the board has not chosen one or more of these methods, it should explain what alternative arrangements are in place and why it considers that they are effective.

Refer to the section 172 Statement.

 

In addition, David Netherway is the appointed designated non-executive director responsible for workplace engagement. However, due to COVID-19 restrictions, no direct engagement with the workforce has taken place during the year. 

6.

There should be a means for the workforce to raise concerns in confidence and - if they wish - anonymously. The board should routinely review this and the reports arising from its operation. It should ensure that arrangements are in place for the proportionate and independent investigation of such matters and for follow-up action.

The CEO holds regular meetings with all employees where open questioning and sharing of concerns is encouraged. However, due to COVID-19 restrictions, no direct engagement with the workforce has taken place since March 2020 however during the year the COO and CFO held weekly virtual meetings with key employees where open questioning and sharing of concerns was encouraged.

 

In addition, a confidential Whistleblowing Policy is in force which allows employees to raise suspected breaches of the Code of Conduct with designated management. No employee will be disadvantaged or prejudiced in the event that a suspected breach is reported in good faith.

The Board, through the Audit and Risk Committee, is informed of material incidents reported.

 

7.

The board should take action to identify and manage conflicts of interest, including those resulting from significant shareholdings, and ensure that the influence of third parties does not compromise or override independent judgement.

Investment agreements are in place with the 2 major shareholders, who have representatives on the board and which address influence and conflicts of interest. In addition, a register of directors' interests is maintained and updated as required. The board has formal procedures to deal with Directors' conflicts of interests. In any instance where a transactional conflict of interest is identified, the Director concerned would not take part in in the discussion or determination of any matter in respect of which he had a disclosed transactional conflict of interest. During the year no transactional conflicts of interest arose.

 

 

 

 

8.

Where directors have concerns about the operation of the board or the management of the company that cannot be resolved, their concerns should be recorded in the board minutes. On resignation, a non-executive director should provide a written statement to the chair, for circulation to the board, if they have any such concerns.

All directors have the opportunity at board meetings to raise concerns on any issues including the operation of the board or the management of the company and give their independent views on all matters being discussed.  All such concerns and views are recorded in the minutes. NEDs are also able to raise any such concerns during the annual board and Chairman's internal evaluation, the results of which are disclosed in the minutes of the board meeting at which the evaluations are discussed.

 

 

Principles

F.  The chair leads the board and is responsible for its overall effectiveness in directing the company. They should demonstrate objective judgement throughout their tenure and promote a culture of openness and debate. In addition, the chair facilitates constructive board relations and the effective contribution of all non-executive directors, and ensures that directors receive accurate, timely and clear information.

G.  The board should include an appropriate combination of executive and non-executive (and, in particular, independent non-executive) directors, such that no one individual or small group of individuals dominates the board's decision-making. There should be a clear division of responsibilities between the leadership of the board and the executive leadership of the company's business.

H.  Non-executive directors should have sufficient time to meet their board responsibilities. They should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account.

I.  The board, supported by the company secretary, should ensure that it has the policies, processes, information, time and resources it needs in order to function effectively and efficiently.

 

Provisions

9.

The chair should be independent on appointment when assessed against the circumstances set out in Provision 10. The roles of chair and chief executive should not be exercised by the same individual. A chief executive should not become chair of the same company. If, exceptionally, this is proposed by the board, major shareholders should be consulted ahead of appointment. The board should set out its reasons to all shareholders at the time of the appointment and also publish these on the company website.

 

 

David Hathorn was considered independent on appointment and, in the Board's view, continues to remain independent as he is not involved in any executive capacity, has no material business relationships with the Company nor is associated with any such material investor and has no close family or other business relationships with the Company or any of its directors or senior executives.

 

The division of responsibilities between the Non-Executive Chairman and the CEO is clearly defined in writing. However, they work closely together to ensure effective decision making and the successful delivery of the Group's strategy.


10.

The board should identify in the annual report each non-executive director it considers to be independent. Circumstances which are likely to impair, or could appear to impair, a non-executive director's independence include, but are not limited to, whether a director:

is or has been an employee of the company or group within the last five years;

has, or has had within the last three years, a material business relationship with the company, either directly or as a partner, shareholder, director or senior employee of a body that has such a relationship with the company;

has received or receives additional remuneration from the company apart from a director's fee, participates in the company's share option or a performance-related pay scheme, or is a member of the company's pension scheme;

has close family ties with any of the company's advisers, directors or senior employees;

holds cross-directorships or has significant links with other directors through involvement in other companies or bodies;

represents a significant shareholder; or

has served on the board for more than nine years from the date of their first appointment

Where any of these or other relevant circumstances apply, and the board nonetheless considers that the non-executive director is independent, a clear explanation should be provided.

The Board considers David Netherway and Jonathan Trollip to be independent as they are not involved in any executive capacity, have no business relationships with the Company nor are associated with any such investor and have no close family or other business relationships with the Company or any of its directors or senior executives.

 

Given the small quantum of shares held by and Performance Rights and Options awarded to each independent non-executive director the Board is of the view that these do not affect their independent judgement.

 

11.

At least half the board, excluding the chair, should be non-executive directors whom the board considers to be independent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

During the year the Board consisted of the Non-Executive Chairman, the CEO, 2 non-executive directors and 2 independent non-executive directors. During the course of the year, 1 non-executive director resigned and 1 non-executive director was appointed. During the year at least half the Board, excluding the Non-Executive Chairman, were not non-executive directors considered to be independent.

 

Due to the current stage of development of the Company's projects this is not considered to impair the judgement of the Board as a whole but the matter is kept under review and the appointment of a further independent non-executive director will be considered when deemed appropriate.

 


12.

The board should appoint one of the independent non-executive directors to be the senior independent director to provide a sounding board for the chair and serve as an intermediary for the other directors and shareholders. Led by the senior independent director, the non-executive directors should meet without the chair present at least annually to appraise the chair's performance, and on other occasions as necessary.

In terms of the Company's Articles of Association, the Directors may appoint a person to be a director to fill a casual vacancy and may appoint from time to time any one or more of their body to be the holder of an executive office and may also remove such person from any such office.

In addition, the Remuneration and Nomination Committee, which comprises entirely of independent non-executive directors, identifies and recommends to the Board candidates to become new Directors to fill casual vacancies as and when they arise. Further, the Committee gives full consideration to succession planning for directors, including executive directors. 

 

The Committee also reviews and recommends an appropriate remuneration policy for executives and considers the performance of any executive director against his performance objectives when considering the executive director's annual remuneration review.

 

13.

 Non-executive directors have a prime role in appointing and removing executive directors. Non-executive directors should scrutinise and hold to account the performance of management and individual executive directors against agreed performance objectives. The chair should hold meetings with the non-executive directors without the executive directors present.

In terms of the Company's Articles of Association, the Directors may appoint a person to be a director to fill a casual vacancy and may appoint from time to time any one or more of their body to be the holder of an executive office and may also remove such person from any such office.

In addition, the Remuneration and Nomination Committee, which comprises entirely of independent non-executive directors, identifies and recommends to the Board candidates to become new Directors to fill casual vacancies as and when they arise. Further, the Committee gives full consideration to succession planning for directors, including executive directors. 

 

The Committee also reviews and recommends an appropriate remuneration policy for executives and considers the performance of any executive director against his performance objectives when considering the executive director's annual remuneration review.

 

 

 

 

 

 

 

 

 

 

 

 

 

 


14.

The responsibilities of the chair, chief executive, senior independent director, board and committees should be clear, set out in writing, agreed by the board and made publicly available. The annual report should set out the number of meetings of the board and its committees, and the individual attendance by directors.

As mentioned in Provision 9. above, the responsibilities of the Non-Executive Chairman and the CEO are clearly defined in writing. In addition, the CEO has entered into a contract of employment so that he can clearly understand the requirements of the role. Each non-executive director, including the Senior Independent non-executive director, has a Letter of Appointment in place to ensure they clearly understand the requirements of their role.

 

Details of executive directors' service contracts and the Chairman's and non-executive directors appointment letters are provided within the Directors Report, copies of all of which are also available for inspection by request at the Company's registered office during normal business hours and at the AGM.

 

The number of meetings of the Board and its committees and the individual attendance by directors is set out within the Directors Report.

 

15.

When making new appointments, the board should take into account other demands on directors' time. Prior to appointment, significant commitments should be disclosed with an indication of the time involved. Additional external appointments should not be undertaken without prior approval of the board, with the reasons for permitting significant appointments explained in the annual report. Full-time executive directors should not take on more than one non-executive directorship in a FTSE 100 company or other significant appointment.

Non-executive directors are required to disclose prior appointments and other significant commitments and are required to inform the Board of any changes or additional commitments in a timely manner.  Details of the non‑executive external appointments can be found on pages 26 to 30.  Before accepting new appointments, non-executive directors are required to obtain approval from the Chairman and the Chairman requires approval from the whole Board. It is essential that no appointment causes a conflict of interest or impacts on the Non-Executive Director's commitment and time spent with the Group in their existing appointment. The CEO has no other current non-executive directorships in a listed entity.

 

16

All directors should have access to the advice of the company secretary, who is responsible for advising the board on all governance matters. Both the appointment and removal of the company secretary should be a matter for the whole board.

All directors have access to the advice and services of the joint company secretaries and each director, and each board committee member may take obtain independent professional advice at the Company's expense, subject to prior notification to the other non-executive directors and the joint company secretaries. The joint company secretaries are accountable directly to the Board through the Chairman. The Company currently has two (2) joint company secretaries, one based in London and one based in Australia. Both the appointment and removal of the company secretary is a matter for the whole Board.

 

COMPOSITION, SUCCESSION AND EVALUATION

 

Principles

J.  Appointments to the board should be subject to a formal, rigorous and transparent procedure, and an effective succession plan should be maintained for board and senior management. Both appointments and succession plans should be based on merit and objective criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognitive and personal strengths.

K.  The board and its committees should have a combination of skills, experience and knowledge. Consideration should be given to the length of service of the board as a whole and membership regularly refreshed.

L.  Annual evaluation of the board should consider its composition, diversity and how effectively members work together to achieve objectives. Individual evaluation should demonstrate whether each director continues to contribute effectively.

 

Provisions

17.

The board should establish a nomination committee to lead the process for appointments, ensure plans are in place for orderly succession to both the board and senior management positions, and oversee the development of a diverse pipeline for succession. A majority of members of the committee should be independent non-executive directors. The chair of the board should not chair the committee when it is dealing with the appointment of their successor.

The Remuneration and Nomination Committee is comprised of Jonathan Trollip, as Chairman of the Committee, together with David Hathorn and David Netherway.

The Remuneration and Nomination Committee Report is on pages 55 and 56 and details how the Company has complied with the relevant sections of the Code or explains the reasons for any areas of non‑compliance. All newly appointed directors are provided with an induction programme which is tailored to their existing skills and experience, a legal update on directors' duties and responsibilities and one-on-one meetings with members of the senior management team are undertaken.

The Board is informed of any material changes to governance, laws and regulations affecting the Group's business by the Chairman in conjunction with the Group's joint company secretaries.

18.

All directors should be subject to annual re-election. The board should set out in the papers accompanying the resolutions to elect each director the specific reasons why their contribution is, and continues to be, important to the company's long-term sustainable success.

All directors are subject to annual re-election. Shareholders are provided with all material information in the notice of meetings to assist in informing the decision on whether or not to elect or re-elect a director as well as reasons why their contribution is, and continues to be, important to the Company's long-term sustainable success.

19.

The chair should not remain in post beyond nine years from the date of their first appointment to the board. To facilitate effective succession planning and the development of a diverse board, this period can be extended for a limited time, particularly in those cases where the chair was an existing non-executive director on appointment. A clear explanation should be provided.

David Hathorn has been the Non-Executive Chairman for approximately 2 and a half years, having been appointed a Director and Non-Executive Chairman on 25 August 2017.

20.

Open advertising and/or an external search consultancy should generally be used for the appointment of the chair and non-executive directors. If an external search consultancy is engaged, it should be identified in the annual report alongside a statement about any other connection it has with the company or individual directors.

No such appointments were made during the year.


21.

There should be a formal and rigorous annual evaluation of the performance of the board, its committees, the chair and individual directors. The chair should consider having a regular externally facilitated board evaluation. In FTSE 350 companies this should happen at least every three years. The external evaluator should be identified in the annual report and a statement made about any other connection it has with the company or individual directors.

 

During the year the Company undertook an internal evaluation of the board and its committees. In addition, an appraisal of the Non-Executive Chairman's performance was led by David Netherway as the Senior Independent Non-Executive Director.

 

 

22.

The chair should act on the results of the evaluation by recognising the strengths and addressing any weaknesses of the board. Each director should engage with the process and take appropriate action when development needs have been identified.

Each director of the Company at the time participated in the Board and Committee evaluations, as applicable, the results of which were discussed at a board meeting attended by all directors. No significant areas of development were identified that required appropriate action to be taken.

23.

The annual report should describe the work of the nomination committee, including:

• the process used in relation to appointments, its approach to succession planning and how both support developing a diverse pipeline;

• how the board evaluation has been conducted, the nature and extent of an external evaluator's contact with the board and individual directors, the outcomes and actions taken, and how it has or will influence board composition;

• the policy on diversity and inclusion, its objectives and linkage to company strategy, how it has been implemented and progress on achieving the objectives; and

• the gender balance of those in the senior management and their direct reports.

 

The Remuneration and Nomination Committee Report on pages 55 to 56 sets out, inter alia, the objectives of the Committee, the processes that are used in relation to appointments, its approach to succession planning, how the board evaluation has been conducted, the policy on diversity and inclusion and the gender balance of senior management and their direct reports.

 

 

 

AUDIT, RISK AND INTERNAL CONTROL

 

Principles

M.  The board should establish formal and transparent policies and procedures to ensure the independence and effectiveness of internal and external audit functions and satisfy itself on the integrity of financial and narrative statements.

N.  The board should present a fair, balanced and understandable assessment of the company's position and prospects.

O.  The board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the company is willing to take in order to achieve its long-term strategic objectives.

 

Provisions

24.

The board should establish an audit committee of independent non-executive directors, with a minimum membership of three, or in the case of smaller companies, two. The chair of the board should not be a member. The board should satisfy itself that at least one member has recent and relevant financial experience. The committee as a whole shall have competence relevant to the sector in which the company operates.

 

The Audit and Risk Committee comprises of 2 members, both of whom are independent Non-Executive Directors, of which David Netherway is considered by the Board to have recent and relevant financial experience.



25.

The main roles and responsibilities of the audit committee should include:

monitoring the integrity of the financial statements of the company and any formal announcements relating to the company's financial performance, and reviewing significant financial reporting judgements contained in them;

providing advice (where requested by the board) on whether the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company's position and performance, business model and strategy;

reviewing the company's internal financial controls and internal control and risk management systems, unless expressly addressed by a separate board risk committee composed of independent non-executive directors, or by the board itself;

monitoring and reviewing the effectiveness of the company's internal audit function or, where there is not one, considering annually whether there is a need for one and making a recommendation to the board;

conducting the tender process and making recommendations to the board, about the appointment, reappointment and removal of the external auditor, and approving the remuneration and terms of engagement of the external auditor;

reviewing and monitoring the external auditor's independence and objectivity;

reviewing the effectiveness of the external audit process, taking into consideration relevant UK professional and regulatory requirements;

developing and implementing policy on the engagement of the external auditor to supply non-audit services, ensuring there is prior approval of non-audit services, considering the impact this may have on independence, taking into account the relevant regulations and ethical guidance in this regard, and reporting to the board on any improvement or action required; and

reporting to the board on how it has discharged its responsibilities.

 

 

 

 

 

 

 

 

 

 

The main roles and responsibilities of the Committee are set out in its Terms of Reference, a copy of which can be found on the Company's website.


26.

The annual report should describe the work of the audit committee, including:

the significant issues that the audit committee considered relating to the financial statements, and how these issues were addressed;

an explanation of how it has assessed the independence and effectiveness of the external audit process and the approach taken to the appointment or reappointment of the external auditor, information on the length of tenure of the current audit firm, when a tender was last conducted and advance notice of any retendering plans;

in the case of a board not accepting the audit committee's recommendation on the external auditor appointment, reappointment or removal, a statement from the audit committee explaining its recommendation and the reasons why the board has taken a different position (this should also be supplied in any papers recommending appointment or reappointment);

where there is no internal audit function, an explanation for the absence, how internal assurance is achieved, and how this affects the work of external audit; and

an explanation of how auditor independence and objectivity are safeguarded, if the external auditor provides non-audit services.

Details of the work of the Committee during the year are set out in the Audit and Risk Committee Report on pages 53 to 54.

27.

The directors should explain in the annual report their responsibility for preparing the annual report and accounts, and state that they consider the annual report and accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the company's position, performance, business model and strategy.

The Directors' Responsibility Statement is set out on page 33. 

 

28.

The board should carry out a robust assessment of the company's emerging and principal risks. The board should confirm in the annual report that it has completed this assessment, including a description of its principal risks, what procedures are in place to identify emerging risks, and an explanation of how these are being managed or mitigated.

 

 

The Board has carried out a robust assessment of the Company's emerging and principal risks, details of which are set out within the Review of Operations and Strategic Report.

The only emerging risk during the year was in respect of COVID-19 and this is referred to in Strategic Report on page 16 under the section headed capital requirement and ability to attract funding and on page 17 under the section headed environmental and occupational health and safety risks.

29.

The board should monitor the company's risk management and internal control systems and, at least annually, carry out a review of their effectiveness and report on that review in the annual report. The monitoring and review should cover all material controls, including financial, operational and compliance controls.

Kore Potash has a Risk Matrix which is reviewed by the Board on a regular basis. The Board considers the Company's risk management and internal control systems to be sound and effective.

 

 

 


30.

In annual and half-yearly financial statements, the board should state whether it considers it appropriate to adopt the going concern basis of accounting in preparing them, and identify any material uncertainties to the company's ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements.

 

 

 

 

The CEO and CFO provide, at the end of each reporting period, a formal statement to the board confirming that the Group's financial reports present a true and fair view, in all material respects, and that the Group's financial condition and operational results have been prepared in accordance with the relevant accounting standards. The statement also confirms the integrity of the Group's financial statements and that it is founded on a sound system of risk management and internal compliance and controls which implemented in accordance with the policies approved by the Board, and that the Group's risk management and internal compliance and control systems, to the extent they relate to financial reporting, are operating efficiently and effectively in all material respects. 


31.

Taking account of the company's current position and principal risks, the board should explain in the annual report how it has assessed the prospects of the company, over what period it has done so and why it considers that period to be appropriate. The board should state whether it has a reasonable expectation that the company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment, drawing attention to any qualifications or assumptions as necessary.

During the year ended 31 December 2020, the Group incurred a loss of USD 3,144,172 (year ended 31 December 2019: USD 4,202,752) and experienced net cash outflows from operating and investing activities of USD 9,277,027 (year ended 31 December 2019: USD 11,257,647). Cash and cash equivalents totalled USD 5,555,000 at 31 December 2020 (at 31 December 2019: USD 7,578,727).

 

The Directors have prepared a cash flow forecast for the period ending 31 December 2022, which indicates that the Group will not have sufficient liquidity to meet its working capital requirements to the end of the going concern period (31 March 2022), primarily being corporate costs and some work on the 1st Phase of the Definitive Feasibility Study ("DFS") related to the DX Project. The Group anticipates a deficit of c.USD 1.3 million towards the end of Q1 2022.

 

The Directors have considered various mitigating actions, which include raising additional capital in Q2 - Q3 2021 to enable the Group to continue to fund its working capital requirements through the going concern period. The Directors have identified a number of funding options available to the Group. The Directors note the Group has a history of successfully raising capital on the AIM and JSE, and in the past on the ASX. However, factors beyond the Company's control, including pandemic diseases such as COVID-19, which affect the stock markets, may in turn have a negative impact on any fund raising.

 

The Directors have reviewed the Group's overall position and outlook in respect of the matters identified above and are of the opinion that there are reasonable grounds to believe that funding will be secured and therefore that the operational and financial plans in place are achievable and accordingly the Group will be able to continue as a going concern and meet its obligations as and when they fall due. The Directors will continue to pursue further capital raising initiatives in order to have sufficient funds to continue the development of the DX Project and for general corporate purposes.

 

The ability of the Group to continue as a going concern is dependent on achieving the matters set out above. These conditions indicate a material uncertainty which may cast significant doubt as to the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

 

 

The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

 

The Directors consider that a period of 1.5 years from the financial statement date is appropriate as the assumptions made in the review about market conditions are expected to remain valid over this period. The Directors have also carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity, as documented in the Review of Operations and Strategic Report on pages 7 to 22, which has informed the assessment of viability.

 

 

Principles

P.  Remuneration policies and practices should be designed to support strategy and promote long-term sustainable success. Executive remuneration should be aligned to company purpose and values and be clearly linked to the successful delivery of the company's long-term strategy.

Q.  A formal and transparent procedure for developing policy on executive remuneration and determining director and senior management remuneration should be established. No director should be involved in deciding their own remuneration outcome.

R.  Directors should exercise independent judgement and discretion when authorising remuneration outcomes, taking account of company and individual performance, and wider circumstances.

 

Provisions

32.

The board should establish a remuneration committee of independent non-executive directors, with a minimum membership of three, or in the case of smaller companies, two. In addition, the chair of the board can only be a member if they were independent on appointment and cannot chair the committee. Before appointment as chair of the remuneration committee, the appointee should have served on a remuneration committee for at least 12 months.

The Remuneration and Nomination Committee is comprised of Jonathan Trollip, as Chairman, together with David Netherway and David Hathorn, who was considered independent on his appointment as a Director and Chairman of the board.

 

Jonathan Trollip has had relevant experience of listed company directors and senior executive remuneration in his former capacity as chairman of ASX listed Spicers Limited and in his current role as non-executive director of ASX listed Propel Funeral Partners Limited

33.

The remuneration committee should have delegated responsibility for determining the policy for executive director remuneration and setting remuneration for the chair, executive directors and senior management. It should review workforce remuneration and related policies and the alignment of incentives and rewards with culture, taking these into account when setting the policy for executive director remuneration.

The Remuneration and Nomination met once during the year to consider the 2019 STIP Awards and the 2020 STIP Target Awards for key management personnel, to confirm the 1st tranche of the 2019 LTIP Options, to consider staff salary reviews and to consider the CEO's 2019 STIP Award and the 2020 STIP parameters and weightings.  In relation to these matters, it made a number of recommendations to the Board which the Board accepted.


34.

The remuneration of non-executive directors should be determined in accordance with the Articles of Association or, alternatively, by the board. Levels of remuneration for the chair and all non-executive directors should reflect the time commitment and responsibilities of the role. Remuneration for all non-executive directors should not include share options or other performance-related elements.

The remuneration of non-executive directors is determined by the board, taking cognisance of the Company's Articles of Association and their time commitment and responsibilities. Additional remuneration is paid to the Chairman of the Board and the chair of each Board Committee in order to reflect the time commitment and responsibilities required for those roles. No increase in non-executive directors' remuneration was made during the year. In addition, at the proposal of the Chairman, his salary was reduced to USD 100,000 per annum with effect from 1 July 2020 to reflect the current market environment and the company's financial position.

 

The Non-Executive Chairman has been awarded Share Options, as approved by shareholders at the June 2020 AGM. The Share Options have been structured to recognise the Company's current state of development and the key project milestones that are critical to the success of the Company, which may result in the Share Options being exercisable within three years from award. Following the achievement of these project milestones and the expiration and/or satisfaction of the conditions of the Share Options, the Board intends to adopt a new incentive scheme that will be more in line with the recommendations of the 2018 UK Code.

 

Certain non-executive Directors are entitled to Performance Rights which unconditionally vest on the first, second and third anniversaries of the Company's Admission to AIM i.e. on 29 March 2019, 21 March 2020 and 29 March 2021, in accordance with the Company's AIM Admission Document dated 26 March 2018. In order to subscribe for the shares in respect of the vested Performance Rights each non-executive director is required to subscribe USD 0.001 per share.

 

35.

Where a remuneration consultant is appointed, this should be the responsibility of the remuneration committee. The consultant should be identified in the annual report alongside a statement about any other connection it has with the company or individual directors. Independent judgement should be exercised when evaluating the advice of external third parties and when receiving views from executive directors and senior management.

An external remuneration consultant is appointed as and when required to advise the Committee However, no such appointment was required during the year.


36.

Remuneration schemes should promote long-term shareholdings by executive directors that support alignment with long-term shareholder interests. Share awards granted for this purpose should be released for sale on a phased basis and be subject to a total vesting and holding period of five years or more. The remuneration committee should develop a formal policy for post-employment shareholding requirements encompassing both unvested and vested shares.

During 2020 the Remuneration and Nomination Committee reviewed the remuneration package of the CEO. It was agreed to defer any recommendation with respect to the CEO's remuneration package, including any short term bonus, pending further clarification on the overall position of the Company, including the outcome of the DX DFS and the Company's projected cash position.

37.

Remuneration schemes and policies should enable the use of discretion to override formulaic outcomes. They should also include provisions that would enable the company to recover and/or withhold sums or share awards and specify the circumstances in which it would be appropriate to do so.

Details of the Company's remuneration scheme and policies are set out within the Remuneration Report. 

38.

Only basic salary should be pensionable. The pension contribution rates for executive directors, or payments in lieu, should be aligned with those available to the workforce. The pension consequences and associated costs of basic salary increases and any other changes in pensionable remuneration, or contribution rates, particularly for directors close to retirement, should be carefully considered when compared with workforce arrangements.

Details of the pension arrangements, including contribution rates, for the CEO are set within the Remuneration Report.

39.

Notice or contract periods should be one year or less. If it is necessary to offer longer periods to new directors recruited from outside the company, such periods should reduce to one year or less after the initial period. The remuneration committee should ensure compensation commitments in directors' terms of appointment do not reward poor performance. They should be robust in reducing compensation to reflect departing directors' obligations to mitigate loss.

 

The CEO is employed on an ongoing basis, which may be terminated by either party giving 6 months' notice.  Each non-executive director has a letter of appointment for an initial term of 3 years (with the exception of the Chairman whose agreement continues until terminated by the Board or in accordance with its terms). The appointment of the non-executive director may be terminated by the Company giving 1 month notice, by the non-executive director by immediate notice and also in accordance with the Company's Articles of Association. 

 


40.

When determining executive director remuneration policy and practices, the remuneration committee should address the following:

 

clarity - remuneration arrangements should be transparent and promote effective engagement with shareholders and the workforce;

simplicity - remuneration structures should avoid complexity and their rationale and operation should be easy to understand;

risk - remuneration arrangements should ensure reputational and other risks from excessive rewards, and behavioural risks that can arise from target-based incentive plans, are identified and mitigated;

• predictability - the range of possible values of rewards to individual directors and any other limits or discretions should be identified and explained at the time of approving the policy;

proportionality - the link between individual awards, the delivery of strategy and the long-term performance of the company should be clear. Outcomes should not reward poor performance; and

alignment to culture - incentive schemes should drive behaviours consistent with company purpose, values and strategy.

 

 

The CEO's remuneration was subject to detailed consideration by the Remuneration and Nomination when the current CEO was employed in 2018.  This was reflected in the CEO's employment contract and considered again in 2029. During 2020 the Remuneration and Nomination Committee gave further consideration to the CEO's remuneration and the results of those considerations are set out in section 36 above.

 

41.

There should be a description of the work of the remuneration committee in the annual report, including:

an explanation of the strategic rationale for executive directors' remuneration policies, structures and any performance metrics; • reasons why the remuneration is appropriate using internal and external measures, including pay ratios and pay gaps;

a description, with examples, of how the remuneration committee has addressed the factors in Provision 40;

whether the remuneration policy operated as intended in terms of company performance and quantum, and, if not, what changes are necessary;

what engagement has taken place with shareholders and the impact this has had on remuneration policy and outcomes;

what engagement with the workforce has taken place to explain how executive remuneration aligns with wider company pay policy; and

to what extent discretion has been applied to remuneration outcomes and the reasons why.

The Remuneration and Nomination Report on pages 57 to 70 sets out, inter alia the objectives of the Committee and a description of the work carried out during the year.

 

 

AUDIT AND RISK COMMITTEE

 

The Audit and Risk Committee ("the Committee") comprises 2 members, both of whom are independent Non-Executive Directors, David Netherway is considered by the Board to have recent and relevant financial experience.

 

The Committee meets formally at least twice a year and otherwise as required and also meets with the Company's external auditors at least twice a year.

 

The Committee assists the Board in discharging its responsibilities with regard to financial reporting, including reviewing the Group's annual and half year financial statements, accounting policies, key judgments and estimates taken, internal and external audit and controls, reviewing and monitoring the scope of the annual audit and the extent of the non-audit work undertaken by external auditors and advising on the appointment of external auditors.

 

In addition, the Committee is responsible for ensuring the integrity of the financial information reported to shareholders and internal control systems and ensuring effective risk management and financial control frameworks have been implemented. The Committee also ensures that appropriate procedures, resources and controls are in place to comply with the AIM Rules for Companies and the Market Abuse Regulations, monitors compliance thereof and seeks to ensure that the Company and its nominated advisor are in contact on a regular basis.

 

The Committee also helps to address risk management, and is committed to maintain a risk management framework that seeks to:

· Avoid the likelihood of unacceptable outcomes and costly surprises;

· Provide greater openness and transparency in decision making and ongoing management processes;

· Provide for a better understanding of issues associated with the Group's activities;

· Comprise an effective reporting framework for meeting corporate governance requirements; and

· Allow an appropriate assessment of innovative processes to identify risks before they occur and allow informed judgement.

 

The Committee is also responsible for approving, reviewing and monitoring the Company's risk management policy. The objectives of this risk management policy are to:

· Provide a structured risk management framework that will provide Senior Management and the Board with comfort that the risks confronting the organisation are identified and managed effectively;

· Create an integrated risk management process owned and managed by the Group's personnel that is both continuous and effective;

· Ensure that the management of risk is integrated into the development of strategic and business plans, and the achievement of the Group's vision and values; and

· Ensure that the Board is regularly updated with reports by the committee.

 

Management is responsible for efficient and effective risk management across the activities of the Group. This includes ensuring the implementation of policies and procedures that address risk identification and control, training and reporting. The CEO is responsible for ensuring the process for managing risks is integrated within business planning and management activities.

 

The Board reviews the effectiveness of the implementation of the risk management system and internal control system annually. When reviewing risk management policies and the internal control system the Board takes into account the Company's legal obligations and also considers the reasonable expectations of the Company's stakeholders, including shareholders, employees, customers, suppliers, creditors, consumers and the wider community.

 

The Group does not currently have an internal audit function. To evaluate and continually improve the effectiveness of the Company's risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks with senior personnel and Directors. Once the Group is at a size and scale that warrants an Internal Auditor, the Board will be responsible for the appointment and overseeing of the Internal Auditor.

 

The Group currently is not subject to any material exposure to environmental and social sustainability risks. The principal areas of risk for the Company are detailed on pages 16 to 18 of the Annual Report.

 

During the year, the Committee reviewed the planning of the 2020 annual report including consideration of the financial statements and going concern (including material uncertainty), impairment assessment of the exploration and evaluation assets, other key judgments and estimates, value proposition and business model. The Committee received and considered memoranda from management regarding these matters, and also took into account the views of the external auditor. The Committee concluded that no impairment charge was necessary for the exploration and evaluation assets and that the going concern basis is the appropriate method to prepare the annual report on.

 

 Following the appointment of BDO LLP, as the Company's auditors with effect from 28 June 2019, a resolution to reappoint BDO LLP as auditors was proposed and passed by the requisite majority at the AGM held on 26 June 2020. A resolution will be proposed at this year's AGM to reappoint BDO for the forthcoming financial year.

 

The Board via the Committee is satisfied that the provision of non-audit services during the year as disclosed in note 18 is compatible with the Financial Reporting Council's Ethical Standard in the UK as well as other general standard of independence for auditors. The Directors are satisfied that non-audit services did not compromise the external auditor's independence for the following reasons:

· all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and

· the nature of the services provided do not compromise the general principles relating to auditor independence under all relevant independence rules.

 

The Committee assesses the quality of the external audit annually and considers the performance of BDO LLP and its associates taking into account the Committee's own assessment, feedback from senior finance personnel and views from BDO LLP and its associates on their performance as detailed in a report of their audit findings at the year end, which they presented to the Committee at its meeting in March 2021. Based on this review, the Committee was satisfied with the effectiveness of the audit for the year ended 31 December 2020.

 

REMUNERATION AND NOMINATION COMMITTEE

 

The Remuneration and Nomination Committee ("the Committee") has three members, two of whom are independent Non-Executive Directors, including the chair, Jonathan Trollip. The Committee also comprises David Netherway and David Hathorn. 

 

The Committee is required to meet annually and at such other times as required. Its objectives are to

· maintain a board of directors that has an appropriate mix of skills, experience and knowledge to be an effective decision-making body;

· ensure that the Board is comprised of directors who contribute to the successful management of the Company and discharge their duties having regard to the law and the highest standards of corporate governance;

· review and recommend an appropriate remuneration policy, the objective of which shall be to attract, retain and motivate executive directors of the quality required to successfully run the Company, without paying more than is necessary having regard to market comparables; and

· adhere to the principle that no director or senior executive shall be involved in any decisions as to their own remuneration.

 

The Committee undertakes a detailed selection process as per the Company's recruitment and diversity policy to appoint or re-appoint a director to the Board. Included in this process are appropriate reference checks which include but not limited to character reference, police clearance certificate and bankruptcy to ensure that the Board remains appropriate for that of an AIM, ASX or JSE quoted company.

 

In addition, the Committee is responsible for considering and recommending board candidates for election or re-election, reviewing succession planning, determining the terms of employment and total remuneration of the executive director and Chairman and considering the Group's incentive schemes.

 

Directors' Remuneration and Share Option Schemes

 

The Non-Executive Chairman and CEO have been awarded Share Options, as approved by shareholders at the June 2019 AGM. The Share Options have been structured to recognise the Company's current state of development and the key project milestones that are critical to the success of the Company, which may result in the Share Options being exercisable within three years from award. Following the achievement of these project milestones and the expiration and/or satisfaction of the conditions of the Share Options, the Board intends to adopt a new incentive scheme that will be more in line with the recommendations of the 2018 UK Code.

 

Diversity Policy

The Group is committed to an inclusive workplace that embraces and promotes diversity, while respecting International, Sovereign, UK, South African, RoC and Australian laws.

 

It is the responsibility of all directors, officers, employees and contractors to comply with the Group's Diversity Policy and report violations or suspected violations in accordance with this Diversity Policy.

 

The Group recognises the value of a diverse work force and believes that diversity supports all employees reaching their full potential, improves business decisions, business results, increases stakeholder satisfaction and promotes realisation of the Group's vision. 

 

Diversity may result from a range of factors including but not limited to gender, age, ethnicity and cultural backgrounds. The Company believes the individual differences between people add to the collective skills and experience of the Group and ensure it benefits by selecting from all available talent.

 

Given the Group's size, early stage of development and relatively small number of employees (46 average number of employees in 2020 of which 8 are females), the Group is yet to define measurable objectives for achieving diversity targets and expects to set in place a range of objectives that are consistent with its growth strategy in future. 

 

Group and Individual Expectations

· Ensure diversity is incorporated into the behaviours and practises of the Group;

· Facilitate equal employment opportunities based on job requirements only using recruitment and selection processes which ensures we select from a diverse pool;

· Engage professional search and recruitment firms when needed to enhance our selection pool;

· Help to build a safe work environment by acting with care and respect at all times, ensuring there is no discrimination, harassment, bullying, victimisation, vilification or exploitation of individuals or groups;

· Develop flexible work practices to meet the differing needs of our employees and potential employees;

· Attract and retain a skilled and diverse workforce as an employer of choice;

· Enhance customer service and market reputation through a workforce that respects and reflects the diversity of our stakeholders and communities that we operate in;

· Make a contribution to the economic, social and educational well‐being of all of the communities it serves;

· Meet the relevant requirements of domestic and international legislation appropriate to the Group's operations;

· Create an inclusive workplace culture; and

· Establish measurable diversity objectives and monitor and report on the achievement of those objectives annually.

 

Evaluation of Senior Executives

Arrangements put in place by the Board to monitor the ongoing performance of the Group's Executives include:

· A review by the Board of the Group's financial performance;

· Annual performance appraisal meetings incorporating analysis of key performance indicators with each individual to ensure that the level of reward is aligned with respective responsibilities and individual contributions made to the success of the Group;

· An analysis of the Group's prospects and projects; and

· A review of feedback obtained from third parties, including advisors (where applicable).

 

Informal evaluations of the CEO and other Senior Executive's individual performance and overall business measures are undertaken progressively and periodically throughout the financial year.

 

HEALTH, SAFETY AND ENVIRONMENTAL COMMITTEE

 

The Health, Safety and Environmental Committee ("the Committee") is chaired by David Netherway and comprises David Hathorn, Brad Sampson and Gavin Chamberlain (COO) and is required under its Terms of Reference to meet formally at least twice a year and at such other times as required. However, as health, safety and environmental matters are reported on each month in management reporting to the Board and are part of each Board meeting agenda and with limited operational activity during the feasibility study phases, creating a low-risk environment, no separate Committee meetings were held during the year. 

 

The Committee is responsible for assisting the Board in fulfilling its oversight responsibilities with respect to health, safety and environmental matters affecting the Group, including recommending various policies and policy changes in relation to these areas to be adopted by the Group, reviewing the compliance status and any material non-compliance and, in the event of an incident, reviewing the incident and considering the remedial actions being taken.

 

Remuneration Report

 

This Remuneration Report sets out information about the remuneration of Kore Potash's key management personnel for the financial year ended 31 December 2020. The term 'key management personnel' refers to those persons having authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group. The prescribed details for each person covered by this report are detailed below under the following headings:

· key management personnel (KMP)

· remuneration policy

· relationship between the remuneration policy and company performance

· key terms of employment contracts

· remuneration of KMP

 

KMP of the Company and the Group

This report details the nature and amount of remuneration for the KMP of the Group. KMP during the financial year 2020 were:

 

Executive Directors


Brad Sampson

Chief Executive Officer (appointed on 4 June 2018)



Non-Executive Directors


David Hathorn

Non-Executive Chairman (appointed on 25 August 2017)

Jonathan Trollip

Non-Executive Director (appointed on 17 November 2017)

Timothy Keating

Non-Executive Director (appointed on 17 November 2017)

David Netherway

Non-Executive Director (appointed on 12 December 2017)

Trinidad Maria Reyes Perez

Non-Executive Director (appointed on 20 November 2020)

José Antonio Merino

Non-Executive Director (resigned on 20 November 2020)



Executives


Henko Vos

Joint Company Secretary (appointed on 17 November 2017)

SJCS

Joint Company Secretary (appointed on 1 October 2018)

Andrey Maruta

Chief Financial Officer (appointed on 21 September 2019)

Gavin Chamberlain

Chief Operating Officer (appointed 1 October 2017)

 

Remuneration Policy

 

The remuneration policy of Kore Potash has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long‑term incentives based on key performance areas affecting the Group's financial results. The Remuneration and Nomination makes recommendations to the Board in relation to the composition of the Board, the appointment of the CEO and succession planning, and remuneration for directors and senior executives. The Board endeavours with its remuneration policy to attract and retain high calibre executives and directors to run and manage the Group within the constraints of the financial position of the Group.

 

The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board. All executives receive a base salary and superannuation, where applicable. The Board reviews executive packages annually by reference to the Group's performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

 

The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain high calibre executives and reward them for performance that results in long‑term growth in shareholder wealth. Executives may also be entitled to participate in the employee share and option arrangements.

 

The Board policy is to remunerate non‑executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the non‑executive directors and reviews their remuneration annually, based on market practice, duties and accountability and the Company's financial capacity constraints. Independent external advice is sought when required. During the financial year, independent external advice was sought on appropriate remuneration of directors to better reflect market practice for comparable companies listed on AIM, and this resulted during the financial year in the implementation of revised remuneration arrangements for all non-executive directors. The maximum aggregate amount of fees that can be paid to non‑executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non‑executive directors are not linked to the performance of the Group, although to assist with the Company's cash position some non-executive directors have agreed to receive a portion of their fees by way of Company shares rather than cash.  However, to align directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company. The Board has adopted the Kore Potash Performance Rights Plan to establish an incentive plan aiming to create a stronger link between employee performance and reward and increasing shareholder value by enabling the participants of the plan to have a greater involvement with and share in the future growth and profitability of the Company.

 

Key Terms of Employment Contracts with Executive KMPs

 

Key Terms of Employment Contracts for the financial year ending 31 December 2020:

Name

Base Salary
per Annum

Term of
Agreement

Notice Period

Brad Sampson (Chief Executive Officer, appointed 4 June 2018)

USD 550,000

No fixed term

6-month notice period

Andrey Maruta (Chief Financial Officer, appointed 23 September 2019)

GBP 172,500

No fixed Term

3-month notice period

Gavin Chamberlain (Chief Operating Officer)

USD 280,500

No fixed term

3-month notice period

 

Non-Executive Director Arrangements

Non-executive directors receive a board fee and fees for chairing or participating on board committees, see table below. They do not receive performance-based pay (except via options and performance rights under the Group's performance rights plan) or retirement allowances. The fees are inclusive of superannuation. The Chairman does not receive additional fees for participating in or chairing committees.

 

Fees are reviewed annually by the Board taking into account comparable roles and market data provided by the Board's independent remuneration adviser. The current base annual fees were reviewed with effect from 1 April 2020.

 


Base Salary Per Annum

Base fees


Chairman

USD 100,000

Senior independent non-executive director

USD 66,500

Other non-executive directors

USD 56,000

Additional fees


Audit and risk committee - Chair

USD 7,000

Audit and risk committee - member

-

Remuneration and nomination - Chair

USD 7,000

Remuneration and nomination - member

-

Health, safety and environmental - Chair

USD 7,000

Health, safety and environmental - member

-

 

 

All non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the Board's policies and terms, including remuneration, relevant to the office of director. Directors with special responsibilities are disclosed within the various committee reports in the Corporate Governance Report on pages 53 to 56.

 

At the proposal of the Chairman, his salary was reduced to USD 100,000 from USD 156,000 per annum with effect from 1 July 2020 to reflect the current market environment and the company's financial position.

 

KMP Remuneration

The remuneration for each Director and KMP of the Group during the year ended 31 December 2020 was as follows:

 

1 January 2020 to 31 December 2020 single figure table


Short-Term Benefits

Post-Employment Benefits

Options /

Performance Rights (i)

USD

Total

USD


Fees/Basic Salary

USD

Annual Bonus

USD

Termination benefits

USD

Superannuation

USD

Executive Directors







Brad Sampson

549,557

146,693

-

-

208,173

904,423

Non-Executive Directors







David Hathorn

120,300

-

-

-

202,151

322,451

Jonathan Trollip

62,685

-

-

-

38,563

101,248

Trinidad Maria Reyes Perez (iii)

-

-

-

-

-

-

Timothy Keating

13,998

-

-

-

11,360

25,358

David Netherway

80,500

-

-

-

11,360

91,860

José Antonio Merino (iii)

13,998

-

-

-


13,998


841,038

146,693

-

-

471,607

1,459,338

Executives







Henko Vos (ii)

12,158

-

-

-

-)

12,158

SJCS

77,159

-

-

-

-)

77,159

Gavin Chamberlain

280,500

-

-

-

187,135

467,635

Andrey Maruta

172,500

-

-

-

116,810

289,310


542,317

-

-

-

303,945

846,262








Total

1,383,355

146,693

-

-

775,552

2,305,600

 

(i)  Options as share-based payment arrangements and performance rights granted under the STIP, LTIP and other schemes are expensed over the vesting period, which includes the years to which they relate and their subsequent vesting periods.

(ii)  Nexia Perth Pty Ltd has been engaged to provide accounting, administrative and company secretarial services on commercial terms. Mr Vos is currently employed by Nexia Perth.

(iii)  Trinidad Maria Perez Peres was appointed as a non-executive director on 20 November 2020, following the resignation of Jose Antonio Merino on 20 November 2020 as non-executive director.

 

Brad Sampson was the highest paid Director during the 2020 year and details of his remuneration are disclosed above.

 

KMP Remuneration

The remuneration for each Director and KMP of the Group during the year ended 31 December 2019 was as follows:

 

1 January 2019 to 31 December 2019 single figure table


Short-Term Benefits

Post-Employment Benefits

Options /

Performance Rights

USD

Total

USD


Fees/Basic Salary

USD

Annual Bonus

USD

Termination benefits

USD

Superannuation

USD

Executive Directors







Brad Sampson

550,000

50,397

-

-

442,813

1,043,210

Non-Executive Directors







David Hathorn

156,000

-

-

-

171,195

327,195

Jonathan Trollip

65,113

-

-

3,195

42,597

110,905

Leonard Math

31,500

-

-

-

87,898

119,398

Timothy Keating

55,992

-

-

-

23,010

79,002

David Netherway

71,750

-

-

-

22,838

94,588

José Antonio Merino

55,992

-

-

-

-)

55,992


986,347

50,397

-

3,195

790,351

1,830,290

Executives







Henko Vos

22,486

-

-

-

-)

22,486

SJCS 

72,257

-

-

-

-)

72,257

John Crews

224,473

-

25,347

-

58,442

308,262

Julien Babey

211,871

-

47,115

-

70,691

329,677

Gavin Chamberlain

286,110

-

-

-

55,658

341,768

Andrey Maruta

48,171

-

-

-

-

48,171

Guy de Grandpre

216,627

-

-

-

-

216,627


1,081,995

-

72,462

-

184,791

1,339,248








Total

2,068,342

50,397

72,462

3,195

975,142

3,169,538

 

 

Brad Sampson was the highest paid Director during the 2019 year and details of his remuneration are disclosed above.

 

Share-based payments granted as compensation to KMP

 

Employee Share Option Plan and Employee Performance Rights Plan

Kore Potash operates an ownership-based scheme for executives and senior employees of the Group. In accordance with the provisions of the plans, as approved by shareholders at a previous general meeting, executives and senior employees may be granted performance rights and/or options to purchase parcels of ordinary shares at an exercise price determined by the Board based on a recommendation by the Remuneration and Nomination Committee.

 

Each employee share option converts into one ordinary share of Kore Potash on exercise. No amounts are paid or payable by the recipient on receipt of the option, aside from when the option is exercised. The options carry neither right to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. Each employee performance rights will be converted into one ordinary share of Kore Potash upon vesting conditions being met. No amounts are paid or payable by the recipient on receipt of the performance rights. The performance rights carry neither right to dividends nor voting rights.

 

The performance rights/options granted expire as determined by the Board based on a recommendation by Remuneration and Nomination Committee, or immediately following the resignation of the executive or senior employee, whichever is the earlier.

 

Summary information for Options as SBP arrangements in existence during 2020

During the financial year, the following options as SBP arrangements for KMP and other personnel were in existence:

 


Grant

Date

Vesting Date

Number of Options

Expiry Date

Fair Value at Grant Date

Exercise Price

Option Series 32 *

27/06/2019

Refer below

4,000,000

27/06/2020

GBP 0.0364

GBP 0.11

Option Series 33

19/07/2019

19/07/2022

26,900,000

19/07/2024

GBP 0.007

GBP 0.022

Options Series 34**

 

15/09/2019

 

15/09/2022

 

12,000,000

 

01/01/2024

 

GBP 0.0092

 

GBP 0.022

Options Series 35**

 

15/09/2019

 

15/09/2022

 

12,000,000

 

01/01/2024

 

GBP 0.0092

 

GBP 0.022

Options Series 36**

 

15/09/2019

 

15/09/2022

 

9,000,000

 

01/01/2024

 

GBP 0.0092

 

GBP 0.022

 

*  Option Series expired during the financial year.

 

**  These options were issued to Gavin Chamberlain (Option Series 34), Andrey Maruta (Option Series 35) and Guy de Grandpre (Option Series 36). The vesting conditions for these Options include milestones being achieved in relation to the Kola Project.

 

Unless otherwise indicated above, there are no performance criteria that need to be met in relation to options granted above before the beneficial interest vests in the recipient. However, the executives and senior employees receiving the options meet the vesting conditions only if they continue to be employed with the Company at the vesting date.

 

Please refer to Note 21 1 to the financial statements for further details of the options granted as detailed above.

 

Options Series 34, 35 and 36 were granted as compensation during the year. Further details of the performance conditions for these options can also be found in Note 21 1 to the financial statements. Option series 32 expired in the financial year.

 

There was no exercise of options during the year or any further issues.

 

Share-based payments granted as compensation to KMP

 

Summary information for Performance Rights as SBP arrangements in existence during 2020

During the financial year, the following performance rights as SBP arrangements for KMP and other personnel were in existence:

 


Grant Date

Vesting Date

Number of Rights

Expiry Date

Fair Value at

Grant Date

Rights Series 7 *

07/12/2015

Refer below

5,000,000

06/12/2020

AUD 0.1753

Rights Series 9 **

20/11/2015

Refer below

8,500,000

01/03/2021

AUD 0.1867

Rights Series 12

29/05/2017

Refer below

2,000,000

31/05/2022

AUD 0.1700

Rights Series 13 **

31/05/2017

Refer below

660,000

31/05/2022

AUD 0.1700

Rights Series 14 **

29/05/2017

Refer below

4,482,005

31/05/2022

AUD 0.1700

Rights Series 15**

29/05/2017

None vested

11,734,853

31/05/2022

AUD 0.17 / AUD 0.104

Rights Series 16**

27/06/2019

Refer below

1,500,000

22/05/2022

GBP 0.0564

Rights Series 17**

27/06/2019

Refer below

750,000

22/05/2022

GBP 0.0564

Rights Series 19**

27/06/2019

Refer below

750,000

22/05/2022

GBP 0.0564

Rights Series 20**

27/06/2019

Refer below

750,000

22/05/2022

GBP 0.0564

Rights Series 25***

17/03/2020

Refer below

2,500,000

17/03/2025

GBP 0.0615

 

The above Performance Rights have nil exercise price.

 

*  Vested, converted to fully paid ordinary shares and/or cancelled during the year - Please refer to Note 21 1 to the financial statements for more details of conversions and cancellations.

 

** these series were partially converted or cancelled in the year.

 

*** Rights series 25 was issued in the period under the STIP scheme

 

 

There are various performance criteria that need to be met in relation to performance rights granted above before the beneficial interest vests in the recipient. However, if the executives and senior employees receiving the performance rights cease to be employed by the Company, the Board of Directors will determine if the performance rights vest immediately, are cancelled or vest upon the vesting condition being achieved.

 

There was no exercise of performance rights during the year.

 

Further details of the performance rights, performance conditions and vesting for the above series can be found in Note 21 1 to the financial statements.


 

Share-based payments granted as compensation to KMP

 

Reconciliation of options as SBP arrangements and performance rights held by KMP

The table below shows a reconciliation of options as SBP arrangements and performance rights held by each KMP from the beginning to the end of the 2020 year.

 

The maximum value of the options yet to vest has been determined as the amount of the grant date fair value of the options that is yet to be expensed. The minimum value of options yet to vest is nil, as the options will be forfeited or cancelled if the vesting conditions are not met.

 

The amount expensed during the year denotes the amount expensed over the vesting period of the options or performance rights, and the percentage indicated denotes the proportion of this expense over the KMP's total compensation, and therefore the proportion of the KMP's total compensation that is linked to the Group's performance for the 2020 year.

 

For further information on each option and performance rights series, please refer to Note 21 to the financial statements.

 

 

 

Name, option or rights series number,
grant date, amount granted on
grant date and issue date

Balance at the
start of the year

Granted or
allocated
as compen-sation

Vested

Exer-
cised

Cancelled
or expired

(iv)

Other

 changes
(ii)

Balance at the
end of the year

Max value
yet to vest

Expensed
in 2020

Vested
and exer-cisable

 


Unvested

Vested
and exer-cisable

Unvested

 


No

No

No

%

No

No

%

No

No

No

No

No

%

 


 


Executive Directors

Brad Sampson (i)

Options

Series 33

02/07/2019

26,900,000

19/07/2019

0

26,900,000

-

8,966,666

33.3

-

-

-

-

8,966,666

17,933,334

465,308

208,173

45

 


-

26,900,000

-

8,966,666

33.3

-

-

-

-

8,966,666

17,933,334

465,308

208,173

45

 

 

Share-based payments granted as compensation to KMP

 

Name, option or rights series number,
grant date, amount granted on
grant date and issue date

Balance at the
start of the year

Granted or
allocated
as compe-nsation

Vested

Exer-
cised

Cancelled
or expired

(iv)

Other

 changes
(ii)

Balance at the
end of the year

Max value
yet to vest

Expensed
in 2020

Vested
and exer-cisable

Unvested

Vested
and exer-cisable

Unvested

No

No

No

No

%

No

No

%

No

No

No

USD

USD

%

Non-executive directors

David Hathorn

Options

Series 32

27/06/2019

4,000,000

01/08/2019

-

4,000,000

-

-

-

-

(4,000,000)

100

-

-

-

-

-

-

Performance Rights

Series 16

27/06/2018

1,500,000

01/08/2018

-

1,000,000

-

-

-

(500,000)

-

-

-

-

500,000

3,220

202.151

16


-

5,000,000

-

-

-

(500,000)

(4,000,000)

80

-

-

500,000

3,220

202,151

-)
















Jonathan Trollip

Performance Rights

Series 17

27/06/2019

500,000

01/08/2019

-

500,000

-

-

-

(250,000)

-

-

-

250,000

25,461

38,563

12


 


 

Timothy Keating

 

Performance Rights

 

Series 20

27/06/2019

750,000

01/08/2019

-

500,000

-

-

-

(250,000)

-

-

-

-

250,000

1,610

11,360

20

 



















 

David Netherway

 

Performance Rights

 

Series 19

27/06/2019

500,000

01/08/2019

-

500,000

-

-

-

(250,000)

-

-

-

-

250,000

1,610

11,360

20

 

 

Share-based payments granted as compensation to KMP

 

Name, option or rights series number,
grant date, amount granted on
grant date and issue date

Balance at the
start of the year

Granted or
allocated
as compen-sation

Vested

Exer-
cised

Cancelled
or expired

(iv)

Other

changes

Balance at the
end of the year

Max value
yet to vest

Expensed
in 2020

Vested
and exer-cisable

Unvested

Vested
and exer-cisable

Unvested

No

No

No

No

%

No

No

%

No

No

No

USD

USD

%

 

 

 

Executives

 

Andrey Maruta

 

Options

 

Series 35

15/09/2019

12,000,000

25/06/20

-

-

12,000,000

4,000,000

33

-

-

-

-

4,000,000

8,000,000

19,586

116,068

86

 

Performance rights

















 

 

Series 25

17/03/2020

200,000

17/03/2020

-

-

200,000

-

-

-

-

-

-

-

200,000

-

741)

100)

 


-

-

12,200,000

4,000,000

-

-

-

-

-

4,000,000

8,200,000

19,586

116,810)

)

 

Gavin Chamberlain

 

Options

 

Series 34

19/07/2019

12,000,000

25/06/2020

-

-

12,000,000

4,000,000

33

-

-

-

-

4,000,000

8,000,000

19,586

116,068

86

 

Performance rights


















 

Series 15

29/05/2017

2,200,000

29/05/2017

-

2,200,000

-

-

-

-

440,000

20

-

-

1,760,000

-

53,190

33)

 

 

Series 25

17/03/2020

850,000

17/03/2020


0

850,000




50,000 

6


800,000 

-

17,877

100 

 


-

2,200,000

12,850,000

4,000,000

-

-

490,000

-

-

4.000.000

10,560,000

19,856

187,135

-

 

Guy De Grandpre

Options

Series 32

15/09/2019

12,000,000

25/06/20

-

-

9,000,000

3,000,000

33

-

-

-

-

3,000,000

6,000,000

14,690

88,163

85

 


 

Share-based payments granted as compensation to KMP

 

Options and Performance Rights granted during 2020

 

The following table summarises the options as share-based payments and performance rights granted and approved to KMP during the financial year ending 31 December 2020.

 


Options / Rights Series

Number of Options / Rights Granted at Grant Date

Number

Value of Options / Rights Granted at Grant Date

USD

Executive Directors




Gavin Chamberlain

Option Series 34

12,000,000

  135,655

Andrey Maruta

Option Series 35

12,000,000

  135,655

Guy De Grandpre

Option Series 36

9,000,000

101,741

 

 

Shares issued on exercise of options or performance rights

 

Shares were issued to the following non-executive directors during the financial year ended 31 December 2020 following the vesting of the performance rights.

 

 


Options / Rights Series

Number of shares granted in exchange for performance rights

Non-executive Directors



David Hathorn

Rights Series 16

500,000

Jonathan Trollip

Rights Series 17

250,000

David Netherway

Rights Series 19

250,000

Timothy Keating

Rights Series 20

250,000

 



 

 

Shareholdings (ordinary shares)

The numbers of ordinary shares in the Company held during the financial year by KMP, including shares held by entities they control, are set out below.

 

31 December 2020

Balance at

1 Jan 2020

Received as

Remuneration

Options

Exercised / Rights Converted

Other

Movements

(i) 

Balance at

31 Dec 2020

Executive Directors






Brad Samson

2,464,705

-

-


2,464,705







Non-executive directors






David Hathorn (i)

49,269,093

7,688,465

500,000

58,720,007

116,177,565

Jonathan Trollip

2,190,051

2,676,139

250,000

-)

5,116,190

Timothy Keating

250,000

-

250,000

-)

500,000

David Netherway

2,122,689

3,473,055

250,000

-)

5,845,744


56,296,538

13,837,659

1,250,000

58,720,007

130,104,204

Executives






Henko Vos

1

-

-

--)

1








1

-

-

-

1







Total

56,296,539

13,837,659

1,250,000

58,720,007

130,104,205

 

(i)  Shares purchased from on-market acquisitions.

 

 

31 December 2019

Balance at

1 Jan 2019

Received as

Remuneration

Options

Exercised / Rights Converted

Other

Movements

(i) (ii) 

Balance at

31 Dec 2019

Executive Directors






Brad Samson (ii)

-

-

-

2,464,705

2,464,705







Non-executive directors






David Hathorn (ii)

23,186,355

5,865,095

500,000

19,717,643)

49,269,093

Jonathan Trollip

791,714

1,148,337

250,000

-)

2,190,051

Timothy Keating

-

-

250,000

-)

250,000

Leonard Math (i)

-

-

312,500

(312,500)

-

David Netherway

350,000

1,522,689

250,000

-)

2,122,689


24,328,069

8,536,121

1,562,500

21,869,848

56,296,538

Executives






Henko Vos

1

-

-

--)

1

Julien Babey (i)

1,043,914

-

-

(1,043,914)

-


1,043,915

-

-

(1,043,914)

1







Total

25,371,984

8,536,121

1,562,500

20,825,934

56,296,539

 

 

Other than otherwise indicated above, no other KMP held any ordinary shares in the Company during the current or prior years.

 

Options, rights and equity warrants over equity instruments granted as compensation

 

 

31 December 2020

Balance at

1 Jan 2020

Received as

Remuneration

Rights Vested

Other

Movements

(i) to (v)

Balance at

31 Dec 2020

Vested and exercisable at year end

Executive Directors







Brad Sampson

26,900,000


-


26,900,000

8,966,666

Non-executive directors







David Hathorn

5,250,000

-

(500,000)

(4,000,000)

750,000

-

Jonathan Trollip

500,000

-

(250,000)


250,000

-

Timothy Keating

500,000

-

(250,000)

-)

250,000

-

David Netherway

500,000

-

(250,000)

-)

250,000

-


33,650,000

-

(1,250,000)

(4,000,000)

28,400,000

8,966,666

Executives







Andrey Maruta

-

12,200,000

-

-)

12,200,000

4,000,000

Guy De Grandpre

-

9,000,000

-

-)

9,000,000

3,000,000

Gavin Chamberlain

2,200,000

12,850,000

-

(490,000))

14,560,000

4,000,000


2,200,000

34,050,000

-

(490,000))

35,760,000

11,000,000








Total

35,850,000

34,050,000

(1,250,000)

(4,490,000)

64,160,000

19,966,666

 

 

 

Other than otherwise indicated above, no other KMP held any options, rights or equity warrants over ordinary shares in the Company during the year ended 31 December 2020.

 

Other transactions with KMP during the financial year ended 31 December 2020

No KMP has entered into a material contract (apart from employment) with the Company and the Group. No amount of remuneration is outstanding at 31 December 2020.

 

 

Nexia Perth Pty Ltd are engaged to provide accounting, administrative and company secretarial services for the Group on commercial terms. Mr Henko Vos, who is based in Perth, Australia has been appointed as joint company secretary and is also currently an employee with Nexia Perth. During the year, the total amount paid to Nexia Perth by the Group for providing accounting, administration and company secretarial services was USD 84,203 and USD 114,484 to Smith & Williamson LLP.

 

St James's Corporate Services Limited was appointed on 1 October 2018 and engaged to provide company secretarial services for Kore Potash plc on commercial terms. During the year, the total amounts paid to St James's Corporate Services Limited by the Group for providing company secretarial services were USD 59,713.

 

There were no other transactions with KMP and its related parties.

 

Voting of shareholders at last year's AGM held on 26 June 2020

The Company received 98.23% "yes" votes on its Remuneration Report for the 2020 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

 

 

OTHER CORPORATE GOVERNANCE MATTERS

 

Code of Conduct

 

The Board acknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of the Group. The Board has adopted a Code of Conduct charter to promote ethical and responsible decision-making by the directors.

 

The Board has approved a Code of Conduct for Directors, Officers, Employees and Contractors, which describes the standards of ethical behaviour that are required to be maintained. The Code of Conduct was approved prior to the Company's listing on the AIM market and on the JSE. The Group promotes the open communication of any unethical behaviour within the organisation.

 

Compliance with the Code of Conduct assists the Company in effectively managing its operating risks and meeting its legal and compliance obligations as well as enhancing the Group's corporate reputation.

 

The Code of Conduct describes the Group's requirements on matters such as confidentiality, conflicts of interest, use of Group information, sound employment practices, compliance with laws and regulations and the protection and safeguarding of the Group's assets.

 

An employee who breaches the Code of Conduct may face disciplinary action. If an employee suspects that a breach of the Code of Conduct has occurred or will occur, he or she must report that breach to the CEO or either of the joint company secretaries, via the Company's confidential "Whistle Blowing" process. No employee will be disadvantaged or prejudiced if he or she reports in good faith a suspected breach. All reports will be investigated, acted upon and kept confidential.

 

Anti-Bribery and Anti-Corruption

The Group's Anti-Bribery and Anti-Corruption policy is set out in the Code of Conduct and has been aligned with relevant UK, Australian and South African laws governing Anti-Bribery and Anti-Corruption. The Group takes a zero-tolerance approach to acts of bribery and corruption by any Directors, officers, employees and contractors.

 

The Group will not offer, give or receive bribes, or accept improper payments to obtain new business, retain existing business or secure any advantage and will not permit others to do so on its behalf.

 

Dealings with Company Securities

The Group's Securities Dealing Policy is binding on all Directors, Senior Executives and Employees who are in possession of "inside information". All such persons are prohibited from trading in the Company's securities if they are in possession of 'inside information'.  Subject to this condition and trading prohibitions applying to certain periods, trading is permissible provided the relevant individual has received the appropriate prescribed clearance.  The Board considers that the Share Dealing Code is in compliance with the MAR, AIM, ASX and JSE requirements, and continues to meet the requirements of the Board.

 

Primary objective

The Group's primary objective is to leverage into resource projects to provide a solid base in the future from which the Group can build its resource business and create wealth for shareholders. The Group's operations are subject to various environmental laws and regulations under the relevant government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for the Group to achieve.

 

In pursuing this objective, the Group manages its business operations consistent with its Code of Conduct.

 

Market Disclosure

 

The Company is subject to parallel obligations under the AIM Rules and the Market Abuse Regulation, in addition to the ASX Listing Rules and the JSE Regulations, in relation to the disclosure and control of price sensitive information. The Company has obligations under corporate and securities laws and stock exchange rules to keep the market fully informed of information which may have a material effect on the price or value of Group's securities and to correct any material misrepresentation, mistake or misinformation in the market.

 

The Group takes its continuous disclosure obligations seriously and requires that all of its Directors, Officers, Employees and Contractors observe and adhere to the Group's procedures and policies governing compliance with all laws pertaining to continuous disclosure, tipping and insider trading.

 

The Company has a formal Disclosure Policy ("Disclosure Policy") addressing its continuous disclosure obligations and arrangements.  The objectives of the Disclosure Policy are to ensure that:

· The communications of the Group with the public are timely, factual and accurate and broadly disseminated in accordance with all applicable legal and regulatory requirements;

· Non-publicly disclosed information remains confidential; and

· Trading of the Group's securities by directors, officers and employees of the Company and its subsidiaries remains in compliance with applicable securities laws.

 

The Disclosure Policy also provides guidance to all Directors, Officers, Employees and Contractors of the Group of their responsibilities regarding their obligation to preserve the confidentiality of undisclosed material information while ensuring compliance with laws respecting timely, factual, complete and accurate continuous disclosure, price sensitive or material information, tipping and insider trading.

 

The Disclosure Policy further covers disclosures in documents filed with the securities regulators and stock exchanges and written statements made in the Group's annual and quarterly reports, news releases, letters to shareholders, presentations by Senior Management and information contained on Kore Potash's website and other electronic communications. It extends to oral statements made in meetings and telephone conversations with analysts and investors, interviews with the media as well as speeches, press conferences and conference calls.

 

All announcements are approved by the Board, or approved delegates, prior to release with each announcement indicating the relevant approving party.  The Board is circulated copies of announcements released to ensure they remain informed of market releases at all times.

 

If there is misuse of price sensitive or material information not yet disclosed to the market by trading or breach in confidentiality, extremely serious penalties may apply to the individual or individuals involved.

 

 

Shareholders

 

The Group places considerable importance on effective communications with its shareholders. The Group's communication strategy requires communication with shareholders and other stakeholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Group. The strategy provides for the use of systems that ensure a regular and timely release of information about the Group is provided to shareholders.

 

The Company's website contains a separate section titled "Investors" which contains key documents for its investors.  The website also provides:

· Information about the Company;

· An overview of the Group's current projects;

· Copies of its half year reports and annual reports;

· Copies of quarterly cash flow reports and review of operations;

· Investors' presentations; and

· Copies of its announcements to the stock exchanges.

 

 

The Company's share register is maintained electronically by Computershare. Their contact details are disclosed in the Corporate Directory of the Annual Report on page 3 .

 

The Board encourages full participation of shareholders at the Company's AGM to ensure a high level of accountability, transparency and understanding of the Group's strategy and goals. The Company provides information in its notice of meeting that is presented in a clear, concise and effective manner. With the Company listed on three exchanges, it aims, where possible, to hold general meetings at a reasonable time for all shareholders. Shareholders are provided with the opportunity at these meetings to ask questions in relation to each resolution before they are put to a vote and discussion is encouraged by the Board.  The Company intends to conduct all voting at general meetings via a poll, as was the case for the two shareholder meetings held during 2020.

 

One of the joint company secretaries, the Company's external auditor and the Registrars are in attendance at general meetings of the Company to assist with any queries shareholders may have.

 

The Corporate Governance Report was approved by the Board of Directors on 30 March 2021 and is signed on its behalf by

 

 

 

 

___________________________  _______________________________ 


 

 

David Hathorn    Brad Sampson

Non-Executive Chairman    Chief Executive Officer


 



 

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF KORE POTASH PLC

 

Opinion on the financial statements

In our opinion:

the financial statements give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 December 2020 and of the Group's loss for the year then ended;

the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006;

the Parent Company financial statements have been properly prepared in accordance with international accounting standards in conformity with the requirements of the  Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006; and

the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

 

We have audited the financial statements of Kore Potash plc (the 'Parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2020 which comprise the consolidated and parent company statements of profit or loss and other comprehensive income, the consolidated and parent company statements of financial position, the consolidated and parent company statements of changes in equity, and the consolidated and parent company statements of cash flows, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006, and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

 

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to Note 1(b) to the financial statements, which indicates that the Group is reliant on future fund raisings to fund its exploration and development activities and fulfil its working capital requirements as they fall due. As stated in Note 1(b), these events or conditions, along with other matters as set out in Note 1(b) indicate that a material uncertainty exists that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

 

Because of the judgements made by management, and the significance of this area, we have determined Going Concern to be a key area of focus for the audit. As described in note 1(b), management have prepared cash flow forecasts for the period to 31 December 2022, which indicate that the Group are reliant on future fundraising activity during 2021 in order to meet its liabilities as they fall due during this period. Our evaluation of the Directors' assessment of the Group and the Parent Company's ability to continue to adopt the going concern basis of accounting and in response to the key audit matter included:

We obtained management's cash flow forecasts for the period to 31 December 2022. We assessed the key underlying assumptions, including forecast levels of expenditure and exploration costs used in preparing these forecasts. In doing so, we considered factors such as actual performance against budget and third party contracted commitments.

We performed sensitivity analysis in respect of the key assumptions underpinning the forecasts, including operational costs, levels of exploration expenditure and assessed the level of cash required under such sensitivities.

We have discussed and gained an understanding of Management's plans to raise funds in the short term as well as the longer term financing plans for the assets and considered the impact of COVID-19 (Coronavirus) on these plans.

We assessed the appropriateness of the disclosures included in the financial statements.

 

In relation to the Parent Company's reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors' statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting.

 

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.

 

Overview

 

Coverage

100% (2019: 100%) of Group total assets

Key audit matters


2020

2019

Going concern

Carrying value of exploration and evaluation ("E&E") assets

Materiality

Group financial statements as a whole

US$2million (2019 - $1.6million) based on 1.25% of Total Assets (2019 - 1.0% of Total Assets)

 

An overview of the scope of our audit

Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.

 

The Group's principal operations are located in the Republic of Congo. In approaching the audit, we considered how the Group is organised and managed. We assessed there to be four significant components, being the Parent Company and the three exploration entities in the Republic of Congo: Sintoukola Potash S.A., Dougou Potash Mining S.A. and Kola Potash Mining S.A. The remaining components were considered non-significant to the Group audit and we performed analytical review procedures in respect of these.

 

A full scope audit for Group reporting purposes was performed on the significant components based in the Republic of Congo by a local BDO member firm. The group audit team performed a full scope audit of the Parent Company, specific procedures over key risk areas including the Key Audit Matters and the audit of the consolidation.

 

Our involvement with component auditors

For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the Group financial statements as a whole. Our involvement with component auditors included the following:

Detailed Group reporting instructions were sent to the component auditors, which included the significant areas to be covered by the audits (including areas that were considered to be key audit matters), and set out the information to be reported to the Group audit team.

The Group audit team was actively involved in the direction of the audits performed by the component auditor for Group reporting purposes, along with the consideration of findings and determination of conclusions drawn.

The Group audit team reviewed the component auditor's work papers remotely, attended clearance meetings for the significant components and engaged with the component auditors during their fieldwork and completion phases.

 

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section above, we have determined the matter described below to be a key audit matter:

 

 

 

 

 

 

Key audit matter

Carrying value of exploration and evaluation ("E&E") assets

At 31 December 2020, the Group held E&E assets on its balance sheet as detailed in in note 7.

 

As detailed in notes 1(q), there are judgments and inherent uncertainties around the recoverability of exploration and evaluation assets. Management and the Board are required to assess whether there are any potential impairment triggers, which would indicate that the carrying value of an asset at 31 December 2020 may not be recoverable.

 

Given the materiality of the E&E assets in the context of the Group's statement of financial position and the significant judgement involved in making the assessment of whether any indicators of impairment exist we consider this to be a key

audit matter.

How our audit addressed the key audit matter

We reviewed and challenged management's impairment assessment which was carried out in accordance with relevant accounting standards in order to determine whether there were any indicators of impairment. Our specific audit

procedures performed in this regard included:

Checking that there is an ongoing plan to develop the licence areas and that the licences remain valid.

The verification of license status, in order to check the legal title.

Meetings with Management in order to understand the future plans for the assets.

Reviewing exploration activity to assess whether there was any evidence from exploration results to date which would indicate a potential impairment

Obtaining approved budgets and minutes of Board meetings to check that the Group intends to continue to explore specific license's by including future expenditure.

Obtaining an understanding of Management's expectation of commercial viability, reviewing any available technical documentation, including the Kola Definitive Feasibility Study and DX Scoping Study, in order to support this expectation and discussing results and operations.

Reviewing correspondence with the Government and holding discussions with Operational Management regarding ongoing updates to the Group's exploration licences.

 

We assessed the appropriateness of the disclosures included in the financial statements with regards to the requirements of relevant accounting standards.

Key Observations

We found management's assessment of the carrying value of E&E assets to be acceptable and appropriately disclosed.

 

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.  We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

 

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

 

Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:


Group financial statements


31-Dec-20

31-Dec-19

Materiality

US$2million

US$1.6million

Basis for determining materiality

1.25% Total Assets

1.0% Total Assets

Rationale for the benchmark applied

Materiality was based on 1.25% of total assets. We consider total assets to be the most appropriate basis for materiality given the Group is in the exploration and development stage.

Materiality was based on 1.0% of total assets. We consider total assets to be the most appropriate basis for materiality given the Group is in the exploration and development stage.

Performance materiality

US$1.5million

US$1.0million

Basis for determining performance materiality

75% of Group Materiality

60% of Group Materiality


Parent company financial statements


31-Dec-20

31-Dec-19

Materiality

US$1.8million

US$1.44million

Basis for determining materiality

Set at 90% of Group materiality

Rationale for the benchmark applied

Set at 90% (2019:  90%) of Group materiality given the assessment of the components aggregation risk.

 

Performance materiality

US$1.35million

US$0.864million

Basis for determining performance materiality

75% of parent company Materiality

60% of parent company Materiality

 

The level of performance materiality was set after considering a number of factors including the expected value of known and likely misstatements and managements attitude towards proposed misstatements.

 

Component materiality

We set materiality for each component of the Group based on a percentage of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality was audited to a lower level of materiality ranging from $0.2m to $1.8m. In the audit of the components, we further applied performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.

 

Reporting threshold 

We agreed with the Audit Committee that we would report to them all individual audit differences in excess of US$0.04m (2019 - US$0.03m).  We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.

 

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

 

We have nothing to report in this regard.

 

Corporate governance statement

As the Group has voluntarily adopted the UK Corporate Governance Code 2018 we are required to review the Directors' statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent Company's compliance with the provisions of the UK Corporate Governance Statement specified for our review.

 

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.

 

Going concern and longer-term viability

 

· The Directors' statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified (set out on page 47-48; and

· The Directors' explanation as to its assessment of the entity's prospects, the period this assessment covers and why the period is appropriate (set out on page 47-48).

 

Other Code provisions

 

 

· Directors' statement on fair, balanced and understandable set out on page 44-45;

· Board's confirmation that it has carried out a robust assessment of the emerging and principal risks (set out on page 45);

· The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems (set out on pages 53-54); and

· The section describing the work of the Audit Committee (set out on pages 53-45).

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. 

 

Strategic report and Directors' report

 

In our opinion, based on the work undertaken in the course of the audit:

· the information given in the Strategic report and the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

· the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.

 

In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors' report.

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

 

· adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or

· the Parent Company financial statements are not in agreement with the accounting records and returns; or

· certain disclosures of Directors' remuneration specified by law are not made; or

· we have not received all the information and explanations we require for our audit.

 

 

Responsibilities of Directors

As explained more fully in the statement of Directors' responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the financial statements, the Directors are responsible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

Extent to which the audit was capable of detecting irregularities, including   fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

 

· Holding discussions with management and the audit committee to understand the laws and regulations relevant to the Group and company. These included elements of financial reporting framework, mining regulations and environmental regulations.

· We assessed the susceptibility of the Group's financial statements to material misstatement, including how fraud might occur by meeting with management from various parts of the business to understand where it is considered there was a susceptibility of fraud.

· We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, and component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

· Holding discussions with management and the audit committee to consider any known or suspected instances of non-compliance with laws and regulations or fraud identified by them;

· Testing the appropriateness of journal entries made throughout the year by applying specific criteria to select journals which may be indicative of possible irregularities and fraud;

· Performing a detailed review of the Group's year-end adjusting entries and testing any that appear unusual as to nature or amount to supporting documentation;

· Assessing the judgements made by management when making key accounting estimates and judgements, and challenging management on the appropriateness of these judgements; and

· Reviewing minutes from board meetings of those charges with governance to identify any instances of non-compliance with laws and regulations.

 

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

 

A further description of our responsibilities is available on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.

 

Use of our report

This report is made solely to the Parent Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

 

 

 

Matt Crane

For and on behalf of BDO LLP, Statutory Auditor

London, United Kingdom

30 March 2021

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).



 

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2020

 



Parent

Consolidated Entity

 

Note

 

Dec 2020

Restate

Dec 2019

 

Dec 2020

 

Dec 2019



USD

USD

USD

USD







Directors' remuneration


(550,509)

(572,961)

(834,760)

(828,445)

Equity compensation benefits

2(a)

(176,388)

(907,102)

(176,388)

(907,102)

Salaries, employee benefits and consultancy expense

2(c)

(1,081,425)

(588,273)

(1,150,649)

(1,687,419)

Credit loss provision

5

1,792,612

(16,375,499)

-

-

London listing and re-domicile expenses


(68,374)

(47,839)

(68,374)

(49,675)

Administration expenses

2(b)

(1,010,164)

(1,637,942)

(985,438)

(1,245,041)

Fair value change in derivative financial liability


1,027

502,345

1,027

502,345

Interest income


28,083

32,898

30,116

52,936

Interest and finance expenses


(6,167)

(6,216)

(10,204)

(15,393)

Net realised and unrealised
foreign exchange gains


48,378

7,070

42,800

(682)







Loss before income tax expense


(1,022,927)

(19,593,519)

(3,151,870)

(4,178,476)







Income tax

3


-

7,698

(24,276)

Loss for the year


(1,022,927)

(19,593,519)

(3,144,172)

(4,202,752)







Other comprehensive income/(loss)






Items that may be classified subsequent to profit or loss






Exchange differences on translating foreign operations


-

-

11,321,754

(3,104,632)

Other comprehensive income/(loss) for the year


-

-

11,321,754

(3,104,632)



 




TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE YEAR


(1,022,927)

(19,593,519)

8,177,582

(7,307,384)







Loss attributable to:






Owners of the Company


(1,022,927)

(19,593,519)

(3,141,042)

(4,204,007)

Non-controlling interest


-

-

(3,130)

1,255



(1,022,927)

(19,593,519)

(3,144,172)

(4,202,752)







Total comprehensive (loss)/income attributable to:






Owners of the Company


(1,022,927)

(19,593,519)

8,180,712

(7,308,639)

Non-controlling interest


-

-

(3,130)

1,255



(1,022,927)

(19,593,519)

8,177,582

(7,307,384)







Basic and diluted loss per share (cents per share)

22

(0.04)

(1.68)

(0.17)

(0.36)







 

The accompanying notes form part of these financial statements.



STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020









Parent

Consolidated Entity


Note

 

Dec 2020

Restated

Dec 2019

 

Dec 2020

 

Dec 2019



USD

USD

USD

USD

CURRENT ASSETS






Cash and cash equivalents

4

5,443,551

7,046,089

5,555,000

7,578,727

Trade and other receivables

5

119,085

180,388

225,044

358,954

Right-of-use-asset

6(a)

-

-

-

42,278

 

TOTAL CURRENT ASSETS


 

562,636

7,226,477

 

5,780,044

 

7,979,959







NON CURRENT ASSETS






Trade and other receivables

5

147,741,819

141,887,553

99,436

198,432

Property, plant and equipment

6

-

-

542,418

560,711

Exploration and evaluation expenditure

7

-


172,025,750

156,019,360

Investment in subsidiary

8

69

69

-

-

TOTAL NON CURRENT ASSETS


147,741,888

141,887,622

172,667,604

156,788,503







TOTAL ASSETS


153,304,524

149,114,099

178,447,648

164,758,462)







CURRENT LIABILITIES






Trade and other payables

9

358,841

2,894,748)

786,020

2,968,093

Lease liability

6(b)

-

-

-

55,582

Derivative financial liability


26

1,053

26

1,053

TOTAL CURRENT LIABILITIES


358,867

2,895,801

786,046

3,024,728







TOTAL LIABILITIES


358,867

2,895,801

786,046

3,024,728







NET ASSETS


152,945,657

146,218,298

177,661,602

161,733,734







EQUITY






Contributed equity - Ordinary Shares

10

2,451,768

1,541,253

2,451,768

1,541,253

Reserves

11

169,598,292

163,740,876

238,515,593

221,336,423

Accumulated losses


(19,104,403)

(19,063,831)

(62,743,176)

(60,584,489)

EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY


 

152,945,657

 

146,218,298

 

178,224,185

 

162,293,187

Non-controlling interests

11(f)

-

-

(562,583)

(559,453)

TOTAL EQUITY


152,945,657

146,218,298

177,661,602

161,733,734

 

The accompanying notes form part of these financial statements.

 

These Financial Statements for Kore Potash plc, registered number 10933682, were approved by the Board of Directors on 30 March 2021 and were signed on its behalf by:

___________________________  _______________________________ 


 

 

David Hathorn    Brad Sampson

Non-Executive Chairman    Chief Executive Officer


STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

 

Consolidated Entity

 

 

 


Ordinary Shares

Share-Based Payments Reserve

Share Premium Reserve

Foreign Currency Translation Reserve

Merger Reserve

Accumulated Losses

Equity Attributable to the Shareholders of Kore Potash plc

NCI

Total

Equity


Note

USD

USD

USD

USD

USD

USD

USD

USD

USD

Balance at
1 January 2019


860,852

12,161,843

13,054,936

(15,310,945)

203,738,800

(59,331,800)

155,173,686

(560,708)

154,612,978












Loss for the period

 


-

-

-

-

(4,204,007)

(4,204,007)

1,255

(4,202,752)

Other comprehensive loss for the year


-

-

-

(3,104,632)

-

(3,104,632)

(3,104,632)

Total comprehensive (loss)/income for the year


-

-

-

(3,104,632)

-

(4,204,007)

(7,308,639)

1,255

(7,307,384)












Transactions with shareholders











Transfer of previously lapsed options

11(a)

-)

(2,951,318)

-)

-

-

2,951,318

-

-

-

Share Issue

10

680,401)

-)

12,923,250)

-

-

-

13,603,651

-

13,603,651

Share issue costs


-)

-)

(404,594)

-

-

-

(404,594)

-

(404,594)

Share based payments

11(a)

-)

1,229,083

-)

-

-

-

1,229,083

-

1,229,083

Balance at 31 December 2019


1,541,253 )

10,439,608

25,573,592

(18,415,577)

203,738,800 )

(60,584,489)

162,293,187

(559,453)

161,733,734












Loss for the period


  -

-

-

-

-

(3,141,042)

(3,141,042)

(3,130)

(3,144,172)

Other comprehensive loss for the year


-

-

-

11,321,754

-

-

11,321,754

-

11,321,754

Total comprehensive (loss)/income for the year


-

-

-

11,321,754

-

(3,141,042)

8,180,712

(3,130)

8,177,582












Transactions with shareholders











Transfer of previously lapsed options

11(a)


(127,825)


-

-

127,825

-

-

-

Conversion of performance rights

11(a)

3,508

(212,111)

-

-

-

212,111

3,508

-

3,508

Cancellation of performance rights

11(a)


(642,419)




642,419

-

-

-

Share issues

10

  886,217


6,633,407



-

7,519,624

-

7,519,624

Share issue costs




(281,199)



-

(281,199)

-

(281,199)

Share based payments

11(a)

20,790

409,283

78,280


-

-

508,353

-

508,353












Balance at 31 December 2020


2,451,768

9,866,536

32,004,080

(7,093,823)

203,738,800

(62,743,176)

178,224,185

(562,583)

177,661,602

 

The accompanying notes from pages 85 to 124 form part of these financial statements.

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2020

 

Parent

 

 

 


Ordinary Shares

Share Based Payments Reserve

Share Premium Reserve

Merger Reserve

Reorganisation

Reserve

Accumulated Losses

Total

Equity


Note

USD

USD

USD

USD

USD

USD

USD

Balance at 31 December 2018


860,852

12,161,843

13,054,936

203,738,800

(76,011,124)

(2,421,631)

151,383,676)










Loss for the year


-

-

-

-

-

(19,593,518)

(19,593,518)

Total comprehensive (loss)/income for the year


-

-

-

-

-

(19,593,518)

(19,593,518)










Transactions with shareholders









Transfer of previously lapsed options

11(a)

-

(2,951,318)

-

-

-

2,951,318

-

Share issue

10

680,401

-

12,923,250

-

-

-

13,603,651

Share issue costs


-

-

(404,594)

-

-

-

(404,594)

Share based payments

11(a)

-

1,229,083

-

-

-

-

1,229,083

Balance at 31 December 2019


1,541,253

10,439,608

25,573,592

203,738,800 )

(76,011,124)

(19,063,831)

146,218,298










Loss for the year


 

-

-


-

(1,022,927)

(1,022,927)

Total comprehensive (loss)/income for the year


-

-

-

-

-

(1,022,927)

(1,022,927)










Transactions with shareholders









Conversion of performance rights

11(a)

 

3,508

 

(212,111)

-

-

-

212,111

 

3,508

Transfer of previously lapsed options

11(a)


 

(127,825)

-