TIDMKRS
RNS Number : 1243F
Keras Resources PLC
06 July 2023
6 July 2023
Keras Resources plc ('Keras' or the 'Company')
Final Results
Keras Resources plc (AIM: KRS) announces its final results for
the year ended 31 December 2022.
Highlights
Utah - Diamond Creek Phosphate Mine ("Diamond Creek") - one of
the highest-grade organic phosphate mines in the US, a fully
integrated mine to market asset
-- 4,750 tons of phosphate were mined and delivered to the
laydown area at Diamond Creek in 2022
-- Total sales of 4,276 tons for the year to 31 December 2022
-- Key product developments for the balance of 2023 will include
completing research into including liquid organic product(s) with
higher phosphate ("P(2) O(5) ") availability into our portfolio,
and finalising the construction of granulator plant to produce
blended organic granulates;2023 summer mining season commencing in
July
-- 100% held subsidiary Falcon Isle Resources LLC ("Falcon
Isle") is currently operating profitably at the company level and
has commenced repaying loans made to it by Keras
Corporate
-- GBP1,950,000 (before costs) fundraising completed May 2022
-- At a general meeting held on 25 July 2022 a resolution was
passed consolidating the ordinary share capital on the basis of 1
new ordinary share of 1p for every 100 old ordinary shares of
0.01p. Following the passing of that resolution the number of
ordinary shares in issue was reduced to 79,735,731
-- Post year end Keras signed an agreement with the Republic of
Togo (the "State") relating to the Nayéga Manganese project
("Nayéga"), under which Keras agreed to transfer all its
intellectual knowledge on Nayéga to the State and provide advisory
and brokerage services to expedite the development of Nayéga and
the State paid Keras a cash consideration of $1,700,000 in July
2023
-- Board Changes
o Graham Stacey assumed the role as CEO on 1 June 2022
o Russell Lamming assumed the role as Non-Executive Chairman
from Brian Moritz on 1 September 2022
o Brian remains a Non-Executive Director and Company
Secretary
o Claire Parry joined the Board as an independent Non-Executive
Director on 1 September 2022
o Also on 1 September 2022 Dave Reeves, who was CEO for many
years following the Company's flotation, resigned from the Board to
concentrate on his role as managing director of Calidus Resources
Ltd in Australia
Graham Stacey, Keras Resources Chief Executive Officer,
commented, " Having acquired 100% of Falcon Isle in April, 2022 has
been a year of consolidation taking full management control of the
business and repositioning ourselves as a mining business in the
North American organic agricultural sector. The organic rock
phosphate segment space remains a niche component of the vast USA
agricultural and produce industry, but research broadly forecasts
the segment to grow at a consolidated annual rate in excess of 8%
in volume terms and 14% in USD terms which is the underlying reason
for our decision to acquire the outstanding 49% shareholding in
Falcon Isle.
Reporting a maiden profit for Falcon Isle in our first year of
ownership has been an incredibly rewarding result from a small but
very focussed team in Utah. We've demonstrated the fundamentals of
the business in its current form - producing sized dry products
only, but from industry engagements at trade shows and from
continuing communication with industry players we've learned that
there's a need for us to broaden our product range to include
liquid and blended granulated products - liquids to serve the
fertigation and hydroponic sectors, and granulates to align with
traditional fertilizer value chain in terms of distribution and
application. Testwork to produce a high available phosphate organic
liquid product is ongoing and we look forward to reporting on
developments in that segment. Having taken delivery of our
granulator plant at the end of 2021 we took the decision to pause
construction at our Spanish Fork site pending negotiations with
potential partners to construct the plant to produce specific
blended granulates rather than simply phosphate products which
again talks to the need for a more diverse product range as we
continue to gain traction in the organic market. I look forward to
reporting on our granulate strategy in the near future.
From a Group perspective, we believe that putting a line under
the uncertainty related to our investment in Togo was a positive
move and the cash received from our divestment underpins the
strategy of focussing the Group's activities in North America. Our
ongoing role in developing the Nayéga Mine with the Togolese State
will remain an important source of cash flow for the Group as we
continue to optimise and grow Falcon Isle in Utah.
Since the end of the year Kershner Grosso & Co ("Kershner
Grosso"), an asset management firm headquartered in Saratoga
Springs, NY, acquired a block of 10.03% of the shares in the
Company previously owned by First Uranium Corporation, and have
since acquired additional shares on the market bringing their
shareholding to 13.16%. It has been very pleasing to receive this
support from Kershner Grosso as long-term investors recognising the
future growth profile in the organic sector and we look forward to
building on the strong relationship we have with Chris Grosso and
his team going forward and delivering on our shared vision for the
sector.
Posting of Annual Report and Notice of AGM and General
Meeting
Copies of the Company's full Annual Report and Financial
Statements (the "Annual Report") will be made available to download
from the Company's w ebsite today at
https://kerasplc.com/results-and-reports/ and will also be posted
to shareholders on 7 July 2023 along with the notice of its Annual
General Meeting ("AGM") to be held at Coveham House, Downside
Bridge Road, Cobham KT11 3EP, on the 31(st) July 2023, a Proxy Form
and a letter detailing shareholders' option to receive electronic
communication from the Company going forward.
Suspension from trading
Shareholders should note that trading in the Company's ordinary
shares will remain suspended pending the publication of the Annual
Report and Accounts for the year ended 31 December 2022 on the
Company's website.
The Company will apply to have trading in its ordinary shares
lifted immediately once the Annual Report and Accounts have been
made available on the Company's website.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of Graham Stacey, Chief Executive Officer. This announcement
contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014.
**S**
For further information please visit www.kerasplc.com , follow
us on Twitter @kerasplc or contact the following:
Graham Stacey Keras Resources plc info@kerasplc.com
Nominated Adviser & Joint SP Angel Corporate Finance
Broker LLP
Ewan Leggat / Charlie Bouverat +44 (0) 20 3470 0470
Joint Broker Shard Capital Partners
Damon Heath / Erik Woolgar LLP +44 (0) 207 186 9900
Notes:
Keras Resources (AIM: KRS) wholly owns the Diamond Creek organic
phosphate mine in Utah, US. Diamond Creek is one of the
highest-grade organic phosphate deposits in the US and is a fully
integrated mine to market operation with in-house mining and
processing facilities. The operation produces a variety of organic
phosphate products that can be tailored to customer organic
fertiliser requirements.
The Company is focused on continuing to build market share in
the fast-growing US organic fertiliser market and build Diamond
Creek into the premier organic phosphate producer in the US.
chairman's statement
I am pleased to provide an update on our progress since the last
report and to set out our outlook for the business going
forward.
The main activity of the Group is now in progressing our organic
phosphate business in Utah, USA, where Keras increased its
ownership from 51% to 100% on 30 March 2022.
The Diamond Creek phosphate mine
The Diamond Creek phosphate mine, which is believed to be one of
the highest grade organic rock phosphate deposits in the US,
comprises an opencast operation located on an 840 acre Federal
Lease, and the Spanish Fork Processing Facility; both owned and
operated by Falcon Isle Resources LLC and Falcon Isle Holdings LLC
(collectively 'Falcon Isle'). Prior to the acquisition of the 49%
outside interest on 30 March 2022, Falcon Isle was a 51% subsidiary
of Keras during 2021, since which it has been a wholly owned
subsidiary. Keras now has full management control with Graham
Stacey also being appointed CEO of Falcon Isle where he can focus
his efforts on the development of that business.
Diamond Creek is located approximately 80km south-east of Salt
Lake City, and our focus going forward is to build the operation
into the premier high-grade organic phosphate producer in the US.
Our focus and target market is in supporting sustainable
agriculture and we are strong advocates for the benefits of
enhancing soil health and reducing the impact that synthetic
fertilisers have on water resources. Our organic phosphate
fertilizer products help farmers realise better crop growth and
yields, and reduce the soil degradation seen when farmers use
chemically manufactured fertilisers, while at the same time
reducing the carbon footprint associated with growing their
crops.
The mine is fully permitted, and the Spanish Fork processing
plant is close to infrastructure and ideally located to take
advantage of Salt Lake City's resources including labour, supplies,
industrial engineering and financial services. The integrated
mining and processing operation has compelling economics with a low
capex, low-intensity seasonal mining operation and our in-house
processing plant has flexibility to process a variety of organic
rock phosphate products throughout the year. The mined material
requires crushing, milling and bagging before being sold as
high-grade organic rock phosphate fertiliser - a 23% total
phosphorus pentoxide ('P(2) 0(5) ') premium product and importantly
with minimum 12% available P(2) 0(5) which is significantly higher
than our competitors in the US. Falcon Isle is currently
investigating ways to expand its product offering and potential
customer base by offering both granulated and liquidised
fertilizers.
The mine has a pre-stripped area with production drilling
information delineating approximately 2 years of planned production
still in-situ. However, we believe there is significant scope to
increase the current life of mine at Diamond Creek with historic
"surface mineable resources" representing in excess of 60 years of
production.
In 2022, 4,750 tons of phosphate were mined and delivered to the
laydown area at Diamond Creek. Sales totalled 4,276 tons of
phosphate for the year. Since Keras took control of the marketing
function and with both the mining and processing facilities now
operating as planned developing market share will be our primary
focus for the next two years. Production rhythm is key to the
supply of both consistent quantity and quality products which
Keras's operational control has now enabled.
A key component of our marketing effort will be growth tests
across a range of crops and soil types. This process is planned to
run for the balance of 2023 and will provide focussed market
feedback to support of our product use across crop types, regions
and planting seasons.
We are now looking forward to commencing our mining season at
Diamond Creek which takes place during the summer season from July
to October 2023, while the mine site is free of snow.
Falcon Isle is currently operating profitably at the company
level and has commenced repaying loans made to it by Keras.
Nayéga manganese mine / Togo
The Group's interests in Togo are accounted for at 31 December
2022 as assets held for sale. Keras holds an 85% interest in
Société Générale de Mines ("SGM"), which owns the Research Permits
for the Nayéga manganese project ("Nayéga") in the Republic of Togo
("State").
On 17 May 2023 an agreement was signed between Keras and the
State whereby it was agreed that Nayéga is a Togolese strategic
asset and the exploitation permit will be awarded to Société
Togolaise de Manganèse, a Togolese incorporated company 100% owned
by the State ("STM") and Keras will no longer pursue the Nayéga
exploitation permit. Keras will transfer all its intellectual
knowledge on Nayéga to the State and provide advisory and brokerage
services to fast track the development of Nayéga.
The State agreed to pay Keras a cash consideration of US$1.7m,
which amount has now been received by Keras, and thereafter Keras
will be paid advisory fees of 1.5% of gross revenue for 3 years and
brokerage fees of 6.0% of gross revenue for the lesser of 3.5 years
or 900,000 tonnes of beneficiated manganese ore produced and sold
from Nayéga.
Financial review
The Consolidated Statement of Comprehensive Income for the year
shows a loss of GBP847,000 (15 months to 31 December 2021 - loss
GBP1,948,000).
The loss for the year includes costs relating to Togo. The
carrying value of assets relating to the Nayéga mine at 31 December
2022 is materially equal to their estimated initial disposal value
amounting to $1.7m, after allowing for costs of the sale. No amount
is included in respect of the value of future income receivable
from Nayéga.
Also included in the consolidated loss is a severance payment of
$340,000 payable to the previous CEO of Falcon Isle.
In May 2022 Keras raised GBP1,950,000 (before costs) by an issue
of new ordinary shares. These funds were used for the first tranche
of US$800,000 of the cost of acquiring the former minority interest
in Falcon Isle, including loans owed to the vendor, and for general
working capital. The second tranche of $800,000, plus $240,000 of
the severance payment referred to above, has been paid from the
$1.7m received from the Republic of Togo. As the payment was made
after 1 July 2023 there was a technical default for late payment,
which default has been remedied within the 30 day period provided
for in the agreement.
At a general meeting held on 25 July 2022 a resolution was
passed consolidating the ordinary share capital on the basis of 1
new ordinary share of 1p for every 100 old ordinary shares of
0.01p. Following the passing of that resolution the number of
ordinary shares in issue was reduced to 79,735,731.
Directors and Management
On 1 June 2022 Graham Stacey took over the role of Chief
Executive Officer from me, and I moved into the role of
Non-Executive Director.
On 1 September 2022, I took over from Brian Moritz as
Non-Executive Chairman. Brian remains a Non-Executive Director and
Company Secretary, and will continue to provide valuable oversight
of the Company's finances.
At the same date Claire Parry joined the Board as an independent
non-executive director. I would like to welcome Claire on behalf of
myself and my colleagues.
Also on 1 September 2022 Dave Reeves, who was CEO for many years
following the Company's flotation, resigned from the Board to
concentrate on his role as managing director of Calidus Resources
Ltd in Australia. I would like to thank Dave for his dedicated work
over the years and wish him well for the future.
Outlook
With the securing of 100% ownership of our high-grade organic
phosphate Diamond Creek mine, drawing a line under the uncertainty
related to Nayéga and securing an agreement with the Togolese State
whereby the $1.7m cash payment and ongoing cashflows for the next 3
years will further underpin the cashflow generative Diamond creek
operation, we believe the Company is excellently positioned to
deliver into the growing North American organic agricultural
sector. This sector is underpinned by the macro-economic tailwinds
of the global fertiliser markets, and we remain bullish on our
premium phosphate product and our position as we continue to build
market share.
Plans for expansion to broaden our product mix are underway and
we continue to negotiate new offtake agreements with our repeat
customers. The construction of a downstream granulator plant is
planned for 2023 to allow us to further expand the range of our
products from five sized dry products to include two sized blend
granulates which will attract a price premium in markets that we
are not currently supplying. Now that we are fully in charge of
operations the Directors are confident that Falcon Isle will be an
increasingly profitable and valuable asset for the Group, and we
look forward to updating our shareholders on our progress as we
continue to ramp up production and build our position and market
share of the fast-growing US organic phosphate market.
Finally, I would like to take this opportunity to thank my
colleagues on the Board and our management team for their hard
work, and shareholders for their continuing support.
Russell Lamming
Chairman
5 July 2023
STRATEGIC REPORT
Having acquired 51% in Falcon Isle Resources LLC in December
2020, we reported on the acquisition of the remaining 49% in Falcon
Isle on 30 March 2022 - a firm commitment to the Company's strategy
of delivering growth from Falcon Isle's Diamond Creek Mine and
downstream processing assets and, in time, from other assets in the
US which we will look to evaluate in terms of their synergies with
commodities contributing to a sustainable future.
The year to 31 December 2022 was therefore one of consolidation
- building on existing client relationships and introducing our
PhosAgri brand to prospective clients at trade shows. To this end
we attended the Organic Growers Summit in Monterey on California's
west coast and the World Ag Expo in Tulare California, both pivotal
to the agricultural sector in California's Central Valley. Two key
take aways from these events revolved around the sector's demand
for both liquid and granular organic products, each aimed directly
at improving phosphate availability from organic rock phosphate and
therefore improved return on organic fertilizer purchase for
organic growers. While sales of our existing range of dry sized
products improved markedly from 2021 (2,197t) to 2022 (4,276t), we
recognise that granulates and solubilised products will represent a
material component of the organic sector demand going forward.
To this end, having acquired and taken delivery of a granulator
plant to our Spanish Fork facility during 2022 we are in
discussions with two potential partners to construct the plant
off-site which will give us and our partner the ability to produce
a range of bespoke granulated organic fertiliser blends rather than
simply a phosphate granule which would limit our market options. A
site selection decision is expected during the second half of 2023
as the feasibility of the sites are evaluated in terms of bulk
infrastructure supply (power, water and natural gas), zoning to
support long-term production and proximity to source materials and
downstream markets.
With regard to producing liquid products, we have four testwork
processes underway to progress the solubilising and/or
microbial/bacterial digestion of our finer 100# or 350# products
into liquid products which can be used in liquid blends in
fertigation (drip fed irrigation) and hydroponic applications. The
application of liquid organic products at higher available
phosphate (P(2) O(5) ) (testwork presented to date suggests
potential for >20% from our micronized 350# product) ensures
quicker absorption, provides for tighter quality control, reduces
losses in the application processes and provides us access to a
rapidly growing indoor controlled environment agricultural ('CEA')
sector.
These opportunities are exciting developments for us and as a
historically mineral resources/mining business we look forward to
researching additional product augmentation opportunities as we
learn more about the organic agricultural sector. Each product
development will broaden our market reach, to grow annual sales to
enforce our strategy to enhance shareholder value through
broadening our product mix and building market share for our
products within the North American organic fertilizer market.
Another meaningful operational improvement has been the
centralisation of all our Falcon Isle crushing and milling
operations at our Spanish Fork site. This will continue to reduce
operating costs by eliminating unnecessary ore transport between
sites previously established for different crushing and/or milling
operations. Value engineering initiatives will continue to
streamline operations and rationalise costs to ensure consistent
product quality and volumes, all aimed at increasing margins.
In the longer-term, enhancing value of that asset will involve
both organic expansion as well as identifying value-accretive
projects/businesses with natural synergies to increase scale and to
add value to the Company, ultimately to build the operation into
the premier organic phosphate producer in the US.
Additional future value enhancements include developing
opportunities around carbon sequestration and the associated carbon
credits. Diamond Creek's organic phosphate products have the
potential to tap directly into this rapidly growing market and the
Company is looking at developing and enhancing the value of this
aspect of its portfolio and in-turn generate greater returns for
shareholders.
The business model has established the Company as an
increasingly efficient, high-quality and low-cost producer direct
into the North American fertiliser market.
As noted in the Chairman's Statement our Togolese asset, which
was being held for sale as at 31 December 2022, was sold on 18 May
2023, although we expect to generate income in Togo for at least
the next three years . From the Company's point of view disposing
of SGM is consistent with our strategy to deliver shareholder value
by concentrating our efforts in the US.
In exploring and developing mines to exploit mineral deposits,
the Group accepts that not all its exploration will be successful
but also that the rewards for success can be high. It therefore
expects that its shareholders will be invested for potential
capital growth, taking a long-term view of management's good track
record in mineral discovery and development. The Directors have
continued to invest in the Company and currently hold approximately
9.04% of the issued shares in Keras, after allowing for the
substantial fund raisings since the period end. We believe this
stake provides further evidence of the Board's belief in and
commitment to its strategy.
To date, the Group has financed its activities through equity
raisings. As the Group's projects become more advanced, the Board
will seek mining and/or offtake finance and may also investigate
strategic opportunities to obtain funding for projects from future
customers via pre-payments, royalties, and other marketing
arrangements.
Mining projects
United States
Keras acquired an interest in Falcon Isle, holder of the Diamond
Creek phosphate mine, in July 2020, and increased its interest to
51% in December 2020. Keras acquired the outstanding 49% in March
2022. The mine is situated approximately 80km SSE of Salt Lake
City, Utah. Diamond Creek is a fully permitted, high-grade direct
shipping ore ('DSO'), low capex organic phosphate mine, which has
significant historical estimated in-situ tonnage (mineral resources
have not been classified according to modern International
Reporting Standards) with sufficient phosphate ore exposed in-situ
to provide for the 2023 and 2024 mining seasons before any
overburden stripping is required. The phosphate mineralisation is
concentrated in the sedimentary shale beds of the Meade Peak Member
of the Phosphoria Formation. The mineralised zone is c.3m thick and
averages 23% total P(2) O(5) with guaranteed available P(2) O(5) of
12%. Historic reports vary with "surface mineable resources"
ranging from 3.10Mt to 4.60Mt. At an internally estimated peak
production rate of 23.5ktpa, the opencast resources alone represent
a significant mine life.
The 2022 mining campaign was completed in October 2022 with a
total of 4,750 ore tons extracted from the mine. Primary crushing
during the reporting period was undertaken using a
contrctor-operated mobile crusher on the mine site, with downstream
processing conducted through a combination of contractor
toll-milling (producing 10mesh and -50mesh products) and Falcon
Isle owned milling plant comprising front-end feed, primary crush,
milling, ultra-fine dust extraction, 50lb and 1ton bagging circuits
to produce -100 mesh and -350 mesh powders. As noted previously a
granulation plant was procured and delivered to our Spanish Fork
site during the fourth quarter of 2021 with construction and
commissioning initially planned for the second half of 2022.
Pending discussions with potential partners in development of the
granulation side of our business, construction has been postponed
to enable us to conclude agreements relating to the feasibility of
proposed sites for the granulator plant. The construction phase of
the plant will be approximately 3 months post conclusion of the
feasibility assessment which is estimated to be concluded during
the fourth quarter of 2023. Our initial intention to construct the
granulator plant in a building adjacent to our milling plant in
Spanish Fork, however as we've established ourselves in the organic
agricultural sector it became apparent that we could extract
greater value from a blended granulate incorporating nitrogen,
phosphate, potassium as well as other minor valuable fertiliser
constituents. We therefore elected to investigate opportunities to
collaborate with partners to select sites to achieve this. These
discussions remain ongoing and we look forward to reporting on
finailisation of these discussions and construction progress.
Our products have received Organic Certification by all three
key certification agencies in the USA - California ('CDFA'),
Washington State ('WSDA') and the federal Organic Materials Review
Institute ('OMRI'). As a Direct Shipping Ore ('DSO') it requires no
chemical/synthetic upgrade processes which is the basis for our
organic certification. Our rock phosphate contains low heavy metal
impurities, significantly higher available P(2) O(5) than any other
organic rock phosphate in North America, and a calcium content of
>25%.
West Africa
Through the Company's 85% interest in the Nayéga manganese
project in Togo, Keras developed the asset through exploration, and
definitive feasibility study ('DFS') culminating in successful
trial mining during the first quarter of 2019. During the final
quarter of 2022 Keras was notified that the Togolese State had
intended to declare manganese, among other metals and minerals, as
strategic state assets and that a process would be implemented to
investigate how the State would take greater ownership and
participate in the development and operation of these assets.
Considering the investment made by Keras between 2012 and 2019
this clearly represented a departure from Togolese Mining Law as
well as the Mining Convention drafted between the parties as to how
the State would benefit from the Nayéga Mine. However, the Company
remained in ongoing discussions with the State to understand how
this State declaration would pan out. As was recently announced on
18 May 2023, Keras and the State entered into an agreement in terms
of which Keras would no longer pursue the granting of an
Exploitation Permit and that the State would establish a wholly
owned manganese holding vehicle - STM which would be responsible
for the development of all manganese assets within Togo.
Given the circumstances, Keras negotiated the disposal of all
historical Nayéga technical studies commissioned and funded by
Keras to the State. While it was not the ideal outcome for the
Company, the State acknowledged that the newly formed STM would
require a period of technical information and skills transfer.
Keras therefore entered into the agreement in good faith in the
knowledge that there would be an ongoing revenue stream for a three
year period post re-commencement of the mine. This in addition to a
USD1.7m cash payment for the technical studies will provide Keras
with an initial compensation for development expenditures as well
as an ongoing revenue stream for advisory and brokerage services
provided to STM meaning that Keras is not walking away from the
project and the State values Keras's institutional knowledge.
Keras is therefore satisfied with the outcome and will continue
to provide routine technical advisory and product sale brokerage
services to STM.
Sustainability
Keras is committed to responsible mining and upholding ESG best
practice across our business. We are similarly committed to our
stakeholders and are focused on looking to create value and
benefits for all whilst seeking to manage and mitigate the
potential impacts that our operations may have. We are focussed on
mining an essential resource that can contribute to a more
sustainable future and importantly sustainable and regenerative
agriculture. With the Diamond Creek mine we are running a simple
operation with only crushing & milling requirements and will
look to maintain our low carbon footprint. We are focused on
meeting our commitments across the ESG space and will continue to
be proactive in this area as we look to develop and sustain a
positive legacy.
Risk Management
The Board regularly reviews the risks to which the Group is
exposed and ensures through its meetings and regular reporting that
these risks are minimised as far as possible.
The principal risks and uncertainties facing the Group at this
stage in its development are:
Market Risk
Unlike marketing globally traded, indexed commodities into
international markets, growing market share within the niche
organic fertiliser market within North America presents risk in
terms of pricing and volume.
The Group has employed a head of marketing to develop and
implement a marketing strategy which will be a key focus area to
build market share. The business has a range of existing customers,
three of which are anchor clients having provided commitments to
purchase a pleasing base load of our planned annual production. Our
marketing strategy rollout will include presence at industry trade
exhibitions and conferences, as well as regular regional direct
contact visits with a comprehensive schedule of contacts within the
wholesale and distribution segments of the organic fertiliser
market. Our business model will largely be driven by uptake from
co-operative type clients with wide distribution networks, rather
than selling directly to farmers themselves.
Exploration Risk
The Group's business has been primarily mineral exploration and
evaluation which are speculative activities and whilst the
Directors are satisfied that good progress is being made, there is
no certainty that the Group will be successful in the definition of
economic mineral resources, nor that it will proceed to the
development of any of its projects or otherwise realise their
value.
The Group aims to mitigate this risk when evaluating new
business opportunities by targeting areas of potential where there
is at least some historical drilling or geological data
available.
Resource Risk
All mineral projects carry risk associated with defined grade
and continuity. Mineral resources and reserves are calculated by
the Group in accordance with accepted industry standards and codes
but are always subject to uncertainties in the underlying
assumptions which include geological projection and commodity price
assumptions.
The Group reports exploration targets, mineral resources and ore
reserves in accordance with internationally approved codes where
our operations/projects are located, which set minimum standards
for public reporting of mineral exploration results, mineral
resources and ore reserves.
Development Risk
Delays in permitting, financing and commissioning a project may
result in delays to the Group meeting development and/or production
targets. Changes in commodity prices can affect the economic
viability of mining projects and affect decisions on continuing
exploration activity
Mining and Processing Technical Risk
Notwithstanding the completion of metallurgical testwork, trial
mining and pilot studies indicating the technical viability of a
mining operation, variations in mineralogy, mineral continuity,
ground stability, ground water conditions and other geological
conditions may still render a mining and processing operation
economically or technically non-viable.
The Group has a small team of mining professionals experienced
in geological evaluation, exploration, financing and development of
mining projects. To mitigate development risk, the Group
supplements this from time to time with engagement of external
expert consultants and contractors.
Environmental Risk
Exploration and development of a project can be adversely
affected by environmental legislation and the unforeseen results of
environmental studies carried out during evaluation of a project.
Once a project is in production unforeseen events can give rise to
environmental liabilities.
As Keras undertakes mining operations, any disturbance to the
environment during this phase is required to be rehabilitated, with
specific requirements for closure and closure funding in accordance
with the prevailing regulations of the countries in which we
operate as well as to international best-practice.
Given the Group's size and scale it is not considered practical
or cost effective to collect and report data on carbon
emissions.
Financing & Liquidity Risk
The Group has had an ongoing requirement to fund its activities
through the equity markets and may in future need obtain finance
for further project development. There is no certainty such funds
will be available when needed. To date, Keras has managed to raise
funds primarily through equity placements despite the very
difficult markets that currently exist for raising funding in the
junior mining industry.
Political Risk
All countries carry political risk that can lead to interruption
of activity. Politically stable countries can have enhanced
environmental and social permitting risks, risks of strikes and
changes to taxation whereas less developed countries can have, in
addition, risks associated with changes to the legal framework,
civil unrest and government expropriation of assets.
Partner Risk
Whilst there has been no past evidence of this, the Group can be
adversely affected if joint venture or equity partners are unable
or unwilling to perform their obligations or fund their share of
future developments. Keras no longer operates with either equity or
joint venture partners having secured 100% of the Diamond Creek
project.
Bribery Risk
The Group has adopted an anti-corruption and bribery policy and
whistle blowing policy under the Bribery Act 2010. Notwithstanding
this, the Group may be held liable for offences under that Act
committed by its employees or subcontractors, whether or not the
Group or the Directors had knowledge of the commission of such
offences.
Financial Instruments
Details of risks associated with the Group's financial
instruments are given in Note 29 to the financial statements. Keras
does not utilise any complex or derivative financial
instruments.
COVID-19
Travel and shipping restrictions in place globally during 2021
had a direct impact on timing and cost of delivery of plant and
equipment to the USA. However, given recent developments the
Directors do not believe that Covid 19 will have a material effect
on the Company or its operations going forward.
Insurance Coverage
The Group maintains a suite of insurance coverage that is
appropriate for the Group and Company. This is arranged via a
specialist mining insurance broker and coverage includes public and
products liability, travel, property and medical coverage and
assistance while Group employees and consultants are travelling on
Group business. This is reviewed at least annually and adapted as
the Group's scale and nature of activities changes. Keras also has
Directors and Officers insurance in place.
Internal Controls and Risk Management
The Directors are responsible for the Group's system of internal
financial control. Although no system of internal financial control
can provide absolute assurance against material misstatement or
loss, the Group's system is designed to provide reasonable
assurance that problems are identified on a timely basis and dealt
with appropriately.
In carrying out their responsibilities, the Directors have put
in place a framework of controls to ensure as far as possible that
ongoing financial performance is monitored in a timely manner, that
corrective action is taken and that risk is identified as early as
practically possible. The Directors review the effectiveness of
internal financial control at least annually.
The Board, subject to delegated authority, reviews capital
investment, property sales and purchases, additional borrowing
facilities, guarantees and insurance arrangements.
The Board takes account of the significance of social,
environmental and ethical matters affecting the business of the
Group. At this stage in the Group's development the Board has not
adopted a specific policy on Corporate Social Responsibility as it
has a limited pool of stakeholders other than its shareholders.
Rather, the Board seeks to protect the interests of Keras'
stakeholders through individual policies and through ethical and
transparent actions.
The Group has adopted an anti-corruption and bribery policy and
a whistle blowing policy as stated previously.
Shareholders
The Directors are always prepared, where practicable and subject
to confidentiality under the AIM Rules, to enter into dialogue with
shareholders to promote a mutual understanding of objectives. The
Annual General Meeting provides the Board with an opportunity to
informally meet and communicate directly with investors.
Employees
The Group operates primarily through contractors.
Notwithstanding this, the Group engages its contract employees to
understand all aspects of the Group's business and seeks to
remunerate them fairly, being flexible where practicable. The Group
gives full and fair consideration to applications for employment
received regardless of age, gender, colour, ethnicity, disability,
nationality, religious beliefs, transgender status or sexual
orientation. The Group takes account of employees' interests when
making decisions and welcomes suggestions from employees aimed at
improving the Group's performance.
The Group currently operates in the USA and Togo. It recruits
locally as many of its employees and contractors as
practicable.
The Company has four directors, three are male and one is
female.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors,
consultants and suppliers is important to its business success and
seeks to build and maintain this goodwill through fair dealings.
The Group has a prompt payment policy and seeks to settle all
agreed liabilities within the terms agreed with suppliers.
Contractors are appointed based on a detailed assessment of their
capabilities, capacity and track record.
Health and Safety
The Board recognises that it has a responsibility to provide
strategic leadership and direction in the development of the
Group's health and safety strategy in order to protect all of its
stakeholders. The Group does not have a formal health and safety
policy at this time. This is re-evaluated as and when the Group's
nature and scale of activities expand.
Section 172 statement
The Directors believe they have acted in the way most likely to
promote the success of the Company for the benefit of its members
as a whole, as required by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long-term;
-- Act fairly between the members of the Company;
-- Maintain a reputation for high standards of business conduct;
-- Consider the interests of the Company's employees;
-- Foster the Company's relationships with suppliers, customers and others; and
-- Consider the impact of the Company's operations on the community and the environment.
The Company's operations and strategic aims are set out
throughout the Strategic Report and in the Chairman's Statement,
and relationships with stakeholders are also dealt with in the
Corporate Governance Statement.
Graham Stacey
Director
This Strategic Report was approved by the Board of Directors on
5 July 2023
THE BOARD
RUSSELL LAMMING
Non-Executive Chairman
Russell Lamming is a qualified geologist with an honours degree
in geology from the University of the Witwatersrand and a Bachelor
of Commerce in Economics from the University of Natal. Russell has
a broad range of experience including directorship of a South
African mining consultancy and precious metals analyst for a
leading international broker and was the CEO of AIM listed Chromex
Mining and Goldplat Plc. He has strong relationships in London and
internationally and has raised considerable funds for resource
companies over the years.
GRAHAM STACEY
Chief Executive Officer
Graham holds an honours degree in Mining Engineering from WITS
University in Johannesburg (1995), and an MBA from the WITS
Business School (2004) and a Mine Manager's Certificate of
Competency (2001). Graham has over 25 years' experience across a
range of commodities in the resources sector, including direct
operational management in the coal, PGE and chrome businesses in
South Africa, manganese in Togo and rock phosphate in the USA, as
well in a technical consulting role (2004-2008). He is a Competent
Person and Competent Valuator as a longstanding member of the South
African Institute of Mining and Metallurgy (SAIMM), and has wide
ranging experience in mine design, project execution, operations
and mineral resource management. He was previously a director of
AIM listed Chromex Mining. Following the acquisition of 100% of
Falcon Isle he has been appointed as CEO of that company.
BRIAN MORITZ
Non-Executive Director
Brian is a Chartered Accountant and former Senior Partner of
Grant Thornton, London. He formed Grant Thornton's Capital Markets
Team which floated over 100 companies on AIM under his
chairmanship. In 2004 he retired from Grant Thornton to concentrate
on bringing new companies to the market as a director. He
concentrates on mining companies, primarily in Africa, and was
formerly chairman of African Platinum PLC (Afplats) and Metal
Bulletin PLC as well as currently being chairman of several junior
mining companies.
CLAIRE PARRY
Non-Executive Director
Claire is a Chartered Accountant and a partner in the Canterbury
office of Azets, a top 10 UK accounting firm. With over 20 years in
the industry she specialises in the application of IFRS and
accounting and financial control generally for smaller quoted
companies, primarily in the natural resources sector.
CORPORATE GOVERNANCE STATEMENT
To the extent applicable, and to the extent able (given the
current size and structure of the Company and the Board), the
Company has adopted the Quoted Companies Alliance Corporate
Governance Code. Details of how the Company complies with the
principles contained in the Code are set out below.
No key governance matters have arisen since the publication of
the last Annual Report.
Taking account of the Company's size and nature, the Board
considers that the current Board is a cost effective and practical
method of directing and managing the Company. As the Company's
activities develop in size, nature and scope, the size of the Board
and the implementation of additional corporate governance policies
and structures will be reviewed. Further disclosures under the Code
are included on the Company's website.
Principle 1: Establish a strategy and business model which
promote long term value for shareholders.
The Company's strategy is to identify mining projects which can
be developed to create value and income for shareholders. In June
2017 this strategy was successfully demonstrated when the Company's
Australian gold exploration assets were floated on the Australian
Securities Exchange (ASX) with the name Calidus Resources Limited.
In November 2019 the Company's shares in Calidus were demerged and
transferred to the Company's shareholders by way of a capital
reduction.
The demerger has permitted the Board to examine other projects,
and in particular the Diamond Creek phosphate mine in Utah, USA,
where the Company has completed the staged acquisition of 100%
equity interest in March 2022. This is now the Company's main
project.
The Company had, for some years, been seeking to convert the
Research Permits held by its 85% owned subsidiary, Société Générale
de Mines SA, over the Nayéga manganese project in Togo, to an
Exploitation Permit. Since 31 December 2022 the Company has sold
its intellectual property and other assets relating to Nayéga to a
newly formed parastatal company, so that it no longer operates in
Togo but will continue to provide advisory and brokerage services
to the Togolese State.
Principle 4: Embed effective risk management, considering both
opportunities and threats, throughout the organisation.
The risks facing the Company are detailed in the Strategic
Report. The Board seeks to mitigate such risks so far as it is able
to do, but certain important risks cannot be controlled by the
Board.
In particular, products the Company is seeking to identify and
mine are traded globally at prices reflecting supply and demand
rather than the cost of production. So far as the Company is
concerned, the substantial decline in the price of iron ore
rendered two previous projects non-viable, both of which had
appeared to have substantial value on a discounted cash flow basis,
and they were abandoned.
While the Company will only invest in exploration projects where
there is a legal right to convert an initial exploration licence to
a mining licence, in practice it may be difficult to obtain such
conversion for political reasons. There is no legal way that the
Company can protect itself against this possibility.
Principle 5: Maintain the Board as well-functioning, balanced
team led by the chair.
The Board has been substantially changed during the year under
review, both as regards its composition and as regards the roles of
the individual directors. Brief CVs of the current directors are
set out separately in this Annual Report.
Previously the board comprised four founder directors, none of
whom qualified as independent as all had material shareholdings
resulting largely from their support of previous fund raisings.
Dave Reeves, who is resident in Western Australia, retired as a
non-executive director on 1 September 2022. He was replaced by
Claire Parry, who is considered to be an independent non-executive
director.
Graham Stacey, the CEO since 1 June 2022, works full time for
the Company, with primary responsibility for the Diamond Creek
phosphate mine in Utah, USA. The other directors, Russell Lamming
(CEO until 1 June 2022 and non-executive chairman from 1 September
2022), Brian Moritz (non-executive chairman until 1 September 2022)
and Claire Parry are non-executive directors. As Utah is in a time
zone 7 hours different from the UK, Board meetings are normally
conducted by video conference or by telephone, supplemented by
physical meeting when Graham Stacey is in the UK.
The CEO is in regular touch with the Directors. He also holds
frequent informal discussions with other directors. Throughout the
year such discussions average approximately two per week.
Non-executive directors are committed to devote 30 days per
annum to the Company, but they are likely to exceed that required
time commitment. Standard director's fees are currently GBP48,000
per annum for the Chairman and GBP24,000 per annum for each
non-executive director, below the median for AIM companies. Brian
Moritz also acts as Company Secretary and has board responsibility
for accounting matters and receives an extra GBP12,000 per annum in
respect of those responsibilities. No further amounts are paid for
serving on Board committees.
Principle 6: Ensure that between them the directors have the
necessary up-to-date experience, skills and capabilities.
Brief CVs of the directors are disclosed elsewhere in this
Annual Report.
Each of the directors maintains up to date skills by a
combination of technical journals, courses, conferences and trade
shows.
As an exploration and mining Company the Board requires skills
in the area of geology and mining. Russell Lamming is a qualified
geologist and Graham Stacey is a qualified mining engineer. Each
has a long history of achievement in this area. Importantly, each
of them has been in charge of the construction and operation of
mines.
Brian Moritz and Claire Parry are Chartered Accountants. In
addition to his financial skills, Brian Moritz has previously been
registered as a Nominated Adviser and has wide experience of
corporate transactions.
The advice of Azets, a top 10 UK accounting firm in which Claire
Parry is a partner, is sought on technical accounting matters, in
particular in relation to compliance with IFRS.
Principle 7: Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement.
Recently the Board has successfully achieved a major objective
by acquiring a phosphate mine in Utah, USA, constructing a
processing plant and commencing production. The next stage for this
mine is to expand its product range and client base.
The Board will concentrate on achieving profitable production
and positive cash flow from its existing project while continuing
to seek other mining projects.
Given the current state of the Company's development the
directors believe that the Board operates efficiently and cost
effectively and that the cost of an external review process is not
justified.
Principle 8: Promote a corporate culture that is based on
ethical values and behaviours.
So far as possible the Company recruits locally for staff and
sub-contractors.
In Utah, the Group's product is a natural organic fertilizer
which plays its part in reducing reliance on artificial
manufactured fertilizers.
Company has adopted a comprehensive anti-corruption and whistle
blowing policy and an ethical policy which is strictly applied.
Principle 10: Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other
relevant stakeholders.
The Board communicates with its stakeholders through social
media and webcasts, as well as by announcements on RNS. It welcomes
the ability to meet and engage with shareholders at general
meetings.
The audit committee normally meets twice per annum, on its own
to consider and approve the interim results, and with the auditors
to consider the annual report and matters raised by the auditors
based on their audit. So far as possible recommendations by the
auditors are immediately implemented. As the CEO is also present as
an observer at such meetings, no further report is submitted to the
Board.
The remuneration committee meets on an ad hoc basis when
required. Fees paid to the non-executive directors are settled by
the Chief Executive Officer, as the non-executive directors
comprise the remuneration committee.
Brian Moritz
Director
DIRECTORS' REPORT
The Directors present their report together with the audited
financial statements of the Group for the year ended 31 December
2022.
The Group's projects are set out in the Strategic Report.
Review of business and financial performance
Further details on the financial position and development of the
Group are set out in the Chairman's Statement, the Strategic Report
and the annexed financial statements.
Results
The Group reports a loss for the year of GBP997,000 (15 months
to 31 December 2021 - loss GBP2,014,000).
Major events after the balance sheet date
Since the end of the year the Company has agreed to transfer its
interests in the Nayéga manganese project to the Republic of Togo
on the terms set out in Note 31.
Dividends
The Directors do not recommend payment of a dividend for the
year ended 31 December 2022 (15 months to 31 December 2021 -
GBPnil).
Political donations
T here were no political donations during the year (15 months to
31 December 2021 - GBPnil).
Going concern
The Directors continue to adopt the going concern basis in
preparing the financial statements as further explained in Note 2
to the financial statements.
Directors' indemnities
The Group maintains Directors and Officers liability insurance
providing appropriate cover for any legal action brought against
its Directors and/or officers.
Audit Committee
The Audit Committee, which currently comprises B Moritz and C
Parry, and is chaired by B Moritz, is responsible for ensuring the
financial performance, position and prospects of the Group are
properly monitored and reported on and for meeting the auditors and
reviewing their reports relating to accounts and internal controls.
Meetings of the Audit Committee are held at least twice a year, at
appropriate times in the reporting and audit cycle. The Audit
Committee reports to the Board on its proceedings after each
meeting on all matters for which it has responsibility. The members
of the Audit Committee are subject to annual re-election by the
Board.
Remuneration Committee
The Remuneration Committee, which comprises B Moritz and C Parry
and which is chaired by B Moritz, reviews the performance of the
executive directors and sets their remuneration, determines the
payment of bonuses to executive directors and considers the future
allocation of share options and other equity incentives pursuant to
any share option scheme or equity incentive scheme in operation
from time to time to Directors and employees. Meetings of the
Remuneration Committee are held on an ad hoc basis as required. The
Remuneration Committee reports to the Board on its proceedings on
all matters for which it has responsibility. The members of the
Remuneration Committee are subject to annual re-election by the
Board.
Directors
The following Directors held office throughout the period:
B Moritz
D Reeves (resigned 1 September 2022)
R Lamming
G Stacey
C Parry (appointed 1 September 2022)
Directors' interests
The beneficial interests of the Directors holding office on 31
December 2022 in the issued share capital of the Company, including
spouses of Directors, were as follows:
31 December 2022 31 December 2021
Percentage Percentage
Number of issued Number of issued
of Ordinary ordinary of Ordinary ordinary
Shares share Shares share capital
capital
R Lamming 4,611,845 5.78% 416,184,497 6.61%
G Stacey 437,390 0.59% 43,739,000 0.69%
B Moritz 2,125,821 2.67% 177,582,118 2.82%
C Parry - - - -
On 26 April 2022 B Moritz, and R Lamming subscribed for
35,000,000 and 45,000,000 Ordinary Shares of 0.01p each
respectively at 0.12p per share. Each share subscribed received a
warrant to subscribe for 1 new Ordinary Share at any time up to 31
May 2024, at an exercise price of 0.18p per share.
On 25 July 2022 every 100 existing ordinary shares of 0.01p each
were consolidated into 1 ordinary share of 1p each. The figures
presented in the 31 December 2022 column above are shown after the
consolidation.
Since 31 December 2022 there have been no changes in these
shareholdings.
Directors' remuneration and service contracts
Details of remuneration payable to Directors as disclosed in
note 11 to these financial statements:
Year to 15 months
31 December to 31 December
Remuneration Share-based 2022 2021
payments Total Total
GBP'000 GBP'000 GBP'000 GBP'000
B Moritz 40 - 40 52
D Reeves 10 - 10 30
C Parry 8 - 8
R Lamming 118 4 122 237
G Stacey 114 - 114 22
--------
290 4 294 341
======== ========== ========== =============
Statement of Directors' responsibilities
The Directors are responsible for preparing the strategic
report, the directors' 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 elected to prepare the Group financial statements in
accordance with UK-adopted International Accounting Standards
("UK-adopted IAS") in conformity with the requirements of the
Companies Act 2006 and the company financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising FRS 101
"Reduced Disclosure Framework", and applicable law).
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 Parent Company and of
the profit or loss of the Group and Parent Company for that
period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether the consolidated financial statements comply
with UK-adopted IAS and the parent company financial statements are
prepared in accordance with UK GAAP/FRS 101 in conformity with the
requirements of the Companies Act 2006, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Company and the Group and enable
them to ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other
irregularities.
The Company is compliant with AIM Rule 26 regarding the
Company's website.
Statement of disclosure to auditor
Each Director at the date of approval of this report confirms
that;
So far as they are aware,
-- there is no relevant audit information of which the Company's
auditor is unaware; and
-- they have taken all steps that they ought to have taken to
make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information.
Auditor
A resolution to re-appoint PKF Littlejohn LLP as auditor will be
proposed at the Annual General Meeting. PKF Littlejohn LLP has
indicated its willingness to continue in office.
By order of the Board
Brian Moritz
Director
5 July 2023
INDEPENT AUDITOR'S REPORT
TO THE MEMBERS OF KERAS RESOURCES PLC
Opinion
We have audited the financial statements of Keras Resources Plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 31 December 2022 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Parent
Company Statements of Financial Position, the Consolidated and
Parent Company Statements of Changes in Equity, the Consolidated
and Parent Company Statements of Cash Flows and notes to the
financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their
preparation is applicable law and UK-adopted international
accounting standards. The financial reporting framework that has
been applied in the preparation of the parent company financial
statements is United Kingdom Accounting Standards, including FRS
101 Reduced Disclosure Framework (United Kingdom Generally Accepted
Accounting Practice) and as applied in accordance with the
provisions of the Companies Act 2006.
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 2022 and of the
group's loss for the period then ended;
-- the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice 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.
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 are independent of the group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
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. Our
evaluation of the directors' assessment of the group's and parent
company's ability to continue to adopt the going concern basis of
accounting included reviewing cashflow forecasts covering a period
of 12 months from the date of approval of these financial
statements, considering the levels of discretionary and
non-discretionary expenditure forecasted, challenging and
conducting sensitivity analysis using the key inputs and
assumptions underpinning said forecasts, ascertaining the group and
parent company's current cash position and reviewing the group and
parent company's performance since the period end. Whilst the group
made a significant loss in the period and has forecasted
significant growth in revenues over the going concern period, the
group and parent company has notable cash reserves and a notable
proportion of the costs forecasted are discretionary therefore if
forecasted growth targets are not met, discretionary costs could be
reduced or deferred accordingly.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's or parent company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements
are free from material misstatement, we define materiality as the
magnitude of misstatement that makes it probable that the economic
decisions of a reasonably knowledgeable person, relying on the
financial statements, would be changed, or influenced. We also
determine a level of performance materiality which we use to assess
the extent of testing needed to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial
statements as a whole.
Materiality for the group financial statements as a whole was
set as GBP121,000 (2021: GBP109,000). This was calculated based
upon 2% of gross assets (2021: 2% of gross assets) due to the
group's significant capitalised exploration costs, assets held for
sale and cash reserves being key balances of interest within the
financial statements and the fact that though generating revenues,
the group is not yet profit generating. Performance materiality and
the triviality threshold for the consolidated financial statements
was set at GBP84,700 (2021: GBP76,300) and GBP6,050 (GBP5,450)
respectively due to the assessed risk and our accumulated knowledge
of the group.
Materiality for the parent company financial statements as a
whole was set as GBP105,000 (2021: GBP43,700). This was calculated
based upon 2% of gross assets (2021: 5% of loss before tax) due to
the focus on the investment in and loans due from Falcon Isle
Resources LLC. Performance materiality and the triviality threshold
for the parent company was set at GBP73,500 (2021: GBP30,600) and
GBP5,250 (2021: GBP2,185) respectively due to the assessed risk and
our accumulated knowledge of the Company.
We also agreed to report to those charged with governance any
other audit misstatements below the triviality thresholds
established above which we believe warranted reporting on
qualitative grounds.
Our approach to the audit
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature,
timing, and extent of our audit procedures.
In designing our audit, we considered areas involving
significant accounting estimates and judgements by the directors as
well as future events that are inherently uncertain. These included
the recoverable value of the parent company's investment in its
subsidiary and the amounts due to the parent company by its
subsidiaries and the recoverable value of capitalised exploration
costs. We also addressed the risk of management override of
internal controls, including among other matters consideration of
whether there was evidence of bias that represented a risk of
material misstatement due to fraud.
We performed an audit of the financial information of the
group's four components in order to obtain the assurance required
for the group audit opinion. All of the components were assessed as
being significant due to their results for the year, the value of
their assets, liabilities and capital and reserves as at 31
December 2022 and the assessed risks in respect of their results
for the year and their assets, liabilities and capital and
reserves.
Of the four reporting components of the group, two are located
in the United Kingdom, one is located in the United States of
America and one is located in Togo. PKF Littlejohn LLP audited the
ultimate parent company, situated in the United Kingdom, and its
subsidiaries, situated in the United Kingdom, United States of
America and Togo. The Engagement Partner conducted audit work in
the United Kingdom but interacted regularly with the Management
team in the United States of America and Togo during all stages of
the audit and was responsible for the scope and direction of the
audit process. This, in conjunction with additional procedures
performed, gave us appropriate evidence for our opinion on the
group financial statements.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, 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) 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.
Key Audit Matter How our scope addressed this matter
Carrying value of intangible assets
========================================================================
As at 31 December 2022 the Group Our work in this area included
has intangible assets with a carrying but was not limited to:
value of GBP3,558k which represents -- Confirming that the group held
capitalised exploration and evaluation good title to the underlying licenses
costs. and assessing whether any indicators
Given the value of the balance of impairment exists.
and the significant estimates and -- Obtaining Management's impairment
judgements required to be made assessments in relation to intangible
by management when conducting their assets and supporting discounted
impairment assessments, there is cashflow forecasts. Reviewing their
a risk that the exploration costs assessment and their supporting
capitalised may be materially misstated value in use calculates for reasonableness;
as they are impaired and/or costs considering whether any of the
capitalised in the year have been IAS 36 impairment indicators have
inappropriately capitalised in been met and considering if the
accordance with the eligibility recoverable value exceeds the carrying
requirements of IFRS 6. value.
We consider Management's assessment
of impairment is reasonable in
concluding that no impairment is
required to be recognised at the
year end.
========================================================================
Assets held for sale - Sale of
Societe General De Mine
========================================================================
During the year, the Company entered Our work in this area included
into discussions to dispose of but was not limited to:
its Togolese operations and negotiations * Obtaining management's justification for the
with an interested party have continued classification the segment as a held for sale asset.
post year-end, leading to the completion Reviewing, discussing with management and obtaining
of a transaction in May 2023. Management corroborative evidence where possible; considering
have therefore classified this whether the recognition criteria per IFRS 5 is met;
segment as a held for sale asset
as per IFRS 5.
Given the value of the assets * Obtaining from management their justification for the
and liabilities of this segment fair value determined and any supporting workings and
and the significant judgement and documentation. Reviewing and discussing with
estimation required in assessing management; challenging the key inputs and
the fair value of the asset held assumptions in their valuation and considering
for sale, there is a risk the segment whether the fair value less costs to sell is
has not been correctly classified reasonable.
as a held for sale asset and accounted
for in accordance with IFRS 5 and
that the fair value less cost to * Ensuring that the segment's assets and liabilities
sell has not been correct calculated have been appropriately presented within the
and thus the assets held for sale financial statements and that they represent the
may be impaired. lower or the carrying value of the segment's net
assets is value and fair value less costs to sell.
* Obtaining the agreement signed post year-end,
reviewing and considering the reasonableness of
management's assessment and the estimates and
judgements made in respect of the assets held for
sale.
We consider Management's classification
of the segment as held for sale
and the estimation of fair value
less cost to sell to be reasonable.
========================================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. 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.
Opinions on other matters prescribed by the Companies Act
2006
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 period 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.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
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 directors' responsibilities
statement, the directors are responsible for the preparation of the
group and parent company 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 group and parent company financial statements,
the directors are responsible for assessing the group 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.
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:
-- We obtained an understanding of the group and parent company
and the sector in which they operate to identify laws and
regulations that could reasonably be expected to have a direct
effect on the financial statements. We obtained our understanding
in this regard through discussions with management, industry
research and our cumulative audit knowledge and experience of the
sector.
-- We determined the principal laws and regulations currently
relevant to the group and parent company in this regard to be those
arising from UK Company Law, rules applicable to issuers on AIM, UK
and US employment law and local mining, environmental and health
and safety laws in the US.
-- We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by
the group with those laws and regulations. These procedures
included, but were not limited to:
o Discussions with management regarding compliance with laws and
regulations by the parent company and components;
o Review of board minutes; and
o Review of regulatory news announcements made throughout and
post period-end.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to
the non-rebuttable presumption of a risk of fraud arising from
management override of controls, that the potential for management
bias exists in relation to the carrying value of intangible assets,
the carrying value of investments in and loans due from
subsidiaries and the carrying value of assets held for sale and we
addressed these by challenging the assumptions and judgements made
by management when auditing these significant accounting estimates
and judgements.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing audit
procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias;
discussing with management as to whether there were any instances
or suspicions of fraud since 1 January 2022 within the parent
company or components and evaluating the business rationale of any
significant transactions that are unusual or outside the normal
course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located 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 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
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 company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed .
Daniel Hutson (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
5 July 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2022
Continuing Discontinued Total Continuing Discontinued Total for
operations operations for operations operations the 15 months
Notes for the for the the year for the for the ended 31
year ended year ended ended 31 15 months 15 months December
31 31 December December ended 31 ended 31 2021
December 2022 2022 December December GBP'000
2022 GBP'000 GBP'000 2021 2021
GBP'000 GBP'000 GBP'000
-------- -------- ----- ---- ------- ----------- ------------- --------- ----------- ------------- ------------------
Revenue 7,8 994 - 994 452 - 452
------- ----------- ------------- --------- ----------- ------------- ------------------
Cost of
sales (263) - (263) (496) - (496)
------- ----------- ------------- --------- ----------- ------------- ------------------
Gross profit 731 - 731 (44) - (44)
------- ----------- ------------- --------- ----------- ------------- ------------------
Administrative expenses 9 (1,414) (110) (1,524) (1,388) (60) (1,448)
---------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Loss from operating
activities (683) (110) (793) (1,432) (60) (1,492)
------------------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Finance costs 12 (183) (21) (204) (43) - (43)
------------------------------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Net finance costs (183) (21) (204) (43) - (43)
---------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Share of net loss of associates
accounted for using the equity
method - - - (116) - (116)
Loss on acquisition of controlling
ownership 17 - - - (363) - (363)
---------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Loss before taxation (866) (131) (997) (1,954) (60) (2,014)
------- ----------- ------------- --------- ----------- ------------- ------------------
Tax 13 - - - - - -
----- ---- ------- ----------- ------------- --------- ----------- ------------- ------------------
Loss for the year (866) (131) (997) (1,954) (60) (2,014)
---------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Other comprehensive income
- items that may be subsequently
reclassified to profit or loss
---- ------- ----------- ------------- --------- ----------- ------------- ------------------
Exchange translation on foreign operations 115 35 150 (7) 73 66
------- ----------- ------------- --------- ----------- ------------- ------------------
Total comprehensive loss for
the period/year (751) (96) (847) (1,961) 13 (1,948)
------- ------- ----------- ------------- --------- ----------- ------------- ------------------
Loss attributable to:
Owners of the Company (963) (113) (1,076) (1,675) (54) (1,729)
--- ------ ------ -------- -------- ----- --------
Non-controlling interests 97 (18) 79 (279) (6) (285)
--- ------ ------ -------- -------- ----- --------
Loss for the year (866) (131) (997) (1,954) (60) (2,014)
--- ------ ------ -------- -------- ----- --------
Total comprehensive loss attributable
to:
--- ------ ------ -------- -------- ----- --------
Owners of the Company (824) (83) (907) (1,679) 9 (1,670)
--- ------ ------ -------- -------- ----- --------
Non-controlling interests 73 (13) 60 (282) 4 (278)
--- ------ ------ -------- -------- ----- --------
Total comprehensive loss for
the period/year (751) (96) (847) (1,961) 13 (1,948)
--- ------ ------ -------- -------- ----- --------
Earnings per share
------ ------ -------- -------- ----- --------
Basic and diluted loss per share
(pence) 26 (1.148) (0.033)
--- ------ ------ -------- -------- ----- --------
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 31 December
2022 2021
Notes GBP'000 GBP'000
Assets
Property, plant and equipment 14 381 554
Right of use asset 15 121 215
Intangible assets 16 3,558 4,606
Non-current assets 4,060 5,375
Inventory 20 668 273
Trade and other receivables 21 191 94
Assets held for sale 23 1,558 -
Cash and cash equivalents 22 207 166
Current assets 2,624 533
Total assets 6,684 5,908
Equity
Share capital 25 797 630
Share premium 25 5,838 4,033
Other reserves 25, 27 282 111
Retained deficit (2,990) (1,721)
Equity attributable to owners
of the Company 3,927 3,053
Non-controlling interests (146) 229
Total equity 3,781 3,282
Liabilities
Trade and other payables 28 1,158 1,658
Liabilities held for sale 23 471 -
Lease liabilities - current 18 126 107
Current liabilities 1,755 1,765
Trade and other payables 28 1,148 749
Lease liabilities - non-current 18 - 112
Non-current liabilities 1,148 861
Total liabilities 2,903 2,626
Total equity and liabilities 6,684 5,908
The financial statements were approved by the Board of Directors
and authorised for issue on 5 July 2023. They were signed on its
behalf by:
Brian Moritz
Director
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2022
Attributable to owners of the Company
Notes Share Share Share Exchange Retained Total Non-controlling Total
capital premium option reserve earnings/(deficit) interests equity
/warrant
reserve GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January
2022 630 4,033 100 11 (1,721) 3,053 229 3,282
Loss for the year - - - - (1,076) (1,076) 79 (997)
Other comprehensive
income - - - 169 - 169 (19) 150
Total comprehensive loss
for the period - - - 169 (1,076) (907) 60 (847)
Issue of ordinary
shares 25 167 1,845 - - - 2,012 - 2,012
Costs of share
issue 25 - (40) - - - (40) - (40)
Share option expense 27 - - 9 - - 9 - 9
Share option forfeit 27 - - (7) - 7 - - -
Acquisition of
non-controlling
interest 17 - - - - (200) (200) (435) (635)
Transactions with owners,
recognised directly in
equity 167 1,805 2 - (193) 1,781 (435) 1,346
Balance at 31 December
2022 797 5,838 102 180 (2,990) 3,927 (146) 3,781
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 15 MONTH PERIODED 31 DECEMBER 2021
Notes Share Share Share Exchange Retained Total Non-controlling Total
capital premium option reserve (deficit)/earnings interests equity
reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
October 2020 487 2,637 63 (47) 8 3,148 (140) 3,008
Loss for
theperiod - - - - (1,729) (1,729) (285) (2,014)
Other
comprehensive
income - - - 58 - 58 8 66
Total
comprehensive
loss for
the year - - - 58 (1,729) (1,671) (277) (1,948)
Issue of
ordinary shares 25 143 1,469 - - - 1,612 - 1,612
Costs of share
issue 25 - (73) - - - (73) - (73)
Share option
expense 27 - - 37 - - 37 - 37
Non-controlling
interest on
acquisition of
subsidiary 17 - - - - - - 646 646
Total
transactions
with owners,
recognised
directly in
equity 143 1,396 37 - - 1,576 646 2,222
Balance at 31
December 2021 630 4,033 100 11 (1,721) 3,053 229 3,282
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 31 DECEMBER 2022
Year ended 15 months
31 December ended 31
Notes 2022 December
GBP'000 2021
GBP'000
Cash flows from operating
activities
Loss from operating activities (997) (2,014)
Adjustments for:
Depreciation and amortisation 14,15,16 179 172
Share of loss of equity accounted associate - 116
Expenses settled in shares 109 -
Finance costs recognised 12 204 -
Equity-settled share-based payments 27 9 37
(496) (1,616)
Changes in:
- inventory (395) (216)
- trade and other receivables (97) 111
- trade and other payables 119 540
Cash generated by/(used in) operating
activities (869) (1,181)
Finance costs (52) -
Taxes paid - -
Net cash generated by/(used in) operating
activities (921) (1,181)
Cash flows from investing
activities
Cash acquired on acquisition - 158
Acquisition of property, plant and
equipment - (188)
Exploration and licence expenditure - (538)
Consideration for purchase of minority
interest in subsidiary 17 (286) -
Net cash used in investing
activities (286) (568)
Cash flows from financing
activities
Net proceeds from issue of share
capital 25 1,641 1,477
Loans received 100 -
Repayment of loans (375) -
Payment of lease obligations (93) -
Net cash flows from financing
activities 1,273 1,477
Net increase/(decrease) in cash and cash
equivalents 66 (272)
Cash and cash equivalents at beginning
of period/year 166 438
Foreign exchange differences (25) 73
Cash and cash equivalents at 31 December 22 207 166
Significant non-cash transactions
During the year, share capital was issued in return for non-cash
consideration being the settlement of GBP231,000 due to creditors
and GBP100,000 in respect of loans.
The notes are an integral part of these consolidated financial
statements.
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 31 December
2022 2021
Notes GBP'000 GBP'000
Assets
Property, plant and equipment 14 - 2
Investments 17 2,594 1,959
Non-current assets 2,594 1,961
Loans 19 3,686 2,081
Trade and other receivables 21 45 20
Cash and cash equivalents 22 54 122
Current assets 3,785 2,223
Total assets 6,379 4,184
Equity
Share capital 25 797 630
Share premium 25 5,838 4,033
Other reserves 25, 27 102 100
Retained deficit (2,190) (729)
Total equity attributable to owners
of the Company 4,547 4,034
Liabilities
Trade and other payables 28 767 150
Current liabilities 767 150
Trade and other payables 28 1,065 -
Non-current liabilities 1,065 -
Total liabilities 1,832 150
Total equity and liabilities 6,379 4,184
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 from presenting the Parent Company profit
and loss account. The Parent Company loss for the period was
GBP1,467,879 (15 months to 31 December 2021: loss of
GBP1,014,000).
The financial statements of Keras Resources PLC, company number
07353748, were approved by the Board of Directors and authorised
for issue on 5 July 2023. They were signed on its behalf by:
Brian Moritz
Director
The notes are an integral part of these consolidated financial
statements.
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 31 DECEMBER 2022
Share Share premium Share option Retained Total
capital /warrant earnings/ equity
GBP'000 reserve (deficit)
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 October 2020 487 2,637 63 285 3,472
Loss for the period - - - (1,014) (1,014)
Total comprehensive loss for the
period - - - (1,014) (1,014)
Issue of ordinary shares 143 1,469 - - 1,612
Costs of share issue - (73) - - (73)
Share option expense - - 37 - 37
Transactions with owners, recognised
directly
in equity 143 1,396 37 - 1,576
Balance at 31 December 2021 630 4,033 100 (729) 4,034
Balance at 1 January 2022 630 4,033 100 (729) 4,034
Loss for the year - - - (1,468) (1,468)
Total comprehensive loss for the year - - - (1,468) (1,468)
---- ------ ---- -------- --------
Issue of ordinary shares 167 1,845 - - 2,012
Costs of share issue - (40) - - (40)
Share option expense - - 9 - 9
Share option forfeit - - (7) 7 -
Transactions with owners, recognised directly
in equity 167 1,805 2 7 1,981
---- ------ ---- -------- --------
Balance at 31 December 2022 797 5,838 102 (2,190) 4,547
==== ====== ==== ======== ========
The notes are an integral part of these consolidated financial
statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2022
1. Reporting entity
Keras Resources PLC is a company domiciled in England and Wales.
The address of the Company's registered office is Coveham House,
Downside Bridge Road, Cobham KT11 3EP. The Group currently operates
as a miner of and explorer for mineral resources.
The Group consists of Keras Resources Plc and all of its
subsidiaries.
2. Going concern
The Directors have adopted the going concern basis in preparing
the Group and Company financial statements. The Group's and
Company's business activities together with the factors likely to
affect its future development, performance and position are set out
in the Chairman's Statement and Strategic Report. In addition, note
29 to the Financial Statements includes the Group's policies and
processes for managing its financial risk management
objectives.
Since the end of the year the Company has agreed to sell its
manganese mining interests in Togo to the Republic of Togo. The
consideration of $1,700,000 was received in July 2023, and the
amount received, after payment of costs associated with the sale,
has been used to pay the 2023 instalment of the consideration for
the acquisition of the 49% interest in Falcon Isle, as described
below, as well as for general working capital.
During the year, the Company acquired the minority 49% interest
in Falcon Isle, and agreed to repay loans made by the vendor to
Falcon Isle, for a total consideration of $3.2 million. In addition
a severance payment of $340,000 is payable to the previous CEO of
Falcon Isle. The consideration amount is payable in four annual
instalments of $800,000 commencing on 1 July 2022 with the
severance payments being due being split $240,000 on 1 July 2023
and the balance of $100k being due on 1 July 2024. The first
instalment has been paid, and the second instalment together with
$240,000 of the severance payment has been settled from the
proceeds of the disposal of the Togolese interests as set out
above.
Falcon Isle is currently generating positive cash flow, which is
forecast to increase as its client base and product range are
expanded. In addition, the agreement with the Republic of Togo for
the provision of advisory and brokerage services, described in Note
31, is expected to generate substantial cash flow over the next
three years.
On this basis, the Directors have a reasonable expectation that
the Group and Company will have adequate resources to continue in
operational existence for the foreseeable future. As such, the
Directors continue to adopt the going concern basis of
accounting.
3. Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards in
conformity with the Companies Act 2006("UK-adopted IAS"), and the
Companies Act 2006 as applicable to entities reporting in
accordance with UK-adopted IAS.
(b) Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis unless otherwise stated.
3. Basis of preparation (continued)
(c) Functional and presentation currency
These consolidated financial statements are presented in Pounds
Sterling ('GBP' or 'GBP'), which is the Group's functional currency
and is considered by the Directors to be the most appropriate
presentation currency to assist the users of the financial
statements. All financial information presented in GBP has been
rounded to the nearest thousand, except when otherwise
indicated.
(d) Basis of parent company preparation
The parent company meets the definition of a qualifying entity
under FRS 101 Reduced Disclosure Framework.
As permitted by FRS 101, the Company has taken advantage of the
following disclosure exemptions from the requirements of IFRS:
(a) the requirements of IFRS 7 'Financial Instruments:
Disclosure';
(b) the requirements within IAS 1 relating to the presentation
of certain comparative information;
(c) the requirements of IAS 7 'Statement of Cash Flows' to
present a statement of cash flows;
(d) paragraphs 30 and 31 of IAS 8 'Accounting policies, changes
in accounting estimates and errors' (requirement for the disclosure
of information when an entity has not applied a new IFRS that has
been issued but it not yet effective); and
(e) the requirements of IAS 24 'Related Party Disclosures' to
disclose related party transactions and balances between two or
more members of a Group.
(e) Use of estimates and judgements
The preparation of the consolidated financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form
the basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised if the revision affects
only that period, or in the period of revision and future periods
of the revision if it affects both current and future periods.
Critical estimates and assumptions that have the most
significant effect on the amounts recognised in the consolidated
financial statements and/or have a significant risk of resulting in
a material adjustment within the next financial year are as
follows:
Deferred consideration and the loan payable to previous minority
shareholder
The deferred consideration due in respect of the acquisition of
the remaining 49% of Falcon Isle Resources LLC has been discounted
at a rate of 12%, being the rate at which interest will accrue in
the event of a default. Further details can be found in Note
17.
(e) Use of estimates and judgements (continued)
Carrying value of intangible assets
Intangible assets consists of prospecting and exploration
rights. Those acquired with subsidiaries are recognised at fair
value at the date of acquisition. Other rights acquired and
evaluation expenditure are recognised at cost.
Impairment of intangible assets
Intangible assets have been assessed during the current year for
any impairment and it was concluded that they are fairly valued.
The recoverable amount from the cash generating unit (CGU), in the
USA, was assessed by performing a 10-year discounted cashflow (DCF)
model and it was concluded that the recoverable amounts exceeded
the intangible asset value indicating no impairment.
Key assumptions
The recoverable amount for the CGU is based on value-in-use
which is derived from discounted cash flow calculations. The key
assumptions applied in value-in-use calculations are those
regarding forecast mine production, sales per product type,
operating profit, phosphate prices and discount rates.
Forecast operating profits
For the CGU, the Group prepared cash flow projections derived
from the most recent forecast for the year ending 31 December 2023.
Forecast revenue, fixed and variable costs are based on recent
performance and expectations of future changes in the market,
operating model and cost base.
Growth rates
For the medium-term, sales growth of 120% was assumed on the
basis of consistent historic sales growth, as well as planned
growth projects.
Discount Rate
A post-tax real discount rate used to assess the forecast free
cashflows from the CGU was derived from its weighted average cost
of capital, taking into account specific factors relating to the
country it operates in. These rates are reviewed annually and
adjusted for the risks specific to the business being assessed and
the market in which the CGU operates. The real post-tax discount
rate used during the period for the USA was 10%.
Sensitivity analysis
A sensitivity analysis on the key model parameters has been
performed and management has concluded that no reasonably
foreseeable change in the key assumptions would result in an
impairment of the intangible assets of the Group's CGU.
Assets held for sale
On classification as held-for-sale, assets and disposal groups
are measured at the lower of the carrying amount and fair value
less costs to sell, with any adjustments taken to profit or loss
(or other comprehensive income in the case of a revalued asset).
The fair value was estimated to be the contract disposal value less
costs as detailed in Note 23.
3. Basis of preparation (continued)
(e) Use of estimates and judgements (continued)
Intercompany receivables (Company only)
All loans to subsidiaries are currently unsecured and interest
free and repayable on demand. Management have reviewed the
forecasts prepared and are satisfied that no impairment of this
amount is required.
Fair value of share options and warrants
The determination of the fair values of the schemes issued have
been made with reference to the Black-Scholes model with the inputs
set out in Note 27.
4. Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by Group
entities.
(a) Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the
acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured
at fair value, as are identifiable net assets acquired. Any
goodwill that arises is tested annually for impairment. Any gain on
a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to
the issue of debt or equity securities. The consideration
transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts generally are recognised
in profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. On disposal of
subsidiaries, any amounts previously recognised in other
comprehensive income in respect of that entity are accounted for as
if the Group had directly disposed of the related assets or
liabilities. This might mean that amounts previously recognised in
other comprehensive income are reclassified to profit or loss.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
(b) Foreign currency
Transactions in foreign currencies are translated into the
respective functional currencies of Group entities at exchange
rates at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies are translated into
the functional currency at the reporting date.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value in a foreign currency
are translated to the functional currency at the exchange rate when
the fair value was determined. Non-monetary items that are measured
based on historical cost in a foreign currency are translated at
the exchange rate at the date of the transaction.
4. Significant accounting policies (continued)
(i) Foreign operations
The assets and liabilities of foreign operations, including
goodwill and the fair value adjustments arising on acquisition, are
translated to GBP at exchange rates at the reporting date. The
income and expenses of foreign operations are translated to GBP at
exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income and accumulated in the translation reserve
except to the extent that the translation difference is allocated
to non-controlling interests. When a foreign operation is disposed
of in its entirety or partially such that control, significant
influence or joint control is lost, the cumulative amount in the
translation reserve related to that foreign operation is
reclassified to profit or loss as part of the gain or loss on
disposal. If the Group disposes of part of its interest in a
subsidiary but retains control, then the relevant proportion of the
cumulative amount is reattributed to non-controlling interests.
When the Group disposes of only part of an associate or joint
venture while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to
profit or loss.
(c) Financial instruments
(i) Financial assets
The Group's financial assets measured at amortised cost comprise
trade and other receivables, cash and cash equivalents and
financial assets at fair value through other comprehensive income
in the consolidated statement of financial position.
Trade receivables and intra group balances are initially
recognised at fair value. New impairment requirements use an
expected credit loss model to recognise an allowance. For
receivables a simplified approach to measure expected credit losses
during a lifetime expected loss allowance is available and has been
adopted by the Group. During this process the probability of
non-payment of the receivables is assessed. This probability is
then multiplied by the amount of the expected loss arising from
default to determine the lifetime expected credit loss for the
receivables. For trade receivables, which are reported net, such
provisions are recorded in a separate provision account with the
loss being reported within the consolidated statement of
comprehensive income. On confirmation that the trade and intra
group receivable will not be collectable, the gross carrying value
of the asset is written off against the provision.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and
subordinated liabilities on the date that they are originated. All
other financial liabilities are recognised initially on the trade
date, which is the date that the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial liability when its
contractual obligations are discharged, cancelled or expire.
The Group classifies non-derivative financial liabilities into
the other financial liabilities category. Such financial
liabilities are recognised initially at fair value less any
directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised
cost using the effective interest method. Other financial
liabilities comprise trade and other payables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
4. Significant accounting policies (continued)
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less
accumulated depreciation and any accumulated impairment losses.
Cost includes expenditure that is directly attributable to the
acquisition of the asset.
When parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and
equipment (calculated as the difference between the net proceeds
from disposal and the carrying amount of the item) is recognised in
profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable
that the future economic benefits associated with the expenditure
will flow to the Group. Ongoing repairs and maintenance is expensed
as incurred.
(iii) Depreciation
Items of property, plant and equipment are depreciated on a
straight-line basis in the statement of comprehensive income over
the estimated useful lives of each component.
Items of property, plant and equipment are depreciated from the
date that they are installed and are ready for use, or in respect
of internally constructed assets, from the date that the asset is
completed and ready for use.
The estimated useful lives of significant items of property,
plant and equipment are as follows:
-- plant and equipment 10 years
-- office equipment 2 years
-- computer equipment 2 years
-- motor vehicles 5 years
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
4. Significant accounting policies (continued)
(e) Intangible assets
(i) Prospecting and exploration rights
Rights acquired with subsidiaries are recognised at fair value
at the date of acquisition. Other rights acquired and evaluation
expenditure are recognised at cost.
(ii) Other intangible assets
Other intangible assets that are acquired by the Group and have
finite useful lives are measured at cost less accumulated
amortisation and any accumulated impairment losses.
(iii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally
generated goodwill and brands, is recognised in profit or loss as
incurred.
(iv) Amortisation
Intangible assets are amortised in profit or loss over their
estimated useful lives, from the date that they are available for
use.
The estimated useful lives are as follows:
-- Prospecting and exploration rights - Life of mine based on units of production
Amortisation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
Amortisation is included within administrative expenses in the
statement of comprehensive income.
(f) Impairment
(i) Non-derivative financial assets
A financial asset not classified as at fair value through profit
or loss is assessed at each reporting date to determine whether
there is objective evidence that it is impaired. A financial asset
is impaired if there is objective evidence of impairment as a
result of one or more events that occurred after the initial
recognition of the asset, and had an impact on the estimated future
cash flows from that asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes
default or delinquency by a debtor, restructuring of an amount due
to the Group on terms that the Group would not consider otherwise,
indications that a debtor or issuer will enter bankruptcy, adverse
changes in the payment status of borrowers or issuers, economic
conditions that correlate with defaults or the disappearance of an
active market for a security. In addition, for an investment in an
equity security, a significant or prolonged decline in its fair
value below its cost is objective evidence of impairment.
4. Significant accounting policies (continued)
(f) Impairment (continued)
(i) Non-derivative financial assets (continued)
Financial assets measured at amortised cost
The Group considers evidence of impairment for financial assets
measured at amortised cost (loans and receivables) at both a
specific asset and collective level. All individually significant
assets are assessed for specific impairment. Those found not to be
specifically impaired are then collectively assessed for any
impairment that has been incurred but not yet identified. Assets
that are not individually significant are collectively assessed for
impairment by grouping together assets with similar risk
characteristics.
In assessing collective impairment, the Group uses historical
trends of the probability of default, the timing of recoveries and
the amount of loss incurred, adjusted for management's judgement as
to whether current economic and credit conditions are such that the
actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate. Losses
are recognised in profit or loss and reflected in an allowance
against loans and receivables. Interest on the impaired asset
continues to be recognised. When an event occurring after the
impairment was recognised causes the amount of impairment loss to
decrease, the decrease in impairment loss is reversed through
profit or loss.
Financial assets at fair value through other comprehensive
income
Impairment losses on financial assets at FVOCI are recognised by
reclassifying the losses accumulated in the fair value reserve to
profit or loss. The amount reclassified is the difference between
the acquisition cost (net of any principal repayment and
amortisation) and the current fair value, less any impairment
previously recognised in profit or loss. Impairment losses
recognised in profit or loss for an investment in an equity
instrument classified as FVOCI are not reversed through profit or
loss.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, the
asset's recoverable amount is estimated. Indefinite-lived
intangible assets are tested annually for impairment or when there
is an indication of impairment. An impairment loss is recognised if
the carrying amount of an asset or Cash Generating Unit ('CGU')
exceeds its recoverable amount.
The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less costs to sell. In assessing
value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks
specific to the asset or CGU. For the purpose of impairment
testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or CGUs.
Subject to an operating segment ceiling test, CGUs to which
goodwill has been allocated are aggregated so that the level at
which impairment testing is performed reflects the lowest level at
which goodwill is monitored for internal reporting purposes.
Goodwill acquired in a business combination is allocated to groups
of CGUs that are expected to benefit from the synergies of the
combination.
4. Significant accounting policies (continued)
(f) Impairment (continued)
(ii) Non-financial assets (continued)
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the CGU (group of
CGUs), and then to reduce the carrying amounts of the other assets
in the CGU (group of CGUs) on a pro rata basis.
An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
(g) Employee benefits
Share-based payments
The grant-date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The amount
recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that meet
the related service and non-market performance conditions at the
vesting date. For share-based payment awards with non-vesting
conditions, the grant-date fair value of the share-based payment is
measured to reflect such conditions and there is no adjustment for
differences between expected and actual outcomes.
(h) Revenue
Revenue from the sale of processed products is recognised when
ownership of the product passes to the purchaser in accordance with
the relevant sales contract. Ownership passes either upon delivery
or once the product is collected where customers arrange
delivery.
(i) Finance income and finance costs
Finance income comprises interest income on bank funds. Interest
income is recognised as it accrues in profit or loss, using the
effective interest method.
Finance costs comprise interest expense on borrowings. Borrowing
costs are recognised in profit or loss in the period in which they
are incurred.
(j) Taxation
Tax expense comprises current and deferred tax. Current and
deferred tax is recognised in profit or loss except to the extent
that it relates to a business combination, or items recognised
directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantially enacted at the reporting date, and any adjustment to
tax payable in respect of previous years. Current tax payable also
includes any tax liability arising from the declaration of
dividends.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
4. Significant accounting policies (continued)
-- temporary differences related to investments in subsidiaries
and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to taxes levied by the same tax authority
on the same taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on a net basis
or their tax assets and liabilities will be realised
simultaneously.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised; such
reductions are reversed when the probability of future taxable
profits improves.
(k) Leases
The Group leases certain property, plant and equipment. Leases
of plant and equipment where the Group has substantially all the
risks and rewards of ownership are classified as finance leases
under IFRS 16. Finance leases are capitalised on the lease's
commencement at the lower of the fair value of the leased assets
and the present value of the minimum lease payments. Other leases
are either small in value or cover a period of less than 12
months.
The lease liability is initially measured at the present value
of the lease payments that are not paid. Lease payments generally
include fixed payments less any lease incentives receivable. The
lease liability is discounted using the interest rate implicit in
the lease or, if that rate cannot be readily determined, the
Group's incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral
assumptions, and the economic environment in which the lease is
denominated. The lease liability is subsequently measured at
amortized cost using the effective interest method. The lease
liability is remeasured when the expected lease payments change as
a result of new assessments of contractual options and residual
value guarantees.
The right-of-use asset is recognised at the present value of the
liability at the commencement date of the lease less any incentives
received from the lessor. Added to the right-of-use asset are
initial direct costs, payments made before the commencement date,
and estimated restoration costs. The right-of-use asset is
subsequently depreciated on a straight-line basis from the
commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The
right-of-use asset is periodically reduced by impairment losses, if
any, and adjusted for certain remeasurements of the lease
liability.
Each lease payment is allocated between the liability and
finance charges. The corresponding rental obligations, net of
finance charges, are included in lease liabilities, split between
current and non-current depending on when the liabilities are due.
The interest element of the finance cost is charged to the
Statement of Profit and Loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. Assets obtained under finance leases
are depreciated over their useful lives. The lease liabilities are
shown in Note 18.
(l) Inventories
Inventories for processed material and ore stockpiles are valued
at the lower of cost and net realisable value. Costs allocated to
processed material are based on average costs and include all costs
of purchase, conversion and other costs in bringing these
inventories to their existing location and condition. Costs
allocated to ore stockpiles are based on average costs, which
include an appropriate share of direct mining costs, direct labour
and material costs, mine site overhead, depreciation and
amortisation. If carrying value exceeds net realisable amount, a
write down is recognised. The write down may be reversed in a
subsequent period if the circumstances which caused it no longer
exist.
(m) Segment reporting
Segment results that are reported to management include items
directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
(n) Equity reserves
Share premium includes any premiums received on issue of share
capital. Any transaction costs associated with the issue of shares
are deducted from share premium.
The share option/warrant reserve is used to recognise the fair
value of equity-settled share based payment transactions.
The exchange reserve is used to record exchange differences
arising from the translation of foreign subsidiaries into the
presentation currency.
The financial assets at FVOCI reserve is used to record
unrealised accumulated changes in fair value on financial
assets.
(o) Discontinued operation
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single co -- ordinated plan to dispose of a
separate major line of business or geographic area of operations;
or
-- is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held -- for -- sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re -- presented
as if the operation had been discontinued from the start of the
comparative year.
5. New standards and interpretations
The current standards, amendments and interpretations have been
adopted in the year and have not had a material impact on the
reported results in the Company's financial statements:
-- Amendments to the Conceptual Framework for Financial Reporting
-- Amendments to IFRS 3 Definition of a Business
-- Amendments to IAS 1 and IAS 8 Definition of Material
-- Amendments to IFRS 9, IAS 39 and IFRS 7 Interest rate benchmark reform
The adoption of the following mentioned standards, amendments
and interpretations in future years:
Effective date
- period beginning
on or after
Deferred Tax related to Assets and Liabilities 1 January 2023
arising from a Single Transaction (Amendments
to IAS 12)
Definition of Accounting Estimates (Amendments 1 January 2023
to IAS 8)
Disclosure of Accounting policies (Amendments 1 January 2023
to IAS 1 and IFRS Practice Statement
2
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IFRS 17 1 January 2023
Initial Application of IFRS 17 and IFRS 1 January 2023
9-Comparative Information
Amendments to IAS 1 Presentation of 1 January 2024*
Financial Statements
-- Non-current Liabilities with Covenants
-- Deferral of Effective Date Amendment
-- Classification of Liabilities as
Current or Non-Current
Lease Liability in a Sale and Leaseback 1 January 2024*
(Amendments to IFRS 16)
* These standards, amendments and interpretations have not yet
been endorsed by the UK and the dates shown are the expected dates.
The directors have undertaken a project to review the above
standards, amendments and interpretations. Management do not expect
these standards to materially impact the financial statements.
6. Determination of fair values
A number of the Group's accounting policies and disclosures
require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been
determined for measurement and/or disclosure purposes based on the
following methods. When applicable further information about the
assumptions made in determining fair values is disclosed in the
notes specific to that asset or liability.
(i) Property, plant and equipment
The fair value of property, plant and equipment recognised as a
result of a business combination is the estimated amount for which
a property could be exchanged on the date of acquisition between a
willing buyer and a willing seller in an arm's length transaction
after proper marketing wherein the parties had each acted
knowledgeably. The fair value of items of plant and equipment is
based on the market approach and cost approaches using quoted
market prices for similar items when available and depreciated
replacement cost when appropriate. Depreciated replacement cost
reflects adjustments for physical deterioration as well as
functional and economic obsolescence.
(ii) Intangible assets
The fair value of other intangible assets is based on the
discounted cash flows expected to be derived from the use and
eventual sale of the assets.
(iii) Trade and other receivables
The fair value of trade and other receivables is estimated at
the present value of future cash flows, discounted at the market
rate of interest at the reporting date. This fair value is
determined for disclosure purposes or when such assets are acquired
in a business combination.
(iv) Share-based payments
The fair value of the employee share options is measured using
the Black-Scholes formula. Measurement inputs include the share
price on the measurement date, the exercise price of the
instrument, expected volatility (based on an evaluation of the
Company's historic volatility, particularly over the historic
period commensurate with the expected term), expected term of the
instruments (based on historical experience and general option
holder behaviour), expected dividends, and the risk-free interest
rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not
taken into account in determining fair value.
(v) Investments - other
When one is available, the Group measures the fair value of an
instrument using the quoted price in an active market for that
instrument. A market is regarded as active if transactions for the
asset or liability take place with sufficient frequency and volume
to provide pricing information on an ongoing basis. A discount is
applied to the value of any Performance shares to reflect the
possibility that the milestones for conversion into ordinary shares
may not be met.
7. Revenue
Revenue comprises:
Group:
Year ended 15 months
31 December ended 31
2022 December
GBP'000 2021
GBP'000
Sale of phosphate (USA) 994 452
994 452
============= ==========
8. Operating segments
The Group considers that it operated during the period in two
distinct business areas, being that of manganese exploration and
development in West Africa, which is now treated as an asset held
for sale, and phosphate mining in Utah, USA. These business areas
form the basis of the Group's operating segments. For each segment,
the Group's CEO (the chief operating decision maker) reviews
internal management reports on at least a quarterly basis.
Other operations relate to the Group's administrative functions
conducted at its head office and by its intermediate holding
company together with consolidation adjustments.
Information regarding the results of each reportable segment is
included below. Performance is measured based on segment result
before tax, as included in the internal management reports that are
reviewed by the Group's Managing Director. Segment results are used
to measure performance as management believes that such information
is the most relevant in evaluating the performance of certain
segments relative to other entities that operate within the
exploration industry.
Information about reportable segments
Year ended 31 December 2022
Other
Manganese Phosphate operations Total
GBP'000 GBP'000 GBP'000 GBP'000
External revenue - 994 - 994
Cost of sales - 263 - 263
Depreciation, amortisation
and impairment 34 144 1 179
(Loss)/profit before
Tax (131) 68 (934) (997)
Assets 1,558 5,027 99 6,684
Exploration and
capital expenditure - 3,558 - 3,558
Liabilities 471 601 1,831 2,903
8. Operating segments (continued)
Information about reportable segments (continued)
15 months ended 31 December 2021
Other operations
Manganese Phosphate GBP'000 Total
GBP'000 GBP'000 GBP'000
External revenue - 452 - 452
Cost of Sales - 496 - 496
Depreciation, amortisation
and impairment 43 143 1 187
Share of associate loss to
date of becoming a subsidiary - 116 - 116
(Loss)/profit before tax (60) (569) (1,385) (2,014)
Assets 1,535 4,229 144 5,908
Exploration and capital
expenditure 1,332 3,274 - 4,606
Liabilities 360 2,113 155 2,628
Information about geographical segments
Year ended 31 December 2022
West Africa US Other Total
GBP'000 GBP'000 GBP'000 GBP'000
External revenue - 994 - 994
Cost of sales - 263 - 263
Depreciation, amortisation
and impairment 34 144 1 179
(Loss)/profit before
tax (131) 68 (934) (997)
Assets 1,558 5,027 99 6,684
Exploration and capital
expenditure - 3,558 - 3,558
Liabilities 471 601 1,831 2,903
8. Operating segments (continued)
Information about geographical segments (continued)
I15 months ended 31 December 2021
West
Africa US Other Total
GBP'000 GBP'000 GBP'000 GBP'000
External revenue - 452 - 452
Cost of Sales - 496 - 496
Interest expense - - - -
Depreciation, amortisation
and impairment 43 143 1 187
Share of associate
loss - (116) - (116)
(Loss)/profit before
tax (44) (569) (1,385) (2,014)
Assets 1,541 4,229 138 5,908
Exploration and capital
expenditure 1,332 3,274 - 4,606
Liabilities 360 2,113 155 2,628
9. Expenses
Year ended 15 months
Expenses include: 31 December ended 31 December
2022 2021
GBP'000 GBP'000
Depreciation and amortisation expense 179 187
Auditor's remuneration
- Audit fee 41 33
Foreign exchange differences 13 12
============= ===================
Auditor's remuneration for the period in respect of the Company
amounted to GBP15,000 (Period ended 31 December 2021:
GBP11,000).
10. Personnel expenses
Year ended 15 months
31 December ended 31
2022 December
GBP'000 2021
GBP'000
Wages and salaries 382 672
Social security costs 26 -
Pension costs 7 -
Fees 114 100
Equity-settled share-based payments (see note
27) 9 37
538 809
============= ==========
10. Personnel expenses (continued)
The average number of employees (including directors) during the
period was:
Year ended 15 months
31 December ended 31
2022 December
2021
Directors 4 4
Other 2 3
6 7
============= ==========
11. Directors' emoluments
Year ended 31 December 2022
Executive Non-executive
directors directors Total
GBP'000
GBP'000 GBP'000
Wages and salaries (incl. fees) 232 58 290
232 58 290
============== ============= ========
15 months ended 31 December 2021
Executive Non-executive
directors directors Total
GBP'000
GBP'000 GBP'000
Wages and salaries (incl. fees) 234 82 316
234 82 316
============== ============ ============
Fees in respect of the services of D Reeves are payable to a
third party, Wilgus Investments (Pty) Limited.
These amounts are disclosed by director in the Directors' report
on page 17.
Emoluments disclosed above include the following amounts payable
to the highest paid director:
Year ended 15 months
31 December ended 31
2022 December
GBP'000 2021
GBP'000
Emoluments for qualifying services 118 219
=========== =========
12. Finance costs
Recognised in loss for period
Year ended 15 months
31 December ended
2022 31 December
GBP'000 2021
GBP'000
Discount unwinding on deferred
consideration and loan payable 152 -
to previous minority shareholder
Other 52 43
204 43
========== ==========
The Discount unwinding disclosed above relates to the deferred
consideration explained in Note 17.
13. Taxation
Current tax
Year ended 15 months
31 December ended
2022 31 December
GBP'000 2021
GBP'000
Tax recognised in profit or loss
Current tax
Current period - -
============= ===============
Deferred tax
Origination and reversal of temporary - -
differences
============= ===============
Total tax - -
============= ===============
Reconciliation of effective tax rate
Year ended 15 months
31 December ended 31
2022 December
GBP'000 2021
GBP'000
Loss before tax (continuing operations) (997) (2,014)
============= ==========
Tax using the Company's domestic tax rate
of 19.0% (2021: 19.0%) (189) (383)
Effects of:
Expenses not deductible for tax purposes 29 2
Overseas (profits)/losses 10 116
Equity-settled share-based payments 2 7
Tax losses carried forward not recognised
as a deferred tax asset 148 258
- -
============= ==========
The UK corporation tax rate was 19% throughout the year.
13. Taxation (continued)
UK budget on 3 March 2021 announced the intention to increase
the tax rate from the current rate of 19% to 25%, with effect from
April 2023.
None of the components of other comprehensive income have a tax
impact.
Factors that may affect future tax charges
At the year end, the Group had unused tax losses available for
offset against suitable future profits of approximately
GBP7,907,000 (Period ended 31 December 2021: GBP7,128,000). A
deferred tax asset has not been recognised in respect of such
losses due to uncertainty of future profit streams.
14. Property, plant and equipment
Group
Plant and Office and
equipment computer Total
equipment
GBP'000 GBP'000 GBP'000
Cost
Balance at 1 October 2020 329 25 354
Acquisition of Falcon
Isle 172 - 172
Additions 185 3 188
Disposals - - -
Effect of movements in exchange rates (25) - (25)
----------- ----------- ----------
Balance at 31 December 2021 661 28 689
----------- ----------- ----------
Balance at 1 January 2022 661 28 689
Effect of movements in exchange rates 59 - 59
Transfers to assets held for sale (Note
23) (323) (16) (339)
----------- ----------- ----------
Balance at 31 December 2022 397 12 409
----------- ----------- ----------
Depreciation and impairment provisions
Balance at 1 October 2020 67 24 91
Depreciation for the year 34 2 36
Depreciation on disposals - - -
Effect of movements in exchange rates 8 - 8
Balance at 31 December 2021 109 26 135
----------- ----------- ----------
Balance at 1 January 2022 109 26 135
Depreciation for the period 47 1 48
Effect of movements in exchange rates 6 - 6
Transfers to assets held for sale (145) (16) (161)
----------- ----------- ----------
Balance at 31 December 2022 17 11 28
----------- ----------- ----------
Carrying amounts
At 1 October 2020 262 1 263
=========== =========== ==========
At 31 December 2021 552 2 554
=========== =========== ==========
At 31 December 2022 380 1 381
=========== =========== ==========
Depreciation is recognised within administrative expenses.
14. Property, plant and equipment (continued)
Company
Computer
equipment
GBP'000
Cost
Balance at 1 October 2020 5
Transfers 3
-----------
Balance at 31 December 2021 8
Balance at 1 January 2022 8
Additions -
Balance at 31 December 2022 8
-----------
Depreciation and impairment provisions
Balance at 1 October 2020 5
Depreciation for the year 1
-----------
Balance at 31 December 2021 6
Balance at 1 January 2022 6
Depreciation for the period 2
Balance at 31 December 2022 8
-----------
Carrying amounts
At 31 December 2021 2
===========
At 31 December 2022 -
===========
15. Right of use assets
Group
Land and
buildings
GBP'000
Cost
Balance at 1 October 2020 -
Additions 314
------------
Balance at 31 December 2021 314
Balance at 1 January 2022 314
Effect of movements in exchange
rates 39
Balance at 31 December 2022 353
------------
Depreciation and impairment provisions
Balance at 1 October 2020 -
Depreciation for the year 99
------------
Balance at 31 December 2021 99
Balance at 1 January 2022 99
Depreciation for the period 118
Effect of movements in exchange
rates 15
Balance at 31 December 2022 232
------------
Carrying amounts
At 1 October 2020 -
============
At 31 December 2021 215
============
At 31 December 2022 121
============
Depreciation is recognised within administrative expenses.
16. Intangible assets - Group
Prospecting
and exploration
rights
GBP'000
Cost
Balance at 1 October 2020 1,227
Acquisition of Falcon
Isle 3,046
Additions 538
Disposals (158)
Effect of movement in exchange
rates (10)
Balance at 31 December 2021 4,643
-----------------
Balance at 1 January 2022 4,643
Additions -
Disposals -
Effect of movements in exchange
rates 349
Transfers to assets held for sale (1,379)
Balance at 31 December 2022 3,613
--------
Amortisation and impairment losses
Balance at 1 October 2020 158
Amortisation 37
Disposals (158)
------
Balance at 31 December 2021 37
------
Balance at 1 January 2022 37
Amortisation 13
Effect of movements in exchange
rates 5
---
Balance at 31 December 2022 55
---
Carrying amounts
At 1 October 2020 1,069
======
At 31 December 2021 4,606
======
At 31 December 2022 3,558
======
The carrying value of the prospecting and exploration rights is
supported by the estimated resource and current market values.
Amortisati on is recognised within administrative expenses.
17. Investments in subsidiaries and associates
Company - subsidiaries
2022 2021
GBP'000 GBP'000
Equity investments
Balance at beginning of period 1,959 -
Additions - Increased investment
in Falcon Isle Resources LLC 635 1,959
Balance at 31 December 2,594 1,959
========= ==========
Country Ownership interest
of
Activity incorporation 2022 2021
Directly
Southern Iron Limited Investment Guernsey 100% 100%
Falcon Isle Resources
LLC Mining USA 100% 51%
Keras US LLC Holding company USA 100% 100%
Indirectly
Société Générale
des Mines SA Exploration Togo 85% 85%
Falcon Isle Holdings LLC Holding company USA 100% 100%
Registered offices of subsidiary companies are:
-- Southern Iron Limited, 1st Floor, Elizabeth House, Les
Ruettes Brayes, St Peter Port, Guernsey
-- Société Générale des Mines, Quartier Adidogome Apedokoe 02,
BP 20022, Lome, Togo
-- Falcon Isle Resources LLC, Falcon Isle Holdings LLC and Keras
US LLC, 8 The Green, Suite B8, Dover, Kent, Delaware 19901, USA
Société Générale des Mines SA and Southern Iron Limited have
been classified as assets held for sale at the year end, see Note
23 for further details.
Group and Company - associates
2022 2021
GBP'000 GBP'000
Accounted for using the equity method
At 1 October / January - 1,622
Additions - including acquisition costs - 453
Share of loss for the period - (116)
Transfer to investment in subsidiary - (1,959)
At 31 December - -
=========== =========
The interest in Falcon Isle was acquired for nominal
consideration under a binding heads of terms dated 28 July 2020.
Under this agreement the Company agreed to provide US$2.5m in loans
to Falcon Isle payable in agreed tranches. Falcon Isle is the 100%
owner of the Diamond Creek phosphate mine located in in Utah (USA)
which is a fully permitted, high grade direct shipping ore organic
phosphate operating mine.
At 30 September 2020 the Company had advanced US$ 1.9m to Falcon
Isle, resulting in an equity interest of 40% and bringing the cost
of the investment in the associate to GBP1,626,000.
On 31 December 2020 the Company advanced the balance of $0.6m
and its equity interest has increased to a controlling interest of
51%.
17. Investments in subsidiaries and associates (continued)
The initial acquisitions were accounted for under the equity
method of accounting but upon achieving control on 31 December
2020, the acquisition method of accounting has been applied.
The investment in associate was revalued prior to acquisition to
fair value based on the price paid to acquire the additional 11%
shareholding. Under IFRS 3, on acquisition of the controlling
stake, the Group remeasured its original 40% investment in Falcon
Isle. This led to a loss on change of ownership of GBP363,000 being
recognised in the Consolidated Statement of Comprehensive
Income.
On acquisition the non-controlling interest, valued based upon
net assets at acquisition, was valued at GBP645,000. No goodwill
has arisen from the acquisition.
On 29 March 2022, the Company agreed to acquire the outstanding
49% equity interest in Falcon Isle for consideration of $1,383,473
and loans totalling $1,816,527 made by the vendor to Falcon Isle,
for total consideration of $3.2 million, payable in four annual
tranches of $800,000 commencing on 1July 2022 and as such the
deferred consideration and loan due to the vendor has been
discounted at 12% with the discount being applied against the
investment in full. As a result the non-controlling interest has
been eliminated against the consideration with the remaining
balance of GBP199,311 transferred to retained earnings. The tranche
due on 1 July 2023 was paid late, which constituted an event of
default under the agreement. This default has been remedied within
the 30 day period provided for in the agreement.
18. Lease liabilities
The following lease liabilities arose in respect of the
recognition of right of use assets with a net book value of GBP121k
(2021 - GBP215k). The Group holds one lease that it accounts for
under IFRS 16.
Maturity analysis 2022 2021
GBP'000 GBP'000
Within one year 129 115
In one to five years - 115
--------- ---------
Total undiscounted liabilities 129 230
Future finance charges (3) (11)
Lease liabilities in the financial statements 126 219
========= =========
Current liabilities - Within one year 126 107
Non-current liabilities - In one to five
years - 112
--------- ---------
126 219
========= =========
The entities in the group were not party to any other leases as
at 31 December 2022 and 31 December 2021.
19. Loans
Company - current
2022 2021
GBP'000 GBP'000
Balance at beginning of period 2,081 1,534
Funds advanced to subsidiaries 756 547
Impairment of loans (534) -
Purchase of subsidiary loans 1,383 -
Balance at 31 December 3,686 2,081
========= =========
All loans to subsidiaries are currently unsecured and interest
free and repayable on demand. All loans are denominated in GBP with
the exception of the loan purchased from the Falcon Isle Resources
LLC non-controlling interest of $1,816,527.
20. Inventories
2022 2021
GBP'000 GBP'000
Phosphate, including processed material
held for sale 668 273
668 273
========= =========
21. Trade and other receivables
Group
2022 2021
GBP'000 GBP'000
Trade receivables 69 7
Other receivables 85 87
Prepayments 37 -
--------- ---------
191 94
========= =========
Company
2022 2021
GBP'000 GBP'000
Other receivables 8 20
Prepayments 37 -
45 20
========= =========
Other receivables are stated at their nominal value less
allowances for non-recoverability.
The Group and Company's exposure to credit and currency risk is
disclosed in note 29. Trade receivables are net of a provision for
bad debts of GBPnil (2021: GBPnil). No bad debt expense has been
recognised in the current or prior years.
22. Cash and cash equivalents
Group
2022 2021
GBP'000 GBP'000
Bank balances 207 166
Cash and cash equivalents 207 166
========= =========
Company
2022 2021
GBP'000 GBP'000
Bank balances 54 122
Cash and cash equivalents 54 122
========= =========
There is no material difference between the fair value of cash
and cash equivalents and their book value.
23. Assets held for sale
Through its 100% owned, Guernsey incorporated subsidiary,
Southern Iron Ltd, Keras holds an 85% interest in Société Générale
des Mines SA ("SGM") which holds research permits for the Nayéga
manganese project in northern Togo ("Nayéga"). The research permits
are effectively the equivalent of a mining exploration licences and
cover a 19,903 ha area in northern Togo.
Keras completed feasibility studies on Nayéga in 2015 and 2019
and completed a metallurgical bulk sample of 10,000 tonnes of
saleable manganese product in 2019. In October 2019, the Council of
Ministers of the Republic of Togo published a decree granting the
right for large-scale exploitation of the manganese deposit at
Nayéga to SGM. Since that date Keras has concentrated its efforts
in Togo on obtaining the required exploitation permit. The terms of
the permit and associated protocols have been agreed; however, the
exploitation permit approval has not been forthcoming.
Keras will no longer pursue the Nayéga exploitation permit and
will sell all the IP comprising reports, feasibility studies etc to
a newly formed mining company set up by the state for $1.7m less
costs leaving net proceeds of $1.33m and as such no impairment has
been recognised and all assets and liabilities of SGM have been
classified as held for sale as follows:
2022
GBP'000
Property, plant and equipment 178
Prospecting and exploration rights 1,379
Cash and cash equivalents 1
---------
1,558
Trade and other payables (471)
1,087
=========
The operating, financing and investing cashflows in respect of
discontinued operations were immaterial in 2022 and in 2021
amounted to GBP233k, GBP88k and (GBP329k) respectively.
24. Retirement benefit schemes
2022 2021
Defined contribution schemes GBP'000 GBP'000
Charge to profit or loss in respect of defined
contribution schemes 7 7
The Group operates a defined contribution pension scheme for all
qualifying employees. The assets of the scheme are held separately
from those of the Group in an independently administered fund.
At the year end, an amount of GBP2,042 (2021 - GBP2,042) was
held in trade and other payables in respect of accrued unpaid
pension contributions.
25. Capital and reserves
Share capital
Number of ordinary shares
Presented after share consolidation Presented before share consolidation
31 December 2022 31 December 2022 31 December 2021
Shares of 1p each Shares of 0.01p Shares of 0.01p
62,960,731 each each
16,775,000 6,296,073,068 4,866,007,851
In issue at beginning of period 1,677,500,000 1,369,565,217
Issued for cash
Issued in settlement of debt - - 60,500,000
--------------
In issue at 31 December/ - fully paid 79,735,731 7,973,573,100 6,296,073,068
All ordinary shares rank equally with regard to the Company's
residual assets. The holders of ordinary shares are entitled to
receive dividends as declared from time to time, and are entitled
to one vote per share at general meetings of the Company.
Issues of ordinary shares
On 5 May 2022 1,000,000,000 ordinary shares of 0.01p each were
issued at 0.12p per share of which 880,000,000 were issued for
cash, 83,333,333 to settle loans and 36,666,667 to settle
creditors.
On 17 May 2022 677,500,000 ordinary shares of 0.01p each were
issued at 0.12p per share of which 521,366,666 were issued for cash
and 156,133,333 to settle creditors.
Consolidation of shares
On 25 July 2022 every 100 existing ordinary shares of 0.01p each
was consolidated into 1 ordinary share of 1p each. The figures
presented in the 31 December 2022 column above are shown after the
consolidation.
25. Capital and reserves (continued)
Warrants
31 December 2022 31 December 2021
Presented after Presented before
share consolidation share consolidation
Average Number Average Number Average Number
exercise exercise exercise
price price price
In issue at
beginning
of period 18p 4,347,856 0.18p 434,785,608 0.24p 984,357,334
Issued in
period 18p 16,775,000 0.18p 1,677,500,000 0.20p 684,785,608
Lapsed 18p (4,347,856) 0.18p (434,785,608) 0.23p (1,234,357,334)
------------------
In issue at
31 December 18p 16,775,000 0.18p 1,677,500,000 0.18p 434,785,608
============ ================== ================
The figures presented in the 31 December 2022 column above are
shown after the consolidation and as such each exercise price has
been multiplied by 100 and each number of shares divided by
100.
On 16 April 2022 1,000,000,000 warrants were agreed to be issued
to subscribers for the Ordinary Shares agreed to be issued for cash
on 16 April 2022 on the basis of 1 warrant for every 2 shares
subscribed. The warrants are exercisable at price of 0.18p at any
time up to 31 May 2024.
On 18 May 2022 677,500,000 warrants were agreed to be issued to
subscribers for the Ordinary Shares agreed to be issued for cash on
18 May 2022 on the basis of 1 warrant for every 2 shares
subscribed. The warrants are exercisable at price of 0.18p at any
time up to 31 May 2024.
The warrants had a fair value of GBPnil at the balance sheet
date and were considered to fall outside the scope of IFRS2.
The weighted average remaining contractual life of the warrants
outstanding is 1 year and 152 days.
Other reserves
Share option/warrant reserve
The share option/warrant reserve comprises the cumulative
entries made to the consolidated statement of comprehensive income
in respect of equity-settled share-based payments as adjusted for
share options cancelled.
Exchange reserve
The exchange reserve comprises all foreign currency differences
arising from the translation of the financial statements of foreign
operations.
26. Earnings per share
Basic and diluted earnings/(loss) per share
The calculation of basic earnings/(loss) per share at 31
December 2022 is based on the following (loss)/profit attributable
to ordinary shareholders and a weighted average number of ordinary
shares in issue.
Loss attributable to ordinary shareholders (GBP)
Year ended
31 December 15 months
2022 ended 31
December
2021
Continuing operations (751,000) (1,948,000)
Discontinued operations (96,000) -
Loss attributable to ordinary shareholders (847,000) (1,948,000)
============= ============
Basic weighted average number of ordinary shares
Year ended
31 December 15 months
2022 ended 31
December
2021
Issued ordinary shares at beginning of
year 62,960,731 48,660,079
Effect of shares issued 10,807,397 10,854,832
Weighted average number of ordinary shares 73,768,128 59,514,911
============= ============
Diluted weighted average number of shares
Year ended
31 December
2022
Basic weighted average number 73,768,128
Effect of share options in
issue 1,300,000
Effect of warrants in issue 11,510,197
Weighted average number of ordinary shares 86,578,325
================
As a result of the group being loss making the earning per share
is presented on a basic weighted average number of shares basis and
not diluted.
Consolidation of shares
On 25 July 2022 every 100 existing ordinary shares of 0.01p each
was consolidated into 1 ordinary share of 1p each. The figures
presented in the table above for both the current and prior period
are shown after the impact of the consolidation.
27. Share-based payments
Number of share options Average exercise price
Presented Presented Presented Presented
after share before share after share before share
consolidation consolidation consolidation consolidation
2022 2022 2021 2022 2022 2021
pence Pence pence
Outstanding
at 1 January
2022 1,450,000 145,000,000 120,000,000 16 0.16 0.16
Granted
in the period - - 25,000,000 - - 0.12
Forfeited
in the period (150,000) (15,000,000) - 12 0.12 -
--------------- --------------- ------------ --------------- --------------- ------
Outstanding
at 31 December
2022 1,300,000 130,000,000 145,000,000 16 0.16 0.16
=============== =============== ============ =============== =============== ======
Exercisable
at 31 December
2022 1,033,333 103,333,333 70,000,000 16 0.16 0.16
=============== =============== ============ =============== =============== ======
The figures presented in the 31 December 2022 column above are
shown after the consolidation of shares completed in July 2022 and
as such each exercise price has been multiplied by 100 and each
number of shares divided by 100.
The Company established an Enterprise Management Incentive
Scheme to incentivise Directors and senior executives. On 17
January 2020, 120,000,000 options were granted at GBP0.001639 with
10,000,000 vesting immediately, 30,000,000 vesting on 9 March 2020,
30,000,000 vesting on 17 January 2021, 30,000,000 vesting on 17
January 2022 and 20,000,000 vesting on 17 January 2023. The options
lapse if not exercised within 5 years. Of the total, 90,000,000
options were granted to R Lamming, a Director.
The Black Scholes pricing model was used to calculate the share
based payment charge incorporating an annual volatility rate of
55%, expected life of between 2 and 5 years and risk free
investment rate of between 0.23% and 0.39%. The charge for the year
ended 31 December 2022 for these rights which was included in
administrative and exploration expenses amounted to GBP4,485 (2021
- GBP25,233).
On 7 April 2021, 10,000,000 options were granted at GBP0.001183
with 3,333,333 vesting on 1 April 2022, 3,333,333 vesting on 1
April 2023 and 3,333,334 vesting on 1 April 2024. The options lapse
if not exercised within 5 years. The Black Scholes pricing model
was used to calculate the share based payment charge incorporating
an annual volatility rate of 57%, expected life of between 4 and 6
years and risk free investment rate of between 0.6% and 0.93%. The
charge for the period ended 31 December 2022 for these rights which
was included in administrative and exploration expenses amounted to
GBP4,370 (2021 - GBP5,450).
27. Share-based payments (continued)
On 27 May 2021, 15,000,000 options were granted at GBP0.001121
with 5,000,000 vesting on 17 May 2022, 5,000,000 vesting on 17 May
2023 and 5,000,000 vesting on 17 May 2024. The Black Scholes
pricing model was used to calculate the share based payment charge
incorporating an annual volatility rate of 57%, expected life of
between 4 and 6 years and risk free investment rate of between 0.6%
and 0.93%. The charge for the year ended 31 December 2022 for these
rights which was included in administrative and exploration
expenses amounted to GBPnil (2021 - GBP6,706). The employee which
these options were granted to left the company during the year and
as such the options lapsed and the balance within the share based
payment reserve relating to these options of GBP6,706 was
transferred to retained earnings.
28. Trade and other payables
Group - Current
2022 2021
GBP'000 GBP'000
Trade payables 262 962
Accrued expenses 59 93
Amounts due to Falcon Isle Resources'
minority interest - 593
Other payables 209 11
Deferred consideration and loans 628 -
to previous minority shareholders
1,158 1,658
========= =========
Group - Non-Current
2022 2021
GBP'000 GBP'000
Amounts due to Falcon Isle Resources'
minority interest - 749
Other payables 83 -
Deferred consideration and loans 1,065 -
to previous minority shareholders
1,148 749
========= =========
Company - Current
2022 2021
GBP'000 GBP'000
Trade payables 68 46
Accrued expenses 60 91
Other payables 11 13
Deferred consideration and loans 628 -
to previous minority shareholders
767 150
========= =========
Company - Non-Current
2022 2021
GBP'000 GBP'000
Deferred consideration and loans 1,065 -
to previous minority shareholders
1,065 -
========= =========
There is no material difference between the fair value of trade
and other payables and accruals and their book value. The Group's
and Company's exposure to currency and liquidity risk related to
trade and other payables is disclosed in Note 29.
28. Trade and other payables (continued)
Deferred consideration and loans to previous minority
shareholders relates to the acquisition of the outstanding 49%
equity interest in Falcon Isle and loans totalling $1,816,527 made
by the vendor to Falcon Isle, for total consideration of $3.2
million, payable in four annual tranches of $800,000 commencing on
1 July 2022 and as such the deferred consideration and loans to
previous minority shareholders has been discounted at 12%.
29. Financial instruments
Financial risk management
The Group's operations expose it to a variety of financial risks
that include liquidity risk. The Group has in place a risk
management programme that seeks to limit the adverse effect of such
risks on its financial performance.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations.
Exposure to credit risk
The carrying amount of financial assets represents the maximum
credit exposure. The maximum exposure to credit risk at the
reporting date was as follows.
Group
Financial assets at
amortised cost
Carrying amount
Credit risk 2022 2021
GBP'000 GBP'000
Trade and other receivables 191 94
Cash and cash equivalents 207 166
398 260
========== ==========
Expected credit loss assessment
Balance Expected Loss allowance
loss rate
%
Trade receivables GBP'000 GBP'000
Current 19 - -
1-30 days overdue 7 - -
31-60 days overdue 28 - -
61-90 days overdue 9 - -
Over 90 days overdue 6 - -
--------
69 -
======== ===============
The director considers that the carrying amount of trade and
other receivables is approximately equal to their fair value.
29. Financial instruments (continued)
Company
Financial assets at
amortised cost
Carrying amount
2022 2021
GBP'000 GBP'000
Loans 2,586 2,081
Trade and other receivables 45 20
Cash and cash equivalents 54 122
2,685 2,223
========== ==========
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset.
The Group reviews its facilities regularly to ensure it has
adequate funds for operations and expansion plans.
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the impact of netting agreements.
Group
2022
Carrying Contractual 3 months 3-12 2-5 years
amount cash flows or less months GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
Inventory 668 668 668 - -
Trade and other
receivables 191 191 191 - -
Assets held for
sale 1,558 1,558 1,558 - -
Cash and cash equivalents 207 207 207 - -
--------- ------------ --------- --------- ----------
2,624 2,624 2,624 - -
--------- ------------ --------- --------- ----------
Non-derivative financial
liabilities
Trade and other
payables 2,306 2,306 331 828 1,147
Liabilities held
for sale 471 471 471 - -
Lease liabilities 126 126 31 95 -
--------- ------------ --------- --------- ----------
2,903 2,903 833 923 1,147
--------- ------------ --------- --------- ----------
Liquidity gap (279) (279) 1,791 (923) (1,147)
========= ============ ========= ========= ==========
29. Financial instruments (continued)
Group
2021
Carrying Contractual 2 months 2-12 2-5
amount cash flows or less months years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
Inventory 273 273 273 - -
Trade and other
receivables 94 94 94 - -
Cash and cash equivalents 166 166 166 - -
---------- ------------ --------- --------- ---------
533 533 533 - -
---------- ------------ --------- --------- ---------
Non-derivative financial
liabilities
Trade and other payables 2,407 2,407 168 1,490 749
Lease liabilities 219 219 19 88 112
---------- ------------ --------- --------- ---------
2,626 2,626 187 1,578 861
---------- ------------ --------- --------- ---------
Liquidity gap (2,093) (2,093) 346 (1,578) (861)
========== ============ ========= ========= =========
Company
2022
Carrying Contractual 3 months 3-12 2-5
amount cash flows or less months years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
Loans 3,686 3,686 3,686 - -
Trade and other
receivables 45 45 45 - -
Cash and cash
equivalents 54 54 54 - -
--------- ------------ --------- --------- -----------
3,785 3,785 3,785 - -
--------- ------------ --------- --------- -----------
Non-derivative financial
assets
Trade and other payables 1,832 1,832 139 628 1,065
1,832 1,832 139 628 1,065
--------- ------------ --------- --------- -----------
Liquidity gap 1,953 1,953 3,646 (628) (1,065)
========= ============ ========= ========= ===========
29. Financial instruments (continued)
Company
2021
Carrying Contractual 2 months 2-12 2-5
amount cash flows or less months years
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Non-derivative financial
assets
Loans 2,081 2,081 2,081 - -
Trade and other
receivables 20 20 20 - -
Cash and cash equivalents 122 122 122 - -
---------- ------------ --------- --------- ---------
2,223 2,223 2,223 - -
---------- ------------ --------- --------- ---------
Non-derivative financial
liabilities
Trade and other payables 150 150 25 125 -
150 150 25 125 -
---------- ------------ --------- --------- ---------
Liquidity gap 2,073 2,073 2,198 (125) -
========== ============ ========= ========= =========
Market risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
Currency risk
The Group is exposed to foreign currency risk on purchases that
are denominated in currencies other than GBP. The currencies giving
rise to this risk are primarily the CFA Franc and the US
dollar.
The carrying amounts of the group's foreign currency denominated
monetary assets and liabilities at the reporting date are as
follows:
GBP USD CFA
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 52 155 -
Trade and other receivables 46 145 -
Trade and other payables (138) (2,168) -
--------- --------- ---------
40 (1,868) -
========= ========= =========
Fair values
The fair values of financial instruments such as trade and other
receivables/payables are substantially equivalent to carrying
amounts reflected in the balance sheet.
Capital management
The Group's objective when managing capital is to safeguard its
accumulated capital in order to provide an adequate return to
shareholders by maintaining a sufficient level of funds, in order
to support continued operations.
The Group considers its capital to be total shareholders' equity
which at 31 December 2022 for the Group totalled GBP3,927,000
(2021: GBP3,053,000) and for the Company totalled GBP4,547,000
(2021: GBP4,034,000).
30. Related parties
The Group's related parties include its key management personnel
and others as described below.
No guarantees have been given or received and all outstanding
balances are usually settled in cash.
As part of a placing in April 2022 which raised a total of
GBP1,200,000 by the issue of 1,000,000,000 new ordinary shares
(before consolidation) at 0.12p per share, the Directors subscribed
for 200,000,000 Placing Shares in aggregate. Brian Moritz, Russell
Lamming and Dave Reeves subscribed for 35,000,000 ( GBP42,000),
45,000,000 (GBP54,000) and 120,000,000 (GBP144,000) new ordinary
shares respectively.
Azets, a firm in which Claire Parry is a partner, charged the
Company GBP9,340 plus VAT for accounting services during the period
from 1 September to 31 December 2022.
Other related party transactions
Transactions with Group companies
The Company had the following related party balances from
financing activities:
2022 2021
GBP'000 GBP'000
Southern Iron Limited
- Loans and receivables (interest free) 1,100 1,622
Falcon Isle Resources LLC
- Loans and receivables (interest free) 2,586 459
Southern Iron Limited had the following related party balances
from financing activities:
Société Générale des
Mines SA
- Loans and receivables (interest free) 1,100 1,777
31. Subsequent events
On 17 May 2023 Keras signed an agreement with the Republic of
Togo (the "State") relating to the Nayéga Manganese project
("Nayéga") in Northern Togo. Under this agreement Keras agreed that
Nayéga is a Togolese strategic asset and Keras will no longer
pursue the Nayéga exploitation permit. Keras agreed to transfer all
its intellectual knowledge on Nayéga to the State and provide
advisory and brokerage services to expedite the development of
Nayéga.
The State agreed to pay Keras a cash consideration of $1,700,000
which was received in July 2023, and thereafter;
-- Keras will be paid an advisory fee of 1.5% of gross revenue
generated from the Nayéga mine for the provision of advisory
services for three years; and
-- Keras will be paid 6.0% of gross revenue generated from the
Nayéga mine for the provision of brokerage services for the lesser
of three and a half years or 900,000 tonnes of beneficiated
manganese ore produced and sold from Nayéga.
In addition, Keras will liquidate its interest in Société
Générale des Mines SA, the company through which Keras holds its
interest in Nayéga.
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END
FR UPUMCMUPWPPA
(END) Dow Jones Newswires
July 06, 2023 02:00 ET (06:00 GMT)
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