TIDMATM
RNS Number : 7181X
AfriTin Mining Ltd
31 August 2022
31 August 2022
AfriTin Mining Limited
("AfriTin" or the "Company")
Audited Financial Results for the 12 months ended 28 February
2022
AfriTin Mining Limited (AIM: ATM), an African technology-metals
mining company with a portfolio of mining and exploration assets in
Namibia, is pleased to announce its final audited results for the
2022 financial year (FY2022) ended 28 February 2022.
Financial Highlights:
-- Revenue of GBP13.6m (FY2021: GBP5.0m) up 178% driven by
increased production and higher FY2022 tin prices;
-- Maiden group profit before tax of GBP0.4m (FY2021: loss of
GBP5.8m), a positive swing of GBP6.2m;
-- Increase in EBITDA of 155% to GBP2.6m (FY2021: loss of GBP4.7m);
-- Loss after tax of GBP0.474m (FY2021: loss of GBP5.796m);
-- Average tin price achieved for the year of US$38,680/tonne (FY2021: US$22,150/tonne); and
-- Cash and cash equivalents at year end of GBP7.4m.
Key Operational Highlights:
-- Annual tin concentrate production increased 70% to 804 tonnes
after ramp-up and expansion initiatives (FY2021: 473 tonnes);
-- Tin production 12% above nameplate capacity reflecting strong operational performance;
-- Definitive Feasibility Study ("DFS") published for up to 67%
expansion on Phase 1 and commenced construction on this
project;
-- Advanced exploration and development into lithium and tantalum as potential by-products; and
-- Preliminary Economic Assessment ("PEA") published for a possible Phase 2 expansion.
Post Year End Highlights:
-- Construction for the Phase 1 Expansion completed, with
commissioning scheduled to be complete by the end of September
2022;
-- Production to increase by up to 67% (up to 1,200 tonnes of tin concentrate per annum); and
-- Conditional, credit approved term sheet signed with the
Development Bank of Namibia to support the Company's growth
strategy.
Anthony Viljoen, CEO of AfriTin, commented :
"I am pleased to report another year of strong operational
delivery that has seen AfriTin significantly increase production
and generate its first group-wide profit. Our production at Uis has
exceeded nameplate capacity by 12% which is a testament to the
operational excellence we have instilled in Namibia and puts the
Company in a good position to deliver our forthcoming further
expansion initiatives.
As we look forward, following commissioning of the Phase 1
expansion in September 2022, we should see tin production rates
increase by up to 67% (up to 1,200 tonnes of concentrate per
annum). Despite volatile global commodity markets this year,
management and the Board of Directors remain confident that the
market fundamentals for tin production will remain positive, giving
AfriTin's existing operations a relative competitive advantage in
this supply-constrained environment. The addition of various growth
initiatives, specifically the addition of lithium and tantalum
production revenue streams, will further drive future value for the
Company. This should transition AfriTin to a multi-commodity
producing technology metals group, which is tremendously
exciting.
I would like to thank my supportive Board of Directors and all
our employees for their efforts in building these foundations to
deliver further success in the coming years"
Annual General Meeting
A Notice of Annual General Meeting ("AGM") will be distributed
to shareholders today and is now available on the Company's
website. The AGM is to be held at 11:00 am on 29 September 2022 at
PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1
3RH.
Annual Report
The Annual Report for the 2022 financial year ended 28 February
2022 is now available on the Company's website at the following
link: https://afritinmining.com/investor-centre/company-reports/ .
Physical copies of the Annual Report will also be posted to
shareholders today, to those who have elected to receive them.
AfriTin Mining Limited +27 (11) 268 6555
Anthony Viljoen, CEO
Nominated Adviser +44 (0) 207 220 1666
WH Ireland Limited
Katy Mitchell
Andrew de Andrade
Corporate Advisor and Joint Broker
H&P Advisory Limited
Andrew Chubb
Jay Ashfield
Nilesh Patel +44 (0) 20 7907 8500
Stifel Nicolaus Europe Limited
Ashton Clanfield
Callum Stewart +44 (0) 20 7710 7600
Tavistock Financial PR (United Kingdom) +44 (0) 207 920 3150
Emily Moss
Catherine Drummond
Adam Baynes
CHAIRMAN'S STATEMENT
The year in review marks a significant milestone for AfriTin and
the team. I congratulate all of our employees on this achievement.
The fundamentals in this financial year have been strong for tin,
coupled with the ever-increasing demand for the transition to a
greener world. Our team has successfully returned Uis to its
rightful state as a producing mine. I congratulate all of our
employees on this achievement.
Since attaining our Namibian licences, we remain confident in
the fundamentals of producing a saleable tin concentrate and
further unlocking future revenue streams. Against the backdrop of
surpassing nameplate production in November 2020 and building on
this throughout 2021, AfriTin is well on its way to becoming a
globally significant producer of high demand strategic commodities.
We look forward to building on our existing platform through our
various expansion projects and complimentary metal streams.
As per most companies globally, AfriTin was not immune to the
effects and disruptions of the COVID-19 pandemic. While our teams
were presented with multiple logistical challenges, acts performed
to overcome these are a testament to the resilience and flexibility
of our employees and management. The health and safety of our
staff, partners and stakeholders has been, and always will be, of
paramount importance to the Board.
AfriTin's commitment to strong Environmental, Social and
Governance (ESG) principles has been entrenched in our philosophy
since inception and is strongly supported by the Board and the
entire organisation. We recognise the need and duty to entrench
good governance and ESG principles as early as possible in our
business development plan and to adopt necessary monitoring and
change to sustainably achieve these.
Looking to the future of AfriTin, we remain confident in our
pursuit of producing saleable commodities at Uis as well as our
other license areas. The positive, global momentum shift in the
green tech revolution and a step-change in demand for these
strategic materials is the global opportunity that presents itself
to AfriTin. AfriTin's ability to economically deliver these
saleable products to what we believe is a pent up and ongoing
future demand for these minerals remains our focussed
objective.
AfriTin is particularly proud of developing Uis in Namibia in
conjunction with our majority Namibian workforce at site, our local
communities and local and national government. Namibia is one of
Africa's leading mining jurisdictions according to the Policy
Perspective Index, and we are proud to play our part in its
continued development. Listing on the Namibian Stock Exchange in
March 2022 solidifies our commitment to the country and our desire
to share our success locally with those who played a part in
it.
We consider AfriTin today to be a significantly different
company to what it was a year ago due to the change achieved and
accelerated development progress at Uis. There are considerable
future strategic milestones we have set for our teams, and whilst
our tin success at Uis provides a proven underpinning foundation on
which to build, we are not resting on this.
I applaud the work completed and the foundations laid to secure
our future and would like to thank my fellow Board members,
management teams, all stakeholders and most of all our people and
their families.
GLEN PARSONS
Chairman
31 August 2022
CHIEF EXECUTIVE OFFICER'S STATEMENT
AfriTin has had another successful year, serving as the
foundation for the rapid deployment of the Company's various growth
initiatives over the coming months. I believe AfriTin is poised to
become a leading supplier of technology metals, targeting a more
diversified portfolio of production in the near future. We find
ourselves a part of a small, unique group of global tin producers,
with a differentiating factor being the prospect of underexplored
lithium and tantalum in the region, as well as additional
historical open pit mines which all form part of our exciting
mining operations at our flagship Uis asset.
The market fundamentals for tin provided the perfect backdrop
for a mine ramping up its production. Our positive production
results coincided with a period of unprecedented tin price highs
triggered by low stocks and no sign of relief from a constrained
physical supply chain. The Company ended the financial year with
cash and cash equivalents of GBP7.365m (2021: GBP1.351m). A GBP4.5
million senior secured term loan agreed with Standard Bank Namibia
marked a strong endorsement of the Company and the expansion of our
tin production. Our focus now turns to leveraging these cashflows
from the tin production, to bring the significant lithium and
tantalum revenue streams into production.
The Phase 1 pilot plant at Uis has performed strongly and
provided a perfect platform to propel AfriTin from a single
commodity producer to a multi-tech metal Company over the next five
years. Production at our flagship asset exceeded nameplate capacity
with an annual production of 804 tonnes of tin concentrate. A
Definitive Feasibility Study for the expansion of the Phase 1
mining and processing facility was published during the year which
served as confirmation of the highly attractive economics
associated with the low-cost modular expansion of the current Phase
1 plant. The Phase 1 expansion project is currently in progress and
is estimated to increase tin concentrate production by 67% by way
of a modular expansion of the existing processing facility. The
bulk of the civil construction and steel fabrication has been
completed, with on-site steel construction currently in
progress.
In line with our vision of diversification of our tech-metal
exposure through by-product production, raising equity funds of
GBP13 million before expenses has put the Company in a position to
expedite the Phase 1 expansion and further investigate lithium and
tantalum by-product potential and exploration. By-product
production as well as the introduction of ore sorting technology,
which upgrades feed to the concentrator by up to four times the ROM
grade, could transform the overall economics and unit cost of
production for Phase 1. The Company is proceeding with the design
and procurement of a pilot lithium beneficiation facility as well
as the implementation of a tantalum concentrating circuit and ore
sorting test circuit. By implementing the pilot phase development
of these additional products, the Company aims to take advantage of
the burgeoning technology metals market by fast-tracking the
by-product streams into production.
Turning to Phase 2, the results of the Phase 2 Preliminary
Economic Assessment (PEA) were announced during the year and
demonstrated the economics and returns for the expansion (see
announcement dated 26 April 2022). Phase 2 should see AfriTin
produce globally significant volumes of tin, lithium and tantalum,
which the Directors believe are vital in meeting the demands of the
transition to a new efficient and greener technology future.
The Directors consider the Damara region to be a metallogenic
jewel with huge, underexplored potential. The ore reserve declared
at Uis represents a small portion of the historically drilled area
in the mining licence property. As a route to expanding our
footprint within the extended Uis project area, an exploration
drilling campaign commenced during the year with the aim of
verifying the historic resources and upgrading the resources to
comply with the JORC (2012) Codes. This could see the resource
increase significantly from 1.54 Mt, however, at this stage there
can be no guarantee what that resource will be. We look forward to
providing updates as we progress. The Company's other licence areas
in the region encompass additional historical mining areas and
there is potential for these to deliver sustained long-term value
by reopening a global significant-tech metals province for AfriTin.
The exploration of these remains a high priority for the Company.
To this end, an exploration programme is in progress to confirm the
historical tin and tantalum resource and investigate the spodumene
(lithium) discovery announced in March 2022 (after the period under
review) at our B1/C1 mining licence. In addition, an aggressive
confirmatory drilling program at the historic Brandberg West tin
and tungsten mining operation, aims to verify the historical
drilling database at this site.
Our fully funded Phase 1 expansion project and the extensive
exploration programme currently underway are the fundamental
building blocks to positioning AfriTin as a globally significant
tech metals producer. While the volatility in the tin prices post
year-end posed a challenge for the Group, we are at the advanced
stages of securing funding to continue with our growth ambitions. A
subsidiary of the Group has entered into a conditional, credit
approved, term sheet for a lending facility with the Development
Bank of Namibia Limited ("Development Bank of Namibia") to fund the
Uis Phase 1 Stage II Continuous Improvement Project. As announced
on 5 July 2022, a Proposed Lending Facility comprising a NAD 100
million (approximately GBP5.5 million) Senior Secured Lending
Facility has been signed with the Development Bank of Namibia.
Although the Lending Facility has been approved by the credit
committee and board of the Development Bank of Namibia, there are
certain conditions precedent that need to be adhered to, including
completion of final legal documentation. At this stage there can be
no guarantee the Lending Facility will be entered into, or that any
funds will be drawn down, but AfriTin Management have every
confidence that it will be. The Company has previously announced
that the terms of this proposed lending facility would expire by
the end of July 2022 but the Directors confirm that this has now
been extended such that completion is anticipated around the end of
September 2022. A further update will be provided at that time.
As an acknowledgment of our commitment to developing Namibia and
its capital markets further, AfriTin announced its dual listing on
the NSX market of the Namibian Stock exchange. We are acutely aware
of the influence and impact we can wield, and it is for this reason
that the leadership team places great emphasis on creating value
for the wider community, our shareholders, investors, and other
stakeholders. Central to all decisions is the commitment to
reducing carbon emissions and limiting the environmental impact of
our operations. An Environmental, Social and Governance (ESG)
system was implemented during the course of the year, and we hope
to present a strategy to the market in H2 2022.
I would like to congratulate and thank our management teams,
staff, and stakeholders for their outstanding efforts, continued
support, and for all that we have achieved over the past year. In
addition, I would like to thank the other Directors for their
guidance and advice. We are committed to expanding and developing
Uis, as well as our other Namibian exploration assets as we embark
on the route to becoming a significant African multi-commodity tech
metals producer. I look forward to updating the market on our
progress.
ANTHONY VILJOEN
Chief Executive Officer
31 August 2022
FINANCIAL REVIEW
I am pleased to report the Company's annual revenue of GBP13.6m
(2021: GBP5.0m) from the sale of 760 tonnes of tin concentrate
(2021: 473 tonnes). During the year under review, 29 shipments
(2021: 19 shipments) of tin concentrate left the Uis Mine and were
sold to our offtake partner, Thaisarco. The average tin price
achieved during the year under review was US$38 680 (2021: US$ 22
150). The increase in tin price achieved resulted in a healthy
gross profit margin of 32% (2021: -0.05%).
Administrative expenses across the Group increased to GBP3.675m
for the year (2021: GBP2.540m). The increase is as a result of an
increase in staff head count given the growth phase of the business
as well as increased support services costs on site and at the
corporate head office due to increased operations.
The increase in finance cost for the year to GBP0.316m (2021:
GBP0.184m) is as a result of interest on the Group's lending
facilities no longer being capitalized to the mining asset post the
achievement of commercial production at Uis in November 2020.
Furthermore, additional interest was charged on the provisional
payments that were received from Thaisarco due to exceptionally
long transit times caused by global shipping delays.
The Group's loss for the year totalled GBP0.474m (2021:
GBP5.796m). Basic loss per share from operations of 0.08 pence was
recorded (2021: 0.76 pence). The Group's EBITDA showed significant
improvement, increasing from negative GBP4.713m in the prior year
to positive GBP2.589m in the current year.
Intangible asset additions amounted to GBP1.577m (2021:
GBP0.982m) and property, plant and equipment additions amounted to
GBP5.213m (2021: GBP2.570m). Capital expenditure occurred on a
variety of growth projects, most notably the Uis Phase 1 Stage II
expansion. The construction of this expansion has been completed
subsequent to year end. During the year, GBP1.737m was transferred
from exploration and evaluation assets to the mining assets as per
the requirements of IFRS 6. Please see Note 12 and 13 for further
details.
As at 28 February 2022, the Group had cash in the bank amounting
to GBP7.365m (2021: GBP1.351m). The inventory balance increased to
GBP1.452m (2021: GBP0.997m) as a result of increased production of
tin concentrate. At year end, 75 tonnes (2021: 36 tonnes) of tin
concentrate was on hand, valued at GBP0.909m (2021: GBP0.373m).
This has been shipped subsequent to year end.
Trade receivables increased to GBP3.953m at year end (2021:
GBP1.188m) as a result of the higher production rates achieved as
well as higher tin prices achieved in the financial year. The
balance incorporates a fair value adjustment which was passed to
reprice the shipments in transit at year end in accordance with the
requirements of IFRS. Trade and other payables increased to
GBP2.970m (2021: GBP1.484m) due to additional operating costs being
incurred as a result of increased operations.
Borrowings increased due to a GBP4.5 million term loan obtained
from Standard Bank for the construction of the Phase 1 Stage II
expansion. The loan note facility as well as the Nedbank working
capital facility were fully settled during the year.
Equity increased due to a GBP13 million equity raise that was
completed in May 2021. The convertible loan note which had been
classified as equity was also fully settled in May 2021.
FUNDING
During the year, the Company completed a NAD 90 million
(approximately GBP 4.5 million) Term Loan Facility with Standard
Bank Namibia. The loan term of 5 years ranked as senior secured
debt at an interest rate of 3-month JIBAR plus 4.5%. In addition to
the Term Loan, Standard Bank took over the existing short-term
banking facilities (working capital facilities) with Nedbank
Namibia totalling NAD 43 million (approximately GBP 2.2 million).
These facilities will incur an interest rate of Namibian prime
lending rate (currently 7.50%) minus 1.00%. Furthermore, Standard
Bank also provided AfriTin Mining (Namibia) Pty Limited with a NAD
5 million guarantee to Namibia Power Corporation Pty Limited in
relation to a deposit for the supply of electrical power.
Management and the Board of Directors have considered cash flow
forecasts and stress testing as a result of the recent decline in
Tin prices, and have concluded that the Company will be able to
continue in operation for the foreseeable future as a going concern
as the group is at an advanced stage of securing strategic funding
for the business.
Notwithstanding the above, these circumstances indicate that a
material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern and, therefore, that
the Group may be unable to realise its assets or settle its
liabilities in the ordinary course of business. As a result of
their review, and despite the aforementioned material uncertainty,
the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational
existence for the going concern assessment period and have
therefore used the going concern basis in preparing these
consolidated financial statements. For further details please see
the going concern disclosure in Note 2.
HITEN OOKA
Chief Financial Officer
31 August 2022
DIRECTORS' REPORT
The Directors of AfriTin hereby present their report together
with the consolidated financial statements for the year from 1
March 2021 to 28 February 2022.
Principal Activities, Business Review and Future
Developments
The principal activity of the Group (AfriTin and its
subsidiaries) is mineral exploration and the development of mining
and exploration projects in Namibia. A review of the Group's
progress and prospects is given in the CEO's statement in this
Annual Report.
Principal Risks and Uncertainties
The Group is subject to a variety of risks, specifically those
relating to the mining and exploration industry. As an
entrepreneurial business operating in commodities and emerging
markets, there is clearly an elevated risk which is balanced by
potentially greater rewards. The Board is mindful of, and monitors,
both its corporate risk and individual project risk. Outlined below
are the principal risk factors that the Board feels may affect
performance. The risks detailed below are not exhaustive, and
further risks and uncertainties may exist which are currently
unidentified or considered to be immaterial. The risks are not
presented in any order of priority.
Risk and Impact Mitigation
Volatility Tin, tantalum and lithium The Board and management
of metal prices prices are subject to high constantly monitor the
levels of volatility and are markets in which the Group
impacted by numerous factors operates. Long-term financial
that are outside of the control planning is undertaken
of the Group. A low tin, tantalum on a regular basis.
or lithium price as well as
commodity demand could affect The Board approved the
the financial performance modular expansion of the
of the Group and this may Phase 1 to increase tin
affect the ability of the output and leverage off
Group to fund future growth. current infrastructure
and reduce unit costs through
a 67% planned increase
in tin production.
The Board is supporting
the exploration and metallurgical
test work for the extraction
of lithium and tantalum
at Uis. The benefits of
extracting these additional
metals includes enhanced
revenue and lowered unit
costs.
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Foreign exchange With AfriTin's operations The Group holds the majority
mainly in Namibia and South of its funds in major currencies.
Africa, but tin sales based It attempts to match cash
in US Dollars and equity funding held in a particular currency
based in Pound Sterling, the to the currency in which
volatility and movement in liabilities are incurred.
the Rand/Namibian Dollar exchange
rate could be a significant
risk factor to the Group.
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Exploration The business of mineral exploration Exploration projects are
and mining involves a high degree of carefully managed with
risks risk. Whilst the discovery regular review by the Board
of a mineral deposit may result of progress against targets
in substantial rewards, few and expenditure. Funds
properties at the exploration are only expended in areas
stage are ultimately developed deemed prospective.
into producing mines.
The Group adheres strictly
The operations of the Group to a health and safety
may be disrupted by a variety programme. When constructing
of risks and hazards which a mine site, external geotechnical,
are beyond the control of environmental and geo-hydrological
the Group, including geological, consultants are used to
geotechnical and seismic factors, ensure all potential risks
environmental hazards, industrial of this nature are understood
accidents, occupational and and mitigation plans are
health hazards, technical put in place.
failures, labour disputes,
unexpected rock properties,
explosions, ooding, and extended
interruptions due to inclement
or hazardous weather conditions
and other acts of God.
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Development Development projects have The Group has appointed
projects no operating history upon an experienced team of
which to base estimates of geoscientists and engineers,
future cash operating costs. complemented by experienced
For development projects, consultants in specialist
estimates of proven and probable areas. Any new capital
reserves and cash operating projects are supported
costs are, to a large extent, by scoping, feasibility
based on the interpretation and intensive test work
of geological data obtained studies. The Uis Phase
from drillholes and other 1 pilot plant has provided
sampling techniques and feasibility an understanding of the
studies. This derives estimates metallurgy and processing
of cash operating costs based elements of the project
upon anticipated tonnage and which will provide essential
grades of ore to be mined up-front information for
and processed, as well as the implementation of Phase
the con guration of the orebody, 2. In addition, detailed
expected throughput and recovery metallurgical test work
rates, comparable facility is being undertaken to
and equipment operating costs assess the feasibility
and other factors. of extraction of Lithium
and Tantalum prior to making
any decision on the extraction
of these metals. Third
party experts are integral
to the metallurgical test
work. The company is advancing
exploration drilling programmes
to increase confidence
levels for lithium and
tantalum. All resources
and reserves need to be
JORC compliant and signed
off by competent persons.
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Capital budget Whilst best estimates are Capital expenditure and
overruns used in preparing capital project execution are subject
project budgets, these budgets to pre-defined governance
are dependent on a number and approval procedures,
of external factors which which include feasibility
are beyond the control of studies prior to implementation.
the Group, resulting in a Management and the Board
risk of material overruns regularly review project
versus budget. progress and related expenditure
on projects. This includes
reviewing actual costs
against budgeted costs,
updating working capital
models, and assessing potential
impacts on future cash
flow.
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Power and water Power sources and water supply The Group has concluded
supply are key to the functioning a formal electrical power
of viable mining operations. supply agreement with Namibia
A lack of power or water, Power Corporation for power
or uncertainties around their to the mining and processing
uninterrupted supply, would facility at Uis and this
adversely impact the feasibility will provide enough power
of the operation. for Phase 1 of the project.
Diesel generators will
serve as backup power.
A geohydrological study,
water drilling and test
pumping programme has demonstrated
the viability of using
groundwater sources for
the Phase 1 pilot plant.
This was confirmed with
the implementation and
successful operation of
a water supply network.
Solutions for Phase 2 in
terms of both electrical
power and water supply
are in the process of being
reviewed.
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Financing The successful extraction The Group has a supportive
of tin, tantalum and eventually shareholder base, as well
lithium will require signi as significant future investor
cant capital investment. The interest, to engage with
Group's ability to raise further for future funding rounds.
funds will depend on the success The management are currently
of existing operations. Market at an advance stage of
conditions may not be conducive securing strategic funding
to financing. The Group may for the business. Refer
not be successful in procuring to note 2 for details.
the requisite funds. The Group monitors cash
flows on an ongoing basis."
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Key personnel The success and operational The Group has built a team
risk performance of the Group is of executives, scientists,
dependent on the skills, expertise engineers and support personnel
and knowledge of management who are experienced and
and qualified personnel. Group versatile enough to address
profitability could be impacted shortcomings that may arise
in the event that key personnel from the loss of employees.
leave the business. In addition, the Group
has developed long-standing
relationships with consulting
firms in key specialist
areas. Remuneration arrangements,
given the stage of the
Group's development, are
intended to be sufficiently
competitive to attract,
retain and motivate high-quality
staff capable of achieving
the Group's objectives,
thereby enhancing shareholder
value.
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Social license Past environmental incidents Our ability to maintain
to operate in the extractive industry regulatory compliance in
highlight risks such as water order to protect the environment,
management, tailings storage as well as the health and
facilities and other potential safety of host communities
hazards to both the environment and workers, remains our
and community health and safety. top priority. We seek to
build partnerships with
host governments and local
communities based on trust
to drive shared long-term
value while working to
minimise the social and
environmental impacts of
our activities. The Board
oversees the Group's environmental,
safety and health, and
corporate social responsibility
programmes, policies and
performance and is in the
process of setting up an
ESG board sub-committee
to focus on these matters.
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Climate change Climate change and regulatory AfriTin is working towards
actions to reduce its impact implementing the recommendations
may affect our suppliers, of the Task Force on Climate-Related
customers and business model, Financial Disclosures.
and hence affect AfriTin's Current risk mitigation
growth and profitability. around climate change involves
This impact could be amplified assessing exposure across
by the perception that the a wide range of outcomes,
Company is undertaking activities monitoring government action
that are harmful to the environment. around climate change and
constantly striving to
reduce the environmental
impact of our operations.
The Board oversees the
Group's environmental,
safety and health, and
corporate social responsibility
programmes, policies and
performance and is in the
process of setting up an
ESG board sub-committee
to focus on these matters.
--------------------------------------- --------------------------------------
COVID-19 COVID-19 resulted in widespread The countries in which
socio-economic disruption the Group operates have
around the world. The countries all instituted measures
where the Group operates, to limit the spread of
namely Namibia, South Africa COVID-19. The Group is
and the United Kingdom continue following the World Health
to be subject to varying levels Organisation (WHO) guidelines
of lockdown restrictions to and is complying with the
contain the spread of the regulations of Namibia,
disease. Despite lockdowns, South Africa and the United
the Group's operation in Namibia Kingdom related to COVID-19.
remained open during the course In addition, the Group
of the reporting period (albeit has updated its health
with a temporary suspension and safety policies and
on mining in April 2020) due procedures to align with
to an exemption granted to the above guidelines and
the mining industry but did to translate these guidelines
suffer supply-chain disruptions into workplace-specific
which delayed production ramp-up. measures.
The Group's operations are
continuing with minimal disruption The Group has adopted technological
now that the global lockdown tools, such as online video
measures have eased. However, conferencing and project
there continues to be a risk and team management software,
that lockdown measures return to enable office-bound
in the event of further COVID-19 staff to work remotely
outbreaks, which may result
in interruptions to operations The countries in which
through supply chain disruption, the Group operates have
illness amongst our workforce rolled out COVID-19 vaccination
and related personnel, together programmes. All employees
with potential volatility of the Group been encouraged
in tin, tantalum and lithium to get vaccinated.
prices.
In addition to the above,
COVID-19 restrictions have
resulted in shipping disruptions
and congestion at container
shipping ports. Despite this,
the shipping of tin concentrate
to Thaisarco has continued.
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Country and AfriTin's operations are predominantly The AfriTin team is experienced
political risk based in Namibia. Emerging-market at operating in Africa.
economies are generally subject AfriTin routinely monitors
to greater risks including political and regulatory
legal, regulatory, tax, economic developments in Namibia
and political risks, which at both regional and local
are potentially subject to level.
rapid change.
--------------------------------------- --------------------------------------
Results and Dividend
The Group's results are a loss of GBP0.474m. The Directors will
not be recommending a dividend.
Share Capital and Funding
Full details of the authorised and issued share capital,
together with details of the movements in the Company's issued
share capital during the year, are shown in Note 21. The Company
has one class of ordinary shares which carry no right to fixed
income. Each share carries the right to one vote at general
meetings of the Company.
Directors
The Directors who served the Company during the year and to date
are as follows:
Anthony Viljoen Chief Executive Officer
Glen Parsons Chairman/Independent Non-Executive Director
Laurence Robb Independent Non-Executive Director
Terence Goodlace Independent Non-Executive Director
Michael Rawlinson Independent Non-Executive Director (Appointed
20(th) December 2021)
Directors' Interests
The Directors' beneficial interests in the shares of the Company
at 28 February 2022 were:
Ordinary
shares of
no par value Share options
Anthony Viljoen 11 296 690 10 600 000
-------------- --------------
Glen Parsons 4 307 486 4 500 000
-------------- --------------
Laurence Robb 1 300 815 4 000 000
-------------- --------------
Terence Goodlace - 4 000 000
-------------- --------------
Michael Rawlinson 2 652 931
-------------- --------------
Directors' Indemnity Insurance
The Group has maintained insurance throughout the year for its
directors and officers against the consequences of actions brought
against them in relation to their duties for the Group.
Employee Involvement Policies
The Group places considerable value on the awareness and
involvement of its employees in the Group's exploration and
development activities. Within the bounds of commercial
confidentiality, information is disseminated to all levels of staff
about matters that affect the progress of the Group, and that are
of interest and concern to them as employees.
Creditors Payment Policy and Practice
The Group's policy is to ensure that, in the absence of dispute,
all suppliers are dealt with in accordance with its standard
payment policy to abide by the terms of payment agreed with
suppliers when agreeing the terms of each transaction. Suppliers
are made aware of the terms of payment.
Related-party Transactions
Details of related-party transactions are given in Note 27 of
the consolidated financial statements.
Events after Balance Sheet Date
Events after balance sheet date are detailed in Note 26 of the
consolidated financial statements.
Statement as to Disclosure of Information to Auditor
The Directors who were in office on the date of approval of
these financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditor
is unaware. Each of the Directors has confirmed that they have
taken all the steps that they ought to have taken as Directors in
order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the auditor.
Auditor
The Directors will place a resolution before the Annual General
Meeting to reappoint BDO LLP as the Group's auditor for the ensuing
year.
Electronic Communications
The maintenance and integrity of the Group's website is the
responsibility of corporate management and the Directors; the work
carried out by the auditor does not involve consideration of these
matters and accordingly the auditor accepts no responsibility for
any changes that may have occurred to the financial statements
since they were initially presented on the website.
The Group's website is maintained in compliance with AIM Rule
26.
By order of the Board
MICHAEL RAWLINSON
Non-executive Director
31 August 2022
CORPORATE GOVERNANCE REPORT
As a listed company traded on the AIM market of the London Stock
Exchange, we recognise the importance of sound corporate governance
throughout our organisation, giving our shareholders and other
stakeholders including employees, customers, suppliers and the
wider community confidence in our business. We endeavour to conduct
our business in an ethical and sensitive manner irrespective of
gender, race, colour or creed.
AfriTin has chosen to adopt the Quoted Companies Alliance (QCA)
Corporate Governance Code 2018 for Smaller Companies. Below we
outline how we apply each of the code's ten key principles to our
business.
Principle Application
1. Establish a The Company is a pure tin company listed in
strategy and business London and its vision is to create a portfolio
model that promotes of world-class, conflict-free, tin-producing
long-term value assets. The Company's flagship asset is the
for shareholders. Uis brownfield tin mine in Namibia, formerly
the world's largest hard-rock tin mine.
The Company is managed by an experienced Board
of Directors and management team with a current
two-fold strategy: fast-track Uis brownfield
tin mine in Namibia to commercial production
(the intention is to ramp up to 10 000 tonnes
of concentrate) and consolidate other quality
African tin assets. The Company strives to capitalise
on the solid supply/demand fundamentals of tin
by developing a critical mass of tin resource
inventory, achieving production in the near
term and further scaling-up production by consolidating
tin assets in Africa.
Sustainable development principles are integrated
into corporate strategies and decision-making
processes by the Board of Directors and management
team. The Company endeavours to ensure that
responsible health and safety, environmental,
human rights and labour practices and policies
are adopted by suppliers and contractors.
The Company is subject to a variety of risks,
specifically those relating to the mining and
exploration industry. The principal risk factors
facing the business as well as mitigation of
those risks are outlined in the Directors' Report
in this Annual Report.
--------------------------------------------------------------
2. Seek to understand The Board is committed to maintaining good communication
and meet shareholder and having a constructive dialogue with all
needs and expectations. its shareholders.
Management, led by the CEO, undertake regular
presentations and roadshows to investors as
appropriate. This enables them to develop a
balanced understanding of the issues and concerns
of shareholders. The views of shareholders are
communicated to the rest of the Board.
Furthermore, the Company keeps shareholders
informed on the Company's progress through its
public announcements and its website. All reports
and press releases are published in the 'Investors'
section of the Company's website.
--------------------------------------------------------------
3. Take into account The Board recognises that its prime responsibility
wider stakeholder is to promote the success of the Company for
and social responsibilities the benefit of its stakeholders and members
and their implications as a whole. This success is largely reliant
for long-term on its relations with its stakeholders, both
success. internal (employees and shareholders) and external
(customers, suppliers, business partners and
advisors).
Employees, community members and other stakeholders
work in collaboration with one another and with
transparency and accountability. Open dialogue
and engagement with community members at our
sites is central to maintaining a successful
relationship, and is essential to ensuring long-term
sustainability for all parties involved. The
Company continually implements inclusive and
supportive approaches with local communities,
to contribute to their economic and social well-being.
The Company endeavours to systematically examine
the environmental impact of any of our operations
and will adopt measures to mitigate this challenge.
The goal is to minimise the negative impacts
on the environment of the different processes
related to the extraction of tin. At our operational
project area, Uis, the non-chemical nature of
ore beneficiation, combined with an ore that
is largely free of deleterious elements, contributes
to a reduced level of environmental risk. Nonetheless,
the Company ensures compliance with its operational
environmental management plan through continuous
monitoring of dust, water and waste management.
The Company maintains a regular dialogue with
key suppliers.
Managing human capital equitably and sustainably
is central to the Company's project development
strategy. The Company promotes an inclusive
work environment through its recruitment policies,
management and remuneration policies and development
initiatives. Within the bounds of commercial
confidentiality, information is disseminated
to all levels of staff about matters that affect
the progress of the Company and that are of
interest and concern to them as employees.
The Company has set up a share option scheme
for key employees which gives them a stake in
the Company's long-term success.
--------------------------------------------------------------
4. Embed effective As an entrepreneurial business operating in
risk management, emerging markets there is clearly an elevated
considering both risk which is balanced by potentially greater
opportunities rewards. The Board is mindful of and monitors
and threats, throughout both its corporate risks and individual project
the organisation. risks.
The Board ensures that there is a risk-management
framework in place which identifies and addresses
all relevant risks in order to execute and deliver
strategy. Key risks are reviewed by the Board
regularly and disclosed in the Directors' Report.
The Audit Committee receives feedback from the
external auditor on the state of the Company's
internal controls, and reports their findings
to the Board.
--------------------------------------------------------------
5. Maintain the The Board is made up of the Chairman, three
Board as a well-functioning, Non-Executive Directors and the CEO.
balanced team
led by the chair. The roles of the Chairman and CEO are clearly
separated.
The CEO is responsible for the day-to-day operational
management of the business and is supported
by a Chief Financial Officer, a Chief Operating
Officer, geologists and engineers.
The Chairman is responsible for the leadership
and effective working of the Board, for the
implementation of sound corporate governance,
for setting the Board agenda, and ensuring that
Directors receive accurate, timely and clear
information.
The Chairman and Non-Executive Directors (Glen
Parsons, Terence Goodlace, Laurence Robb and
Michael Rawlinson) are considered to be independent
of management and free to exercise independent
judgement. It is acknowledged that the Non-Executive
Directors do have share options. However, the
quantum of these share options is not material
and is too low to affect independence.
The Board meets at least every three months
or at any other time deemed necessary for the
good management of the business. Every Director
has attended all Board meetings whilst being
a Director of the Company.
--------------------------------------------------------------
6. Ensure that Directors who have been appointed to the Company
between them the have been chosen because of the skills, knowledge
Directors have and experience they offer considering the stage
the necessary of the Company and the strategy that it is pursuing.
up-to-date experience,
skills and capabilities. The composition of the Board as well as biographical
details of Board members can be found on the
Board of Directors page on the Company website.
Furthermore, the Company has put in place an
Audit Committee and a Remuneration Committee.
The Directors have access to training (online
training or external training courses) to ensure
that their skills are kept up to date. The Board
and its committees will also seek external expertise
and advice where required.
As part of the induction programme conducted
by the Company's nominated adviser, Directors
are briefed on regulations that are relevant
to their role as directors of an AIM-quoted
company.
Hiten Ooka (Chief Financial Officer) and Frans
van Daalen (Chief Operating Officer) attend
Board meetings by invitation to provide input
from a financial and operational perspective.
--------------------------------------------------------------
7. Evaluate Board The Board considers evaluation of its performance
performance based and that of its committees and individual Directors
on clear and relevant to be an integral part of corporate governance
objectives, seeking to ensure Board Members have the necessary skills,
continuous improvement. experience and abilities to fulfil their responsibilities.
The goal of the Board evaluation process is
to identify and address opportunities for improving
the performance of the Board and to solicit
honest, genuine and constructive feedback.
The Chairman is responsible for ensuring the
evaluation process is "fit for purpose", as
well as for dealing with matters raised during
the process.
Succession planning is a vital task for boards
and the management of succession planning represents
a key measure of the effectiveness of the Board.
--------------------------------------------------------------
8. Promote a corporate The Company has a strong ethical culture, which
culture that is is promoted by the Board and the management
based on ethical team.
values and behaviours.
The Company endeavours to conduct its business
in an ethical, professional and responsible
manner, treating all employees, customers, suppliers
and partners with equal courtesy irrespective
of gender, race, colour or creed.
--------------------------------------------------------------
9. Maintain governance The Board approves the Company's strategy and
structures and ensures that necessary resources are in place
processes that in order for the Company to meet its objectives.
are fit for purpose
and support good Whilst the Board has delegated the operational
decision-making management of the Company to the Chief Executive
by the Board. Officer and other senior management, a number
of specific matters are subject to the approval
of the Board. These include:
* annual budget;
* interim and final financial statements;
* management structure and appointments;
* mergers, acquisitions and disposals;
* capital raising;
* joint ventures and investments;
* corporate strategy;
* projects of a capital nature; and
* major contracts.
The Non-Executive Directors have a particular
responsibility to constructively challenge the
strategy proposed by the executive management
team, to scrutinise and challenge performance,
to ensure appropriate remuneration, and to ensure
that succession planning is in place in relation
to senior members of the management team. The
senior management team enjoy open access to
the Non-Executive Directors.
The Chairman is responsible for leadership of
the Board and ensuring its effectiveness. The
Chairman with the assistance of the Chief Executive
Officer sets the Board's agenda and ensures
that adequate time is available for discussion
of all agenda items, in particular strategic
issues.
The roles of the Audit Committee and the Remuneration
Committee are set out further on in this report.
The governance structures will evolve over time
in parallel with the Company's objectives, strategy,
and business model to reflect the development
of the Company.
--------------------------------------------------------------
10. Communicate The Board is committed to maintaining good communication
how the company and having constructive dialogue with all of
is governed and its stakeholders, including shareholders, providing
is performing them with access to information to enable them
by maintaining to come to informed decisions about the Company.
a dialogue with The 'Investors' section on the Company's website
shareholders and provides all required regulatory information
other relevant as well as additional information shareholders
stakeholders. may find helpful, including:
* information on Board members, advisers and
significant shareholdings;
* a historical list of the Company's announcements;
* corporate governance information;
* historical Annual Reports and notices of Annual
General Meetings; and
* share price information and interactive charting
facilities to assist shareholders in analysing
performance.
Results of shareholder meetings and details
of votes cast will be publicly announced through
the regulatory system and displayed on the Company's
website with suitable explanations of any actions
undertaken as a result of any significant votes
for or against resolutions.
--------------------------------------------------------------
The Board of Directors
The Board currently comprises:
Independent Non-Executive Chairman
-- Glen Parsons (appointed 23 October 2017)
Independent Non-Executive Directors
-- Laurence Robb (appointed 23 October 2017)
-- Terence Goodlace (appointed 23 May 2018)
-- Michael Rawlinson (appointed 20 December 2021)
Executive Director - Chief Executive Officer
-- Anthony Viljoen (appointed 23 October 2017)
Operational management in South Africa and Namibia is led by
Anthony Viljoen supported by a Chief Financial Officer (Hiten
Ooka), a Chief Operating Officer (Frans van Daalen), geologists and
engineers. Operational management is also supported technically
through various consultancy agreements that were in place during
the year under review.
The Board met formally four times during the year.
All press releases, including operational updates, are approved
by the entire Board.
The Audit Committee
The Audit Committee meets at least twice a year and is composed
exclusively of Non-Executive Directors: Glen Parsons (Chairman) and
Michael Rawlinson. The Chief Executive Officer, Anthony Viljoen,
and the Chief Financial Officer, Hiten Ooka, attend Audit Committee
meetings by invitation. The committee is responsible for:
-- reviewing the annual financial statements and interim reports
prior to approval, focusing on changes in accounting policies and
practices, major judgemental areas, significant audit adjustments,
going concern and compliance with accounting standards, stock
exchange requirements, and legal requirements;
-- receiving and considering reports on internal financial
controls, including reports from the auditor, and reporting auditor
findings to the Board;
-- considering the appointment of the auditor and their
remuneration, including reviewing and monitoring their independence
and objectivity;
-- meeting with the auditor to discuss the scope of the audit,
issues arising from their work and any matters they wish to raise;
and
-- developing and implementing policy on the engagement of the
external auditor to supply non-audit services.
The Audit Committee is provided with details of any proposed
related-party transactions in order to consider and approve the
terms and conditions of such transactions.
The Audit Committee met three times during the year to consider
the following agenda items:
July 2021:
-- Critical accounting estimates
-- Going concern assessment
-- Approval of the Annual Report for the period ended February 2021
September 2021:
-- Approval of the half-year results and report to 31 August 2020
-- Going concern assessment
February 2022:
-- Auditor independence
-- External audit plan for the year ended February 2022
The Remuneration Committee
The Remuneration Committee meets at least once a year and is
composed exclusively of Non-Executive Directors: Michael Rawlinson
(Chair) and Glen Parsons.
The Committee is responsible for reviewing the performance of
senior management and for setting the scale and structure of their
remuneration, determining the payment of bonuses, considering the
grant of options under any share option scheme and, in particular,
the price per share and the application of performance standards
which may apply to any such grant, paying due regard to the
interests of shareholders and the performance of the Group.
The Remuneration Committee met formally once during the year to
consider the following agenda items:
February 2022:
-- Initiation of STIP and Share Option plan for Organisation (2021/2022)
-- Review and implementation of Balance Score Card for organisation performance (2021/2022)
The Environmental, Social and Governance Committee
The ESG committee comprises of the following Board of Directors:
Terence Goodlace (Chairman), Laurence Robb and Anthony Viljoen.
Additional members of the Board, Executive Management and the ESG
team attend the committee meetings by invitation.
The Committee ensures that ESG is embedded in the business'
operations. We are conscious of the impact ESG has on the long-term
success of the business. Our approach to ESG is one that is
inclusive, intended to benefit all stakeholders involved.
The ESG Committee's role to date has been to advise on the
approach the Company should implement to maintain a good ESG
scorecard and Social Licence to operate. This includes drafting of
the ESG Strategy, policies, compliance systems and monitoring the
Company's performance against industry practices.
The ESG Committee met twice during the year to consider the
following agenda items:
August 2021:
-- Governance Structure of the Committee and Organisation
-- Identification of critical policies and procedures to be implemented
-- 4 x polices
o Occupational Health and Safety Policy
o Environmental Policy
o Sustainable Development Policy
o Risk Management Policy
February 2022:
-- Climate change risk assessment
-- Amendment of Group Diversity Policy
-- Development of 5-year ESG Strategy
Internal Controls
The Board acknowledges its responsibility for the Group's
systems of internal controls and for reviewing their effectiveness.
These internal controls are designed to safeguard the assets of the
Group and to ensure the reliability of financial information for
both internal use and external publication. Whilst the Board is
aware that no system can provide absolute assurance against
material misstatement or loss, in light of the increased activity
and further development of the Group, continuing reviews of
internal controls will be undertaken to ensure that they are
adequate and effective.
Risk Management
The Board considers risk assessment and management to be
important in achieving its strategic objectives. Project milestones
and timelines are regularly reviewed.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
The Companies (Guernsey) Law, 2008 requires the Directors to
prepare the Annual Report and Consolidated Financial Statements for
each financial year in accordance with UK Adopted International
Accounting Standards and AIM Rules for Companies.
The financial statements of the Group are required by law to
give a true and fair view of the state of the Group's affairs at
the end of the financial year and of the profit or loss of the
Group for that year and are required by UK Adopted International
Accounting Standards to reflect fairly the financial position and
performance of the Group.
In preparing the Group financial statements, the Directors are
required to:
i) Select suitable accounting policies and then apply them consistently;
ii) Make judgements and accounting estimates that are reasonable and prudent;
iii) State whether they have been prepared in accordance with UK
Adopted International Accounting Standards ; and
iv) Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions, disclose with reasonable accuracy at any time the
financial position of the Group, and enable them to ensure that the
financial statements comply with the Companies (Guernsey) Law,
2008. They are also responsible for safeguarding the assets of the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the Group's
website. Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
The Directors confirm they have discharged their
responsibilities as noted above.
Independent auditor's report to the members of AfriTin Mining
Limited
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 28 February 2022 and of its loss for the year then ended;
-- have been properly prepared in accordance with UK adopted
international accounting standards; and
-- have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
We have audited the financial statements of AfriTin Mining
Limited (the 'Company') and its subsidiaries (the 'Group') for the
year ended 28 February 2022 which comprise the consolidated
statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in
equity, the consolidated statement of cash flows and notes to the
consolidated financial statements, including a summary of
significant accounting policies
The financial reporting framework that has been applied in their
preparation is applicable law and UK adopted international
accounting standards.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those
standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
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 and we
have fulfilled our other ethical responsibilities in accordance
with these requirements.
Material uncertainty related to going concern
We draw attention to note 2 to the financial statements, which
indicates that the Group will need to raise additional funding
within twelve months from the date of approval of financial
statements to fund their working capital and capital projects. As
stated in note 2, these events or conditions, indicate that a
material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the Directors' assessment of the Group and the Parent
Company's ability to continue to adopt the going concern basis of
accounting and our audit procedures in response to key audit matter
included the following:
-- We discussed with Directors and the Audit Committee their assessment of potential risks and uncertainties, forecast commodity prices and the availability of financing that are relevant to the Group's business model and operations. We formed our own assessment of risks and uncertainties based on our understanding of the business and mining sector and considered these in performing our own sensitivities.
-- We reviewed the latest board approved cash flow forecasts for
the Group to December 2023. We challenged management's assumptions
in respect of level of production, Forecast Tin prices, operating
costs and capital expenditure. In doing so, we considered factors
such as empirical operational performance, recent cost profile and
market analyst commentary regarding forecast commodity prices.
-- We recalculated forecast covenant compliance calculations and
assessed the consistency of such calculations with the ratios
stated in the relevant lender agreements.
-- We assessed the sensitivity analysis performed in respect of
key assumptions underpinning the forecasts and considered
management's conclusions as to whether such scenarios are
reasonably possible based on our knowledge of the business and
operating environment.
-- We discussed with management and the Board the Group's
strategy to access capital to fund its development plans and
working capital needs. We considered the Director's judgement that
they had reasonable expectation of securing necessary funding and
the timing of such funding requirement.
-- We reviewed and considered the adequacy of the disclosure
within the financial statements relating to Directors' assessment
of the going concern basis of preparation with the requirements of
the financial reporting framework, our understanding of the
business and the Directors going concern assessment.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage 89% (2021: 89%) of Group total assets
99% (2021: 99%) of Group revenue
Key audit matters 2022 2021
Going concern Yes Yes
Carrying value of the Uis mining Yes Yes
assets
-------------------------------------------------
Materiality Group financial statements as a whole
GBP370,000 (2021: GBP230,000) based on 1% of
total assets (2021: 1% of total assets)
-------------------------------------------------
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented a
risk of material misstatement.
In approaching the Group audit we considered how the Group is
organised and managed. Whilst AfriTin Mining Limited is a Company
registered in Guernsey and listed on AIM in the UK and the NSX in
Namibia, the Group's principal operations are located in Namibia
and South Africa. We assessed the business as being principally a
single project comprising of the Namibia subsidiaries that operate
the Uis Mine, a corporate head office function and an exploration
business unit.
The Namibia subsidiaries that operate the Uis Mine and the
corporate head office function were regarded as being significant
components of the Group and were subject to full scope audits.
The audits of each of the components were principally performed
in the United Kingdom, Namibia and South Africa. All of the audits
were conducted by either the group audit team or BDO network member
firms.
The remaining components of the Group were considered
non-significant and these components were principally subject to
analytical review procedures, together with specified audit
procedures over exploration and evaluation related assets. This
work was conducted by BDO network member firms.
Our involvement with component auditors
For the work performed by component auditors, we determined the
level of involvement needed in order to be able to conclude whether
sufficient appropriate audit evidence has been obtained as a basis
for our opinion on the Group financial statements as a whole. Our
involvement with component auditors included the following:
-- We held planning meetings with the component auditors and local management.
-- Detailed Group reporting instructions were sent to the
component auditors, which included significant areas to be covered
by the audits and set out the information to be reported to the
Group audit team.
-- The Group audit team was actively involved in the direction
of the audits performed by the component auditor for Group
reporting purposes, along with the consideration of findings and
determination of conclusions drawn. We performed our own additional
procedures in respect of certain of the significant risk areas that
represented key audit matters in addition to the procedures
performed by the component auditor.
-- We received and reviewed Group reporting submissions and
performed a review of the component auditors' file. Our review was
performed remotely using our online audit software as a result of
travel restrictions due to Covid-19.
-- We held clearance meetings remotely with the component
auditors and local management to discuss significant audit and
accounting issues and judgements.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty
related to going concern section above, we have determined the
matters described below to be key audit matters.
Key audit matter How the scope of our audit
addressed the key audit matter
Carrying Details of the carrying We reviewed and challenged management's
value of value of the Uis mining impairment indicator assessment
the Uis assets are disclosed for the Uis Mine mining assets
mining assets in Note 13: Property, which was carried out in accordance
Plant and Equipment. with relevant accounting standards
See Note As disclosed in Note in order to determine whether
2 Critical 2 Critical accounting there were any indicators of
accounting estimates and judgements, impairment. In doing so, our
estimates management have performed procedures included:
and judgements an impairment indicator * Reviewing the Competent Person's Report to support
and Note review for Uis mining the mineral reserve and performed an assessment of
13: Property, assets in accordance the independence and competence of managements
Plant and with the accounting expert.
Equipment. standards. In undertaking
this assessment management
have prepared the * Critically reviewing the Life of Mine ('LoM')
underlying valuation forecast by making enquiries of operational
model of the Uis mine. management, evaluating it against our understanding
As set out in Note of the operations and historic performance, and
2, Management have evaluating the consistency of available reserves with
concluded that no the Competent Person's Report.
indicators of impairment
have been identified
at year-end. * Obtaining management's impairment model to confirm
that headroom existed over the asset carrying value
The assessment of as part of our assessment of potential impairment
the recoverable value indicators.
of the Uis mining
assets requires significant
judgement and estimates * Checking the mathematical accuracy of management's
to be made by management impairment model.
- in particular regarding
the inputs applied
in the models including; * Challenging the significant inputs and assumptions
future tin prices, used in the managements impairment model and whether
production and reserves, these were indicative of potential bias. This
operating and development included comparing forecast commodity prices to a
costs and discount range of third-party independent market outlook
rates. reports and historical actual data, comparing the
forecast production to third party feasibility and
The carrying value resource studies. We compared forecasted costs
of the Uis mining against the expected production profiles in the mine
assets is therefore plans and recent historical performance.
considered a key audit
matter given the level
of judgement and estimation * Recalculating the discount rate and utilising BDO
involved. valuation experts to assist us in assessing
managements discount rate by recalculating it in
reference to external data.
* Review of management's sensitivity analysis and
performance of our own sensitivity analysis over
individual key inputs including tin prices, discount
rate and plant recovery.
Key observation:
We found the key assumptions
made by management in their
impairment model to be within
an acceptable range and found
management's conclusion that
no impairment indicator was
present in respect of the Uis
mining assets at 28 February
2022 to be appropriate.
----------------------------- -------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Group financial statements
2022 2021
---------------------- ---------------------
Materiality GBP370,000 GBP230,000
---------------------- ---------------------
Basis for determining 1% of total assets 1% of total assets
materiality
---------------------- ---------------------
Rationale for the benchmark We consider total assets to be the
applied most significant determinant of the
Group's financial performance used
by members given the Group.
The Group has invested significant
sums on its production and non-production
mining assets and these are considered
to be the key value driver for the
Group as its assets are an indicator
of future value to shareholders.
---------------------------------------------
Performance materiality GBP278,000 GBP172,500
---------------------- ---------------------
Basis for determining Performance materiality was set at
performance materiality 75% of the above materiality level
based on assessment of aggregation
risk considering factors such as
volume and nature of errors in prior
periods.
---------------------------------------------
Component materiality
We set materiality for each component of the Group based on a
percentage between 18% and 83% (2021: 20% and 55%) of Group
materiality dependent on the size and our assessment of the risk of
material misstatement of that component. Component materiality
ranged from GBP66,000 to GBP264,000 (2021: GBP46,000 to
GBP128,000). In the audit of each component, we further applied
performance materiality levels of 75% (2021: 75%) of the component
materiality to our testing to ensure that the risk of errors
exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP18,500
(2021:12,000). We also agreed to report differences below this
threshold that, in our view, warranted reporting on qualitative
grounds.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit, or
otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are
required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
Other Companies (Guernsey) Law, 2008 reporting
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to report to
you if, in our opinion:
-- proper accounting records have not been kept by the Company; or
-- the financial statements are not in agreement with the accounting records; or
-- we have failed to obtain all the information and explanations
which, to the best of our knowledge and belief, are necessary for
the purposes of our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors'
Responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Group's and the Parent Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
-- Holding discussions with the Directors and the Audit
Committee and made enquiries about whether they were aware of any
known or suspected instances of non-compliance with laws and
regulations or fraud;
-- Gaining an understanding of the of the laws and regulations
relevant to the Group and the industry in which it operates,
through discussion with Directors and our knowledge of the
industry. These included the listing rules, the financial reporting
framework, Guernsey Companies Law, tax legislation and the various
Mining Regulations in Namibia;
-- Communicating relevant identified laws and regulations and
potential fraud risks to all engagement team members and remaining
alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit;
-- Assessing the susceptibility of the Group's financial
statements to material misstatement, including how fraud might
occur by making enquiries of the Directors and the Audit Committee
during the planning and execution phases of our audit to understand
where they considered there to be susceptibility to fraud,
considering the risk of management override of controls and
relevant controls established to address risks identified to
prevent or detect fraud.
We believed the areas in which fraud might occur were in the
management override of controls, recognition of revenue in the
correct period, and bias in accounting estimates. In response our
procedures included, but were not limited to;
- Agreeing the financial statement disclosures to underlying supporting documentation;
- Addressing the fraud risk in relation to revenue recognition
by testing one hundred percent of revenue transactions to
supporting documentation, including testing the that revenue was
recorded in the correct period by testing revenue transactions in
the period proceeding and preceding year end.
- Addressing the risk of fraud through management override of
internal controls, by testing the appropriateness of journal
entries made throughout the year by applying specific criteria to
select journals which may be indicative of possible irregularities
or fraud;
- Assessing areas of the Financial Statements which include
judgement and estimates, as set out in note 2 to the financial
statements and in our Key audit matters section above and evaluated
whether there was evidence of bias by the Directors;
- Made of enquiries of Directors as to whether there was any
correspondence from regulators in so far as the correspondence
related to the Financial Statements;
- Reading minutes from board meetings of those charges with
governance to identify any instances of non-compliance with laws
and regulations
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available on
the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities . This description forms
part of our auditor's report.
Use of our report
This report is made solely to the Company's members, as a body,
in accordance with Section 262 of the Companies (Guernsey) Law,
2008. 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.
Jack Draycott
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
31 August 2022
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28 February 2022
Year ended Year ended
28 February 28 February
2022 2021
Notes GBP GBP
Continuing operations
Revenue 5 13 615 045 4 985 107
Cost of Sales 6 (9 302 518) (4 987 696)
--------------------------- ------------
Gross profit / (loss) 4 312 527 (2 589)
Administrative expenses 7 (3 674 662) (2 539 762)
Impairment of exploration licences - (3 069 232)
Other income 61 753 -
--------------------------- ------------
Operating loss 699 619 (5 611 583)
Finance income 6 545 -
Finance cost 9 (316 365) (184 300)
--------------------------- ------------
Profit / (loss) before tax 389 798 (5 795 883)
Deferred tax movement 10 (864 199) -
--------------------------- ------------
Profit / (loss) for the year (474 401) (5 795 883)
=========================== ============
Other comprehensive income / (loss)
Items that will or may be reclassified
to profit or loss:
Exchange differences on translation
of share-based payment
reserve 767 (531)
Exchange differences on translation
of foreign operations 526 779 (526 231)
Exchange differences on non-controlling
interest (6 700) 1 390
Total comprehensive income for the
year 46 445 (6 321 255)
=========================== ============
Profit / (loss) for the year attributable
to:
Owners of the parent (815 645) (5 694 962)
Non-controlling interests 24 341 244 (100 921)
(474 401) (5 795 883)
=========================== ============
Total comprehensive profit / (loss)
for the year attributable to:
Owners of the parent (288 098) (6 221 724)
Non-controlling interests 334 543 (99 531)
46 445 (6 321 255)
=========================== ============
Loss per ordinary share
Basic loss per share (in pence) 11 (0.08) (0.76)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 28 February 2022
28 February 28 February
2022 2021
Notes GBP GBP
Assets
Non-current assets
Intangible assets 12 5 147 782 5 240 461
Property, plant and equipment 13 19 150 092 13 634 701
------------ -----------------------
Total non-current assets 24 297 875 18 875 162
============ =======================
Current assets
Inventories 14 1 451 933 996 698
Trade and other receivables 15 3 953 382 1 188 152
Cash and cash equivalents 16 7 365 379 1 351 200
------------ -----------------------
Total current assets 12 770 694 3 536 050
============ =======================
Total assets 37 068 569 22 411 212
============ =======================
Equity and liabilities
Equity
Share capital 21 38 655 078 25 608 001
Convertible loan note reserve - 2 170 645
Accumulated deficit (10 739 321) (10 030 679)
Warrant reserve 22 192 632 211 348
Share-based payment reserve 23 704 828 743 615
Foreign currency translation reserve (1 534 560) (2 061 339)
Equity attributable to the owners
of the parent 27 278 657 16 641 591
------------ -----------------------
Non-controlling interests 24 183 200 (151 344)
------------ -----------------------
Total equity 27 461 857 16 490 247
============ =======================
Non-current liabilities
Environmental rehabilitation liability 19 295 151 180 917
Borrowings 17 4 095 405 -
Lease liability 20 167 216 260 512
Deferred tax liability 10 861 784 -
Total non-current liabilities 5 419 556 441 429
============ =======================
Current liabilities
Trade and other payables 18 2 969 833 1 484 482
Borrowings 17 1 024 736 3 869 489
Lease liability 20 192 586 125 565
------------ -----------------------
Total current liabilities 4 187 155 5 479 536
============ =======================
Total equity and liabilities 37 068 569 22 411 212
============ =======================
The notes that follow in this report form part of these
financial statements.
The financial statements were authorised and approved for issue
by the Board of Directors and authorised for issue on 31 August
2022.
MICHAEL RAWLINSON
Non-executive Director
31 August 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 28 February 2022
Foreign
Convertible Share-based currency
Share loan note Accumulated Warrant payment translation Non-controlling Total
capital reserve deficit reserve reserve reserve Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
Total equity
at 29
February 20 487 (4 365 (1 535 18 995 18 943
2020 239 3 770 645 500) 78 651 559 534 108) 461 (51 812) 649
Loss for the (5 694 (5 795
year - - (5 694 962) - - - 962) (100 921) 883)
Other
comprehensive
income
/ (loss) - - - - (531) (526 231) (526 762) 1 390 (525 372)
Transactions
with owners:
Share-based
payments - - - - 281 431 - 281 431 - 281 431
Issue of
shares 3 774 079 - - - (96 819) - 3 677 260 - 3 677 260
Share issue
costs (253 317) - - - - - (253 317) - (253 317)
Conversion of
convertible
loan notes 1 600 000 (1 600 000) - - - - - -
Warrants
issued in the
year - - - 162 480 - - 162 480 - 162 480
Warrants
expired in
the
year - - 29 783 (29 783) - - - - -
---------- ----------- ----------- -------- ----------- ----------- --------- --------------- ---------
Total equity
at 28
February 25 608 (10 030 (2 061 16 641 16 490
2021 001 2 170 645 679) 211 348 743 615 339) 591 (151 344) 247
Loss for the
year - - (815 645) - - - (815 645) 341 244 (474 401)
Other
comprehensive
income
/ loss - - - - 767 526 779 527 546 (6700) 520 846
Transactions
with owners:
Issue of 13 029 13 029
shares 13 039 102 - - - (10 000) - 102 - 102
Share issue
costs (793 775) - - - - - (793 775) - (793 775)
Share-based
payments - - - - 88 088 - 88 088 - 88 088
Share options
exercised
during the
year 308 545 - 117 642 - (117 642) - 308 545 - 308 545
Warrants
exercised in
the
year 63 150 - 18 716 (18 716) - - 63 150 - 63 150
Issue costs
reclassified
to retained
earning - 29 355 (29 355) - - - - - -
Settlement of
convertible
loan note in
shares 430 055 (430 055) - - - - - - -
Settlement of
convertible
loan note in (1 769 (1 769
cash - (1 769 945) - - - - 945) - 945)
Total equity
at 28
February 38 655 (10 739 (1 534 27 278 27 461
2022 078 - 321) 192 632 704 828 560) 657 183 200 857
========== =========== =========== ======== =========== =========== ========= =============== =========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 28 February 2022
Year ended Year ended
28 February 28 February
2022 2021
Notes GBP GBP
Cash flows from operating activities
Profit / (loss) before taxation 389 798 (5 795 883)
Adjustments for:
Fair value adjustment to customer
contract 5 (137 019) (205 635)
Depreciation of property, plant and
equipment 13 1 861 023 898 528
Depreciation of intangible assets 12 28 198 -
Impairment of exploration licences - 3 069 232
Share-based payments 55 793 217 407
Equity-settled transactions 66 101 618 260
Finance income (6 545) -
Finance costs 9 316 365 184 300
Changes in working capital:
Increase in receivables 15 (2 866 192) (352 953)
Increase in inventory 14 (418 556) (753 688)
Increase in payables 18 1 006 060 619 573
------------ ------------
Net cash used in operating activities 569 064 (1 500 858)
------------ ------------
Cash flows from investing activities
Purchase of intangible assets (1 442 774) (964 191)
Purchase of property, plant and equipment (4 543 884) (1 990 856)
------------ ------------
Net cash used in investing activities (5 986 658) (2 955 047)
------------ ------------
Cash flows from financing activities
Finance income 6 545 -
Finance costs 9 (224 061) (37 612)
Lease payments 20 (213 661) (128 600)
Net proceeds from issue of shares 21 12 548 248 2 796 683
Settlement of convertible loan notes 17 (1 769 945) -
Proceeds from borrowings 17 5 024 727 7 908 028
Repayment of borrowings 17 (3 907 086) (5 378 742)
------------ ------------
Net cash generated from financing
activities 11 464 767 5 159 757
------------ ------------
Net increase in cash and cash equivalents 6 047 173 703 852
Cash and cash equivalents at the beginning
of the year 1 351 200 574 600
Foreign exchange differences (32 994) 72 748
------------ ------------
Cash and cash equivalents at the
end of the year 16 7 365 379 1 351 200
============ ============
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 28 February 2022
1. Corporate information and principal activities
AfriTin Mining Limited ("AfriTin") was incorporated and
domiciled in Guernsey on 1 September 2017, and admitted to the AIM
market in London on 9 November 2017. The company's registered
office is PO Box 282, Oak House, Hirzel Street, St Peter Port,
Guernsey GY1 3RH, and it operates from Illovo Edge Office Park, 2nd
Floor, Building 3, Corner Harries and Fricker Road, Illovo,
Johannesburg, 2116, South Africa.
These financial statements are for the year ended 28 February
2022 and the comparative figures are for the year ended 28 February
2021.
The AfriTin Group comprises AfriTin Mining Limited and its
subsidiaries as noted below.
AfriTin Mining Limited ("AML") is an investment holding company
and holds 100% of Guernsey subsidiary, Greenhills Resources Limited
("GRL").
GRL is an investment holding company that holds investments in
resource-based tin and tantalum exploration companies in Namibia
and South Africa. The Namibian subsidiary is AfriTin Mining
(Namibia) Pty Limited ("AfriTin Namibia"), in which GRL holds 100%
equity interest. The South African subsidiaries are Mokopane Tin
Company Pty Limited ("Mokopane") and Pamish Investments 71 Pty
Limited ("Pamish 71"), in which GRL holds 100% equity interest.
AfriTin Namibia owns an 85% equity interest in Uis Tin Mining
Company Pty Limited ("UTMC"). The minority shareholder in UTMC is
The Small Miners of Uis who own 15%.
Mokopane owns a 74% equity interest in Renetype Pty Limited
("Renetype") and a 50% equity interest in Jaxson 641 Pty Limited
("Jaxson").
The minority shareholders in Renetype are African Women
Enterprises Investments Pty Limited and Cannosia Trading 62 CC who
own 10% and 16% respectively.
The minority shareholder in Jaxson is Lerama Resources Pty
Limited who owns a 50% interest in Jaxson. Pamish 71 owns a 74%
interest in Zaaiplaats Mining Pty Limited ("Zaaiplaats"). The
minority shareholder in Zaaiplaats is Tamiforce Pty Limited who
owns 26%.
AML holds 100% of Tantalum Investment Pty Limited, a company
holding Namibian exploration licenses EPL5445 and EPL5670 for the
exploration of tin, tantalum and associated minerals.
As at 28 February 2022, the AfriTin Group comprised:
Equity holding
and voting Country
Company rights of incorporation Nature of activities
AfriTin Mining Limited N/A Guernsey Ultimate holding
company
-------------- ----------------- --------------------------
Greenhills Resources Limited(1) 100% Guernsey Holding company
-------------- ----------------- --------------------------
AfriTin Mining Pty Limited(1) 100% South Africa Group support services
-------------- ----------------- --------------------------
Tantalum Investment Pty 100% Namibia
Limited(1) Tin & tantalum exploration
-------------- ----------------- --------------------------
AfriTin Mining (Namibia) 100% Namibia
Pty Limited(2) Tin & tantalum operations
-------------- ----------------- --------------------------
Uis Tin Mining Company 85% Namibia
Pty Limited(3) Tin & tantalum operations
-------------- ----------------- --------------------------
Mokopane Tin Company Pty 100% South Africa
Limited(2) Holding company
-------------- ----------------- --------------------------
Renetype Pty Limited(4) 74% South Africa Tin & tantalum exploration
-------------- ----------------- --------------------------
Jaxson 641 Pty Limited(4) 50% South Africa Tin & tantalum exploration
-------------- ----------------- --------------------------
Pamish Investments 71 Pty 100% South Africa
Limited(2) Holding company
-------------- ----------------- --------------------------
Zaaiplaats Mining Pty Limited(5) 74% South Africa Property owning
-------------- ----------------- --------------------------
(1) Held directly by AfriTin Mining Limited
(2) Held by Greenhills Resources Limited
(3) Held by AfriTin Mining (Namibia) Pty Limited
(4) Held by Mokopane Tin Company Pty Limited
(5) Held by Pamish Investments 71 Pty Limited
These financial statements are presented in Pound Sterling (GBP)
because that is the currency in which the Group has raised funding
on the AIM market in the United Kingdom. Furthermore, Pound
Sterling (GBP) is the functional currency of the ultimate holding
company, AfriTin Mining Limited.
The Group's key subsidiaries, AfriTin Namibia and UTMC, use the
Namibian Dollar (N$) as their functional currency. The year-end
spot rate used to translate all Namibian Dollar balances was GBP1 =
N$20.33 and the average rate for the financial year was GBP1 =
N$20.27.
2. Significant accounting policies
Basis of accounting
The Consolidated Financial Statements have been prepared in
accordance with UK Adopted International Accounting Standards. The
Consolidated Financial Statements also comply with the AIM Rules
for Companies, NSX Listing Requirements and the Companies
(Guernsey) Law, 2008 and show a true and fair view.
The significant accounting policies applied in preparing these
Consolidated Financial Statements are set out below. These policies
have been consistently applied throughout the period. The
Consolidated Financial Statements have been prepared under the
historical cost convention except as where stated.
Going concern
The Group closely monitors and manages its liquidity risk and
day to day working capital requirements. Cash forecasts are
regularly produced, considering the global logistical challenges
around sales to ensure sufficient cash within the Group to meet its
obligations. The Group runs sensitivities for different scenarios,
including but not limited to changes in commodity prices and
exchange rates. The Group also routinely monitors the covenants
associated with the borrowing facilities and proactively engages
with Standard Bank, the lender, where there is any risk. Based on
the year to date production profile and latest forecast, the group
will be able to meet its covenant obligations for the testing
period February 2023. For the purpose of assessing going concern,
the directors have prepared forecasts to December 2023.
The main sensitivities considered as part of management's going
concern assessment are production, tin prices, exchange rates and
committed expansion capital. The Group's ability to achieve its
future production profile is predicated on the successful
completion of the Uis phase 1 expansion which will increase the
production capability up to 1,200 tonnes of tin concentrate per
annum.
Based on the forecasts, additional funding is likely to be
required within the next 12 months for the purpose of working
capital and capital projects. The Group believes it has several
options available to it, including but not limited to, use of the
overdraft facility, restructuring of the debt, additional debt or
equity, cost reduction strategies as well as potential offtake
arrangements. Management is already at an advanced stage of
securing bank funding and other finance for the next 12 months,
with a primary allocation to capital expansion projects and
by-product pilot facilities. Accordingly, the Directors continue to
adopt the going concern basis in preparing the consolidated
financial information.
Notwithstanding the above, these circumstances indicate that a
material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern and, therefore, that
the Group may be unable to realise its assets or settle its
liabilities in the ordinary course of business. As a result of
their review, and despite the aforementioned material uncertainty,
the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational
existence for the going concern assessment period and have
therefore used the going concern basis in preparing these
consolidated financial statements.
Basis of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control
ceases.
Inter-company transactions, balances and unrealised gains/losses
on transactions between Group companies are eliminated. When
necessary, amounts reported by subsidiaries have been adjusted to
conform with the Group's accounting policies.
Non-controlling interests
Non-controlling interests in subsidiaries are identified
separately from the Group's equity therein. Those interests of
non-controlling shareholders that present ownership interests
entitling their holders to a proportionate share of the net assets
upon liquidation are initially measured at fair value. Subsequent
to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the
non-controlling interests' share of subsequent changes in equity.
Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests
having a deficit balance.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the management steering committee
that makes strategic decisions.
Foreign currencies
Functional and presentational currency
The individual financial statements of each Group company are
prepared in the currency of the primary economic environment in
which that company operates (its functional currency). For the
purpose of the consolidated financial statements, the results and
financial position of each group company are expressed in Pound
Sterling, which is the functional currency of the Company, and the
presentation currency for the consolidated financial
statements.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation date where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the income statement, except when deferred in
other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges.
Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyper-inflationary economy)
that have a financial currency different from the presentation
currency are translated into the presentation currency as
follows:
i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance
sheet;
ii) income and expenses for each income statement are translated
at average exchange rates, unless the average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions; and
iii) all resulting exchange differences are recognised in other comprehensive income.
Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" establishes a
comprehensive framework for determining whether, how much, and when
revenue is recognised. The core principle is that an entity
recognises revenue to depict the transfer of promised goods and
services to the customer of an amount that reflects the
consideration to which the entity expects to be entitled in
exchange for those goods or services. The Group generates revenue
from its primary activity, the sale of tin concentrate, and it
continued to generate immaterial revenue from the sale of sand.
The Group produces and sells tin concentrate from its Uis Tin
Mine in Namibia. Once concentrate has been produced at the Uis
plant, it is sampled, bagged and loaded into containers for
transportation to the port in Walvis Bay for shipment.
The company currently has an offtake agreement with its
customer, Thailand Smelting and Refining Company ("Thaisarco"),
which was signed on 1 August 2019. This contract was renewed on 1
December 2020 for a further 3 years. As per the contract, Thaisarco
pays AfriTin on the basis of actual tin content in the concentrate
per Thaisarco's analysis, at the London Metal Exchange price less
treatment charges, unit deductions and impurity charges.
The Group can elect for the sale of each shipment to occur under
the following terms:
Option 1: Standard provisional payment
Thaisarco shall pay 90% provisional payment on the basis of
actual tin content as per their own analysis. Payment is to be made
within 10 working days after the arrival of concentrate at
Thaisarco's works. Title shall pass to Thaisarco when the
concentrate arrives at the Songkhla Port in Thailand.
Option 2: Provisional payment option against original bill of
lading
Thaisarco shall pay 90% provisional payment on the basis of
provisional tin content per UTMC's analysis. The provisional
payment shall be done against presentation of a provisional invoice
and an original bill of lading. Title shall pass to Thaisarco when
UTMC receives the 90% provisional payment.
Option 3: Provisional payment option against warehouse holding
certificate
Thaisarco shall pay 70% provisional payment on the basis of
provisional tin content per UTMC's analysis. The provisional
payment shall be done against presentation of a provisional invoice
and an original warehouse holding certificate. Thaisarco shall pay
an additional 20% provisional payment upon presentation of the
original bill of lading. Title shall pass to Thaisarco when UTMC
receives the 70% provisional payment.
During the financial year, the Group concluded sales under
Option 3.
Revenue is recognised at a point in time when title and control
of the goods has transferred to the customer, which is when the
concentrate arrives at Songkhla Port in Thailand under Option 1 or
when provisional payment is received by UTMC under Option 2 and
Option 3. There is limited judgement needed to identify the point
at which control passes: once physical delivery of the products to
the agreed location has occurred, the Group no longer has physical
possession of the products. At this point, the Group will have a
present right to payment and retains none of the significant risks
and rewards of the goods in question.
Pricing for the provisional payment is determined by the
published tin price on the date that title and control passes.
Pricing for the final payment shall be declared within 30 market
days after arrival at Thaisarco's works. The lower of the cash
price and the 3-month forward-looking price is used in these
calculations.
Variable consideration relating to final assay results is
constrained in estimating revenue unless it is highly probable that
there will not be a future reversal in the amount of revenue
recognised when the final assay has been determined.
Revenue from the sale of sand is recognised at the point in time
when control of the goods has transferred to the customer, which is
when the sand leaves the Group's premises. At this point, the Group
will have a present right to payment and retains none of the
significant risks and rewards of the goods in question.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The tax charge is based on taxable profit for the period. The
Group's liability for current tax is calculated by using tax rates
that have been enacted or substantively enacted by the reporting
date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
"balance sheet liability" method.
Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to
apply to the year when the asset is realised or the liability is
settled based upon rates enacted and substantively enacted at the
reporting date. Deferred tax is charged or credited to profit or
loss, except when it relates to items credited or charged to other
comprehensive income, in which case the deferred tax is also dealt
with in other comprehensive income.
Intangible exploration and evaluation assets
All costs associated with mineral exploration and evaluation are
capitalised as intangible exploration and evaluation assets and
subsequently measured at cost. These include the costs of:
acquiring prospecting licenses; mineral production licenses and
annual license fees; rights to explore; topographical, geological,
geochemical and geophysical studies; and exploratory drilling,
trenching, sampling and other activities to evaluate the technical
feasibility and commercial viability of extracting a mineral
resource.
If an exploration project is successful, the related
expenditures will be transferred at cost to property, plant and
equipment and amortised over the estimated life of the commercial
ore reserves on a unit of production basis (with this charge being
taken through profit or loss). Where capitalised costs relate to
both development projects and exploration projects, the Group
reclassifies a portion of the costs which are considered
attributable to near-term production based on a percentage of the
ore resource expected to be mined in the relevant phase. Where a
project does not lead to the discovery of commercially viable
quantities of mineral resources and is relinquished, abandoned, or
is considered to be of no further commercial value to the Group,
the related costs are recognised in the income statement.
The recoverability of deferred exploration costs is dependent
upon the discovery of economically viable ore reserves, the ability
of the Group to obtain necessary financing to complete the
development of ore reserves and future profitable production or
proceeds from the extraction or disposal thereof.
Impairment of exploration and evaluation assets
Intangible exploration and evaluation assets are reviewed
regularly for indicators of impairment following the guidance in
IFRS 6 "Exploration for and Evaluation of Mineral Resources" and
tested for impairment where such indicators exist.
In accordance with IFRS 6, the Group considers the following
facts and circumstances in their assessment of whether the Group's
exploration assets may be impaired:
-- whether the period for which the Group has the right to
explore in a specific area has expired during the period or will
expire in the near future, and is not expected to be renewed;
or
-- whether substantive expenditure on further exploration for
and evaluation of mineral resources in a specific area is neither
budgeted for nor planned for; or
-- whether exploration for and evaluation of mineral resources
in a specific area have not led to the discovery of commercially
viable deposits and the Group has decided to discontinue such
activities in the specific area; or
-- whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying
amount of the exploration and evaluation assets is unlikely to be
recovered in full from successful development or by sale.
If any such facts or circumstances are noted, the Group, as a
next step, performs an impairment test in accordance with the
provisions of IAS 36 "Impairment of Assets". In such circumstances,
the aggregate carrying value of the mining exploration and
evaluation assets is compared to the expected recoverable amount of
the cash-generating unit. The recoverable amount is the higher of
value in use and the fair value less costs to sell.
Share capital and reserves
i) W a rrant reserve
The warrants issued by the Company are recorded at fair value on
initial recognition net of transaction costs. The fair value of
warrants granted is recognised as an expense or as share issue
costs based on their nature, with a corresponding increase in
equity. The fair value of the warrants granted is measured using
the Black Scholes valuation model, taking into account the terms
and conditions under which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number
of warrants that vest.
ii) Convertible loan note reserve
The proceeds received on issue of the Group's convertible loan
notes are allocated into their liability and equity components
based on the terms of the agreement.
The Group takes into account:
-- whether there is a contractual obligation to settle in cash;
-- whether there is a contractual obligation to issue a variable number of shares; and
-- whether the instrument's book value is variable.
Where none of the above criteria are met, the convertible loan
notes are allocated as equity.
iii) Share-based payment reserve
Where equity-settled share options are awarded to directors or
employees, the fair value of the options at the date of grant is
charged to the statement of comprehensive income over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options that eventually vest. Non-vesting conditions and market
vesting conditions are factored into the fair value of the options
granted. As long as all other vesting conditions are satisfied, a
charge is made irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before
they vest, the increase in the fair value of the options, measured
immediately before and after the modification, is also charged to
the statement of comprehensive income over the remaining vesting
period.
Where equity instruments are granted to persons other than
employees, the statement of comprehensive income is charged with
the fair value of goods and services received.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation.
Depreciation is provided at rates calculated to write off the
cost less the estimated residual value of each asset over its
expected useful economic life. The applicable rates are:
-- The mining assets are depreciated using the units of
production method from the point that commercial production was
achieved. This reflects the production activity in the period as a
proportion of the total mining reserve. Where the units of
production method is used, the assets are depreciated based on a
rate determined by the tonnes of ore processed divided by the
estimate of the mineral reserve.
-- Short-lived assets which are used in the mining and
processing plant are depreciated over a period of between one and
ten years.
-- Right-of-use assets are depreciated over the period of the lease contract.
-- Computer equipment is depreciated over three years.
-- Furniture is depreciated over five years.
-- Vehicles are depreciated over four years.
-- Mobile equipment is depreciated over ten years.
Land and mining assets under construction are not
depreciated.
The estimated useful lives, residual values and depreciation
methods are reviewed at each year end and adjusted if
necessary.
Gains or losses on disposal are included in profit or loss.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Mining asset - stripping
In open pit mining operations, it is necessary to incur costs to
remove overburden and other mine waste materials in order to access
the ore body ("stripping costs"). During the development of a mine,
stripping costs are capitalised and included in the carrying amount
of the related mining property. During the production phase of a
mine, stripping costs will be recognised as an asset only if the
following conditions are met:
-- It is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
-- The entity can identify the component of the ore body (mining
phases) for which access has been improved; and
-- The costs relating to the stripping activity associated with
that component can be measured reliably.
Stripping costs incurred and capitalised during the development
and production phase are depleted using the unit-of-production
method over the reserves and, in some cases, a portion of resources
of the area that directly benefit from the specific stripping
activity. Costs incurred for regular waste removal that do not give
rise to future economic benefits are considered as costs of sales
and included in operating expenses.
Right-of-use asset
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset, for a period of time, in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses
whether:
-- the contract involves the use of an identified asset. The
asset may be specified explicitly or implicitly and should be
physically distinct or represent substantially all of the capacity
of a physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
-- the Group has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of
use; and
-- the Group has the right to direct the use of the asset. The
Group has the right when it has the decision-making rights that are
most relevant to changing how and for what purposes the asset is
used. In rare cases where the decision about how and for what
purposes the assets is used is predetermined, the Group has the
right to direct the use of the asset if either:
- the Group has the right to operate the asset; or
- the Group designed the asset in a way that predetermines how
and for what purposes it will be used.
At inception or on reassessment of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of its relative
stand-alone price.
The right-of-use asset is initially measured at the present
value of the remaining lease payments, discounted using the
incremental borrowing rate.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term. In addition, the right-of-use asset is annually
assessed for impairment and will be adjusted for certain
re-measurements of the lease liability.
Impairment of property, plant and equipment
At each statement of financial position date, the Group reviews
the carrying amounts of its tangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss, if any. Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Where there has been a change in economic conditions that
indicate a possible impairment in a cash-generating unit, the
recoverability of the net book value relating to that unit is
assessed by comparison with the estimated discounted future cash
flows based on management's expectations of future commodity prices
and future costs.
The recoverable amount is determined on the fair value less cost
to develop basis. In assessing the recoverable amount, the expected
future post-tax cash flows from the asset are discounted to their
present value using a post-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. The Life of Mine ("LoM") plan is the
approved management plan at the reporting date for ore extraction
and its associated capital expenditure. The capital expenditure
included in the impairment model does not include capital
expenditure to enhance the asset performance outside of the
existing LoM plan. The ore tonnes included in the LoM plan are
those as per the Reserve Statement, which management considers
economically viable.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease to the extent that it reverses gains
previously recognised in other comprehensive income.
Where conditions giving rise to impairment subsequently reverse,
the effect of the impairment charge is also reversed as a credit to
the income statement, net of any depreciation that would have been
charged since the impairment.
Inventories
Inventory consists of tin concentrate on hand, the run of mine
stockpile, and consumable items.
The tin concentrate is carried at the lower of cost or net
realisable value. The cost of the concentrate includes direct
materials, direct labour, depreciation, and overhead costs relating
to processing and engineering activities. Net realisable value is
the estimated selling price net of any estimated selling costs in
the ordinary course of business.
The run of mine stockpile is carried at the lower of cost or net
realisable value. The cost of the stockpile includes direct
materials, direct labour, depreciation, and overhead costs relating
to mining activities. Net realisable value is the estimated selling
price net of necessary processing costs and any estimated selling
costs in the ordinary course of business.
Consumables are valued at the lower of cost (determined on the
weighted average basis) and net realisable value. Cost comprises
all costs of purchase, costs of conversion, and other costs
incurred in bringing the inventories to their present location and
condition. Replacement cost is used as the best available measure
of net realisable value.
Financial instruments
Financial instruments are recognised in the Group's statement of
financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets
The Company classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at amortised cost, and
-- those to be measured subsequently at fair value through profit or loss.
The classification depends on the Company's business model for
managing the financial assets and the contractual terms of the cash
flows.
Financial assets are classified as at amortised cost only if the
asset is held to collect the contractual cash flows and the
contractual terms of the asset give rise to cash flows that are
solely payments of principal and interest. At subsequent reporting
dates, financial assets at amortised cost are measured at amortised
cost less any impairment losses.
For assets measured at fair value, gains and losses will be
recorded in profit or loss.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected
credit losses, defined as the difference between the contractual
cash flows and the cash flows that are expected to be received,
associated with its assets carried at amortised cost. The
impairment methodology applied depends on whether there has been a
significant increase in credit risk. For trade receivables only,
the simplified approach permitted by IFRS 9 "Financial Instruments"
is applied, which requires expected lifetime losses to be
recognised from initial recognition of the receivables. Losses are
recognised in the income statement. When a subsequent event causes
the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through the income statement.
To measure the expected credit losses, trade receivables have
been grouped based on shared credit risk characteristics and the
days past due.
The expected loss rates are based on the payment profiles of
sales over a period of 24 months before 28 February 2022 and the
corresponding historical credit losses experienced within this
period. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting
the ability of our customer to settle the receivables balance.
Trade and other receivables
Trade and other receivables are initially recognised at the fair
value of the consideration receivable less any impairment.
Trade and other receivables are subsequently measured at
amortised cost or at fair value through profit or loss.
Under its offtake arrangement, the Group receives a provisional
payment upon satisfaction of its performance obligations based on
the tin price at that date. This occurs prior to the final price
determination and the Group then subsequently receives the
difference between the final price and quantity and the provisional
payment. As a result of the pricing structure, the instrument is
classified at fair value through profit or loss and changes in fair
value are recorded as other revenue.
Trade and other receivables are classified as a current asset as
these are expected to be settled within a year.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits on
a term of not greater than three months.
Financial liabilities
Financial liabilities include trade and other payables,
borrowings, and other longer-term financing, classified into one of
the following categories:
-- Fair value through profit or loss: The liabilities are
carried in the statement of financial position at fair value with
changes in fair value recognised in the income statement. The Group
currently has no financial liabilities carried at fair value
through profit or loss.
-- Financial liabilities carried at amortised cost
Trade and other payables
Trade and other payables are initially recognised at fair value
and are subsequently measured at amortised cost, calculated using
the effective interest rate method.
Borrowings
Interest-bearing debt is initially recorded at fair value less
transaction costs, and is subsequently measured at amortised cost,
calculated using the effective interest rate method.
Borrowing costs are expensed as incurred except where they
relate to the financing of construction or development of
qualifying assets in which case they are capitalised up to the date
when the qualifying asset is ready for its intended use.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised when:
-- The rights to receive cash flows from the asset have expired; or
-- The company has transferred its right to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party, and
either
- The company has transferred substantially all the risks and
rewards of the asset, or
- The company has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
A financial liability (in whole or in part) is derecognised when
the Group has extinguished its contractual obligations, it expires,
or it is cancelled.
Any gain or loss on derecognition is taken to the profit or
loss.
Rehabilitation provision
The net present value of estimated future rehabilitation costs
is provided for in the financial statements and capitalised within
property, plant and equipment on initial recognition.
Rehabilitation will generally occur on or after closure of a
mine.
Initial recognition is at the time that the construction or
disturbance occurs, and thereafter as and when additional
construction or disturbances take place. The estimates are reviewed
annually to take into account the effects of inflation and changes
in the estimated cost of the rehabilitation works, and are
discounted using rates that reflect the time value of money. Annual
increases in the provision due to the unwinding of the discount are
recognised in the statement of comprehensive income as a finance
cost. The present value of additional disturbances and changes in
the estimate of the rehabilitation liability are recorded to mining
assets against an increase/decrease in the rehabilitation
provision.
The rehabilitation asset is amortised over the life of the mine
once commercial production commences. Rehabilitation projects
undertaken, included in the estimates, are charged to the provision
as incurred. Environmental liabilities, other than rehabilitation
costs, which relate to liabilities arising from specific events,
are expensed when they are known, probable and may be reasonably
estimated.
Lease liability
The lease liability is initially measured at the present value
of the remaining lease payments, discounted using the interest rate
implicit in the lease. The liability is subsequently measured at
amortised cost using the effective interest rate method. Lease
payments are apportioned between the finance charges and reduction
of the lease liability using the incremental borrowing rate to
achieve a constant rate of interest on the remaining balance of the
liability.
Critical accounting estimates and judgements
In the application of the Group's accounting policies, the
Directors are required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may
differ from these estimates. In particular, information about
significant areas of estimation uncertainty considered by
management in preparing the financial statements is provided
below.
Estimates and judgements are continually evaluated. Revisions to
accounting estimates are recognised in the year in which the
estimates are revised if the revision affects only that year, or in
the year of revision and in future years if the revision affects
both current and future years.
i) Going concern and liquidity
Significant estimates were required in forecasting cash flows
used in the assessment of going concern including tin and tantalum
prices, the levels of production, operating costs, and capital
expenditure requirements. For further details, refer to going
concern considerations laid out earlier in Note 2.
ii) Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation
obligations is complex and requires management to make estimates
and judgements, as most of the obligations will be fulfilled in the
future and contracts and laws are often not clear regarding what is
required. The resulting provisions (see Note 19) are further
influenced by changing technologies, and by political,
environmental, safety, business, and statutory considerations.
The Group's rehabilitation provision is based on the net present
value of management's best estimates of future rehabilitation
costs. Judgement is required in establishing the disturbance and
associated rehabilitation costs at period end, timing of costs,
discount rates, and inflation. In forming estimates of the cost of
rehabilitation which are risk adjusted, the Group assessed the
Environmental Management Plan and reports provided by internal and
external experts. Actual costs incurred in future periods could
differ materially from the estimates, and changes to environmental
laws and regulations, life of mine estimates, inflation rates, and
discount rates could affect the carrying amount of the
provision.
The carrying amount of the rehabilitation obligations for the
Group at 28 February 2022 was GBP295 151 (2021: GBP180 917). In
determining the amount attributable to the rehabilitation
liability, management used a discount rate of 10% (2021: 12.8%), an
inflation rate of 5% (2021: 6%) and an estimated mining period of
17 years (2021: 18 years), being the Phase 1 expansion life of
mine. A 1% increase or decrease in the inflation rate used would
result in a GBP52 848 difference in the liability. A 2% increase or
decrease in the discount rate used would result in a GBP79 345
difference in the liability.
iii) Impairment indicator assessment for exploration and evaluation assets
Determining whether an exploration and evaluation asset is
impaired requires an assessment of whether there are any indicators
of impairment, including specific impairment indicators prescribed
in IFRS 6: Exploration for and Evaluation of Mineral Resources. If
there is any indication of potential impairment, an impairment test
is required based on value in use of the asset. The valuation of
intangible exploration assets is dependent upon the discovery of
economically recoverable deposits which, in turn, is dependent on
future tin prices, future capital expenditures, environmental and
regulatory restrictions, and the successful renewal of licences.
The Group considers the South African exploration and evaluation
assets to be non-core as it continues to primarily focus on
developing its Namibian assets. Accordingly, the capitalised
exploration and evaluation expenditure relating to the South
African assets was impaired to nil in the prior year on the basis
that the Group did not intend on incurring any further expenditure
on its South African licences. The directors have concluded that
there are no indications of impairment in respect of the carrying
value of Namibian intangible assets at 28 February 2022 based on
planned future development of the Namibian projects, and current
and forecast tin prices. Exploration and evaluation assets are
disclosed fully in Note 12.
iv) Impairment assessment for property, plant and equipment
Management have reviewed the Uis mine for indicators of
impairment and have considered, among other factors, the operations
to date at the Uis Tin Mine, the Phase 1 Stage II expansion of the
Uis operations, forecast commodity prices, and market
capitalisation of the Group. In undertaking the indicator review,
management have also reviewed the underlying LoM valuation model
for Uis and have concluded that no indicators of impairment have
been noted at year end. The LoM valuation model is on a fair value
less cost to develop basis and includes assessments of different
scenarios associated with capital development and expansion
opportunities.
The forecasts required estimates regarding forecast tin prices,
ore resources and production, and operating and capital costs. The
discounted cash flows use a discount rate of 8% post tax nominal.
Under the base case forecast using a forecast tin price of $35 940
falling to $31 339 by 2025, the forecast indicates headroom as at
28 February 2022.
As an additional test, management performed certain sensitivity
calculations. These included raising the discount rate to 12% post
tax nominal, lowering the forecast tin prices by 5%, lowering plant
recovery by 5% and increasing operating costs by 10%. In each of
these circumstances, the forecast indicated headroom as at 28
February 2022.
v) Depreciation
Judgement is applied in making assumptions about the
depreciation charge for mining assets when using the
unit-of-production method in estimating the ore tonnes held in
reserves. The relevant reserves are those included in the current
approved LoM plan which relates to the Phase 1 expansion. Judgement
is also applied when assessing the estimated useful life of
individual assets and residual values. The assumptions are reviewed
at least annually by management and the judgement is based on
consideration of the LoM plan, as well as the nature of the assets.
The reserve assumptions included in the LoM plan are evaluated by
management.
vi) Capitalisation and depreciation of waste stripping
The Group has elected to capitalise the costs of waste stripping
activities as these are necessary to allow improved access to the
ore and, therefore, will result in future economic benefits. The
costs of drilling, blasting and load & haul of waste material
is capitalised until such time that the underlying ore is used in
production. These costs are then expensed on a proportional basis.
The capitalised costs are included in the mining asset in property,
plant & equipment and are expensed back into the statement of
comprehensive income as depreciation. Capitalisation of waste
stripping requires the Group to make judgements and estimates in
determining the amounts to be capitalised. These judgements and
estimates include, amongst others, the expected life of mine
stripping ratio for each separate open pit, the determination of
what defines separate pits, and the expected volumes to be
extracted from each component of a pit for which the stripping
asset is depreciated.
vii) Determination of ore reserves
The estimation of ore reserves primarily impacts the
depreciation charge of evaluated mining assets, which are
depreciated based on the quantity of ore reserves. Reserve volumes
are also used in calculating whether an impairment charge should be
recorded where an impairment indicator exists.
The Group estimates its ore reserves and mineral resources based
on information, compiled by appropriately qualified persons,
relating to geological and technical data on the size, depth,
shape, and grade of the ore body and related to suitable production
techniques and recovery rates. The estimate of recoverable reserves
is based on factors such as tin prices, future capital requirements
and production costs, along with geological assumptions and
judgements made in estimating the size and grade of the ore
body.
There are numerous uncertainties inherent in estimating ore
reserves and mineral resources. Consequently, assumptions that are
valid at the time of estimation may change significantly if or when
new information becomes available.
viii) Valuation of inventories
Judgement is applied in making assumptions about the value of
inventories and inventory stockpiles, including tin prices, plant
recoveries and processing costs, to determine the extent to which
the Group values inventory and inventory stockpiles. The Group uses
forecast tin prices to determine the net realisable value of the
ROM stockpile and the tin concentrate inventory on hand at year
end. Inventory stockpiles are measured using actual mining and
processing costs.
ix) Determining the lease term
In determining the lease term, management considers all facts
and circumstances that create an economic incentive to exercise, or
not to exercise, an extension option. Extension options are only
included in the lease term where the company is reasonably certain
that it will extend or will not terminate the lease when the lease
expires. For all leases, the most relevant factors include:
-- Historical lease durations;
-- Costs incurred in replacing the leased asset;
-- Possible business disruption due to replacing the leased asset;
-- Likelihood of extension of the lease - if there are
significant penalties to terminate, then it's reasonably certain
that the Group will extend.
The lease term is reassessed on an ongoing basis, especially
when the option to extend becomes exercisable, or on occurrence of
a significant event or a significant change in circumstances which
affects this assessment, and that is within the control of the
Group.
x) Determining the incremental borrowing rate to measure lease liabilities
The interest rate implicit in leases is not available, therefore
the Group uses the relevant incremental borrowing rate (IBR) to
measure its lease liabilities. The IBR is estimated to be the
interest rate that the Group would pay to borrow:
-- over a similar term;
-- with similar security;
-- the amount necessary to obtain an asset of a similar value to the right of use asset; and
-- in a similar economic environment.
The IBR, therefore, is considered to be the best estimate of the
incremental rate and requires management's judgement as there are
no observable rates available.
xi) Determining the fair value of trade receivables classified
at fair value through profit or loss
The consideration receivable in respect of certain sales for
which performance obligations have been satisfied at year end and
for which the Group has received prepayment under the terms of the
offtake agreement, remain subject to pricing adjustments with
reference to market prices at the date of finalisation. Under the
Group's accounting policies, the fair value of the consideration is
determined, and the remaining receivable is adjusted to reflect
fair value. Management estimated the forward price based on the LME
3-month tin price that is expected when the open shipments will be
finalised. As at 28 February 2022 the Group recognised a receivable
at fair value through profit or loss of GBP812 594 (2021: GBP531
583).
3. Adoption of new and revised standards
A number of new and amended standards and interpretations issued
by IASB have become effective for the first time for financial
periods beginning on (or after) 1 March 2021 and have been applied
by the Group in these financial statements. None of these new and
amended standards and interpretations had a significant effect on
the Group because they are either not relevant to the Group's
activities or require accounting which is consistent with the
Group's current accounting policies.
Accounting standards and interpretations not applied
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods and which have not been
adopted early.
4. Segmental reporting
The reporting segments are identified by the management steering
committee (who are considered to be the chief operating
decision-makers) by the way that the Group's operations are
organised. As at 28 February 2022, the Group operated within two
operating segments: tin exploration and mining activities in
Namibia and South Africa.
Segment results
The following is an analysis of the Group's results by
reportable segment.
South Africa Namibia Total
GBP GBP GBP
Year ended 28 February
2022
Results
13 580 13 615
Revenue 34 444 600 045
(10 693 (10 724
Associated costs (30 843) 637) 480)
2 886 2 890
Segmental profit 3 601 963 564
============ ========== =======
Year ended 28 February
2021
Results
4 950 4 985
Revenue 34 863 244 107
(5 715 (5 724
Associated costs (8 786) 954) 740)
Impairment of exploration (3 069
licence (3 069 232) - 232)
------------ ---------- -------
(3 043 (3 808
Segmental loss 155) (765 710) 865)
============ ========== =======
The reconciliation of segmental gross loss to the Group's loss
before tax is as follows:
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Segmental profit
/ (loss) 2 890 564 (3 808 865)
Unallocated costs (2 252 700) (1 802 718)
Other income 61 755 -
Finance income 6 545 -
Finance costs (316 365) (184 300)
------------ ------------
Profit / (loss)
before tax 389 798 (5 795 883)
============ ============
Unallocated costs are mainly comprised of corporate overheads
and costs associated with being listed in London.
Other segmental information
South Africa Namibia Total
GBP GBP GBP
As at 28 February 2022
Intangible assets - exploration
and evaluation 12 565 5 043 165 5 055 730
Other reportable segmental 24 119 24 190
assets 70 564 470 033
Other reportable segmental (4 038 (4 101
liabilities (63 006) 840) 846)
Unallocated net liabilities - - 2 317 939
------------ --------- ---------
25 123 27 461
Total consolidated net assets 20 122 795 857
============ ========= =========
As at 28 February 2021
Intangible assets - exploration
and evaluation 11 309 5 229 152 5 240 461
Other reportable segmental 15 494 15 571
assets 76 460 907 367
Other reportable segmental (1 651 (1 713
liabilities (62 302) 016) 318)
(2 608
Unallocated net liabilities - - 263)
------------ --------- ---------
19 073 16 490
Total consolidated net assets 25 467 043 247
============ ========= =========
Unallocated net assets/liabilities are mainly comprised of cash
and cash equivalents and the working capital facility which are
managed at a corporate level.
5. Revenue
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Revenue from the sale of
tin 13 717 620 4 744 609
Revenue from the sale of
sand 34 444 34 863
Total revenue from customers 13 752 064 4 779 472
Other revenue - change in
fair value of
customer contract (137 019) 205 635
Total revenue 13 615 045 4 985 107
============ ============
The revenue from the sale of tin and sand is recognised at the
point in time at which control transfers. Refer to Note 2 for
further details.
Other revenue relates to the change in the fair value of amounts
receivable under the offtake agreement between the date of initial
recognition and the period end resulting from forecast market
prices at the estimated final pricing date. Refer to Note 2 for
details of trade receivables recorded at fair value through profit
or loss.
6. Cost of sales
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Costs of production 8 057 083 4 531 697
Smelter charges 748 892 287 319
Logistics costs 126 086 48 578
Government royalties 370 457 120 102
9 302 518 4 987 696
============ ============
7. Administrative expenses
The profit / (loss) for the year has been arrived at after
charging:
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Staff costs 1 269 882 1 201 489
Depreciation of property,
plant & equipment 221 948 275 987
Professional fees 621 379 127 902
Travelling expenses 96 956 44 793
Uis administration expenses 660 476 361 509
Auditor's remuneration 95 000 69 250
Other costs 709 022 458 832
3 674 662 2 539 762
============ ============
Other costs are mainly comprised of corporate overheads
necessary to run the South African head office and the costs
associated with being listed in London.
8. Staff costs
Year ended Year ended
28 February 28 February
2020 2021
GBP GBP
Staff costs capitalised under property,
plant and
equipment 607 622 1 094 729
Staff costs capitalised under intangible
assets 171 793 261 844
Staff costs recognised as administrative
expenses 1 182 228 666 746
Staff costs included in cost of
sales 1 317 548 285 216
Share-based payment charge capitalised
under property,
plant and equipment 18 892 45 820
Share-based payment charge capitalised
under
intangible assets 6 076 18 204
Share-based payment charge recognised
as administrative expenses 80 253 207 407
Share issue charge 7 401 327 336
3 391 813 2 907 301
============ ============
Key management personnel have been identified as the Board of
Directors, Frans van Daalen (Chief Operating Officer of the Group)
and Robert Sewell (Chief Financial Officer of the Group). Details
of key management remuneration are shown in Note 27.
The average number of staff during the period was 165 (2021:
108) with an average total cost per employee for the year of GBP20
510 (2021: GBP26 862).
Emoluments of GBP183 712 including GBP13 258 of share options
and shares to be issued (2021: GBP289 104 including GBP172 323 of
share options and shares to be issued) were paid in respect of the
highest-paid director during the year.
9. Finance cost
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Interest on lease liability 42 630 39 691
Interest on environmental rehabilitation
liability 12 080 7 593
Bank interest 102 655 31 696
Interest on loan notes 68 836 49 863
Amortisation of warrant charge 37 594 49 541
Other interest 52 570 5 916
------------ ------------
316 365 184 300
============ ============
10. Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
Year ended Year ended
28 February 28 February
2022 2021
Factors affecting tax for the year: GBP GBP
The tax assessed for the year at
the Guernsey corporation
tax charge rate of 0%, as explained
below:
Profit / (loss) before taxation 389 798 (5 795 883)
------------ ------------
Profit/ (loss) before taxation multiplied - -
by the Guernsey corporation
tax charge rate of 0%
Effects of:
Differences in tax rates (overseas
jurisdictions) (525 598) (549 615)
Tax losses carried forward 525 598 549 615
Movement in deferred tax (864 199) -
------------ ------------
Tax for the year (864 199) -
============ ============
Accumulated losses in the subsidiary undertakings for which
there is an unrecognised deferred tax asset are GBP4 290 665 (2021:
GBP3 244 873).
11. Loss per share from continuing operations
The calculation of a basic loss per share of 0.08 pence (2021:
loss per share of 0.76 pence), is calculated using the total loss
for the year attributable to the owners of the Company of GBP815
645 (2021: loss of GBP5 694 962) and the weighted average number of
shares in issue during the period of 1 064 247 295 (2021: 749 085
933).
Due to the loss for the year, the diluted loss per share is the
same as the basic loss per share. The number of potentially
dilutive ordinary shares, in respect of share options, warrants and
shares to be issued as at 28 February 2022 is 76 261 762 (2021: 86
882 728). These potentially dilutive ordinary shares may have a
dilutive effect on future earnings per share.
12. Intangible assets
Exploration
and evaluation Computer
assets software Total
Cost GBP GBP GBP
7 441
As at 29 February 2020 7 324 494 116 523 018
Additions for the year - other expenditure 977 797 4 598 982 395
(3 069
Impairment for the year (3 069 232) - 232)
Exchange differences (108 373) (5 347) (113 720)
5 240
As at 28 February 2021 5 124 686 115 775 461
Additions for the year - other expenditure 1 577 065 - 1 577 065
(1 058
Transfer to mining asset (1 058 602) - 602)
Transfer to mining asset under construction (678 467) (678 467)
Exchange differences 91 047 4 397 95 443
5 175
As at 28 February 2022 5 055 729 120 172 901
=========== ========= =========
Exploration
and evaluation Computer
assets software Total
Accumulated Depreciation GBP GBP GBP
As at 28 February 2021 - - -
Charge for the period - 28 198 28 198
Exchange differences - (79) (79)
As at 28 February 2022 - 28 119 28 119
===== ========= ======
Exploration
and evaluation Computer
assets software Total
Net Book Value GBP GBP GBP
As at 28 February 2022 5 055 729 92 053 5 147 782
As at 28 February 2021 5 124 686 115 775 5 240 461
As at 28 February 2020 7 324 494 116 523 7 441 018
For the purposes of impairment testing, the intangible
exploration and evaluation assets are allocated to the Group's
cash-generating units, which represent the lowest level within the
Group at which the intangible exploration and evaluation assets are
measured for internal management purposes, which is not higher than
the Group's operating segments as reported in Note 4.
The amounts for intangible exploration and evaluation assets
represent costs incurred on active exploration projects. Amounts
capitalised are assessed for impairment indicators under IFRS 6 at
each year end as detailed in the Group's accounting policy.
During the year, the Group transferred the costs incurred on the
Phase 1 Stage II Definitive Feasibility Study (DFS) from
exploration & evaluation assets to mining asset under
construction. It was determined that the project had reached the
stage of being commercially viable and technically feasible,
therefore, the transfer from intangible assets to property, plant
and equipment was deemed necessary. Demonstration of commercial
viability and technical feasibility coincided with a board decision
and approval to commence development and construction of the
project. As this expansion was still being constructed at year-end,
the cost of the study was transferred to the mining asset under
construction.
Furthermore, the Group transferred the purchase price of the Uis
mining licence ML134. The pegmatites covered by this mining licence
are currently being mined at the Uis Mine. As mining activities are
actively taking place and revenue is being generated from the ore
that has been mined on this licence area, management concluded that
the value of this licence must be moved to property, plant and
equipment, in the mining asset category.
The Group considers the South African exploration and evaluation
assets to be non-core as it continues to primarily focus on
developing its Namibian assets. Accordingly, the capitalised
exploration and evaluation expenditure relating to the South
African assets of GBP3.069m was impaired to nil in the prior year
on the basis that the Group does not intend to incur any further
expenditure on its South African licences.
The directors have concluded that there are no indicators of
impairment in respect of the carrying value of the Namibian
exploration and evaluation assets at 28 February 2022 based on
planned future development of the projects and current and forecast
tin prices.
13. Property, plant and equipment
Mining Mining
asset asset Mobile
under Mining - Decommissioning Right-of-use Computer equipment
Land construction asset Stripping asset Asset Equipment Furniture Vehicles (crane) Total
Cost
As at 29
February 12 000 12 607
2020 12 438 929 - - 79 497 255 964 94 373 84 748 79 135 - 084
Additions for
the 2 028 2 570
year - 009 123 803 - 90 323 259 957 46 543 21 598 - - 233
Disposals for
the
year - - - - - - (1 955) - - - (1 955)
Transfer
between
categories of (13 550 13 550
assets - 114) 114 - - - - - - - -
Foreign
exchange
differences (576) (478 824) 1 236 - (2 777) (9 250) (3 903) (3 681) (3 662) - (501 437)
------- ------------- -------- ---------- ---------------- ------------- ---------- ---------- --------- ---------- ---------
As at 28
February 13 675 14 673
2021 11 862 - 153 - 167 043 506 671 135 058 102 665 75 473 - 925
Additions for
the 2 600 1 335 5 213
year - 997 728 150 861 95 585 129 982 73 337 72 991 - 176 273 176
Disposals for
the
year - - - - - - (15 891) - (12 523) - (28 414)
Transfer from
exploration
and
evaluation
asset 1 058 1 737
(see note 11) - 678 467 602 - - - - - - - 069
Foreign
exchange
differences 450 304 389 147 863 (3 733) 6 076 18 877 4 968 3 674 2 901 (493) 484 972
------- ------------- -------- ---------- ---------------- ------------- ---------- ---------- --------- ---------- ---------
As at 28
February 3 583 15 609 1 332 22 080
2022 12 312 853 768 128 268 704 655 530 197 472 179 330 65 851 175 780 728
======= ============= ======== ========== ================ ============= ========== ========== ========= ========== =========
Accumulated
Depreciation
As at 29
February
2020 - - - - 53 887 40 339 18 610 26 380 139 216
Charge for the
year - - 717 864 - 108 794 35 622 17 566 18 682 898 528
Foreign
exchange
differences - - 6 118 - (1 407) (1 528) (669) (1 034) 1 480
------- ------------- -------- ---------- ---------------- ------------- ---------- ---------- --------- ---------- ---------
As at 28
February 1 039
2021 - - 723 982 - - 161 274 74 433 35 507 44 028 - 224
Charge for the 1 115 1 861
year - - 292 489 372 9 461 165 689 40 445 28 329 9 204 3 231 023
Foreign
exchange
differences - - 20 501 (1 368) (26) 5 661 2 727 1 255 1 646 (9) 30 388
------- ------------- -------- ---------- ---------------- ------------- ---------- ---------- --------- ---------- ---------
As at 28
February 1 859 2 930
2022 - 775 488 005 9 435 332 624 117 605 65 091 54 878 3 222 635
======= ============= ======== ========== ================ ============= ========== ========== ========= ========== =========
Net Book Value
As at 28
February 3 583 13 749 19 150
2022 12 312 853 993 844 123 259 269 322 906 79 867 114 239 10 973 172 558 092
As at 28
February 12 951 13 634
2021 11 862 - 171 167 043 345 397 60 625 67 158 31 445 701
As at 29
February 12 000 12 467
2020 12 438 929 - 79 497 202 077 54 034 66 138 52 755 868
The Uis Tin Mine reached commercial production during the
previous financial year, on 1 December 2020. Nameplate capacity
(taking into account mining volumes, plant throughput and recovery)
of Stage I of Phase 1 was defined as 60 tonnes of tin concentrate
at a grade of 60% tin in concentrate per month (36 tonnes of
contained tin). 63.9 tonnes of tin concentrate was produced in
November 2020 and production of 60 tonnes or more per month has
been consistently achieved subsequently. Management therefore
determined that commercial production was reached at this point. Up
to this date, costs directly related to the development of the mine
were capitalised to the mining asset.
In October 2020, the Company embarked on the Uis Phase 1 Stage
II Definitive Feasibility Study (DFS) with a view to expand the
existing Phase 1 plant to increase its nameplate production from 60
to 105 tonnes of tin concentrate per month. This DFS has been
approved by the Board, the necessary funding has been obtained and
construction has commenced to implement the expansion. All costs
associated with carrying out the study were previously capitalized
as exploration and evaluation assets under IFRS 6. During the
financial year, management performed an assessment and transferred
the costs associated with the study from exploration and evaluation
assets to mining assets under construction. It was determined that
the project had reached the stage of being commercially viable and
technically feasible, therefore, the transfer was deemed necessary.
The capitalised costs of the study as well as the construction
costs of the expansion will remain in mining asset under
construction until the project has been completed.
Additions to the mining asset include capitalised costs and
equipment purchased as part of the Uis Phase 1 Continuous
Improvement project as well as the transfer of the cost of ML134
from exploration and evaluation assets to PPE.
The Group has elected to capitalise the costs of waste stripping
activities as these are necessary to allow improved access to the
ore and, therefore, will result in future economic benefits. The
costs of drilling, blasting and load & haul of waste material
is capitalised until such time that the underlying ore is used in
production.
Please refer to note 19 for further information on the
right-of-use asset.
From 1 December 2020, depreciation of the mining asset commenced
in accordance with IAS 16. The total depreciation charge for the
current financial year was split between administrative expenses
and cost of sales. GBP221 948 (2021: GBP275 987) was included in
administrative expenses, while the balance of GBP1 639 075 (2021:
GBP622 541) was included in cost of sales as it was a cost that was
incurred for mining and processing purposes.
14. Inventories
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Tin concentrate on hand 909 180 373 310
Run-of-mine stockpile 155 389 427 423
Consumables 387 364 195 965
------------
1 451 933 996 698
============ ============
15. Trade and other receivables
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Trade receivables 96 173 185 451
Trade receivables at fair
value through profit
or loss 812 594 531 583
Other receivables 1 875 561 204 779
VAT receivables 1 169 053 266 339
3 953 382 1 188 152
============ ============
The Directors consider that the carrying amount of trade and
other receivables approximates to their fair value due to their
short-term nature. No allowance for any expected credit losses
against any of the trade receivables is provided due to no history
of default or non-payment from any of the Group's customers.
Trade receivables at fair value through profit or loss relates
to the change in the fair value of trade receivables under the
offtake agreement between the date of initial recognition and the
period end resulting from forecast market prices at the estimated
final pricing date.
Other receivables primarily consist of prepayments that the
Group has made and deposits that have been paid on items of
equipment that are necessary for the Phase 1 Stage II
expansion.
The total trade and other receivables denominated in South
African Rand amount to GBP61 316 (2021: GBP79 888), denominated in
Namibian Dollars amount to GBP2 851 028 (2021: GBP429 819) and
denominated in US Dollars amount to GBP812 594 (2021: 627 566).
16. Cash and cash equivalents
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Cash on hand and in bank 7 365 379 1 351 200
============ ============
Cash and cash equivalents (which are presented as a single class
of assets on the face of the Statement of Financial Position)
comprise cash at bank. The Directors consider that the carrying
amount of cash and cash equivalents approximates their fair value.
The total cash and cash equivalents denominated in South African
Rand amount to GBP80 463 (2021: GBP119 976), the total cash and
cash equivalents denominated in Namibian Dollars amount to GBP1 279
798 (2021: GBP13 156) and the total cash and cash equivalents
denominated in US Dollars amount to GBP3 450 626 (2021: GBP551
832).
17. Borrowings
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Standard Bank term
loan facility 4 523 414 -
Standard Bank VAT
facility 367 739 -
Standard Bank working
capital facility 228 988
Nedbank working capital
facility - 1 710 247
Loan note instrument - 2 159 242
5 120 141 3 869 489
============ ============
On 18 November 2021, a term loan facility of N$90 000 000 (c.
GBP4 428 000), a VAT facility of N$8 000 000 (c. GBP394 000) and a
working capital facility of N$35 000 000 (c. GBP1 722 000) was
entered into between the Company's subsidiary, Uis Tin Mining
Company (Pty) Ltd and Standard Bank Namibia.
The maturity date of the term loan facility is November 2026 and
the capital balance of the loan together with accrued interest will
be repaid in quarterly instalments over the next 5 years. Interest
is charged on the outstanding capital balance of the loan at a rate
of 3-month JIBAR plus a margin of 4.5%.
The Group is required to meet the following covenants as part of
the term loan facility agreement:
-- EBITDA ÷ total interest must not be lower than 4.5 times
-- Total debt ÷ EBITDA must not exceed 4 times in year 1, 3.5
times in year 2 and 3 times thereafter
-- Free cash flow before Debt Service Cover ÷ Principal and
Interest Senior Debt Service Payments must not be lower than 1.3
times
-- Free cash flow before Debt Service Cover + Total Cash
Collateral ÷ Principal and Interest Senior Debt Service Payments
must not be lower than 2 times
The Group met all the above covenant requirements at 28 February
2022.
The VAT facility is secured by assessed/audited VAT returns
(refunds) which have not been paid by Namibia Inland Revenue.
Standard Bank Namibia provides a facility amounting to the unpaid
refunds. Any drawdowns against this facility are repaid to the bank
upon receipt of cash from Namibia Inland Revenue.
The VAT facility and the working capital facility have no fixed
maturity date, but are both renewed on an annual basis. Interest
accrues on these facilities at the Namibian prime rate less 1%.
Standard Bank Namibia have provided a N$ 4 117 500 (c. GBP195
000) guarantee to the Namibia Power Corporation Pty Limited in
relation to a deposit for the supply of electrical power. As a
result of the guarantee provided by Standard Bank, no cash was paid
over for the deposit.
The full working capital facility that was previously held with
Nedbank Namibia was repaid during the year as the Group's
facilities were moved over to Standard Bank.
On 5 May 2020, GBP2 050 000 financing was secured by way of a
new loan note facility. The notes, which were issued in tranches of
GBP50 000, had an interest rate of 10% per annum which was accrued
and payable in full on redemption. The notes had a 12-month term
and were repaid along with the accrued interest in May 2021.
Reconciliation of net cash flow to movement in borrowings
Balance as at 29 February
2020 1 230 961
Incoming cash flows
--------------------------------------- --------------------
Proceeds from working capital
facility 5 858 028
Proceeds from loan note instrument 2 050 000
--------------------------------------- --------------------
Outgoing cash flows
--------------------------------------- --------------------
Repayment of working capital
facility (5 347 044)
Interest paid on working capital
facility (31 696)
Non-cash flows
--------------------------------------- --------------------
Interest accrued on loan note
instrument 146 836
Warrants issued during the
year (162 480)
Amortisation of warrant charge 124 886
--------------------------------------- --------------------
Balance as at 28 February
2021 3 869 489
Incoming cash flows
--------------------------------------- --------------------
Proceeds from term loan 4 428 000
Proceeds from VAT facility 367 739
Proceeds from working capital
facility 228 988
--------------------------------------- --------------------
Outgoing cash flows
--------------------------------------- --------------------
Repayment of loan note instrument
and interest (2 196 836)
Repayment of working capital
facility (1 607 592)
Interest paid on working capital
facility (102 655)
--------------------------------------- --------------------
Non-cash flows
--------------------------------------- --------------------
Interest accrued on term loan
(capitalised to mining asset
under construction) 95 414
Amortisation of warrant charge 37 594
--------------------------------------- --------------------
Balance as at 28 February
2022 5 120 141
====================
18. Trade and other payables
Year ended Year ended
28 February 28 February 2021
2022 GBP
GBP
Trade payables 2 293 471 1 094 390
Other payables 341 276 141 677
Accruals 335 087 248 415
2 969 833 1 484 482
============ =================
Trade and other payables principally comprise amounts
outstanding for trade purchases and on-going costs. The average
credit period taken for trade purchases is 30 days.
The Group has financial risk management policies in place to
ensure that payables are paid within the pre-arranged credit terms.
No interest has been charged by any suppliers as a result of late
payment of invoices during the year.
The Directors consider that the carrying amount of trade and
other payables approximates to their fair value.
The total trade and other payables denominated in South African
Rand amount to GBP124 904 (2021: GBP232 071) and GBP2 692 924
(2021: GBP1 185 802) is denominated in Namibian Dollars.
19. Environmental rehabilitation liability
GBP
Balance as at 28 February
2020 86 005
Increase in provision 90 323
Interest expense 7 593
Foreign exchange differences (3 004)
-------
Balance as at 28 February
2021 180 917
Increase in provision 95 585
Interest expense 12 080
Foreign exchange differences 6 569
-------
Balance as at 28 February
2022 295 151
=======
Provision for future environmental rehabilitation and
decommissioning costs are made on a progressive basis. Estimates
are based on costs that are regularly reviewed and adjusted
appropriately for new circumstances. The environmental
rehabilitation liability is based on disturbances and the required
rehabilitation as at 28 February 2022.
The rehabilitation provision represents the present value of
decommissioning costs relating to the dismantling and sale of
mechanical equipment and steel structures related to the Phase 1
pilot plant, the demolishing of civil platforms, and reshaping of
earthworks. A provision for this requires estimates and assumptions
to be made around the relevant regulatory framework, the magnitude
of the possible disturbance, and the timing, extent and costs of
the required closure and rehabilitation activities. In calculating
the appropriate provision, cost estimates of the future potential
cash outflows based on current studies of the expected
rehabilitation activities and timing thereof are prepared. These
forecasts are then discounted to their present value using a
risk-free rate specific to the liability. In determining the amount
attributable to the rehabilitation liability, management used a
discount rate of 10% (2021: 12.8%), an inflation rate of 5% (2021:
6%), and an estimated mining period of 17 years (2021: 18 years).
Actual rehabilitation and decommissioning costs will ultimately
depend upon future market prices for the necessary rehabilitation
works and timing of when the mine ceases operation.
20. Lease liability
The Company assessed all existing and new rental agreements and
concluded that the following rentals fall within the scope of IFRS
16: Leases and therefore a lease liability has been raised:
Lease Option to extend/terminate Incremental
term borrowing
rate
Option to extend not specified
in contract. Term of lease determined
Office building 5 years to be 5 years. 13.75%
--------- ---------------------------------------- ------------
Option to extend not specified
in contract. Term of lease determined
Workshop facility 2 years to be 2 years. 7.5%
--------- ---------------------------------------- ------------
The lease will continue automatically
after the initial period for
an open-ended period. Either
party must provide written notice
Residential if they wish to terminate. Lease
housing 5 years term determined to be 5 years. 8.5%
--------- ---------------------------------------- ------------
The lessee is granted the option
to purchase the units after the
Mobile Units 2 years lease period of 2 years. 7.5%
--------- ---------------------------------------- ------------
Office Mobile
Building Workshop Housing units Total
GBP GBP GBP GBP GBP
Balance at 28 February
2020 223 673 - - - 223 673
Additions - 108 252 151 705 - 259 957
Interest expense 24 419 3 923 11 349 - 39 691
Lease payments (64 201) (30 319) (34 080) - (128 600)
Foreign exchange
differences (10 749) 818 1 287 - (8 644)
---------
Balance at 28 February
2021 173 142 82 674 130 261 - 386 077
Additions 61 293 - - 68 689 129 982
Interest expense 25 103 4 259 9 857 3 411 42 630
Lease payments (95 317) (54 641) (36 811) (26 892) (213 661)
Foreign exchange
differences 6 600 3 280 5 021 (126) 14 775
---------
Balance at 28 February
2022 170 821 35 572 108 328 45 082 359 803
========= ======== ======== ======== =========
The following is the split between the current and the
non-current portion of the liability:
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Non-current liability 167 215 260 512
Current liability 192 588 125 565
359 803 386 077
============ ============
Reconciliation of net cash flow to movement in leases
Balance as at 28 February
2021 386 077
Outgoing cash flows
------------------------------ ---------
Lease payments (213 661)
------------------------------ ---------
Non-cash flows
------------------------------ ---------
Additions 129 982
Interest expense 42 630
Foreign exchange differences 14 775
Balance as at 28 February
2022 359 803
21. Share capital
Number of ordinary
shares of no
par value issued Share Capital
and fully paid GBP
Balance at 29 February 653 146
2020 373 20 487 239
Capital Raise - 3 August
2020 145 238 089 3 050 000
Shares issued to suppliers 15 273 480 320 743
Share issue costs - (253 317)
Shares issued to directors/employees 16 133 440 403 336
Loan note conversion 44 898 630 1 600 000
------------------ -------------
Balance at 28 February 874 690
2021 012 25 608 001
Warrants exercised - 22
April 2021 1 686 666 63 150
Capital raise - 12 May 2021 216 666 667 13 000 000
Share issue costs - (823 447)
Convertible loan note settled
- 25 May 2021 18 963 699 430 055
Shares issued to suppliers
- 25 May 327 868 29 672
Shares issued to suppliers
- 15 Dec 798 001 39 102
Exercising of employee share
options - 14 Jan 2 185 087 72 059
Exercising of employee share
options - 27 Jan 1 250 000 56 250
Exercising of employee share
options - 22 Feb 5 273 684 180 236
------------------ -------------
Balance as at 28 February 1 121 841
2022 684 38 655 078
================== =============
Authorised: 1 220 486 913 ordinary shares of no par value
Allotted, issued and fully paid: 1 121 841 684 ordinary shares
of no par value
On 22 April 2021, warrant holders exercised 1 186 666 warrants
at an exercise price of 4.5 pence and 500 000 warrants at an
exercise price of 1.95 pence.
On 12 May 2021, the Company completed an equity fundraising by
way of a placing and direct subscription of 216 666 667 ordinary
shares of no par value in the Company at a price of 6 pence per
share.
On 25 May 2021, the holders of the outstanding 2019 Convertible
Loan Notes elected to convert a portion of the outstanding amount
into fully paid ordinary shares of no par value in the Company,
with the remainder being redeemed in cash. 18 963 699 ordinary
shares of no par value were issued to various holders to settle
this loan.
On 25 May 2021, 327 868 ordinary shares of no-par value were
issued to Hannam & Partners Advisory Limited, in accordance
with the terms of their broker engagement letter with the Company.
These shares were issued at a price of 6 pence per share.
On 4 January 2021, 16 133 440 ordinary shares of no par value
were issued to various directors and employees in lieu of payment
of director fees and part settlement of salaries. These shares were
issued at a price of 2.5 pence per share.
On 15 December 2021, 798 001 ordinary shares of no par value
were issued to settle a contractual liability at 4.90 pence in lieu
of fees in relation to a consulting agreement.
On 14 January 2022, the Company received notice from share
option holders to exercise 1 300 877 share options at an exercise
price of 3 pence, 467 105 share options at an exercise price of 3.5
pence and 417 105 share options at an exercise price of 4
pence.
On 27 January 2022, the Company received notice from share
option holders to exercise 1 250 000 share options at an exercise
price of 4.5 pence.
On 22 February 2022, the Company received notice from share
option holders to exercise 2 336 842 share options at an exercise
price of 3 pence, 1 468 421 share options at an exercise price of
3.5 pence, and 1 468 421 share options at an exercise price of 4
pence.
22. Warrants
The following warrants were granted during the year ended 28
February 2021:
Date of grant 10 December
2020 7 July 2020 31 May 2020 5 May 2020
Number granted 2 500 000 2 500 000 2 500 000 13 000 000
Contractual life 2.4 years 2.8 years 2.9 years 3 years
Estimated fair value
per warrant (GBP) 0.0101 0.0122 0.0068 0.0069
The estimated fair values were calculated by applying the Black
Scholes pricing model. The model inputs were:
Date of grant 10 December
2020 7 July 2020 31 May 2020 5 May 2020
Share price at grant
date (pence) 2.35 3 1.8 1.8
Exercise price (pence) 1.95 1.95 1.95 1.95
Expected life 2.4 years 2.8 years 2.9 years 3 years
Expected volatility 60% 60% 60% 60%
Expected dividends Nil Nil Nil Nil
Risk-free interest
rate 1.24% 1.24% 1.24% 1.24%
The warrants in issue during the year are as follows:
Outstanding at 29 February
2020 5 671 939
Exercisable at 29 February
2020 5 671 939
Granted during the year 20 500 000
Expired during the year (1 871 939)
Exercised during the year -
-----------
Outstanding at 28 February 24 300
2021 000
Exercisable at 28 February 24 300
2021 000
Granted during the year -
Expired during the year -
Exercised during the year (1 686 666)
-----------
Outstanding at 28 February 22 613
2022 334
Exercisable at 28 February 22 613
2022 334
The warrants outstanding at year end have an average exercise
price of GBP0.024, with a weighted average remaining contractual
life of 1.13 years.
On 22 April 2021, notice was received from warrant holders to
exercise 1 186 666 warrants at an exercise price of 4.5 pence and
500 000 warrants at an exercise price of 1.95 pence. The charges
previously raised on these warrants was reversed, resulting in a
movement in the warrant reserve. Please refer to the statement of
changes in equity for the reconciliation of the warrant
reserve.
23. Share-based payment reserve
Director share options
The director share options in issue during the year are as
follows:
Outstanding at 29 February 27 100
2020 000
Exercisable at 29 February 13 125
2020 000
Granted during the year -
Forfeited during the year -
Exercised during the year -
Expired during the year -
-----------
Outstanding at 28 February 27 100
2021 000
Exercisable at 28 February
2021 8 389 999
Granted during the year -
Forfeited during the year -
Exercised during the year (1 250 000)
Expired during the year -
-----------
Outstanding at 28 February
2022 25 850 000
Exercisable at 28 February
2022 23 850 000
On 4 January 2021, 10 600 000 share options held by the Chief
Executive Officer, Anthony Viljoen were repriced by the
Remuneration Committee to align company and shareholder
expectations with long-term incentivisation goals. The exercise
price and the first exercise date were changed, however, the
contractual life of the options remained unchanged. The fair value
of the repriced options (calculated using the Black Scholes method)
decreased from the initial fair valuation. As such, no adjustment
to amortising of the initial fair value over the vesting period was
made.
A previous non-executive director elected to exercise his
remaining 1 250 000 share options during the year. This resulted in
a charge of GBP13 800 being passed through the share-based payment
reserve.
No new share options were issued during the year.
The director share options outstanding at year end have an
average exercise price of GBP0.045 (2021: GBP0.053), with a
weighted average remaining contractual life of 1.79 years (2021:
2.77 years).
A director must remain as a director of the Company for the
share options to vest. In the event that a director ceases to be a
director during the vesting period, the Board reserves the right to
determine whether the share options will be terminated or not.
There are no market-based vesting conditions on the share
options.
Employee share options
The employee share options in issue during the year are as
follows:
Outstanding at 29 February 34 830
2020 000
Exercisable at 29 February 11 250
2020 000
Granted during the year -
Forfeited during the year -
Exercised during the year -
Expired during the year -
-----------
Outstanding at 28 February 34 830
2021 000
Exercisable at 28 February 26 610
2021 001
Granted during the year -
Forfeited during the year -
Exercised during the year (7 458 771)
Expired during the year -
-----------
Outstanding at 28 February 27 371
2022 229
Exercisable at 28 February 27 371
2022 229
On 4 January 2021, 34 830 000 share options held by employees
were repriced by the Remuneration Committee to align company and
shareholder expectations with long-term incentivisation goals. The
exercise price and the first exercise date were changed, however
the contractual life of the options remained unchanged. The fair
value of the repriced options (calculated using the Black Scholes
method) decreased from the initial fair valuation. As such, no
adjustment to amortising of the initial fair value over the vesting
period was made.
A number of employees elected to exercise their share options
during the year. This resulted in a charge of GBP103 824 being
passed through the share-based payment reserve.
The employee share options outstanding at the year end have an
average exercise price of GBP0.034 (2021: GBP0.034), with a
weighted average remaining contractual life of 1.96 years (2021:
2.96 years).
An employee must remain in employment with the Company for the
share options to vest. There are no market-based vesting conditions
on the share options.
Director shares to be issued
Directors fees of GBP25 508 (2021: GBP16 342) are owing to the
directors at the end of the year. The Company may consider settling
these fees by issuing shares in the future.
Employee shares to be issued
Employee salaries of GBP4 182 (2021: GBP17 720) are owing to
employees at the end of the year. The Company may consider settling
these salaries by issuing shares in the future.
24. Non-controlling Interests
Non-controlling interest that is material in the Group relates
to the Small Miners of Uis ("SMU") who own 15% of UTMC. SMU is a
non-profit association incorporated in Namibia. The entity was set
up by the Ministry of Mines and Energy to act on behalf of
small-scale miners across Namibia.
Other includes the following minority interests which are not
material:
-- Cannosia Trading 62 CC which own 16% of Renetype
-- African Women Enterprise Investments (Pty) Ltd which own 10% of Renetype
-- Lerama Resources (Pty) Ltd which own 50% of Jaxson
-- Tamiforce (Pty) Ltd which own 26% of Zaaiplaats
As at 28 February 2022
UTMC Other Total
Amount attributable to all shareholders:
Profit / (loss) after tax 2 281 762 (3 926) 2 277 836
Non-current assets 7 085 066 12 313 7 097 379
Current assets 8 862 468 - 8 862 468
--------- -------- ---------
15 947 15 959
Total assets 534 12 313 847
--------- -------- ---------
12 843 12 888
Non-current liabilities 653 44 967 620
Current liabilities 1 788 861 12 786 1 801 648
--------- -------- ---------
14 632 14 690
Total liabilities 514 57 753 267
--------- -------- ---------
1 315 1 269
Net assets / (liabilities) 020 (45 440) 580
========= ======== =========
Amount attributable to non-controlling
interest:
Profit / (loss) after tax 342 264 (1 021) 341 243
Net assets / (liabilities) 196 230 (13 030) 183 200
As at 28 February 2021
UTMC Other Total
Amount attributable to all shareholders:
Loss after tax (659 673) (7 150) (666 822)
Non-current assets 2 678 021 15 233 2 693 254
Current assets 2 524 054 - 2 524 054
--------- -------- ---------
5 202 5 217
Total assets 076 15 233 308
--------- -------- ---------
Non-current liabilities 5 136 254 43 275 5 179 529
Current liabilities 997 620 11 964 1 009 584
--------- -------- ---------
6 133 6 189
Total liabilities 874 55 239 113
--------- -------- ---------
Net liabilities (931 798) (40 006) (971 804)
========= ======== =========
Amount attributable to non-controlling
interest:
Loss after tax (98 951) (1 970) (100 921)
Net liabilities 139 770 11 574 151 344
25. Financial instruments
The Group is exposed to the risks that arise from its use of
financial instruments. This note describes the objectives, policies
and processes of the Group for managing those risks and the methods
used to measure them. Further quantitative information in respect
of these risks is presented throughout these financial
statements.
Capital risk management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
returns to shareholders. In order to maintain or adjust the capital
structure, the Group may issue new shares or arrange debt
financing.
The capital structure of the Group consists of cash and cash
equivalents and equity, comprising issued capital, issued
convertible loan notes, borrowings and retained losses.
The Group is not subject to any externally imposed capital
requirements.
Significant accounting policies
Details of the significant accounting policies and methods
adopted including the criteria for recognition, the basis of
measurement, and the bases for recognition of income and expenses
for each class of financial asset, financial liability, and equity
instrument, are disclosed in note 2.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Trade and other receivables
-- Cash and cash equivalents
-- Trade and other payables
-- Borrowings
-- Lease liability
Categories of financial instruments
The Group holds the following financial assets:
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Measured at amortised
cost:
Trade and other receivables 1 971 734 390 230
Cash and cash equivalents 7 365 379 1 351 200
Measured at fair value
through profit or loss:
Trade and other receivables 812 594 531 583
10 149
Total financial assets 708 2 273 013
============ ============
Under its customer sale arrangement, the Group receives a
provisional payment upon satisfaction of its performance
obligations based on the spot price at that date. This occurs prior
to the final price determination, with the Group then subsequently
receiving or paying the difference between the final price and
quantity and the provisional payment. As a result of the pricing
structure, the instrument is classified at fair value through
profit or loss and measured at fair value with resulting changes in
fair value recorded as other revenue.
Trade receivables at fair value through profit or loss fail the
criteria for being measured at amortised cost owing to the
variability resulting from final pricing adjustments. Financial
instruments measured at fair value are presented by level within
which the fair value measurement is categorised. The levels of fair
value measurement are determined as follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
The Group's contract receivable at 28 February 2022 is recorded
at fair value through profit or loss and fair valued based on the
estimated forward prices that will apply under the terms of the
sales contracts on the product reaching the port of destination.
The trade receivables fair value reflects amounts receivable from
the customer adjusted for forward prices expected to be
realised.
The forward price is based on the expected LME 3-month tin price
on the date of finalisation. Given the short period to final
pricing, the time value of money is not considered to be
significant.
Fair value of this trade receivable at fair value through profit
or loss is categorised at Level 1. During the year there were no
transfers between levels of fair value hierarchy.
The Group holds the following financial liabilities:
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Measured at amortised
cost:
Trade and other payables 2 969 833 1 484 482
Borrowings 5 120 141 3 869 489
Lease liability 359 803 386 077
Total financial liabilities 8 449 777 5 740 048
============ ============
Maturity analysis of the contractual undiscounted cash
flows:
Between Between Between Total
Up to 3 1 2
3 months and 12 months and 2 years and 5 years
Trade and other
payables 2 969 833 - - - 2 969 833
Borrowings 139 694 885 042 1 031 067 3 064 338 5 120 141
Lease Liability 50 077 142 511 124 288 42 927 359 803
---------- --------------- ------------- ------------- ----------
3 159
604 1 027 553 1 155 355 3 107 265 8 449 777
========== =============== ============= ============= ==========
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies. The Board
receives reports through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives
and policies it sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below:
Credit risk
The Group's principal financial assets are bank balances and
trade and other receivables.
Credit risk arises principally from the Group's cash and trade
and other receivables balances. Credit risk is the risk that the
counterparty fails to repay its obligation to the Group in respect
of amounts owed. The Group gives careful consideration to which
organisations it uses for its banking services in order to minimise
credit risk.
The concentration of the Group's credit risk is considered by
counterparty, geography and currency. The Group has split its cash
reserves across multiple banks in an effort to mitigate credit
risk. The Pound Sterling and US Dollar accounts are held with a
bank in Mauritius which has a rating of Baa1 (Moody's), the Rand
account is held with a bank in South Africa which has a rating of
Ba2 (Moody's) and the Namibian Dollar account is held with a bank
in Namibia with a rating of Ba2 (Moody's). The banks chosen remain
stable and do not present any further risks.
The concentration of credit risk was as follows:
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Currency
Sterling 2 554 492 666 236
USD 3 450 626 551 832
South African
Rand 80 463 119 976
Namibian Dollars 1 279 798 13 156
7 365 379 1 351 200
============ ============
Credit risk relating to trade & other receivables has also
been considered. Credit verification procedures are undertaken for
all customers with whom we trade on credit. This includes an
assessment of the credit quality of the customer, taking into
account its financial position, past experience and other factors.
The trade account receivables comprise a limited customer base.
Ongoing credit evaluation of the financial position of customers is
performed and compliance with credit limits by customers is
regularly monitored by management. Please refer to note 15 for the
concentration of credit risk relating to trade receivables.
At 28 February 2022, the Group held no collateral as security
against any financial asset. The carrying amount of financial
assets recorded in the financial statements, net of any allowances
for losses, represents the Group's maximum exposure to credit risk
without taking account of the value of any collateral obtained. The
Group applies IFRS 9 to measure expected credit losses for
receivables and these are regularly monitored and assessed. There
has been no impairment of financial assets during the year.
Management considers the above measures to be sufficient to control
the credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors. The Board manages liquidity risk by
regularly reviewing the Group's gearing levels, cash-flow
projections and associated headroom and ensuring that excess
banking facilities are available for future use.
The Group maintains good relationships with its banks and its
cash requirements are anticipated via the budgetary process. At 28
February 2022, the Group had GBP7 365 379 (2021: GBP1 351 200) of
cash reserves.
Market risk
The Group's activities expose it primarily to the financial risk
of changes in foreign currency exchange rates and interest
rates.
Interest rate risk
The Group has interest bearing assets in the form of cash &
cash equivalents. The Group does not earn significant interest on
cash balances.
The Group has interest bearing liabilities in the form of bank
loans and facilities. These liabilities are exposed to variable
interest rates. The following table details the Group's sensitivity
to a 1% increase and a 1 % decrease in the interest rate.
Value Cash flow impact Cash flow impact
GBP of a 1% increase of a 1% decrease
in interest rate in interest rate
GBP GBP
Borrowings 5 120 141 (51 201) 51 201
Foreign exchange risk
The Group has foreign currency denominated assets and
liabilities, and is therefore exposed to exchange rate
fluctuations. The carrying amounts of the Group's foreign currency
denominated monetary assets and liabilities, all in Pound Sterling,
are shown below.
Year ended Year ended
28 February 28 February
2022 2021
GBP GBP
Cash and cash equivalents 4 810 887 684 964
Other receivables 2 555 885 1 137 272
Trade and other
payables (2 550 860) (1 417 873)
Borrowings (5 120 141) (1 710 247)
304 229 (1 305 884)
============ ============
The Company operates on an international basis, therefore,
foreign exchange risk exposures arise from transactions denominated
in foreign currencies. The Company is exposed to foreign currency
risk on fluctuations related to financial instruments that are
denominated in British Pounds, US Dollars, South African Rand and
Namibian Dollars.
The Group does not enter into any derivative financial
instruments to manage its exposure to foreign currency risk.
The following table details the Group's sensitivity to a 10%
increase and decrease in the Pound Sterling against the Rand and
the Namibian Dollar. 10% is the sensitivity rate used when
reporting foreign currency risk internally to key management
personnel and represents management's assessment of the reasonable
possible change in foreign currency rates. The sensitivity analysis
includes only outstanding foreign currency denominated monetary
items and adjusts their translation at year end for a 10% change in
foreign currency rates.
Rand denominated Rand currency Rand currency
monetary items impact impact
GBP Strengthening Weakening
GBP GBP
Assets 141 779 155 957 127 601
Liabilities (124 904) (137 395) (112 414)
---------------- ---------------- ----------------
16 875 18 562 15 187
================ ================ ================
Namibian Dollar Namibian Dollar Namibian Dollar
denominated currency impact currency impact
monetary items Strengthening Weakening
GBP GBP GBP
Assets 4 130 827 4 543 909 3 717 744
Liabilities (7 813 065) (8 594 372) (7 031 759)
---------------- ---------------- ----------------
(3 682 239) (4 050 462) (3 314 015)
================ ================ ================
26. Events after balance sheet date
Decline in Tin Price
The recent volatility in the tin prices has placed additional
pressures on the group with regards to funding of capital expansion
project via internal sources. Management had anticipated the
declines and are already at advanced stages of securing the funding
in order to continue its growth ambitions.
Proposed Lending Facility
Uis Tin Mining Company (Pty) Limited ("UTMC"), a subsidiary of
the Group has entered into a conditional, credit approved, term
sheet for a lending facility with the Development Bank of Namibia
Limited ("Development Bank of Namibia") to fund the Uis Phase 1
Stage II Continuous Improvement Project.
As announced on 5 July 2022, a Proposed Lending Facility
comprising a NAD 100 million (approximately GBP5.5 million) Senior
Secured Lending Facility has been signed with the Development Bank
of Namibia. Although the Lending Facility has been approved by the
credit committee and board of the Development Bank of Namibia,
there are certain conditions precedent that need to be adhered to,
including completion of final legal documentation. At this stage
there can be no guarantee the Lending Facility will be entered
into, or that any funds will be drawn down, but AfriTin Management
have every confidence that it will be. The Company has previously
announced that the terms of this proposed lending facility would
expire by the end of July 2022 but the Directors confirm that this
has now been extended such that completion is anticipated around
the end of September 2022. A further update will be provided at
that time.
Issue of Share Options
On the 8th of April 2022, the Group has issued options of 54 310
000 ordinary shares as part of its Long-Term Incentive Scheme to
certain Directors, PDMRs and employees of the Company. These are in
line with the established share option scheme of the Company to
both reward and incentivise key employees, as per the company's
reward policies. These share options vest in three tranches over
three and are exercisable at a price of 9.8 pence, 10.3 pence and
10.8 pence. They are conditional only on the continued employment
of the relevant recipient as a director or employee of the company
at the time of exercise.
Phase 1 Stage II Expansion: Construction Completed
Construction of the plant expansion circuits is now complete,
allowing the Project to advance to the commissioning stage.
Commissioning of the new circuits is being implemented in two
stages: firstly, the commissioning of the dry plant which has
commenced and will be completed by end of August 2022, and secondly
the commissioning of the wet plant, which is scheduled for the
month of September 2022. The commissioning process has been
designed to minimise production disruption. There is a requirement
to shutdown certain plant circuits to facilitate tie-ins with the
existing plant but due to stockpiling and flexibility built into
the current circuit, this is not expected to have a material impact
on the production performance of the Company.
Key management change
During the month of July 2022 Mr Robert Sewell stepped down as
CFO of the Company to pursue other opportunities. He remained as a
consultant to the Company in the short-term to ensure a smooth
transition process with the newly appointed CFO, Mr Hiten Ooka.
27. Related-party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
Bushveld Minerals Limited ("Bushveld") is a related party due to
Anthony Viljoen, Chief Executive Officer, being a Non-Executive
Director on the Bushveld Board. During the period, Bushveld charged
the Group GBP37 924 (2021: GBP82 423) for the use of office space.
At period end, the Group owed Bushveld GBP71 040 (2021: GBP112
962).
The remuneration of the key management personnel of the Group,
which includes the Directors, as well as Frans van Daalen and
Robert Sewell, is set out below.
28 February 2022 Shares
Issued Shares
Share in Relation Issued Director
Option to Director in Relation Fees/ Other
Charge Fees/Salary to Bonus Salary Fees Total
GBP GBP GBP GBP GBP GBP
Non-Executive Directors
Glen Parsons (Chairman) 5 524 - - 59 167 - 64 691
Terence Goodlace 5 524 - - 56 308 - 61 832
Laurence Robb 5 524 18 000 - 17 000 8 000 48 524
Michael Rawlinson (appointed
20 Dec 2021) - 3 500 - 4 000 49 102 56 602
Executive Director
Anthony Viljoen (Chief Executive 183
Officer) 13 258 - - 170 454 - 712
Other key management personnel
Robert Sewell (Chief Financial 119
Officer) 8 838 - - 110 326 - 164
Frans van Daalen (Chief Operating 149
Officer) 8 838 - - 140 390 - 228
------------
557 57 683
47 506 21 500 - 645 102 753
======= ============ ============ ======== ====== ======
28 February 2021 Shares
Issued Shares
Share in Relation Issued Director
Option to Director in Relation Fees/ Other
Charge Fees/Salary to Bonus Salary Fees Total
GBP GBP GBP GBP GBP GBP
Non-Executive Directors
Glen Parsons (Chairman) 10 893 40 000 - - - 50 893
Terence Goodlace 10 761 - - 28 750 - 39 511
Laurence Robb 10 761 13 000 - 12 000 - 35 761
Roger Williams (resigned
28 September 2020) 10 761 - - 14 583 - 25 344
Executive Director
Anthony Viljoen (Chief Executive 289
Officer) 26 090 17 365 128 868 116 781 - 104
Other key management personnel
Robert Sewell (Chief Financial 172
Officer) 19 599 - 65 919 86 745 - 263
Frans van Daalen (Chief 215
Operating Officer) 22 099 - 81 178 112 322 - 599
------------
110 275 371 828
964 70 365 965 181 - 475
======= ============ ============ ======== ===== ======
28. Capital commitments
Significant capital expenditure contracted for at the end of the
reporting period but not recognised as liabilities is as
follows:
Year ended
28 February
2022
GBP
Exploration and evaluation
projects 1 021 297
Property, plant and equipment 1 695 932
2 717 228
============
The full balance of these commitments will be due within the
next 12 months.
29. Reserves within equity
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Convertible loan note reserve
The convertible loan note reserve represents proceeds on issue
of convertible loan notes relating to equity component plus accrued
interest on the convertible loan notes. These notes were settled in
full during the financial year .
Warrant reserve
The warrant reserve represents the cumulative charge to date in
respect of unexercised share warrants at the balance sheet
date.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge
to date in respect of unexercised share options at the balance
sheet date as well as fees/salaries owed to directors/employees to
be settled through the issuing of shares.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign
exchange differences arising from the translation of entities with
a functional currency other than Pound Sterling.
Retained earnings/accumulated deficit
The retained earnings/accumulated deficit represents the
cumulative profit and loss net of distribution to owners.
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END
FR FIFSSTAILVIF
(END) Dow Jones Newswires
August 31, 2022 02:01 ET (06:01 GMT)
Andrada Mining (LSE:ATM)
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Andrada Mining (LSE:ATM)
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