TIDMATM

RNS Number : 3399K

Andrada Mining Limited

24 August 2023

24 August 2023

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information will be in the public domain.

Andrada Mining Limited

("Andrada" or the "Company")

AUDITED FINANCIAL RESULTS FOR THE 12 MONTHSED 28 FEBRUARY 2023

Successful Uis Mine expansion results in a 34% increase in concentrate production

Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), an African technology metals mining company with a portfolio of mining and exploration assets in Namibia is pleased to announce the release of its audited financial results for the 2023 financial year ended 28 February 2023 (FY2023).

FINANCIAL HIGHLIGHTS

   --   Revenue of GBP9.8m (FY 2022: GBP13.6m) impacted by the decrease in tin prices. 

-- Cash costs (C1) decreased to US$19 762 per tonne of contained tin (FY 2022: US$21 839) due to higher tonnage.

-- All-in sustaining cost decreased to US$24 939 per tonne of contained tin (FY 2022: US$27 515) due to higher tonnage.

   --   EBITDA at GBP5.9m loss (FY2022: GBP2.6m loss) mainly due to a 34% decrease in the tin price. 
   --   Average tin price at US$25k per tonne (FY2022: US$39k per tonne). 
   --   Cash and cash equivalents at year end at GBP8.2m. 
   --   Cash balance at 23 August 2023 is GBP8.6m (unaudited). 

OPERATIONAL HIGHLIGHTS

   --    Annual tin concentrate production increased 34% to 960 tonnes (FY2022:780 tonnes). 
   --    Exports increased to 33 shipments compared to 29 shipments in FY 2022. 
   --    Processing plant production capacity increased by 70%. 

LITHIUM HIGHLIGHTS

   --    Infill drilling at ML 133 mining licence area ("Lithium Ridge") commenced in January 2023. 
   --    Off-site lithium pilot testing commenced during the fourth quarter. 
   --    Construction of the on-site lithium pilot plant commenced at the end of the financial year. 

-- Exploration drilling programme completed on the ML129 mining licence area ("Spodumene Hill") over 17 drill holes.

-- Updated Mineral Resource Estimate ("MRE") in February 2023 for V1/V2 pegmatites on the Uis Mining Licence area (ML 134) increased the deposit by 13% to 81 million tonnes making Uis a globally significant lithium and tin resource.

POST-PERIOD HIGHLIGHTS

-- Binding documentation for the conditional US$25m (cGBP18m) funding package signed in August 2023. The funding will expedite the lithium implementation programme when approved by the shareholders at the Annual General Meeting on 29 September 2023.

-- Development Bank of Namibia N$100m (c GBP5.3m) funding intercreditor agreement concluded in August. The associated security package the only outstanding condition to concluding the agreement.

-- Unsecured, convertible loan notes issued to raise GBP7.7m (c.US$10m) primarily to fund the completion and commissioning of the lithium pilot plant and tantalum circuit in July 2023.

   --    Initial saleable petalite concentrate, 85% pure and at a grade of 4.16% produced in May 2023. 

-- Barclays Bank was appointed the strategic adviser to seek out a suitable partner to expedite the lithium strategy in May 2023.

-- Upgraded listing on the New York OTCQB(R) in June 2023 to make the Andrada shares accessible to the North American market that is known for its appetite for investing in mining companies.

-- First - pass Reverse Circulation drilling programme commenced at Lithium Ridge in April 2023 to investigate the subsurface continuation of lithium and tin mineralisation.

Anth ony Viljoen, Chief Executive Officer, commented:

"In FY2023 we achieved, and in certain instances surpassed, our operational milestones such as the successful expansion of the Uis Mine processing plant resulting in cost efficiencies. The 70% increase in production capacity enabled Uis to increase the tin concentrate output by 34% to 960 tonnes for the financial year.

Post-period, we have achieved additional significant milestones such as the production of the high purity, saleable petalite in May 2023 which has escalated the engagement with potential offtakers. In June 2023 we completed the lithium pilot plant construction thereby establishing Andrada as an emerging, potential lithium producer. The GBP7.7m funding we raised in July enabled us to commence the commissioning of the lithium pilot plant and the tantalum circuit further accelerating our lithium production strategy. As we progress in FY2024, the focus will be to expedite lithium development through the strategic process, the lithium pilot plant, and the extensive exploration programme. Our significantly strengthened balance sheet will enable us to achieve these and other major milestones in the current financial year."

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: https://andradamining.com/media/reports/ . The AGM will be held at 11.00am on 29 September 2023, at PO Box 282, Oak House, Hirzel Street, St Peter Port, Guernsey GY1 3RH.

ANNUAL REPORT

The Annual Report for the 2023 financial year ended 28 February 2023 is now available on the Company's website at the following link: https://andradamining.com/media/reports/ . Physical copies of the Annual Report will also be posted today to shareholders who elected to receive them.

 
 Andrada Mining Limited                 +27 (11) 268 6555 
  Anthony Viljoen, CEO                   investorrelations@andradamining.com 
  Sakhile Ndlovu, Investor Relations 
 
 Nominated Adviser 
 WH Ireland Limited 
  Katy Mitchell                         +44 (0) 207 220 1666 
 
 Corporate Adviser and Joint 
  Broker 
 H&P Advisory Limited 
  Andrew Chubb 
  Jay Ashfield 
  Matt Hasson                           +44 (0) 20 7907 8500 
 
 Stifel Nicolaus Europe Limited 
  Ashton Clanfield 
  Calum Stewart 
  Varun Talwar                          +44 (0) 20 7710 7600 
 
 Tavistock Financial PR (United         +44 (0) 207 920 3150 
  Kingdom)                               andrada@tavistock.co.uk 
  Jos Simson 
  Catherine Drummond 
  Adam Baynes 
 

CHAIRMAN'S STATEMENT

The 2023 financial year proved to be a successful one for Andrada, culminating in significant milestones achieved. Unfortunately, the depressed tin prices resulted in negative earnings as detailed in the financial review by the Chief Finance Officer. Nonetheless, we further cemented the foundation by rounding our production suite towards becoming a meaningful tech-metals producer. The Company's stated Five-Year Growth Strategy and the tangible attributable value of our assets, as displayed in the internally developed Preliminary Economic Assessment, provide stakeholders with visibility on how Andrada will achieve its goals.

Maintaining sufficient cash resources during this development and growth phase is key to achieving all our stakeholder objectives and I am pleased to state that the Andrada team has been managing this diligently in what has been a challenging market. The support and success of the fundraising in September 2022 by our loyal, existing as well as, new shareholders highlight their confidence in our strategy. Furthermore, it allows the Company to fast track the development of the lithium and tantalum opportunities while accelerating the expansion of the existing operations. For this, we are appreciative of their continued support.

During the year, the Company began expanding beyond being a tin-only producer to potentially becoming one of the first significant African lithium producers on the AIM, a market of the London Stock Exchange. This important transformational focus of the Company has meant that we identify ourselves as a Company that will play a significant role in the energy transition space. It is for this reason that we decided to rename the Company Andrada Mining.

The global rhetoric around the supply of critical metals continues to gain momentum and there is a continued drive to transition to a greener world. We are determined to play our part in this transition by sustainably contributing to bridging the burgeoning supply gap by producing critical metals. We are fully committed to observing strong Environmental, Social and Governance (ESG) principles. The publication of Andrada's inaugural Sustainability Report for the 2022 financial year demonstrates this commitment to our ESG best practices. We are particularly proud of the role we have played in redeveloping the town of Uis in conjunction with our majority Namibian workforce, the local communities, as well as the government.

We recognise that the diversity and talent of our employees will ultimately determine Andrada's success. By the end of FY 2023, 38% of our corporate team were women, with six women on the Management Committee (40%) and one woman on the executive team. As a Board, we are committed to continue striving to maintain and improve on these global governance standards.

Looking to the future, we are hugely excited by the prospect of becoming a multi-tech-metal producer. The immediate objective of the Board is to accelerate the growth of Andrada. Therefore, we have embarked on seeking a strategic partner with appropriate technical and financial capabilities to assist the Company in accelerating the development of the lithium opportunity on the Uis mining licence area. Simultaneously, we will start developing our other licence areas through expansive exploration programmes. These programmes will start bearing fruit if we are able to confirm the mineralisation potential within all the mining licences, providing significant blue sky for shareholders.

I congratulate the management team and employees on the work and goals achieved during the year, especially against a backdrop of volatile financial markets and a declining tin price. On behalf of the Board, I wish to express my appreciation to all our valued investors, suppliers and customer for their mutual trust and confidence in Andrada Mining. Along with this, I would like to thank my fellow Board members for their tireless effort to ensure that Andrada achieves its stated objectives.

Finally, I would like to welcome the newly appointed Board members who complement the team, namely Ms Gida Sekandi as a Non-Executive Director and Mr Hiten Ooka, the Company's Chief Financial Officer, as an Executive Director. Gida's extensive regional and sustainability experience and Hiten's broad financial experience enhance our team as we move forward to our next exciting phase.

GLEN PARSONS

Chairman

24 August 2023

CHIEF EXECUTIVE OFFICER'S STATEMENT

INTRODUCTION

The adjective 'transformative' is often over-used in Company reporting, but it is one which I believe to be truly befitting of Andrada's latest financial year. It is a pleasure to reflect on our achievements this year, taking advantage of our significant portfolio of tech-metals assets and laying the foundation of a leading global mineral supplier.

Beginning with the discovery of lithium-bearing spodumene within our mining licence ML129 ("Spodumene Hill"), we fully understood the significance of a lithium revenue stream on the incremental returns for shareholders. This discovery at Spodumene Hill in early March 2022 complemented the Company's confirmed mineral resource on the lithium-bearing pegmatites within the adjacent Uis licence area and set in motion our transformation from a tin producer to a Company with a full suite of tech-metals assets.

This discovery motivated the name change from AfriTin Mining to Andrada Mining. The AfriTin name served us excellently for five years, but it is important to reflect the inclusion of our significant lithium assets in the Company's new name. Therefore, we could think of no better way than a nod to José Bonifácio de Andrada e Silva, the Brazilian mineralogist and professor who first categorised petalite and spodumene, which are major lithium-bearing minerals. We have continued the great work that we did as AfriTin and are confident that the Andrada name will build on the strong market reputation of AfriTin for many years to come.

HEALTH AND SAFETY

The Company understands the importance of its workforce in operational success and is always focused on strengthening health and safety management. To realise our vision of everyone going home uninjured every day, we have integrated safety thinking into everything we do. During the reporting year we recorded zero fatalities and three Lost Time Injuries (LTIs), resulting in a Lost Time Injury Frequency Rate (LTIFR) of 3.04 (2022: 6.26). On 28 February 2023, our operations celebrated 500 000 LTI-free hours, a significant safety milestone for the Group. In our most recent operational update, for the first quarter of 2023, we announced a safety performance significantly improved to 0.95 LTIFR, amounting to 881 808 LTI-free hours. Additional measures to improve our on-site health and safety include an online health and safety system requiring each employee to complete a risk assessment at the start of each shift. The system enables real-time reporting across the operation, enabling us to better understand and respond to incidents with the ultimate goal of preventing future incidents from occurring.

Furthermore, the Company introduced an initiative called 'Maintenance Wednesdays' that involves the lockdown of the entire plant every Wednesday to allow for uninterrupted maintenance work, while simultaneously involving our entire workforce in occupational health and safety awareness activities.

OPERATIONAL REVIEW

In the first quarter of the financial year, we communicated and embarked on our Five-Year Growth Strategy, aiming to become one of the lowest cost tech-metal producers. The strategy is built on four pillars: unlocking the resource in the existing tenements with the intent to expand into the rest of Africa, driving operational excellence, implementation of sound ESG principles, and best practice in project development. Our goal is to become a 10m tonnes per annum Run Of Mine (ROM) Company of global significance.

Recognising the magnitude of the goal, we decided on a phased approach in implementing the strategy. During the period under review, we completed Phase 1a of the strategy that consisted of a modular expansion of the crushing and screening circuit, as well as construction of a fines ore stockpile on the existing plant. This successful expansion resulted in a 23% increase in tin concentrate production to 960 tonnes and an 22% increase in contained tin to 586 tonnes year-on-year ("YoY"). The increased plant production capacity enabled processing of significantly higher tonnage, which inevitably reduced C1 operating costs and AISC (All-In Sustaining Cost) by 10% and 9% YoY respectively. The improved costs confirm the view that large scale bulk mining at Uis is amenable to favourable economies of scale.

We anticipate implementing the intermediate Phase 1b at 2.5Mtpa ROM production with a partner who will be identified as part of by the current strategic process. This phase will introduce the production of lithium and tantalum, as these minerals will be extracted from existing processing streams. In September 2022, we successfully raised approximately US$22.8m (c GBP18.1m ) gross, to further expand the Uis resource drilling programme, exploration campaigns and for general corporate purposes. These funds enabled the Company to complete the modular expansion within the targeted period.

Our tin assets remain an integral part of our tech-metals offering, and so we were delighted to expand our resource estimate in February 2023 based on the analysis of drill holes at Uis's Proximal Pegmatites. The additional results from the Proximal Pegmatites, were added to the maiden resource derived solely from the V1/V2 pegmatite, bringing the resource to approximately 138 Mt. The occurrence of several minerals in the same pegmatites such as lithium and tantalum, provide the opportunity for producing multiple tech-metals from the same ore body. Therefore, the expansion of the resource made us the owner of one of the largest tech-metals asset globally and moved us closer to our internal target of a 200Mt resource. Andrada's primary strength currently lies in its globally significant lithium resource.

LITHIUM DEVELOPMENT:

METALLURGICAL TESTWORK

All three mining licences contain prolific pegmatite occurrences, containing lithium, tin, and tantalum mineralisation. Petalite and spodumene appear to be the dominant lithium minerals present in the mineralised pegmatites. Metallurgical test work to date has focused on the concentration of petalite due to its prevalence in the current mining area on Uis. However, spodumene beneficiation has been included in the future work programme, in response to the discovery of spodumene occurrences on Spodumene Hill and Lithium Ridge (ML133). We commenced a pilot test programme for lithium during the first quarter of the 2023 calendar year, consisting of bulk sampling and pilot processing.

LITHIUM PILOT TESTING PLANT

Construction of the on-site lithium bulk-sampling pilot plant commenced at the end of the financial year and was completed within budget and on time in June 2023. Commissioning of the pilot plant and tantalum circuit started in July 2023. The pilot plant, consisting of a crusher, screen, dense medium separator, and a gravity separation circuit is expected to expedite Andrada's bulk pilot test work and to produce saleable lithium concentrate. The pilot plant processing capacity will be 20 tonnes per hour with minimum annual production targeted at 2 400 tonnes. Therefore, the pilot plant can potentially generate revenue of US$5m, assuming an average grade of 4.0% Li O and a petalite price of US$2 000.

EXPLORATION

An infill surface exploration programme started in January 2023 on the Lithium Ridge licence area to enhance the data resolution and to confirm the continuity of lithium mineralisation along an identified strike length of 6km. In April 2023, a first-pass Reverse Circulation drilling programme commenced to investigate the subsurface continuation of lithium and tin mineralisation identified during the 2022 calendar year mapping and sampling programme. The results of this drilling programme will be released as soon as the associated assays are returned from the laboratory.

Furthermore, an exploration drilling programme was undertaken on Spodumene Hill, resulting in 1159m of Diamond Drilling ("DD") being completed over 17 drill holes. The drill results, released in July 2023, indicate zones of lithium enrichment within the pegmatite unit with the primary and only lithium ore mineral identified as being spodumene.

SUSTAINABILITY UPDATE

The publication of Andrada's inaugural Sustainability Report for the 2022 financial year in January 2023 demonstrates our commitment to ESG best practice. We are proud that we have further improved reporting on the Company's ESG performance, as disclosed in the FY 2023 Sustainability Report that has been released together with this Annual Report. We believe that a strong ESG performance enhances shareholder value and investor confidence.

POST-PERIOD ACTIVITY

INITIAL SALEABLE LITHIUM CONCENTRATE

In May 2023 we produced half a tonne of 85% pure petalite concentrate at a grade of 4.16%, making Andrada one of the few companies currently on AIM to have produced a saleable sample. The concentrate was produced as part of the Company's off-site pilot test programme to investigate the metallurgical potential of the pegmatites from its Lithium Ridge mining licence area located approximately 33km from the Uis Mine. We believe this moves us one step closer to full-scale lithium production and with the completion of the on-site pilot plant, we intend to expedite bulk pilot test work on all our mineral licences.

In May 2023 Andrada also announced the appointment of Barclays Bank ("Barclays") as a Strategic Adviser to seek out a suitable partner to accelerate Andrada's lithium strategy. Barclays provides the optimal combination of extensive experience in advising on strategic partnerships and access to the global financial markets. The strategic process comes as a result of numerous unsolicited approaches Andrada has received from international entities.

The main objective of the process is to identify a partner with appropriate technical and financial capabilities to accelerate the development of the lithium opportunity on the Uis mining licence area. The Company will provide updates on the process as it develops.

LISTING ON THE NEW YORK OTCQB(R)

Alongside great operational progress, the Company commenced trading on the US OTCQB(R) platform in June 2023, which has been a key step in broadening our shareholder register, making our shares more accessible to North American retail and institutional investors. This investor base is known for its understanding of, and strong appetite for, mining companies, particularly lithium equities.

THANK YOU

I would like to thank all our stakeholders for their continued support, which is never taken for granted. To our employees, thank you for your commitment and dedication to Andrada's vision, shown by your diligence. To our investors, we thank you for your support as we pursue our strategic objectives. To our Board of Directors, your guidance and oversight have enabled us to achieve the milestones to date.

In particular, I extend gratitude to our Chief Financial Officer and Executive Director, Hiten Ooka for his sterling work on the successful fundraising in September 2022 and the progress on the various financing packages. Since joining in July 2022, Hiten's experience working for multinational organisations, coupled with his technical finance and tax experience, has proven invaluable to Andrada's operational progress.

In the same vein, the milestones we have enjoyed over the past year could not have been possible without the efforts of Frans van Daalen, appointed to the role of Chief Strategy Officer in March 2023, and Chris Smith as Chief Operations Officer. Frans is a qualified engineer with over 20 years of operational and technical experience across multiple commodities. He is well placed to drive the Company's development as a significant global lithium producer. Chris has significant experience in process optimisation and a proven track record of stimulating operational performance. He has surpassed the targets for plant expansion and will be instrumental in optimising the operational processes for the next level of growth. Our collaboration as a highly experienced C-suite has ensured that our multiple workstreams run smoothly.

We have entered FY 2024 with confidence and look forward to delivering and communicating our progress as we continue to unlock value from across our portfolio. We have full confidence in achieving our ambitions to become a global tech-metals champion.

CONCLUSION

As we progress in FY 2024, the key objectives will be to commence testing and the production of lithium through the pilot plant. We aim to attain off-take agreements for the petalite as we expedite the exploration programme at Spodumene Hill and Lithium Ridge. We are also looking forward to the development of the Brandberg West license area (EPL5445) following the receipt of the Environmental Clearance Certificate. This project will potentially add Tungsten to our growing list of technology metal inventories. Finally, we look forward to the conclusion of the strategic process to expedite the lithium development.

Anthony Viljoen

Chief Executive Officer

24 August 2023

CHIEF FINANCIAL OFFICER'S FINANCIAL REVIEW

The group managed to deliver on its key strategic milestones despite several challenges in the macro- economic environment. Annual tin concentrate tonnage increased by 23% to 960 (2022: 780 tonnes) but revenue decreased to GBP9.8m (2022: GBP13.6m) mainly due to a 34% decline in the average tin price to US$25k (2022: US$39k). Andrada exported 33 shipments (2022: 29 shipments) of tin concentrate to the Company's offtake partner Thaisarco. The full impact on the production profile and cash costs of the expansion project that was successfully completed towards the end of the financial year, will reflect in the upcoming financial year.

PROFIT AND LOSS STATEMENT OVERVIEW

Despite increased sales volumes, the significant decrease in the tin price against inflationary cost increases further negatively impacted profitability, resulting in a gross loss of GBP0.7m (2022: profit of GBP4.3m). The administrative expenses increased to GBP7.5m (2022: GBP3.7m) mainly due to the expanded operations and the higher headcount in line with the continued implementation of the growth strategy. The multiple workstreams and special skills necessary to achieve the potential lithium production necessitated the increase in recruitment.

The Group's EBITDA was similarly impacted by the significantly lower tin pricing, resulting in a loss of GBP5.9m (2022: GBP2.6m). The net finance costs increased to GBP0.6m (2022: GBP0.3m), mainly due to the higher interest on leases and bank debt. In addition, the Company was charged GBP0.2m (2022: GBP0.05m) interest on the prepayments received from Thaisarco due to the higher sales volume and long transit periods caused by shipping delays.

The Group net loss for the year was GBP8.1m (2022: loss GBP0.5m) resulting in the basic loss per share of 0.60 pence (2022: loss 0.08 pence). The expansion on the Uis Mine plant is expected to further reduce the cash costs as demonstrated by the FY 2023 C1 costs that decreased to US$19 762 per tonne of contained tin from US$21 839 in the comparative period due to the 70% increase in production capacity. The all-in sustaining unit cost was 9% lower YoY at US$24 939 (2022: US$27 515) due to the favourable economies of scale.

FINANCIAL POSITION STATEMENT OVERVIEW

Total assets increased by 28%, mainly due to additions on property, plant, and equipment ("PPE"), as well as intangible assets. The value of PPE increased to GBP27m (2022: GBP19m), mainly due to the equipment purchased and capitalised costs for the Uis Phase 1a continuous improvement project.

During the year, GBP9.5m of costs related to the Uis Phase 1 Definitive Feasibility Study and the related construction was transferred from mining assets under construction to the mining assets, as per the requirements of IFRS 6. Consequently, the capital expenditure increased from GBP6.0m to GBP13.3m. Further details on the PPE and intangible assets can be read in the Annual Financial Statements ("AFS") Notes 11 and 12. The inventory balance increased to GBP2.7m (2022: GBP1.5m) due to the expanded capacity resulting in higher volumes of tin concentrate, ROM stockpile and consumables. At year end, 157 tonnes (2022: 75 tonnes) of tin concentrate was on hand, valued at GBP1.4m (2022: GBP0.9m).

Trade and other receivables were valued at GBP2.6m at year end (2022: GBP3.9m), mainly due to the comparatively lower tin prices during the financial year. Trade and other payables increased to GBP3.66m (2022: GBP2.97m) due to accruals related to the expanded operations. All payables are paid within the agreed credit terms with the average credit peri- od for trade purchases being 30 days.

Borrowings increased to GBP6.2m (2022: GBP5.1m) mainly due to the higher working capital facility at GBP1.3m (GBP0.2m) and the introduction of a GBP0.5m vehicle financing facility from Standard Bank Namibia. The value of equity increased by GBP8.5m to approximately GBP36m due to the fundraising in September 2022 for GBP11.1m and in October 2022 for GBP8.7m. Further- more, warrants valued at GBP0.4m were exercised in January 2023. Consequently, the number of issued shares increased from 1 121 841 684 to 1 537 863 344.

CASH FLOW STATEMENT OVERVIEW

Fundraising proceeds supported cashflows during the year as the Company implemented its continuous improvement project at the Uis Mine plant. The value accretion of these inflows is demonstrated by the improvement in operational costs. Approximately GBP13m (2022: GBP6m) was utilised to purchase assets required for the plant expansion. Borrowings mainly provided the requisite cash inflows for working capital purposes. On 28 February 2023, the Group cash balance amounted to GBP8.2m (2022: GBP7.4m).

FUNDING OVERVIEW

During the year, the Company secured a vehicle financing facility for the value of GBP0.7m which had a balance of GBP0.5m at year end. The GBP4.5m term loan facility at an interest rate of three-month JIBAR plus 4.5% had a balance of GBP4.1m at year end. The loan including the accrued interest is being repaid quarterly for five years from February 2022.

The VAT and working capital financing facilities do not have a fixed maturity dates but are renewed annually, attracting an interest charge of the Namibian prime rate minus 1%. At year end the effective rate on the term loan was 11.7% and the rate on the VAT and working capital facilities was 10.75%. The vehicle asset financing facility has a term of five years at an interest charge of the Namibian prime rate minus 0.5%. Therefore, at year end the effective rate on the vehicle financing was 11.25%. The Company received a covenant waiver for the year under review without penalty and the next measurement date will be 28 February 2024.

POST-PERIOD FUNDING

CONVERTIBLE LOAN NOTES

In July 2023, Andrada raised GBP7.7m (c.US$10m) through the issue of 77 unsecured, convertible loan notes of GBP100 000 each to new and existing investors. The proceeds are intended for commissioning the lithium pilot plant and the tantalum circuit. In addition, the funds are for working capital purposes as the Company implements the exploration programme and a lithium feasibility study. These work- streams further consolidate Andrada's competitive lithium advantage within the Erongo region of Namibia.

ORION GLOBAL RESOURCE FUND

On 14 August 2023, Andrada signed the conditional binding documentation for an updated US$25m unsecured funding package with funds managed by Orion Resource Partners ("Orion"). Orion agreed to an unsecured financing package at marginally higher rates. The financing includes a royalty on the production of contained tin, a convertible note, equity subscription and warrants. The outstanding conditions to finalise the financing are the requisite shareholder authorities at the upcoming Annual General Meeting, Andrada lender banks' consent, the exchange control approval to remit funds into Namibia, and the admission of subscription shares to trading on AIM.

DEVELOPMENT BANK OF NAMIBIA

At the writing of this review, the inter-creditor agreements between DBN and Standard Bank have been concluded. The only outstanding condition to complete and access the N$100m (c. US$5.8m) facility is the finalisation of the security package. The terms are unchanged from those detailed in the Company's announcement of 5 July 2022.

These are that the facility is for a 10-year term, for the first 12 months after execution there will be no interest or capital repayment, and interest accrues at Namibian prime lending rate (currently 11.5%) plus 2.5% per annum. The facility is ringfenced for the continuous improvement programme of Uis Mine.

CONCLUSION: GOING CONCERN

Management and the Board of Directors have considered cash flow forecasts and have stress tested the potential impact of the decline in tin prices. There are circumstances indicating that a material uncertainty exists which may cast significant doubt on the Group's ability to continue as a going concern and that the Group may therefore be unable to realise its assets or settle its liabilities in the ordinary course of business. However, following their review, 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.

HITEN OOKA

Chief Financial Officer

24 August 2023

INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF ANDRADA MINING

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 2023 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 Andrada Mining Limited (the "Parent Company") and its subsidiaries (the "Group") for the year ended 28 February 2023 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 financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements 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.

INDEPENCE

We remain 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 from the Development Bank of Namibia and other sources after the approval of the financial statements to fund their working capital and capital projects. However, this additional funding has not yet been completed. 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'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, production 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 September 2024. We challenged Directors' assumptions in respect of level of production, forecast tin prices, operating costs and capital expenditure. In doing so, we considered factors such as 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 Directors' 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 have verified the post year end funding received by the Group. We considered the Director's judgement that they had reasonable expectation of securing further necessary funding and the timing of such funding requirement. There are term-sheets in place; however, currently there are no binding agreements in respect of additional fund raising.

-- 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(1)    99% (2022: 99%) of Group revenue 
                90% (2022: 89%) of Group total assets 
               ---------------------------------------  -----  ----- 
 Key audit 
  matters                                                2023   2022 
                                                        -----  ----- 
  Going concern                                          Yes    Yes 
 -----------------------------------------------------  -----  ----- 
  Potential Impairment of mining assets                  Yes    Yes 
 -----------------------------------------------------  -----  ----- 
 Materiality    Group financial statements as a whole 
               ---------------------------------------  -----  ----- 
  GBP470 000 (2022: GBP370 000) based 
   on 1% of total assets (2022: 1% of 
   total assets) 
 -----------------------------------------------------  -----  ----- 
 

(1) These are areas which have been subject to a full scope audit and specified audit procedure performed by the group engagement team and the component auditor teams.

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. Andrada Mining Limited is a Company registered in Guernsey and listed on AIM in the UK, the NSX in Namibia and has qualified to trade on the OTCQB Venture Market in the US from 5 June 2023. The Group's principal operations are located in Namibia and South Africa. Our Group audit scope focused on the Group's producing and exploration assets to gain sufficient coverage over the Group's total assets, total revenue and loss before tax while considering the audit risks identified. As a result, we determined Parent Company and two subsidiary entities, AfriTin Mining (Namibia) Pty Limited and Uis Tin Mining Company Pty Limited which operate the Uis Mine to be significant components of the Group and were subject to the full scope audits. The audits of each of the significant components were principally performed in the United Kingdom, Namibia, and South Africa. All 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 engagement partner visited Namibia, and during this visit he had meetings with the component auditor and the management of the audited entity, and visited the mine site.

-- 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' files. Our review was performed remotely using our online audit software.

-- 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. In addition to the matter disclosed in the material uncertainty related to going concern section of our report, we have determined the matter described below to be the key audit matter to be communicated. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 
 Key audit matter                           How the scope of our audit addressed 
                                             the key audit matter 
 Potential impairment of mining             We reviewed and challenged management's 
  assets                                     impairment indicator assessment and testing 
                                             performed on the underlying LoM valuation 
  See Note 2: Critical accounting            model for the Uis mining assets which 
  estimates and judgements and               was carried out in accordance with relevant 
  Note 12: Property, Plant and               accounting standards. Our audit procedures 
  Equipment.                                 in this regard included: 
                                              *    Reviewing the Competent Person's Report to support 
  As disclosed in Note 2 Critical                  the mineral reserve and performed an assessment of 
  accounting estimates and judgements,             the independence and competence of management's 
  management have reviewed the                     expert. 
  Uis Mine for indicators of 
  impairment and have considered 
  among other factors, the operations         *    Critically reviewing LoM forecast by making enquiries 
  to date at Uis Mine including                    of operational management, evaluating it against our 
  production from the lithium                      understanding of the operations and historic 
  pilot plant, forecast commodity                  performance, and evaluating the consistency of 
  prices, production profile,                      available reserves with the Competent Person's 
  inflation rate, post-tax real                    Report. 
  discount rate and market capitalisation 
  of the Group. The drilling 
  and testing of lithium, decision            *    Obtaining management's LoM valuation model to confirm 
  on lithium production and                        that sufficient headroom existed over the asset 
  the initial steps that were                      carrying value as part of our assessment of potential 
  taken prior 28 February 2023                     impairment indicators. 
  and, the construction of pilot 
  plant concluded in July 2023. 
  Hence, production from lithium              *    Checking the mathematical accuracy of management's 
  pilot plant is included in                       LoM valuation model. 
  the impairment review of the 
  mining asset. 
                                              *    Challenging the significant inputs and assumptions 
  As set out in Note 2, Management                 used in the management's LoM valuation model and 
  have identified the reduction                    whether these were indicative of potential bias. This 
  in the tin price as an indicator                 included comparing forecast commodity prices to a 
  of impairment. In undertaking                    range of third- party independent market outlook 
  the impairment review, management                reports and historical actual data, comparing the 
  have also reviewed the underlying                forecast production to third party feasibility and 
  Life of Mine ("LoM") valuation                   resource studies. We compared forecasted costs 
  model for Uis. The LoM valuation                 against the expected production profiles in the mine 
  model is on a fair value less                    plans and recent historical performance. 
  cost to develop basis and 
  includes assessments of different 
  scenarios associated with                   *    Recalculating the discount rate and utilising BDO 
  capital improvements and expansion               valuation experts to assist us in assessing 
  opportunities. The impairment                    management's discount rate by recalculating it in 
  testing performed by management                  reference to external data. 
  did not result in an impairment. 
 
  The assessment of the recoverable           *    We enquired management and reviewed the pre and post 
  value of the Uis mining assets                   year end RNS announcements with respect to 
  requires significant judgement                   identification of lithium resources. This was further 
  and estimates to be made by                      corroborated with the drilling cost for 
  management - in particular                       identification of lithium resources in the current 
  regarding the inputs applied                     year. 
  in the models including; future 
  tin, tantalum and lithium 
  prices, production and reserves,            *    We reviewed the post year end RNS announcements 
  operating and development                        regarding completion of construction and 
  costs and discount rates.                        commissioning of the lithium bulk sampling plant and 
  The carrying value of the                        tantalum circuit. 
  Uis mining assets is therefore 
  considered a key audit matter 
  given the level of judgement                *    Review of management's sensitivity analysis and 
  and estimation involved.                         performance of our own sensitivity analysis over 
                                                   individual key inputs including tin prices, discount 
                                                   rate and plant recovery. 
 
 
                                             Key observation: 
                                             Based on the procedures performed, we 
                                             found that the key judgements and estimates 
                                             applied by management in their LoM valuation 
                                             model to be within an acceptable range 
                                             and found their conclusion that there 
                                             was no impairment as of 28 February 2023 
                                             to be reasonable. 
                                           ------------------------------------------------------------- 
 

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 
                                 2023                          2022 
                                ----------------------------  ------------------- 
 Materiality                     GBP470 000                    GBP370 000 
                                ----------------------------  ------------------- 
 Basis for determining           1% of total assets            1% of total assets 
  materiality 
                                ----------------------------  ------------------- 
                                 We consider total assets to be the most 
                                  significant determinant of the Group's 
                                  financial performance used by members 
                                  given the nature of 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         GBP352 000                    GBP278 000 
                                ----------------------------  ------------------- 
 Basis for determining           75% of Materiality            75% of Materiality 
  performance materiality 
                                ----------------------------  ------------------- 
 Rationale for the percentage    Performance materiality was set at 75% 
  applied for performance         of the above materiality level based 
  materiality                     on assessment of aggregation risk considering 
                                  factors such as volume and nature of 
                                  errors in prior periods. 
                                ------------------------------------------------- 
 

COMPONENT MATERIALITY

We set materiality for each significant component of the Group based on a percentage of between 21% and 66% (2022: 18% and 83%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Significant component materiality ranged from GBP97 000 to GBP310 000 (2022: GBP66 000 to GBP264 000). In the audit of each component, we further applied performance materiality levels of 75% (2022: 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 GBP23 000 (2022: GBP18 500). We also agreed to report differences be- low 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 Parent 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 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 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:

NON-COMPLIANCE WITH LAWS AND REGULATIONS

Based on:

   --       Our understanding of the Group and the industry in which it operates; 
   --       Discussion with management and those charged with governance; and 

-- Obtaining and understanding of the Group's policies and procedures regarding compliance with laws and regulations.

We considered the significant laws and regulations directly relevant to specific assertions in the financial statements are those related to reporting framework (UK adopted international accounting standards, the Companies (Guernsey) Law, 2008, AIM rules and the various Mining Regulations in Namibia), and terms and conditions included in the Group's exploration and evaluation licences and the mining licences.

Our procedures in respect of the above included:

-- Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations;

   --       Review of financial statement disclosures and agreeing to supporting documentation; 

-- 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; and

-- 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.

FRAUD

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included:

-- Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;

-- Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud;

-- Discussion among the engagement team as to how and where fraud might occur in the financial statements; and

-- Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these.

Based on our risk assessment, we considered the areas most susceptible to fraud to be revenue recognition and management override of controls.

Our procedures in respect of the above included:

-- Addressing the fraud risk in relation to revenue recognition by testing one hundred percent of revenue transactions to supporting documentation, including testing 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;

-- Held a meeting with forensic specialists to understand industry specific susceptible areas. Based on the input from forensic team, we added two additional testing criteria for journal entries testing.

-- 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.

   --       Agreeing the financial statement disclosures to underlying supporting documentation; 

-- Made enquiries of Directors as to whether there was any correspondence from regulators in so far as the correspondence related to the financial statements;

-- Assessing the judgements made in respect of going concern (see section on Material uncertainty relating to going concern above) and Note 2 to the financial statements; and

-- Assessed whether the judgements made in accounting estimates were indicative of a potential bias (refer to key audit matters above and Note 2 to the financial statements).

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members, including component engagement teams who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. For component engagement teams, we also reviewed the result of their work performed in this regard.

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.

The engagement partner on the audit resulting in this independent auditor's opinion is Jack Draycott (Senior Statutory Auditor).

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 Parent Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

BDO LLP Chartered Accountants

London, United Kingdom

24 August 2023

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

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 28 February 2023

 
                                                    Year ended     Year ended 
                                                     28 February    28 February 
                                                     2023           2022 
                                            Notes   GBP            GBP 
                                           ------  -------------  ------------- 
 Revenue                                    4       9 827 474      13 615 045 
                                           ------  -------------  ------------- 
 Cost of Sales                              5       (10 509 418)   (9 302 518) 
                                           ------  -------------  ------------- 
 Gross (loss) / profit                              (681 944)      4 312 527 
                                           ------  -------------  ------------- 
 Administrative expenses                    6       (7 451 352)    (3 674 662) 
                                           ------  -------------  ------------- 
 Idle plant costs                                   (258 177)      - 
                                           ------  -------------  ------------- 
 Other income                                        52 196        61 753 
                                           ------  -------------  ------------- 
 Operating (loss) / profit                          (8 339 277)    699 618 
                                           ------  -------------  ------------- 
 Finance income                                      39 054        6 545 
                                           ------  -------------  ------------- 
 Finance cost                               8       (669 824)      (316 365) 
                                           ------  -------------  ------------- 
 (Loss) / profit before tax                         (8 970 047)    389 798 
                                           ------  -------------  ------------- 
 Deferred tax movement                      9        866 203       (864 199) 
                                           ------  -------------  ------------- 
 Loss for the year                                  (8 103 844)    (474 401) 
                                           ------  -------------  ------------- 
 Other comprehensive (loss) 
  / income 
                                           ------  -------------  ------------- 
 Items that will or may be 
  reclassified to profit or 
  loss: 
                                           ------  -------------  ------------- 
 Exchange differences on translation 
  of share-based payment reserve                    (441)          767 
                                           ------  -------------  ------------- 
 Exchange differences on translation 
  of foreign operations                             (2 298 674)    526 779 
                                           ------  -------------  ------------- 
 Exchange differences on non-controlling 
  interest                                           19 395        (6 700) 
                                           ------  -------------  ------------- 
 Total comprehensive (loss) 
  / income for the year                             (10 383 564)   46 445 
                                           ------  -------------  ------------- 
 
 Loss for the year attributable 
  to: 
                                           ------  -------------  ------------- 
 Owners of the parent                               (7 753 819)    (815 645) 
                                           ------  -------------  ------------- 
 Non-controlling interests                  23      (350 025)      341 244 
                                           ------  -------------  ------------- 
                                                    (8 103 844)    (474 401) 
                                           ------  -------------  ------------- 
 
 Total comprehensive (loss) 
  / profit for the year attributable 
  to: 
                                           ------  -------------  ------------- 
 Owners of the parent                               (10 052 933)   (288 098) 
                                           ------  -------------  ------------- 
 Non-controlling interests                          (330 631)      334 543 
                                           ------  -------------  ------------- 
                                                    (10 383 564)   46 445 
                                           ------  -------------  ------------- 
 
 Loss per ordinary share 
                                           ------  -------------  ------------- 
 Basic loss per share (in pence)            10      (0.60)         (0.08) 
                                           ------  -------------  ------------- 
 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 28 February 2023

 
                                          28 February    28 February 
                                           2023           2022 
                                  Notes   GBP            GBP 
                                 ------  -------------  ------------- 
 Assets 
                                 ------  -------------  ------------- 
 Non-current assets 
                                 ------  -------------  ------------- 
 Intangible assets                11       7 279 593     5 147 782 
                                 ------  -------------  ------------- 
 Property, plant and equipment    12       26 723 218    19 150 092 
                                 ------  -------------  ------------- 
 Total non-current assets                 34 002 811     24 297 874 
                                 ------  -------------  ------------- 
 
 Current assets 
                                 ------  -------------  ------------- 
 Inventories                      13       2 667 193     1 451 933 
                                 ------  -------------  ------------- 
 Trade and other receivables      14       2 592 770     3 953 382 
                                 ------  -------------  ------------- 
 Cash and cash equivalents        15       8 205 705     7 365 379 
                                 ------  -------------  ------------- 
 Total current assets                     13 465 668     12 770 694 
                                 ------  -------------  ------------- 
 
 Total assets                              47 468 479    37 068 568 
                                 ------  -------------  ------------- 
 
 Equity and liabilities 
                                 ------  -------------  ------------- 
 Equity 
                                 ------  -------------  ------------- 
 Share capital                    20       56 883 908    38 655 078 
                                 ------  -------------  ------------- 
 Accumulated deficit                      (18 334 115)   (10 739 321) 
                                 ------  -------------  ------------- 
 Warrant reserve                  21       50 307        192 632 
                                 ------  -------------  ------------- 
 Share-based payment reserve      22       1 049 663     704 828 
                                 ------  -------------  ------------- 
 Foreign currency translation 
  reserve                                 (3 833 234)    (1 534 560) 
                                 ------  -------------  ------------- 
 Equity attributable to 
  the owners of the parent                 35 816 529    27 278 657 
                                 ------  -------------  ------------- 
 Non-controlling interests        23      (147 430)      183 200 
                                 ------  -------------  ------------- 
 Total equity                              35 669 099    27 461 857 
                                 ------  -------------  ------------- 
 
 Non-current liabilities 
                                 ------  -------------  ------------- 
 Environmental rehabilitation 
  liability                       18       965 578       295 151 
                                 ------  -------------  ------------- 
 Borrowings                       16       3 287 121     4 095 405 
                                 ------  -------------  ------------- 
 Lease liability                  19       707 355       167 216 
                                 ------  -------------  ------------- 
 Deferred tax liability           9        -             861 784 
                                 ------  -------------  ------------- 
 Total non-current liabilities             4 960 054     5 419 556 
                                 ------  -------------  ------------- 
 
 Current liabilities 
                                 ------  -------------  ------------- 
 Trade and other payables         17       3 655 126     2 969 833 
                                 ------  -------------  ------------- 
 Borrowings                       16       2 915 917     1 024 736 
                                 ------  -------------  ------------- 
 Lease liability                  19       268 283       192 586 
                                 ------  -------------  ------------- 
 Total current liabilities                 6 839 326     4 187 155 
                                 ------  -------------  ------------- 
 
 Total equity and liabilities             47 468 479     37 068 568 
                                 ------  -------------  ------------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 28 February 2023

 
                  Share     Convertible   Accumulated   Warrant    Share-based   Foreign       Total     Non-controlling   Total 
                  capital    loan          deficit       reserve    payment      currency                 interests         equity 
                             note                                   reserve      translation 
                             reserve                                             reserve 
                  GBP       GBP           GBP           GBP        GBP           GBP           GBP       GBP               GBP 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Total 
  equity 
  at 28 
  February        25 608    2 170         (10 030                                (2 061        16 641    (151              16 490 
  2021             001       645           679)         211 348    743 615        339)          591       344)              247 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Loss for                                                                                      (815      341               (474 
  the year        -         -             (815 645)     -          -             -              645)      244               401) 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Other 
  comprehensive 
  income          -         -             -             -          767           526 779       527 546   (6 700)           520 846 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Transactions 
  with owners: 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Issue            13 039                                                                       13 029                      13 029 
  of shares        102      -             -             -          (10 000)      -              102      -                  102 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Share 
  issue           (793                                                                         (793                        (793 
  costs            775)     -             -             -          -             -              775)     -                  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                 (430 
  in shares       430 055    055)         -             -          -             -             -         -                 - 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Settlement 
  of 
  convertible 
  loan note                 (1 769                                                             (1 769                      (1 769 
  in cash         -          945)         -             -          -             -              945)     -                  945) 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Total 
  equity 
  at 28 
  February        38 655                  (10 739                                (1 534        27 278    183               27 461 
  2022             078      -              321)         192 632    704 828        560)          657       200               857 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Loss for                                 (7 753                                               (7 753    (350              (8 103 
  the year         -         -             819)          -          -             -             819)      025)              844) 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Other 
  comprehensive 
  income                                                                         (2 298        (2 299     19               (2 279 
  / (loss)         -         -             -             -         (441)          674)          115)       395              720) 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Transactions 
  with owners: 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Issue             19 801                                                                       19 801                      19 801 
  of shares         083      -             -             -          -             -              083      -                  083 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Share 
  issue           (1 962                                                                       (1 962                      (1 962 
  costs            253)      -             -             -          -             -             253)      -                 253) 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Share-based                                                                                    345                         345 
  payments         -         -             -             -          345 276       -              276      -                  276 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Warrants 
  exercised 
  in the           390                                  (159                                    390                         390 
  year              000                    159 025       025)       -             -              000      -                  000 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Warrants 
  modified 
  in the 
  year             -         -             -            16 700      -             -             16 700    -                 16 700 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 Total 
  equity 
  at 28 
  February         56 883                 (18 334                   1 049        (3 833         35 816   (147               35 669 
  2023              908      -             115)         50 307       663          234)           529      430)               099 
                 --------  ------------  ------------  ---------  ------------  ------------  --------  ----------------  -------- 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 28 February 2023

 
                                                  Year ended     Year ended 
                                                   28 February    28 February 
                                                   2023           2022 
                                          Notes   GBP            GBP 
                                         ------  -------------  ------------- 
 Cash flows from operating activities 
                                         ------  -------------  ------------- 
 (Loss) / profit before taxation                  (8 970 047)    389 798 
                                         ------  -------------  ------------- 
 Adjustments for: 
                                         ------  -------------  ------------- 
 Fair value adjustment to customer 
  contract                                4        261 689       (137 019) 
                                         ------  -------------  ------------- 
 Depreciation of property, plant 
  and equipment                           12       2 377 349     1 861 023 
                                         ------  -------------  ------------- 
 Depreciation of intangible assets        11       10 290        28 198 
                                         ------  -------------  ------------- 
 Share-based payments                              345 276       55 793 
                                         ------  -------------  ------------- 
 Equity-settled transactions                      16 700         66 101 
                                         ------  -------------  ------------- 
 Finance income                                   (39 054)       (6 545) 
                                         ------  -------------  ------------- 
 Finance costs                            8        669 824       316 365 
                                         ------  -------------  ------------- 
 Changes in working capital: 
                                         ------  -------------  ------------- 
 Decrease / (increase) in receivables     14       869 458       (2 866 192) 
                                         ------  -------------  ------------- 
 Increase in inventory                    13      (1 471 706)    (418 556) 
                                         ------  -------------  ------------- 
 Increase in payables                     17       997 469       1 006 060 
                                         ------  -------------  ------------- 
 Net cash (used in) / generated 
  from operating activities                       (4 932 752)    569 064 
                                         ------  -------------  ------------- 
 
 Cash flows from investing activities 
                                         ------  -------------  ------------- 
 Purchase of intangible assets                    (2 580 267)    (1 442 774) 
                                         ------  -------------  ------------- 
 Purchase of property, plant and 
  equipment                                       (10 677 505)   (4 543 884) 
                                         ------  -------------  ------------- 
 Net cash used in investing activities            (13 257 772)   (5 986 658) 
                                         ------  -------------  ------------- 
 
 Cash flows from financing activities 
                                         ------  -------------  ------------- 
 Finance income                                    39 054        6 545 
                                         ------  -------------  ------------- 
 Finance costs                                    (499 621)      (224 061) 
                                         ------  -------------  ------------- 
 Lease payments                           19      (363 959)      (213 661) 
                                         ------  -------------  ------------- 
 Net proceeds from issue of shares        20       18 228 830    12 548 248 
                                         ------  -------------  ------------- 
 Settlement of convertible loan 
  notes                                           -              (1 769 945) 
                                         ------  -------------  ------------- 
 Proceeds from borrowings                 16       1 729 454     5 024 727 
                                         ------  -------------  ------------- 
 Repayment of borrowings                  16      (89 014)       (3 907 086) 
                                         ------  -------------  ------------- 
 Net cash generated from financing 
  activities                                       19 044 744    11 464 767 
                                         ------  -------------  ------------- 
 
 Net increase in cash and cash 
  equivalents                                      854 220       6 047 173 
                                         ------  -------------  ------------- 
 Cash and cash equivalents at the 
  beginning of the year                            7 365 379     1 351 200 
                                         ------  -------------  ------------- 
 Foreign exchange differences                     (13 894)       (32 994) 
                                         ------  -------------  ------------- 
 Cash and cash equivalents at the 
  end of the year                         15       8 205 705     7 365 379 
                                         ------  -------------  ------------- 
 

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 24 August 2023.

MICHAEL RAWLINSON

Non-executive Director

24 August 2023

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 28 February 2023

1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES

Andrada Mining Limited ("Andrada") 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, Ground Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg, 2116, South Africa.

These financial statements are for the year ended 28 February 2023 and the comparative figures are for the year ended 28 February 2022.

As at 28 February 2023, the Andrada Group comprised:

 
 Company                           Equity        Country             Nature of 
                                    holding       of incorporation    activities 
                                    and voting 
                                    rights 
 Andrada 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             Tin & Tantalum 
  Limited(1)                                                          exploration 
                                  ------------  ------------------  ----------------------- 
 AfriTin Mining (Namibia)          100%          Namibia             Tin, Tantalum & 
  Pty Limited(2)                                                      Lithium operations 
                                  ------------  ------------------  ----------------------- 
 Uis Tin Mining Company            85%           Namibia             Tin, Tantalum & 
  Pty Limited(3)                                                      Lithium operations 
                                  ------------  ------------------  ----------------------- 
 Mokopane Tin Company Pty          100%          South Africa        Holding Company 
  Limited(2) 
                                  ------------  ------------------  ----------------------- 
 Renetype Pty Limited(4)           74%           South Africa        Tin exploration 
                                  ------------  ------------------  ----------------------- 
 Jaxson 641 Pty Limited(4)         50%           South Africa        Tin exploration 
                                  ------------  ------------------  ----------------------- 
 Pamish Investments 71             100%          South Africa        Holding Company 
  Pty Limited(2) 
                                  ------------  ------------------  ----------------------- 
 Zaaiplaats Mining Pty             74%           South Africa        Property owning 
  Limited(5) 
                                  ------------  ------------------  ----------------------- 
 Uis Tin Mining Rwanda             100%          Rwanda              Tin & Tantalum 
  Limited(2)                                                          exploration 
                                  ------------  ------------------  ----------------------- 
 

(1) Held directly by Andrada 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, Andrada 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$22.22 and the average rate for the financial year was GBP1 = N$20.22.

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 that there is 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. Although the bank granted the Group a waiver on all covenants on the 28 February 2023 measurement date, 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 to February 2024. For the purpose of assessing going concern, the directors have prepared forecasts to February 2025.

The main estimates considered as part of management's going concern assessment are production profiles, tin, lithium and tantalum prices, exchange rates and committed capital. The production profile is based on the Group's current achieved production post the completion of the expansion project, as well as the additional production on the successful completion of the continuous improvement capital project, which will be started upon receipt of the funding from the Development Bank of Namibia, this is conditional and not yet completed. In addition, the Group successfully raised GBP7.7m through the issue of 77 unsecured convertible loan notes of GBP100 000 each on 18 July 2023. This further supports the liquidity requirements of the Group and its ability to meet its obligations in the ordinary course of business until February 2025. The Group also retains the ability to flex its ongoing exploration and metallurgical capital expenditures in line with cash availability as well as macro-economic circumstances.

Based on the forecasts, additional funding will be required within the next 12 months for the purpose of envisaged capital and exploration projects. As the Group is also entering a new market with reference to lithium and tantalum sales, which are close to near-term production, the cash flow forecast has assumed the successful completion of the lithium pilot plant and the tantalum circuit in order to deliver the business strategy. The need for further funding would be required for additional exploration and capital projects as well as studies related to the feasibility of the future growth phases. 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 mentioned above as well as other finance for the next 12 months. On the 14th of August 2023, the Group has entered into a conditional binding agreement to secure a blended funding package for the amount of US$25m from Orion Resource Partners to further support the capital investment strategy of the Group. 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.

The Group previously reported a Namibian and a South African operating segment. In the 2021 financial year, the Group made the decision to impair the full value of the South African mining licences as it chose to focus on developing its Namibian assets and it did not intend to incur any further expenditure on its South African licences. The Group now has a single operating segment, consisting of the Namibian operations. During the financial year, the Namibian operations earned GBP10 024 487 revenue from the sale of tin concentrate to the Group's customer, Thailand Smelting and Refining Company ("Thaisarco"). The Namibian operating segment has a non-current asset balance of GBP25 442 966 (consisting of property, plant and equipment of GBP21 824 522 and intangible assets of GBP3 618 444). The Group will continue to monitor their operating segments and provide the necessary disclosure going forward.

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 Group, 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.

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 Group 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 three years. As per the contract, Thaisarco pays the Group 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 three-month forward-looking price is used in these calculations.

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 licences; mineral production licences and annual licence 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 depreciated 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)              Warrant reserve 

The warrants issued by the Group 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)             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. 
   --    Buildings are depreciated over twenty 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 depreciated 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.

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 are 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 Group 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 Group'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.

TRADE AND OTHER RECEIVABLES

Trade and other receivables are initially recognised at the fair value of the consideration receivable.

Trade and other receivables are subsequently measured at amortised cost less impairment 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 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 Group 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 Group has transferred substantially all the risks and rewards of the asset, or

- the Group 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 18) 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 2023 was GBP965 578 (2022: GBP295 151). In determining the amount attributable to the rehabilitation liability, management used a risk-free discount rate of 13% (2022: 10%), an inflation rate of 5.3% (2022: 5%) and an estimated mining period of 13.4 years (2022: 17 years), being the Phase 1 expansion life of mine. The decrease in the mining period is as a result of the increased mining volumes post the Phase 1 Expansion. A 1% increase or decrease in the inflation rate used would result in an increase of GBP139 637 or a decrease of GBP123 812 difference in the liability respectively. A 2% increase or decrease in the discount rate used would result in a decrease of GBP175 466 or increase of GBP 322 516 difference in the liability respectively.

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 directors have concluded that there are no indications of impairment in respect of the carrying value of Namibian intangible assets at 28 February 2023 based on planned future development of the Namibian projects, and current and forecast tin prices. Exploration and evaluation assets are disclosed fully in Note 11.

   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 including production from the lithium pilot plant, forecast commodity prices, production profile, inflation rate, post-tax real discount rate and market capitalisation of the Group. The drilling and testing of lithium, decision on lithium production, the initial steps taken prior 28 February 2023 and the construction of pilot plant that was concluded in July 2023. Therefore, production from the lithium pilot plant is included in the impairment review of the mining asset. Management identified the reduction in the tin price as an indicator of impairment. In undertaking the impairment review, management have also reviewed the underlying LoM valuation model for Uis. The LoM valuation model is on a fair value less cost to develop basis and includes assessments of different scenarios associated with capital improvements and expansion opportunities. The impairment testing performed by management did not result in an impairment. The forecasts require estimates regarding forecast tin, tantalum and lithium prices, ore resources, production, operating and capital costs.

Under the base case forecast scenario, management used life of mine of 30 years a forecast tin price of US$26 000, tantalum price of US$150 000, lithium price of US$2 960 for FY 2024, US$1 619 for FY 2025, US$1 429 for FY2026 and US$1 051 from FY 2027 onwards, discount rate of 11.5% post-tax real rate and inflation rate of 4.5%. The forecast indicates sufficient headroom as at 28 February 2023. Life of mine is assumed to be 30 years based on the measured resources and based on assumption that the licences will be renewed.

One of the complex judgements in determining the recoverable amount of mining assets is an estimation of the future tin price. The estimation of future tin price is subject to uncertainty considering the market volatility. Management has therefore compared the forecast tin price with the economic consensus estimates and found that the forecast tin prices are within the range suggested by economic consensus estimates. Furthermore, a sensitivity analysis was performed by lowering the forecast tin prices by 5% which also indicated sufficient headroom as at 28 February 2023.

As an additional test, management performed certain sensitivity calculations. These included lowering plant recovery by 5% raising the discount rate by 2% and and increasing operating costs by 5%. In each of these circumstances, the forecast indicated sufficient headroom as at 28 February 2023.

   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 and 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 and 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, lithium and tantalum 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 Group 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 three month tin price that is expected when the open shipments will be finalised. The forward prices used by management were US$23 866 and US$24 469 depending on the date the shipments were finalised.

As at 28 February 2023 the Group, using forward price of US$24 469 and US$23 866 based on when shipments will be finalised and recognised as a receivable at fair value through profit or loss of GBP126 125 (2022: GBP812 594).

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 2022 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. REVENUE

 
                                      Year ended     Year ended 
                                       28 February    28 February 
                                       2023           2022 
                                      GBP            GBP 
                                     -------------  ------------- 
 Revenue from the sale of tin          10 024 487    13 717 620 
                                     -------------  ------------- 
 Revenue from the sale of sand         64 676        34 444 
                                     -------------  ------------- 
 Total revenue from customers         10 089 163     13 752 064 
                                     -------------  ------------- 
 
 Revenue - change in fair value of 
  customer contract                   (261 689)      (137 019) 
                                     -------------  ------------- 
 Total revenue                        9 827 474      13 615 045 
                                     -------------  ------------- 
 

The revenue from the sale of tin and sand is recognised at the point in time at which control transfers. 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 further details.

5. COST OF SALES

 
                         Year ended     Year ended 
                          28 February    28 February 
                          2023           2022 
                         GBP            GBP 
                        -------------  ------------- 
 Costs of production      9 334 142     8 057 083 
                        -------------  ------------- 
 Smelter charges          757 459       748 892 
                        -------------  ------------- 
 Logistics costs          106 626       126 086 
                        -------------  ------------- 
 Government royalties     311 191       370 457 
                        -------------  ------------- 
                         10 509 418     9 302 518 
                        -------------  ------------- 
 

6. ADMINISTRATIVE EXPENSES

The profit / (loss) for the year has been arrived at after charging / (crediting):

 
                                      Year ended     Year ended 
                                       28 February    28 February 
                                       2023           2022 
                                      GBP            GBP 
                                     -------------  ------------- 
 Staff costs                           3 025 406      1 269 882 
                                     -------------  ------------- 
 Depreciation of property, plant & 
  equipment                            366 190        221 948 
                                     -------------  ------------- 
 Professional fees                     1 201 984      621 379 
                                     -------------  ------------- 
 Travelling expenses                   350 884        96 956 
                                     -------------  ------------- 
 Uis administration expenses           916 238        660 476 
                                     -------------  ------------- 
 Auditor's remuneration                190 000        95 000 
                                     -------------  ------------- 
 Foreign exchange (gains)/losses       696 621       (15 109) 
                                     -------------  ------------- 
 IT costs                              285 408        154 748 
                                     -------------  ------------- 
 Other costs                           418 621        569 383 
                                     -------------  ------------- 
                                      7 451 352      3 674 663 
                                     -------------  ------------- 
 

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.

7. STAFF COSTS

 
                                             Year ended     Year ended 
                                              28 February    28 February 
                                              2023           2022 
                                             GBP            GBP 
                                            -------------  ------------- 
 Staff costs capitalised under property, 
  plant, and equipment                        1 044 009     607 622 
                                            -------------  ------------- 
 Staff costs capitalised under intangible 
  assets                                      413 939       171 793 
                                            -------------  ------------- 
 Staff costs recognised as administrative 
  expenses                                    2 680 130     1 182 228 
                                            -------------  ------------- 
 Staff costs included in cost of sales        1 796 229     1 317 548 
                                            -------------  ------------- 
 Share-based payment charge capitalised 
  under property, plant and equipment         -             18 892 
                                            -------------  ------------- 
 Share-based payment charge capitalised 
  under intangible assets                     -             6 076 
                                            -------------  ------------- 
 Share-based payment charge recognised 
  as administrative expenses                  345 276       80 253 
                                            -------------  ------------- 
 Share issue charge                           -             7 401 
                                            -------------  ------------- 
                                              6 279 583     3 391 813 
                                            -------------  ------------- 
 

Key management personnel have been identified as the Board of Directors, Frans van Daalen (Chief Strategy Officer of the Group) and Hiten Ooka (Chief Financial Officer of the Group). Details of key management remuneration are shown in Note 26.

The average number of staff during the period was 219 (2022: 165) with an average total cost per employee for the year of GBP23 102 (2021: GBP20 510).

Emoluments of GBP305 270 including GBP90 081 of share options and shares to be issued (2022: GBP183 712 including GBP13 258 of share options and shares to be issued) were paid in respect of the highest-paid director during the year.

8. FINANCE COST

 
                                             Year ended     Year ended 
                                              28 February    28 February 
                                              2023           2022 
                                             GBP            GBP 
                                            -------------  ------------- 
 Interest on lease liability                  156 118       42 630 
                                            -------------  ------------- 
 Interest on environmental rehabilitation 
  liability                                   14 085        12 080 
                                            -------------  ------------- 
 Bank interest                                338 812       102 655 
                                            -------------  ------------- 
 Interest on loan notes                       -             68 836 
                                            -------------  ------------- 
 Amortisation of warrant charge               -             37 594 
                                            -------------  ------------- 
 Interest paid on prepayments from 
  customer                                    160 809       52 570 
                                            -------------  ------------- 
                                              669 824       316 365 
                                            -------------  ------------- 
 

9. TAXATION

The tax expense represents the sum of the tax currently payable and deferred tax.

 
                                            Year ended     Year ended 
                                             28 February    28 February 
                                             2023           2022 
 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: 
                                           -------------  ------------- 
 (Loss) / profit before taxation            (8 970 048)     389 798 
                                           -------------  ------------- 
 
 (Loss) / profit before taxation            -              - 
  multiplied by the Guernsey corporation 
  tax charge rate of 0% 
                                           -------------  ------------- 
 Effects of: 
                                           -------------  ------------- 
 Differences in tax rates (overseas 
  jurisdictions)                            (1 791 238)    (525 598) 
                                           -------------  ------------- 
 Tax losses carried forward                 1 791 238      525 598 
                                           -------------  ------------- 
 Movement in deferred tax                   866 203        (864 199) 
                                           -------------  ------------- 
 Tax for the year                           866 203        (864 199) 
                                           -------------  ------------- 
 

Accumulated losses in the subsidiary undertakings for which there is an unrecognised deferred tax asset are GBP8 100 173 (2022: GBP4 290 665).

A deferred tax asset of GBP1 694 362 was not recognised in the Namibian entities. Due to the sizeable assessed losses that have accumulated in these entities, management has decided not to recognise the deferred tax asset in the 2023 financial year as the timing of future taxable profits is not certain at this stage.

10. LOSS PER SHARE FROM CONTINUING OPERATIONS

The calculation of a basic loss per share of 0.60 pence (February 2022: loss per share of 0.08 pence), is calculated using the total loss for the period attributable to the owners of the Company of GBP7 753 819 (February 2022: GBP815 645) and the weighted average number of shares in issue during the period of 1 291 331 804 (February 2022: 1 064 247 295).

Due to the loss for the period, 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 2023 is 77 636 918 (February 2022: 76 261 762). These potentially dilutive ordinary shares may have a dilutive effect on future earnings per share.

11. INTANGIBLE ASSETS

 
                                   Exploration       Computer    Total 
                                    and evaluation    software 
                                    assets 
 Cost                              GBP               GBP         GBP 
                                  ----------------  ----------  ------------ 
 As at 28 February 2021            5 124 686         115 775     5 240 461 
                                  ----------------  ----------  ------------ 
 Additions for the year - other 
  expenditure                      1 577 065         -           1 577 065 
                                  ----------------  ----------  ------------ 
 Transfer to mining asset          (1 058 602)       -           (1 058 602) 
                                  ----------------  ----------  ------------ 
 Transfer to mining asset under 
  construction                     (678 467)         -           (678 467) 
                                  ----------------  ----------  ------------ 
 Exchange differences              91 047            4 397       95 444 
                                  ----------------  ----------  ------------ 
 As at 28 February 2022            5 055 729         120 172     5 175 901 
                                  ----------------  ----------  ------------ 
 Additions for the year - other 
  expenditure                      2 580 267         -           2 580 267 
                                  ----------------  ----------  ------------ 
 Exchange differences              (431 234)         (7 858)     (439 092) 
                                  ----------------  ----------  ------------ 
 As at 28 February 2023            7 204 762         112 314     7 317 076 
                                  ----------------  ----------  ------------ 
 
                                   Exploration       Computer    Total 
                                    and evaluation    software 
                                    assets 
                                  ----------------  ----------  ------------ 
 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 
                                  ----------------  ----------  ------------ 
 Charge for the period             -                  10 290      10 290 
                                  ----------------  ----------  ------------ 
 Exchange differences              -                 (926)       (926) 
                                  ----------------  ----------  ------------ 
 As at 28 February 2023            -                  37 483      37 483 
                                  ----------------  ----------  ------------ 
 
                                   Exploration       Computer 
                                    and evaluation    software 
                                    assets                       Total 
                                  ----------------  ----------  ------------ 
 Net Book Value                    GBP               GBP         GBP 
                                  ----------------  ----------  ------------ 
 As at 28 February 2023            7 204 762         74 831      7 279 593 
                                  ----------------  ----------  ------------ 
 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 
                                  ----------------  ----------  ------------ 
 

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 prior year, the Group transferred the costs incurred on the Phase 1 Stage II Definitive Feasibility Study (DFS) from exploration and 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. 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 during the prior year.

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 2023 based on planned future development of the projects and current and forecast tin, lithium and tantalum prices.

12. PROPERTY, PLANT AND EQUIPMENT

 
 Cost           Land      Mining         Mining   Mining      Decommissioning   Right-of-use   Computer    Furniture   Vehicles   Mobile      Buildings   Total 
                          asset           asset   asset        asset             Asset         Equipment                          equipment 
                          under                   -                                                                               (crane) 
                          construction            Stripping 
 As 
  at 
  28 
  February       11                      13 675               167               506            135         102         75                                 14 673 
  2021            862     -               153     -            043               671            058         665         473       -           -            925 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Additions 
  for 
  the                      2 600          728      1 335       95                129            73          72                     176                     5 213 
  year           -          997            150      861         585               982            337         991        -           273       -             176 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Disposals 
  for 
  the                                                                                          (15                     (12                                (28 
  year           -         -              -        -           -                 -              891)        -           523)       -          -            414) 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Transfer 
  from 
  exploration 
  and 
  evaluation               678            1 058                                                                                                            1 737 
  asset          -          467            602     -           -                 -              -           -           -          -          -             069 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Foreign 
  exchange                 304            147                                    18             4           3           2                                  484 
  differences    450        389            863    (3 733)      6 076              877            968         674         901      (493)       -             972 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28                                      15                                                                                                               22 
  February       12        3 583           609     1 332       268               655            197         179         65         175                      080 
  2022            312       853            768      128         704               530            472         330         851        780       -             728 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Additions 
  for                                                                            1                                                                         12 
  the                      7 264          984      1 531       750                121           112         99          294        303         284          746 
  year           -          184            390      721         363               536            496         371         699        356         733         849 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Disposals 
  for 
  the                                    (309                                   (61                                                                       (370 
  year           -         -              259)     -           -                 435)           -           -           -          -           -           694) 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Transfer 
  between 
  categories 
  of                      (9 532          9 532 
  assets         -         184)            184     -           -                 -              -           -           -          -           -           - 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Foreign 
  exchange      (1        (74            (2 154   (251        (90               (156           (26         (24         (32        (42         (25         (2 880 
  differences    051)      979)           393)     622)        495)              934)           928)        209)        154)       317)        635)        714) 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28                                      23                                     1                                                                         31 
  February       11        1 240           662     2 612       928                558           283         254         328        436         259          576 
  2023            261       874            690      227         572               697            040         492         396        819         098         169 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 
 Accumulated 
  Depreciation 
                   ----  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 
 As 
  at 
  28 
  February                                723                                    161            74          35          44                                 1 039 
  2021           -         -               982     -           -                  274            433         507         028       -          -             224 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Charge 
  for 
  the                                     1 115    489                           165            40          28          9          3                       1 861 
  year           -         -               292      372        9 461              689            445         329         204        231       -             023 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Foreign 
  exchange                                20                                     5              2           1           1                                  30 
  differences    -         -               501    (1 368)     (26)                661            727         255         646      (7)         -             389 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28 
  February                                1 859    488                           332            117         65          54         3                       2 930 
  2022           -         -               775      004        9 435              624            605         091         878        224        -            636 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Charge 
  for 
  the                                     964      967         15                254            50          43          35         35          9           2 377 
  year           -         -               857      435         542               667            928         556         297        930         137         349 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 Foreign 
  exchange                               (225     (128                          (62            (14         (9          (7         (3                      (455 
  differences    -         -              323)     759)       (2 205)            451)           656)        447)        862)       511)       (823)        037) 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28 
  February                                2 599    1 326       22                524            153         99          82         35          8           4 852 
  2023           -         -               309      680         772               840            877         200         313        643         314         948 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 
 Net 
  Book 
  Value 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28                                      21                                     1                                                             2           26 
  February       11        1 240           063     1 285       905                033           129         155         246        401          507         723 
  2023            261       874            381      547         800               857            163         292         083        176         834         218 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28                                      13                                                                                                               19 
  February       12        3 583           749     844         259               322            79          114         10         172                      150 
  2022            312       853            993      124         269               906            867         239         973        556       -             092 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 As 
  at 
  28 
  February       11        1 240         12 951                167               345            60          67          31                                13 634 
  2021            862       873           171     -             043               397            625         158         445      -           -            701 
               --------  -------------  -------  ----------  ----------------  -------------  ----------  ----------  ---------  ----------  ----------  ------- 
 
 

In October 2020, the Group 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. All costs associated with carrying out the study were previously capitalised as exploration and evaluation assets under IFRS 6. During the prior 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 were accumulated in the mining asset under construction. The Uis Phase 1 Expansion was commissioned in November 2022 and the total costs of the study and the construction were transferred to the mining asset at this date.

Additions to the mining asset include capitalised costs and equipment purchased as part of the Uis Phase 1 Continuous Improvement project.

Additions to the mining asset under construction include capitalised costs and equipment purchased as part of the construction of the Bulk Sample Processing Facility. This includes a Lithium pilot plant, a Tantalum pilot plant and an ore sorting plant.

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 and 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.

The total depreciation charge for the current financial year was split between administrative expenses and cost of sales. GBP336 190 (2022: GBP221 948) was included in administrative expenses, while the balance of GBP2 071 856 (2022 GBP1 639 075) was included in cost of sales as it was a cost that was incurred for mining and processing purposes.

13. INVENTORIES

 
                            Year ended     Year ended 
                             28 February    28 February 
                             2023           2022 
                            GBP            GBP 
                           -------------  ------------- 
 Tin concentrate on hand     1 364 286     909 180 
                           -------------  ------------- 
 Run-of-mine stockpile       589 725       155 389 
                           -------------  ------------- 
 Consumables                 713 182       387 364 
                           -------------  ------------- 
                             2 667 193     1 451 933 
                           -------------  ------------- 
 

14. TRADE AND OTHER RECEIVABLES

 
                                            Year ended     Year ended 
                                             28 February    28 February 
                                             2023           2022 
                                            GBP            GBP 
                                           -------------  ------------- 
 Trade receivables                           27 678        96 173 
                                           -------------  ------------- 
 Trade receivables at fair value through 
  profit or loss                             126 125       812 594 
                                           -------------  ------------- 
 Other receivables                           1 369 867     1 875 561 
                                           -------------  ------------- 
 VAT receivables                             1 069 100     1 169 054 
                                           -------------  ------------- 
                                             2 592 770     3 953 382 
                                           -------------  ------------- 
 

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 a history without 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 GBP164 427 (2022: GBP61 316), denominated in Namibian Dollars amount to GBP2 221 827 (2022: GBP2 851 028) and denominated in US Dollars amount to GBP126 125 (2022: GBP812 594).

15. CASH AND CASH EQUIVALENTS

 
                             Year ended     Year ended 
                              28 February    28 February 
                              2023           2022 
                             GBP            GBP 
                            -------------  ------------- 
 Cash on hand and in bank     8 205 705     7 365 379 
                            -------------  ------------- 
 

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 GBP110 625 (2022: GBP80 463), the total cash and cash equivalents denominated in Namibian Dollars amount to GBP2 526 962 (2022: GBP1 279 798) and the total cash and cash equivalents denominated in US Dollars amount to GBP3 808 714 (2022: GBP3 450 626).

16. BORROWINGS

 
                                           Year ended     Year ended 
                                            28 February    28 February 
                                            2023           2022 
                                           GBP            GBP 
                                          -------------  ------------- 
 Standard Bank term loan facility           4 083 503     4 523 414 
                                          -------------  ------------- 
 Standard Bank VAT facility                 336 357       367 739 
                                          -------------  ------------- 
 Standard Bank working capital facility     1 298 805     228 988 
                                          -------------  ------------- 
 Standard Bank vehicle asset financing      484 373       - 
  facility 
                                          -------------  ------------- 
                                            6 203 038     5 120 141 
                                          -------------  ------------- 
 

On 18 November 2021, a term loan facility of N$90 000 000 (c. GBP4 050 000), a VAT facility of N$8 000 000 (c. GBP360 000) and a working capital facility of N$35 000 000 (c. GBP1 575 000) was entered into between the Group's subsidiary, Uis Tin Mining Company (Pty) Ltd and Standard Bank Namibia. During the current year, a vehicle asset financing facility to the value of N$15 000 000 (c. GBP675 000) was provided.

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 five years. Interest is charged on the outstanding capital balance of the loan at a rate of three month JIBAR plus a margin of 4.5%. The Company has offered security in the form of lien over all movable assets, inter-Company guarantees over all book debts, cession of insurance policies, the offtake agreement and all shareholder loans.

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 received a covenant waiver from Standard Bank for the year ended 28 February 2023. The next measurement date will be 28 February 2024.

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$5 956 100 (c. GBP268 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 Standar Bank, no cash was paid over for the deposit.

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 
                           2023 
                          GBP            GBP 
                         -------------  ------------------ 
 Non-current liability     3 287 121     4 095 405 
                         -------------  ------------------ 
 Current liability         2 915 917     1 024 736 
                         -------------  ------------------ 
                           6 203 038     5 120 141 
                         -------------  ------------------ 
 

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN BORROWINGS

 
 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 
                                              ------------ 
 Incoming cash flows 
                                              ------------ 
 Proceeds from vehicle asset financing 
  facility                                      532 296 
                                              ------------ 
 Proceeds from working capital facility         1 197 158 
                                              ------------ 
 Outgoing cash flows 
                                              ------------ 
 Repayment of capital balance of term 
  loan                                         (89 014) 
                                              ------------ 
 Interest paid on term loan                    (95 903) 
                                              ------------ 
 Non-cash flows 
                                              ------------ 
 Interest accrued on term loan (capitalised 
  to mining asset)                              125 832 
                                              ------------ 
 Foreign exchange differences                  (587 472) 
                                              ------------ 
 Balance as at 28 February 2023                6 203 038 
                                              ------------ 
 

17. TRADE AND OTHER PAYABLES

 
                   Year ended     Year ended 
                    28 February    28 February 
                    2023           2022 
                   GBP            GBP 
                  -------------  ------------- 
 Trade payables     1 624 816     2 293 471 
                  -------------  ------------- 
 Other payables     202 127       341 276 
                  -------------  ------------- 
 Accruals           1 828 183     335 086 
                  -------------  ------------- 
                    3 655 126     2 969 833 
                  -------------  ------------- 
 

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing 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 GBP1 147 054 (2022: GBP124 904) and GBP2 154 031 (2022: GBP2 692 924) is denominated in Namibian Dollars.

18. ENVIRONMENTAL REHABILITATION LIABILITY

 
                                   GBP 
 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 
                                  --------- 
 Increase in provision              750 363 
                                  --------- 
 Interest expense                   14 085 
                                  --------- 
 Foreign exchange differences      (94 021) 
                                  --------- 
 Balance as at 28 February 2023     965 578 
                                  --------- 
 

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 2023.

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 13% (2022: 10%), an inflation rate of 5.3% (2022: 5%), and an estimated mining period of 13.4 years (2022: 17 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.

19. LEASE LIABILITY

The Group 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                                      Incremental 
                term           extend/terminate                               borrowing 
                                                                              rate 
                              Option to extend not specified in 
 Office                        contract. Term of lease determined 
  building         5 years     to be 5 years.                                13.75% 
                  ---------  ---------------------------------------------  ------------ 
                              Option to extend not specified in 
 Workshop                      contract. Term of lease determined 
  facility         2 years     to be 2 years.                                9.75% 
                  ---------  ---------------------------------------------  ------------ 
                              The lease will continue automatically 
                               after the initial period for an open-ended 
                               period. Either party must provide 
 Residential                   written notice if they wish to terminate. 
  housing          5 years     Lease term determined to be 5 years.          11.75% 
                  ---------  ---------------------------------------------  ------------ 
                              The lessee is granted the option 
 Mobile                        to purchase the units after the lease 
  Units            2 years     period of 2 years.                            7.5% 
                  ---------  ---------------------------------------------  ------------ 
                              The lessee will own the vehicles 
                               after the after the lease period 
 Vehicles          5 years     of 5 years.                                   11.25% 
                  ---------  ---------------------------------------------  ------------ 
 
 
 
                     Office      Workshop   Housing    Mobile     Vehicles   Total 
                      Building                          units 
                     GBP         GBP        GBP        GBP        GBP        GBP 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 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 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
                                                                   208 
 Additions            534 606     43 507     153 388    -           892       940 393 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 Disposals           (22 035)     -          -          -          -         (22 035) 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 Interest expense     55 378      15 612     62 198     1 906      21 024     156 118 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 Lease payments      (159 096)   (59 332)   (51 685)   (37 147)   (56 699)   (363 959) 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 Foreign exchange 
  differences        (51 391)    (3 018)    (24 004)   (676)      (15 593)   (94 682) 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 Balance at 
  28 February                                                      157 
  2023                528 283     32 341     248 225    9 165       624       975 638 
                    ----------  ---------  ---------  ---------  ---------  ---------- 
 

The following is the split between the current and the non-current portion of the liability:

 
                          Year ended     Year ended 
                           28 February    28 February 
                           2023           2022 
                          GBP            GBP 
                         -------------  ------------- 
 Non-current liability     707 355       167 215 
                         -------------  ------------- 
 Current liability         268 283       192 588 
                         -------------  ------------- 
                           975 638       359 803 
                         -------------  ------------- 
 

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 
                                  ---------- 
 Outgoing cash flows 
                                  ---------- 
 Lease payments                    (363 959) 
                                  ---------- 
 Non-cash flows 
                                  ---------- 
 Additions                          940 393 
                                  ---------- 
 Disposals                         (22 035) 
                                  ---------- 
 Interest expense                   156 118 
                                  ---------- 
 Foreign exchange differences      (94 682) 
                                  ---------- 
 Balance as at 28 February 2023    975 638 
                                  ---------- 
 

20. SHARE CAPITAL

 
                                             Number of ordinary   Share Capital 
                                              shares of no-par     GBP 
                                              value issued 
                                              and fully paid 
 Balance at 28 February 2021                 874 690 012          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 December    798 001              39 102 
                                            -------------------  -------------- 
 Exercising of employee share options - 
  14 January                                 2 185 087            72 059 
                                            -------------------  -------------- 
 Exercising of employee share options - 
  27 January                                 1 250 000            56 250 
                                            -------------------  -------------- 
 Exercising of employee share options - 
  22 February                                5 273 684            180 236 
                                            -------------------  -------------- 
 Balance as at 28 February 2022              1 121 841 684        38 655 078 
                                            -------------------  -------------- 
 Capital raise - 16 September 2022            222 701 660          11 135 083 
                                            -------------------  -------------- 
 Capital raise - 10 October 2022              173 320 000          8 666 000 
                                            -------------------  -------------- 
 Share issue costs                            -                   (1 962 253) 
                                            -------------------  -------------- 
 Warrants exercised - 25 January 2023         20 000 000           390 000 
                                            -------------------  -------------- 
 Balance at 28 February 2023                  1 537 863 344        56 883 908 
                                            -------------------  -------------- 
 

Authorised: 1 616 508 573 ordinary shares of no par value Allotted, issued and fully paid: 1 537 863 344 ordinary shares of no par value

On 16 September 2022, the Group completed an equity fundraising by way of a placing and direct subscription of 222 701 660 ordinary shares of no par value in the Group at a price of 5 pence per share. A further 173 320 000 660 ordinary shares of no par value in the Group at a price of 5 pence per share were issued on 10 October 2022 as part of the same capital raise.

On 25 January 2023, warrant holders exercised 20 000 000 warrants at an exercise price of 1.95.

21. WARRANTS

The warrants in issue during the year are as follows:

 
                                    24 300 
 Outstanding at 28 February 2021     000 
 Exercisable at 28 February 2021    24 300 000 
                                   ------------ 
 Granted during the year            - 
                                   ------------ 
 Expired during the year            - 
                                   ------------ 
 Exercised during the year          (1 686 666) 
                                   ------------ 
                                    22 613 
 Outstanding at 28 February 2022     334 
                                   ------------ 
 Exercisable at 28 February 2022    22 613 334 
                                   ------------ 
 Granted during the year            - 
                                   ------------ 
 Expired during the year            - 
                                   ------------ 
                                    (20 000 
 Exercised during the year           000) 
                                   ------------ 
 Outstanding at 28 February 2023    2 613 334 
                                   ------------ 
 Exercisable at 28 February 2023    2 613 334 
                                   ------------ 
 

On 22 January 2023, 2 613 334 warrants at an exercise price of 4.5 pence were extended for an additional six months.

On 25 January 2023, notice was received from warrant holders to exercise 20 000 000 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.

In the year ended 28 February 2023, there was a charge of GBP16 700 accounted for due to the extension of the period of the warrants in issue (February 2022: nil).

Please refer to the statement of changes in equity for the reconciliation of the warrant reserve.

22. SHARE-BASED PAYMENT RESERVE

DIRECTOR SHARE OPTIONS

The following director share options were granted during the year ended 28 February 2023:

 
 Date of grant                      8 April     8 April     8 April 
                                     2022        2022        2022 
 Number granted                     7 800 000   3 900 000   3 900 000 
                                   ----------  ----------  ---------- 
 Vesting period                     1 year      2 years     3 years 
                                   ----------  ----------  ---------- 
 Contractual life                   3 years     3 years     3 years 
                                   ----------  ----------  ---------- 
 Estimated fair value per option 
  (pence)                           2.0830      2.8490      3.4090 
                                   ----------  ----------  ---------- 
 

The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were:

 
 Date of grant                        8 April        8 April        8 April 
                                       2022           2022           2022 
 Share price at grant date (pence)    9.35           9.35           9.35 
                                     -------------  -------------  -------- 
 Exercise price (pence)               9.80           10.30          10.80 
                                     -------------  -------------  -------- 
 Expiry date                          8 April 2025   8 April 2025   8 April 
                                                                     2025 
                                     -------------  -------------  -------- 
 Expected volatility                  60%            60%            60% 
                                     -------------  -------------  -------- 
 Expected dividends                   Nil            Nil            Nil 
                                     -------------  -------------  -------- 
 Risk-free interest rate              1.24%          1.24%          1.24% 
                                     -------------  -------------  -------- 
 

The director share options in issue during the year are as follows:

 
 Outstanding at 28 February 2021    27 100 000 
 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 
                                   ------------ 
 Granted during the year            15 600 000 
                                   ------------ 
 Forfeited during the year           - 
                                   ------------ 
 Exercised during the year          - 
                                   ------------ 
 Expired during the year            - 
                                   ------------ 
 Outstanding at 28 February 2023    41 450 000 
                                   ------------ 
 Exercisable at 28 February 2023    23 850 000 
                                   ------------ 
 

The director share options outstanding at year end have an average exercise price of GBP0.067 (2022: GBP0.045), with a weighted average remaining contractual life of 1.29 years (2022: 1.79 years).

A director must remain as a director of the Group 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 following employee share options were granted during the year ended 28 February 2023:

 
 Date of grant                      8 April     8 April     8 April 
                                     2022        2022        2022 
 Number granted                     2 400 000   1 200 000   1 200 000 
                                   ----------  ----------  ---------- 
 Vesting period                     1 year      2 years     3 years 
                                   ----------  ----------  ---------- 
 Contractual life                   3 years     3 years     3 years 
                                   ----------  ----------  ---------- 
 Estimated fair value per option 
  (pence)                           2.0830      2.8490      3.4090 
                                   ----------  ----------  ---------- 
 

The estimated fair values were calculated by applying the Black Scholes pricing model. The model inputs were:

 
 Date of grant                        8 April        8 April        8 April 
                                       2022           2022           2022 
 Share price at grant date (pence)    9.35           9.35           9.35 
                                     -------------  -------------  -------- 
 Exercise price (pence)               9.80           10.30          10.80 
                                     -------------  -------------  -------- 
 Expiry date                          8 April 2025   8 April 2025   8 April 
                                                                     2025 
                                     -------------  -------------  -------- 
 Expected volatility                  60%            60%            60% 
                                     -------------  -------------  -------- 
 Expected dividends                   Nil            Nil            Nil 
                                     -------------  -------------  -------- 
 Risk-free interest rate              1.24%          1.24%          1.24% 
                                     -------------  -------------  -------- 
 

The employee share options in issue during the year are as follows:

 
                                     34 830 
 Outstanding at 28 February 2021      000 
 Exercisable at 28 February 2021    26 610 001 
                                   ------------ 
 Granted during the year            - 
                                   ------------ 
 Forfeited during the year          - 
                                   ------------ 
 Exercised during the year          (7 458 771) 
                                   ------------ 
 Expired during the year            - 
                                   ------------ 
 Outstanding at 28 February 2022    27 371 229 
                                   ------------ 
 Exercisable at 28 February 2022    27 371 229 
                                   ------------ 
 Granted during the year            4 800 000 
                                   ------------ 
 Forfeited during the year          - 
                                   ------------ 
 Exercised during the year          - 
                                   ------------ 
 Expired during the year            - 
                                   ------------ 
 Outstanding at 28 February 2023    32 171 229 
                                   ------------ 
 Exercisable at 28 February 2023    27 371 229 
                                   ------------ 
 

The employee share options outstanding at the year end have an average exercise price of GBP0.044 (2022: GBP0.034), with a weighted average remaining contractual life of 1.13 years (2021: 1.96 years).

An employee must remain in employment with the Group for the share options to vest. There are no market-based vesting conditions on the share options.

23. 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 

No dividends have been paid to any of the minority interests listed above.

 
 As at 28 February 2023                      UTMC          Other      Total 
 Amount attributable to all shareholders: 
                                            ------------  ---------  ------------ 
 Loss after tax                              (2 321 500)   (6 147)    (2 327 647) 
                                            ------------  ---------  ------------ 
 
                                                                       10 519 
 Non-current assets                           10 508 167    11 262      429 
                                            ------------  ---------  ------------ 
 Current assets                               5 116 388     -          5 116 388 
                                            ------------  ---------  ------------ 
                                                                       15 635 
 Total assets                                 15 624 555    11 262      817 
                                            ------------  ---------  ------------ 
 
 Non-current liabilities                      7 956 192     -          7 956 192 
                                            ------------  ---------  ------------ 
 Current liabilities                          8 839 733     58 417     8 898 150 
                                            ------------  ---------  ------------ 
                                                                       16 854 
 Total liabilities                            16 795 925    58 417      342 
                                            ------------  ---------  ------------ 
 
 Net assets / (liabilities)                  (1 171 370)   (47 155)   (1 218 525) 
                                            ------------  ---------  ------------ 
 
 Amount attributable to non-controlling 
  interest: 
                                            ------------  ---------  ------------ 
 Profit / (loss) after tax                   (348 224)     (1 801)    (350 025) 
                                            ------------  ---------  ------------ 
 Net assets / (liabilities)                  (173 406)     (13 557)   (186 963) 
                                            ------------  ---------  ------------ 
 
 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 
                                            ------------  ---------  ------------ 
 Total assets                                15 947 534    12 313     15 959 847 
                                            ------------  ---------  ------------ 
 
 Non-current liabilities                     12 843 653    44 967     12 888 620 
                                            ------------  ---------  ------------ 
 Current liabilities                         1 788 861     12 786     1 801 647 
                                            ------------  ---------  ------------ 
 Total liabilities                           14 632 514    57 753     14 690 267 
                                            ------------  ---------  ------------ 
 
 Net assets / (liabilities)                  1 315 020     (45 440)   1 269 580 
                                            ------------  ---------  ------------ 
 
 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 
                                            ------------  ---------  ------------ 
 

24. 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, 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 
                                          2023               2022 
                                         GBP                GBP 
                                        -----------------  ------------- 
 Measured at amortised cost: 
                                            -------------  ------------- 
 Trade and other receivables                  1 397 545     7 365 379 
                                            -------------  ------------- 
 Cash and cash equivalents                    8 205 705     7 365 379 
                                            -------------  ------------- 
 Measured at fair value through profit 
  or loss: 
                                            -------------  ------------- 
 Trade and other receivables                  126 125       812 594 
                                            -------------  ------------- 
 Total financial assets                       9 729 375     10 149 707 
                                            -------------  ------------- 
 
 

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 2023 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 three 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 
                                 2023           2022 
                                GBP            GBP 
                               -------------  ------------- 
 Measured at amortised cost: 
                               -------------  ------------- 
 Trade and other payables        3 655 126     2 969 833 
                               -------------  ------------- 
 Borrowings                      6 203 038     5 120 141 
                               -------------  ------------- 
 Lease liability                 975 638       359 803 
                               -------------  ------------- 
 Total financial liabilities      10 833 802   8 449 777 
                               -------------  ------------- 
 

Maturity analysis of the contractual undiscounted cash flows:

 
                    Up to       Between          Between        Between    Total 
                     3 months    3                1              2 
                                 and 12 months    and 2 years    and 5 
                                                                 years 
 Trade and other     3 655                                                  3 655 
  payables            126        -                -              -           126 
                   ----------  ---------------  -------------  ---------  --------- 
                                                                 2 060      6 203 
 Borrowings          560 908     2 355 009        1 226 338       783        038 
                   ----------  ---------------  -------------  ---------  --------- 
 Lease Liability     75 616      192 668          205 633        501 721    975 638 
                   ----------  ---------------  -------------  ---------  --------- 
                     4 291                                       2 562     10 833 
                      650       2 547 677        1 431 971        504       802 
                   ----------  ---------------  -------------  ---------  --------- 
 

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 Baa3 (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 2023    28 February 
                                            2022 
                       GBP                 GBP 
                      ------------------  ------------- 
 Currency 
                      ------------------  ------------- 
 UK Pound Sterling      1 759 404          2 554 492 
                      ------------------  ------------- 
 US Dollar              3 808 714          3 450 626 
                      ------------------  ------------- 
 South African Rand     110 625            80 463 
                      ------------------  ------------- 
 Namibian Dollars       2 526 962          1 279 798 
                      ------------------  ------------- 
                         8 205 705         7 365 379 
                      ------------------  ------------- 
 

Credit risk relating to trade and 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 14 for the concentration of credit risk relating to trade receivables.

At 28 February 2023, 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. No expected credit losses have been recognised on 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 2023, the Group had GBP8 205 705 (2021: GBP7 365 379) 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 and 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        Cash flow 
                GBP         impact of        impact of 
                            a 1% increase    a 1% decrease 
                            in interest      in interest 
                            rate             rate 
                            GBP              GBP 
 Borrowings    6 203 038   (62 030)         62 030 
              ----------  ---------------  --------------- 
 

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 
                                 2023           2022 
                                GBP            GBP 
                               -------------  ------------- 
 Cash and cash equivalents       6 446 301     4 810 887 
                               -------------  ------------- 
 Trade and other receivables    1 443 280      2 555 885 
                               -------------  ------------- 
 Trade and other payables       (3 301 085)    (2 550 860) 
                               -------------  ------------- 
 Borrowings                     (6 203 038)    (5 120 141) 
                               -------------  ------------- 
                                (1 614 542)    304 229 
                               -------------  ------------- 
 

The Group operates on an international basis; therefore, foreign exchange risk exposures arise from transactions denominated in foreign currencies. The Group is exposed to foreign currency risk on fluctuations related to financial instruments that are denominated in UK Pound Sterling, 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          137 109               150 820            123 398 
               --------------------  -----------------  ----------------- 
 Liabilities    (1 147 054)           (1 261 760)        (1 032 349) 
               --------------------  -----------------  ----------------- 
                (1 009 945)           (1 110 940)        (908 951) 
               --------------------  -----------------  ----------------- 
 
                Namibian              Namibian           Namibian Dollar 
                 Dollar denominated    Dollar currency    currency impact 
                 monetary items        impact             Weakening 
                 GBP                   Strengthening      GBP 
                                       GBP 
               --------------------  -----------------  ----------------- 
 Assets          3 943 758            4 338 133          3 549 382 
               --------------------  -----------------  ----------------- 
 Liabilities    (8 357 069)           (9 192 776)        (7 521 362) 
               --------------------  -----------------  ----------------- 
                (4 413 311)           (4 854 643)        (3 971 980) 
               --------------------  -----------------  ----------------- 
 

25. EVENTS AFTER BALANCE SHEET DATE

KEY MANAGEMENT CHANGE

Frans Van Daalen was appointed as Chief Strategy Officer to drive business development strategy, with a focus on accelerating the lithium project. Chris Smith was appointed as the Chief Operations Officer.

BOARD APPOINTMENTS

Hiten Ooka, the Chief Financial Officer, was appointed as an Executive Director and Gida Nakazibwe Sekandi has been appointed as a Non-Executive Director.

ISSUE OF SHARE OPTIONS

On 11 May 2023, the Group granted options over 41 217 116 ordinary shares to certain Directors, senior managers, and employees of the Group, in line with its LTIP. The options are exercisable at a price of 6p per ordinary share. For the employees and senior managers, the options can be exercised at any time from 1 May 2026, for a period of seven years and for the Directors, the options can be exercised at any time from 1 May 2028, for a period of seven years. In each case, the options will vest in three tranches and each tranche can only be exercised if the 60-day Volume Weight Average Price of the Andrada share price exceeds the target share price for that tranche. The target share price for the three tranches are 7p, 8p and 9p respectively. The options expire in 2033 and are conditional on the continued employment of the relevant recipient as an employee of the Group at the time of exercise.

LISTING ON THE OTCQB MARKET

On 5 June 2023, the Group has qualified to trade on the OTCQB Market (an American financial market) and trading in the Group's ordinary shares has commence trading on this. The trading of the Group's ordinary shares on AIM, a market of the London Stock Exchange, and on the Namibian Stock Exchange, remain unaffected by this additional listing.

DEVELOPMENT BANK OF NAMIBIA FACILITY

On 2 June 2023, the Group executed the contractual documentation for the N$100m (c. US$5.8m) senior secured debt facility with the Development Bank of Namibia. The facility is for a 10-year term; for the first 12 months after execution, no interest or capital repayments are required; and interest accrues at Namibian prime lending rate (currently 11%) plus 2.5% per annum. Completion of the Facility remains subject to a series of final conditions including the execution of an inter-creditor agreement between the DBN and Standard Bank and finalisation of the associated security package.

COMPLETION OF CONSTRUCTION OF PILOT PLANTS

On 18 July 2023, the Group completed the construction of both the lithium bulk sampling plant and the tantalum production circuit. The Group has begun the commissioning of these plants.

ISSUE OF CONVERTIBLE LOAN NOTES

On 21 July 2023, the Group raised GBP7.7m through the issue of 77 unsecured, convertible loan notes of GBP100 000 each to new and existing investors. The Group has also issued the holders of the loan notes two warrants for every GBP1 of loan note held. Each warrant enables the holder to subscribe for one ordinary share in the Company.

ORION FACILITY

On 14 August 2023, Andrada signed binding documentation for an updated, conditional US$25m financing package with Orion. The details of the Orion financing are detailed below:

-- US$2.5m (c. GBP2.0m) equity at 6.39p and, US$10m (c. GBP7.9m) convertible loan note ("the Note") being for the general purposes of accelerating Andrada's overall strategy of achieving commercial production of its lithium, tin, and tantalum revenue streams.

-- US$12.5m unsecured tin royalty for the sole purpose of increasing Andrada's tin production as it ramps up its capital programmes over the next two years.

-- The Company will issue Orion with warrants equivalent to double the GBP value of the US$10m Note based on the USD/GBP rate at market close on the Orion Issuance Date. Each warrant will enable Orion to subscribe for one ordinary share in Andrada.

   --    The financing is subject to the fulfilment of the following outstanding conditions precedent: 

o shareholder approval at the upcoming Annual General Meeting;

o the Company's lender banks' consent;

o exchange control approval to remit funds into Namibia; and

o Admission of the Subscription Shares (as defined below) to trading on AIM.

Funding expected to be completed around the end of September 2023.

26. RELATED-PARTY TRANSACTIONS

Balances and transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

The remuneration of the key management personnel of the Group, which includes the Directors, as well as Frans van Daalen and Hiten Ooka, is set out below.

 
 28 February 2023           Share     Shares to      Director        Other    Total 
                             Option    be Issued      Fees/Salary     Fees     GBP 
                             Charge    in Relation    (incl. bonus    GBP 
                             GBP       to Director    payment and 
                                       Fees/Salary    accrual) 
                                       GBP            GBP 
 Non-Executive Directors 
                           --------  -------------  --------------  -------  -------- 
 Glen Parsons (Chairman)     36 032   -               55 000         -         91 032 
                           --------  -------------  --------------  -------  -------- 
 Terence Goodlace            36 032   -               44 778         -         80 810 
                           --------  -------------  --------------  -------  -------- 
 Laurence Robb               36 032   18 000          17 000         24 000    95 032 
                           --------  -------------  --------------  -------  -------- 
 Michael Rawlinson           36 032   21 000          24 000                   81 032 
                           --------  -------------  --------------  -------  -------- 
 
 Executive Director 
                           --------  -------------  --------------  -------  -------- 
 Anthony Viljoen 
  (Chief Executive 
  Officer)                   90 081    -              360 780         -       450 861 
                           --------  -------------  --------------  -------  -------- 
 
 Other key management 
  personnel 
                           --------  -------------  --------------  -------  -------- 
 Hiten Ooka (Chief 
  Financial Officer 
  - appointed June 
  2022)                      72 065    -             198 042          -       270 107 
                           --------  -------------  --------------  -------  -------- 
 Frans van Daalen 
  (Chief Strategy 
  Officer)                   72 065    -             265 894          -       337 959 
                           --------  -------------  --------------  -------  -------- 
                                                                              1 406 
                            378 339   39 000         965 494         24 000    833 
                           --------  -------------  --------------  -------  -------- 
 
 
 28 February 2022           Share Option   Shares          Director        Other    Total 
                             Charge         to be Issued    Fees/Salary     Fees     GBP 
                             GBP            in Relation     (incl. bonus    GBP 
                                            to Director     payment) 
                                            Fees/Salary     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          -              3 500           4 000           49 102   56 602 
                           -------------  --------------  --------------  -------  -------- 
 
 Executive Director 
                           -------------  --------------  --------------  -------  -------- 
 Anthony Viljoen 
  (Chief Executive 
  Officer)                  13 258         -               170 454         -        183 712 
                           -------------  --------------  --------------  -------  -------- 
 
 Other key management 
  personnel 
                           -------------  --------------  --------------  -------  -------- 
 Robert Sewell (previous 
  Chief Financial 
  Officer                   8 838          -               110 326         -        119 164 
                           -------------  --------------  --------------  -------  -------- 
 Frans van Daalen 
  (Chief Strategy 
  Officer)                  8 838          -               140 390         -        149 228 
                           -------------  --------------  --------------  -------  -------- 
                            47 506         21 500          557 645         57 102   683 753 
                           -------------  --------------  --------------  -------  -------- 
 

27. CAPITAL COMMITMENTS

Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:

 
                                        Year ended     Year ended 
                                         28 February    28 February 
                                         2023           2022 
                                        GBP            GBP 
                                       -------------  ------------- 
 Exploration and evaluation projects     1 246 195     1 021 297 
                                       -------------  ------------- 
 Property, plant, and equipment          954 192       1 695 932 
                                       -------------  ------------- 
                                         2 200 387     2 717 229 
                                       -------------  ------------- 
 

28. 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 prior 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.

__________________________________________________________________________________

About Andrada Mining Limited

Andrada Mining Limited has a vision to create a portfolio of globally significant, conflict-free, production and exploration assets. The Company's flagship asset is the Uis Mine in Namibia, formerly the world's largest hard-rock open cast tin mine.

Andrada has three mining licences namely:

ML 134 on which Uis Mine is located.

ML133 (Lithium Ridge)

ML129 (Spodumene Hill)

The main minerals in these mining licences are tin, lithium and tantalum. Additionally, the Company has an exploration licence EL5445 (Brandberg West) on which the main minerals are tin, copper and tungsten. The Company has set a mineral resource target of 200 Mt to be delineated within the next 5 years. The substantial mineral resource potential allows the Company to consider economies of scale.

Andrada is managed by a board of directors with extensive industry knowledge and a management team with deep commercial and technical skills. Furthermore, the Company is committed to the sustainable development of its operations and the growth of its business. This is demonstrated by how the leadership team places significant emphasis on creating value for the wider community, investors, and other key stakeholders. Andrada has established an environmental, social and governance system which has been implemented at all levels of the Company and aligns with international standards.

   www.andradamining.com   or connect@andradamining.com 

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END

FR SELSWLEDSEFA

(END) Dow Jones Newswires

August 24, 2023 03:30 ET (07:30 GMT)

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