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
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