CMET Capital Metals Plc

 

 

STATEMENTS OF CASH FLOWS

For the year ended 31 March 2024

 

 

		Group			Company
	Note	Year ended 31 March 2024 $	Year ended 31 March 2023 $		Year ended 31 March 2024 $	Year ended 31 March 2023 $
Cash flows from operating activities
Loss before income tax		(931,577)	(1,138,538)		(594,166)	(730,044)
Adjustments for:
Depreciation	6	4,021	3,208		-	-
Share based payments	15/16	70,970	-		70,970	-
Foreign exchange		(16,153)	(11,494)		(26,389)	(31,675)
Interest received		(1,355)	(4,463)		-	-
Changes in working capital:
(Increase) in trade and other receivables		(9,106)	(5,349)		(219,793)	(165,874)
Increase/(decrease) in trade and other payables		5,749	115,885		(103,142)	126,579
Net cash used in operating activities		(877,451)	(1,040,751)		(872,520)	(801,014)
Cash flows from investing activities
Purchase of property plant and equipment	6	(1,833)	(7,168)		-	-
Disposal of property, plant and equipment	6	441	-		-	-
Cash expenditure on exploration and evaluation activity	7	(436,175)	(287,688)		-	-
Disposal of subsidiary undertaking	10	-	(124,897)		-	-
Loan to subsidiaries	9	-	-		(440,658)	(533,627)
Interest received		1,355	4,463		-	-
Net cash used in investing activities		(436,212)	(415,290)		(440,658)	(533,627)
Cash flows from financing activities
Proceeds from issue of share capital		4,304,987	-		4,304,987	-
Transaction costs of share issue		(124,600)	-		(124,600)	-
Net cash generated from financing activities		4,180,387	-		4,180,387	-
Net increase/(decrease) in cash and cash equivalents		2,866,724	(1,456,041)		2,867,209	(1,334,641)
Cash and cash equivalents at beginning of year		216,213	1,775,754		174,707	1,602,766
Exchange loss on cash and cash equivalents		4,392	(103,500)		3,549	(93,418)
Cash and cash equivalents at end of year	12	3,087,329	216,213		3,045,465	174,707
Non-cash investing and financing activities
Shares issued in respect of services - share based payment1	15	39,528	-		39,528	-
Share options and warrants issued2	16	31,442	-		31,442	-

 

¹ Comprised of 737,082 shares at 4.25p to satisfy commissions payable.

² Share options and warrants over a total of 11,800,000 ordinary shares were granted to Directors, management and employees in the period.

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 March 2024

 

1.   General information

The principal activity of Capital Metals plc (the 'Company') and its subsidiaries (together the 'Group') is the exploration and development of the Eastern Minerals Project located in the Ampara District of the Eastern Province of Sri Lanka. The Company's shares are quoted on AIM of the London Stock Exchange. The Company is incorporated and domiciled in England.

 

The address of its registered office is 6 Heddon Street, London, W1B 4BT.

 

2.   Summary of significant Accounting Policies

The principal Accounting Policies applied in the preparation of these Consolidated Financial Statements are set out below. These Policies have been consistently applied to all the periods presented, unless otherwise stated.

 

2.1. Basis of preparation of Financial Statements

These financial statements have been prepared in accordance with UK adopted International Accounting Standards and in accordance with the requirements of the Companies Act 2006. The Financial Statements have also been prepared under the historical cost convention, except as modified for assets and liabilities recognised at fair value on business combination.

 

The Financial Statements are presented in US Dollars. The functional currency of the Company is Pound Sterling.

 

The preparation of financial statements in accordance with the applicable financial reporting framework requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Accounting Policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements are disclosed in Note 4.

 

2.2. New and amended standards

(a) New and amended standards adopted by the Group and Company

 

A number of new and amended standards and interpretations issued by the International Accounting Standards Board (IASB) have become effective for the first time for financial periods beginning on (or after) 1 April 2023 and have been applied by the Company and Group in these financial statements. None of these new and amended standards and interpretations had a significant effect on the Company or Group because they are either not relevant to the Company or Group's activities or require accounting which is consistent with the Company or Group's current accounting policies.

 

(b) New standards, amendments, and interpretations in issue but not yet effective or not yet endorsed and not early adopted.

 

No material impact expected on the financial statements.

 

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.  

 

2.3. Basis of Consolidation

These consolidated financial statements comprise the financial statements of Capital Metals plc and its subsidiaries as at 31 March 2024.  Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. Where subsidiaries follow differing accounting policies from those of the Group, those accounting policies have been adjusted to align with those of the Group. Inter-company balances and transactions between Group companies are eliminated on consolidation, though foreign exchange differences arising on inter-company balances between subsidiaries with differing functional currencies is recognised in profit or loss.

 

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

 

During the prior year, the Group completed a restructure which resulted in the disposal of a subsidiary and disposal of an equity proportion of a subsidiary whilst control was maintained. Refer to Note 18 for further details. Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

 

2.4. Going concern

These financial statements have been prepared on the going concern basis. The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and the Strategic Report.

 

As at 31 March 2024, the Group had cash and cash equivalents of $3,087,329. The Directors have prepared cash flow forecasts to 31 March 2026, which take account of the cost and operational structure of the Group and Company, planned exploration and evaluation expenditure, licence commitments and working capital requirements. These forecasts indicate that the Group and Company, will have sufficient funds in order to meet their operational objectives, and meet their expected liabilities as they fall due, for at least the next 12 months. Thus, the Directors continue to adopt the going concern basis of accounting preparing these financial statements.

 

2.5. Segment reporting

An operating segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.

 

The Directors are of the opinion that the Group operates in two geographical areas, the UK and Sri Lanka. The Company operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Sri Lanka relate to exploration and evaluation of mineral sand resources. The reports used by the chief operating decision maker are based on these geographical segments.

 

2.6. Foreign currencies

(a) Functional and presentation currency

Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The functional currency of the UK parent entity is Pound Sterling, the functional currency of the BVI subsidiaries is US Dollars and the functional currency of the Sri Lankan subsidiaries is Sri Lankan Rupee. The Financial Statements are presented in US Dollars which is the Group's presentation currency.

 

(b) 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 where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

 

(c)  Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

·    assets and liabilities for each period end date presented are translated at the period-end closing rate;

 

·    income and expenses for each Income Statement are translated at average exchange rates (unless this 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 dates of the transactions); and

 

·    all resulting exchange differences are recognised in other comprehensive income.

 

On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Income Statement as part of the gain or loss on sale.

 

2.7. Intangible assets

Exploration and evaluation assets

Exploration and evaluation assets include the cost of acquisition, exploration, determination of resources and recoverable reserves, technical studies, economic feasibility studies and all technical and administrative overheads directly associated with these assets, where a mineral deposit has development potential.

 

Exploration and evaluation assets which are acquired are recognised at fair value. Capitalised exploration and evaluation expenditure is recorded and held at cost. 

 

The Group performs an impairment test on the exploration and evaluation assets when specific facts and circumstances indicate an impairment test is required, including:

 

i)          the Group's right to explore in an area has expired, or will expire in the near future without renewal;

ii)         no further exploration or evaluation is planned or budgeted for;

iii)        a decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; and

iv)        sufficient data exists to indicate that the book value will not be fully recovered from future development and production.

 

If any such facts or circumstances are noted, the Group, as a next step, perform an impairment test in accordance with the provisions of IAS 36 "Impairment of Assets". In such circumstances, the aggregate carrying value of the exploration and assets is compared against 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. Management considers all licences relating to the Project to represent one asset when undertaking their impairment assessment.

 

2.8. Investments in subsidiaries

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

 

2.9. Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided on all property, plant and equipment to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates:

 

Computer & office equipment - 3 years

Motor vehicles - 4 years

Field equipment - 5 years

Drilling equipment - 10 years

Furniture & fittings - 5 years

 

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

 

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

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. If an impairment review is conducted following an indicator of impairment, assets which are not able to be assessed for impairment individually are assessed in combination with other assets within a cash generating unit.

 

Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are recognised within 'Other (losses)/gains' in the Income Statement.

 

2.10.       Impairment of non-financial assets

Assets that have an indefinite useful life, for example, intangible assets not ready to use, and goodwill, are not subject to amortisation and are tested annually for impairment. Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

 

 

 

2.11.       Financial assets

(a)        Recognition and measurement

 

Management determines the classification of its financial assets at initial recognition, the classification of which depends on the purpose for which the financial assets were acquired.

 

Financial assets are classified in four categories:

 

i)          amortised cost;

ii)         fair value through other comprehensive income ("FVOCI") with gains or losses recycled to profit or loss on derecognition;

iii)        FVOCI with no recycling of gains or losses to profit or loss on derecognition; and

iv)        fair value through profit or loss ("FVTPL").

 

Financial assets are classified as at amortised cost only if both of the following criteria are met:

·           the asset is held within a business model whose objective is to collect contractual cash flows; and

·           the contractual terms give rise to cash flows that are solely payments of principal and interest

 

The Group's financial assets comprise cash and receivables which are classified as financial assets at amortised cost.  The Company's financial assets comprise cash and loans to subsidiaries and connected parties, which are classified as financial assets at amortised cost.

 

The Company accounts for loan receivables at amortised cost as the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. After classification as amortised cost, the financial assets are initially measured at fair value plus directly attributable transaction costs, and subsequently measured at amortised cost using the effective interest method, less provision for impairment. 

 

Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred, and the Group has transferred substantially all of the risks and rewards of ownership.

 

(b)        Impairment

 

Impairment provisions for loans to subsidiaries are recognised based on a forward-looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset.

 

For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

 

2.12.       Financial liabilities

Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument.

 

All financial liabilities are initially recognised at fair value and subsequently measured either as:

·      amortised cost using the effective interest method, with interest-related charges recognised as an expense in the income statement; or

·      financial liabilities measured at FVTPL, re-measured at subsequent reporting dates to fair value through the income statement. 

 

During the reporting period, the Group's financial liabilities comprised trade and other payables, deferred consideration payable, loans and convertible bonds.  The trade and other payables, and loans, are classified at amortised cost. 

 

The deferred consideration payable in respect of the acquisition of the Project is treated as a financial liability measured at FVTPL.

 

The convertible bonds were assessed to contain an embedded derivative conversion feature and the Group elected to treat the entire instrument as a financial liability measured at FVTPL.

 

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

 

2.13.       Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand.

 

2.14.       Equity

Equity comprises the following:

·      "Share capital" represents the nominal value of the Ordinary shares;

·      "Share Premium" represents consideration less nominal value of issued shares and costs directly attributable to the issue of new shares;

·      "Other reserves" represents the capital contribution reserve, deferred share reserve, merger reserve, foreign currency translation reserve, reverse acquisition reserve and share option and warrant reserve where;

o  "Merger reserve" represents the difference between the fair value of an acquisition and the nominal value of the shares allotted in a share exchange;

o  "Foreign currency translation reserve" represents the translation differences arising from translating the financial statement items from functional currency to presentational currency;

o  "Reverse acquisition reserve" represents a non-distributable reserve arising on the acquisition of Capital Metals Limited;

o  "Share option and warrant reserve" represents share options and warrants awarded by the Group;

o  Capital contribution reserve - represents capital contributed by one or more of the members without taking shares in return or creating a debt. 

o  Deferred share reserve - represents shares to be issued upon certain conditions being met.

o  "Retained earnings" represents retained losses.

 

2.15.       Share capital, share premium and deferred shares

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 provided there is sufficient premium available. Should sufficient premium not be available placing costs are recognised in the Income Statement. All ordinary shares are fully paid and carry full voting, dividend and capital distribution (including on winding up) rights.

 

Deferred shares are classified as equity. Deferred shares represent shares to be issued upon certain conditions being met. The holders of deferred shares do not have any right to receive written notice of or attend, speak or vote at any general meeting of the Company.  As regards income, on any dividend or other distribution of the Company, the holders of deferred shares shall be entitled to payment in priority to any dividend or distribution to the holders of any other class of shares in the Company, £1 in aggregate.  Upon any capital distribution of the Company (including upon winding up), the holders of the deferred shares shall be entitled to payment in priority to any distribution to the holders of any other class of shares in the Company, £1 in aggregate.  The deferred shares may be cancelled by the Company at any time at its determination for no payment and without obtaining sanction of such holders.

 

2.16.       Share based payments

The Group has granted options over its unissued share capital to certain Directors, management, employees and consultants as part of their remuneration. The fair value of options granted in respect of services provided, is measured at the grant date and recognised as an expense over the vesting period, with a corresponding increase in the Share warrants and options reserve.

 

The fair value of the share options and warrants are determined using the Black Scholes valuation model, taking into account the terms and conditions upon which the warrants or options were issued or granted.

 

Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense or charge is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement or equity as appropriate, with a corresponding adjustment to a separate reserve in equity.

 

When the options are exercised, the Group issues new shares. The proceeds received, net of any directly attributable transaction costs, are credited to share capital (nominal value) and share premium when the options are exercised.

 

2.17.       Taxation

No current tax is yet payable in view of the losses to date.

 

Deferred tax is recognised for using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

 

In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used.

 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

 

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

 

Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the statement of financial position date and are expected to apply to the period when the deferred tax asset is realised or the deferred tax liability is settled.

 

Deferred tax assets and liabilities are not discounted.

 

3.   Financial risk management

3.1. Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (foreign currency risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. None of these risks are hedged.

 

Risk management is carried out by the management team under policies approved by the Board of Directors.

 

Market risk

(a) Foreign currency risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Sri Lankan Rupee (LKR), US Dollar (USD) and the British Pound Sterling (GBP or £). Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

 

The Group negotiates all material contracts for activities in relation to its subsidiaries in either LKR, AUD or USD. The Group does not hedge against the risks of fluctuations in exchange rates. The volume of transactions is not deemed sufficient to enter into forward contracts as most of the foreign exchange movements result from the retranslation of intercompany loans. The Group has sensitised the figures for fluctuations in foreign exchange rates, as the Directors acknowledge that, at the present time, the foreign exchange retranslations have resulted in rather higher than normal fluctuations and is predominantly due to the exceptional nature of the LKR exchange rate in the current economic climate.

 

As at 31 March 2024, the exposure of the Group to foreign exchange rates is summarised as follows:

 

	Group	Group	Company	Company
	2024	2023	2024	2023
Cash and cash equivalents	$	$	$	$
US Dollar	19,091	18,859	18,355	18,415
Sri Lankan Rupee	41,128	41,062	-	-
Australian Dollar	662,072	-	662,072	-
Pound Sterling	2,365,038	156,292	2,365,038	156,292
	3,087,329	216,213	3,045,465	174,707
Other receivables
US Dollar	-	-	-	-
Sri Lankan Rupee	-	-	-	-
Australian Dollar	-	-	-	-
Pound Sterling	24,198	26,333	22,767	26,333
	24,198	26,333	22,767	26,333
	3,111,527	242,546	3,068,232	201,040

 

As at 31 March 2024, if Sterling had gained or lost 10 per cent. against the USD, the impact on comprehensive loss would have been as follows:

 

 

	Group	Group	Company	Company
	2024	2023	2024	2023
Impact on comprehensive loss	$	$	$	$
+10% GBP/USD	238,924	18,262	238,780	18,262
-10% GBP/USD	(238,924)	(18,262)	(238,780)	(18,262)

 

As at 31 March 2024, if the Sri Lankan Rupee had gained or lost 10 per cent. against the USD, the impact on comprehensive loss would have been as follows:

 

	Group	Group	Company	Company
	2024	2023	2024	2023
Impact on comprehensive loss	$	$	$	$
+10% LKR/USD	4,113	4,106	-	-
-10% LKR/USD	(4,113)	(4,106)	-	-

 

 

As at 31 March 2024, if the Australian Dollar had gained or lost 10 per cent. against the USD, the impact on comprehensive loss would have been as follows:

 

	Group	Group	Company	Company
	2024	2023	2024	2023
Impact on comprehensive loss	$	$	$	$
+10% AUD/USD	66,207	-	66,207	-
-10% AUD/USD	(66,207)	-	(66,207)	-

 

Credit risk

Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations.

 

Credit risk relating to the Group's financial assets which comprise principally cash and cash equivalents, arises from the potential default of counterparties.  The credit risk on liquid funds is limited because the counterparties are reputable banks with high credit ratings assigned by international credit-rating agencies.

 

The carrying amount of financial assets represents the maximum credit exposure, which at the reporting date was:

 

 

		Group	Group	Company	Company
		2024	2023	2024	2023
		$	$	$	$
Cash and bank balances		3,087,329	216,213	3,045,465	174,707
Trade and other receivables		21,870	13,655	459,181	198,339
Loan to subsidiaries		-	-	2,796,677	2,278,546
		3,109,199	229,868	6,301,323	2,651,592

 

The expected credit risk for both the Group and the Company was assessed as not material.

 

Liquidity risk

In keeping with similar sized mineral exploration groups, the Group's continued future operations depend on the ability to raise sufficient working capital through the issue of equity share capital or debt. The Directors are reasonably confident that adequate funding will be forthcoming with which to finance operations. Controls over expenditure are carefully managed.

 

With exception to deferred taxation, financial liabilities are all due within one year. The significant liabilities of the Group are not discounted and as such, no undiscounted future cashflow analysis provided.

 

3.2. Capital risk management

The Directors consider the Group's capital to comprise of share capital and reserves stated on the statement of financial position. The Group manages its capital to ensure the Group will be able to continue on a going concern on a long-term basis while ensuring the optimal return to shareholders and other stakeholders through an effective debt and equity balance. No changes were made in the objectives, policies and processes during the current or previous year.

 

The share capital, including share premium, and reserves totalling $7,180,534 (2023: $3,417,112) provides the majority of the working capital required by the Group. Management reviews the capital structure and makes adjustment to it in the light of changes in economic conditions.

 

4.   Critical accounting estimates and judgements

The preparation of the Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period. Actual results may vary from the estimates used to produce these Financial Statements.

 

Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

 

Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to:

 

Impairment of intangible assets - exploration and evaluation costs

Management makes the judgement as to which costs are directly associated with the exploration and evaluation assets and are to be capitalised, including the allocation of applicable salary and overhead costs.

 

Exploration and evaluation costs have a carrying value at 31 March 2024 of $5,332,471 (31 March 2023 $4,451,811). Such assets have an indefinite useful life as the Group has a right to renew exploration licences and the asset is only amortised once extraction of the resource commences. Management tests for impairment annually whether exploration projects have future economic value in accordance with the accounting policy stated in Note 2.7. Each exploration project is subject to an annual review by either a consultant or senior company geologist to determine if the exploration results returned during the period warrant further exploration expenditure and have the potential to result in an economic discovery. This review takes into consideration long term metal prices, anticipated resource volumes and supply and demand outlook. In the event that a project does not represent an economic exploration target and results indicate there is no additional upside a decision will be made to discontinue exploration; an impairment charge will then be recognised in the Income Statement.

 

Whilst there is no certainty that the remaining IML's will be granted, management are of the judgement that there is a reasonable expectation, based on the ongoing discussions with the Geological Survey and Mines Bureau, that the remaining IMLs will be approved in due course. Given this judgement it was deemed that no impairment test was required to be performed.  Should the Group not be successful with the remaining IML applications then Directors would expect to consider an impairment of the E&E assets. See Note 7 for further considerations at the year end.  

 

DEL and EML have now initiated the process to apply for new additional exploration licenses over seven grids and is concluding the preliminary requirements and approvals.

 

Carrying value of intercompany loans

At 31 March 2024 management reassessed the recovery profile of the Company loans granted to subsidiaries and noted the updated project development timetable would mean that it is unlikely that repayments from subsidiaries would commence in the next 12 months and accordingly the loans continue to be classified as non-current receivables in the current year. See Note 9 for further information.

 

Share based payment transactions

Management measured the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of shares was determined by the share price at the date of grant.  The fair value of options and warrants was determined using the Black-Scholes model. Management estimated the number of options that are expected to vest based on the non-market vesting conditions. The valuation of these options and warrants involved making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and forfeiture rates. These assumptions are described in more detail in Note 16.

 

Control and consolidation of Damsila Exports (Pvt) Limited

If an entity with a 40% shareholding has a contractual arrangement that gives it the power to direct the relevant activities of the other entity, it can maintain control and is required to consolidate the financial statements of the other entity. After the restructure of the Group during the prior year, the contractual arrangements in place to determine whether they have the power to direct the relevant activities of another entity and, as a result, maintain control were carefully assessed and it was concluded Redgate Lanka maintains control of Damsila Exports and as such they shall remain consolidated within the Group accounts. No non-controlling interest has been recognised against the net assets as the Group continues to have full rights to the returns of the subsidiary. Please refer to Note 18 for details of the Group restructure.

Fair value of deferred and contingent consideration

Deferred consideration represents amounts payable in respect of the acquisitions of Damsila Exports (Pvt) Limited and Eastern Minerals (Pvt) Limited. The amounts fall due and payable upon completion of certain milestones within the Group, being for each of Damsila Exports (Pvt) Limited and Eastern Minerals (Pvt) Limited: $625,000 in cash (recognised at 95% of face value) upon completion of feasibility studies and all approvals on the relevant project and $750,000 in cash (recognised at 80% of face value) upon commencement of first commercial production from the relevant project. At the reporting year end, the probability estimated for the likelihood of completion of Tranche 2 and 3 of the deferred and contingent consideration was considered, and management continue to estimate 95% probability for Tranche 2 and 80% probability for Tranche 3. If these estimates prove incorrect then the amounts payable in respect of the acquisition may be different to those stated within the financial statements.

 

5.   Segment information

As at 31 March 2024, the Group operates in two geographical areas, the UK and Sri Lanka. The Company operates in one geographical area, the UK. Activities in the UK are mainly administrative in nature whilst activities in Sri Lanka relate to exploration and evaluation of mineral sand resources. The reports used by the chief operating decision maker are based on these geographical segments.

 

The Group generated no revenue during the year ended 31 March 2024 (2023: $Nil).

 

2024	Sri Lanka	UK	Total
	$	$	$
Administrative expenses	(130,071)	(800,844)	(930,915)
Other gains/(losses)	(121)	(2,021)	(2,142)
Finance income	1,355	125	1,480
Operating loss from continued operations per reportable segment	(128,837)	(802,740)	(931,577)
Reportable segment assets	5,540,595	3,087,576	8,628,171
Reportable segment liabilities	(1,321,214)	(126,423)	(1,447,637)
Reportable segment net assets/(liabilities)	4,219,381	2,961,153	7,180,534

 

2023	Sri Lanka	UK	Total
	$	$	$
Administrative expenses	(188,665)	(943,833)	(1,132,498)
Other gains/(losses)	3,533	(14,068)	(10,535)
Finance income	4,463	32	4,495
Operating loss from continued operations per reportable segment	(180,669)	(957,869)	(1,138,538)
Reportable segment assets	4,646,925	212,078	4,859,003
Reportable segment liabilities	(1,207,565)	(234,326)	(1,441,891)
Reportable segment net assets/(liabilities)	3,439,360	(22,248)	3,417,112

 

Segment assets and liabilities are allocated based on geographical location.

 

6.   Property, plant and equipment

The movement on the property, plant and equipment asset accounts are shown in aggregate as follows:

		Group Total $
Cost
As at 1 April 2022	81,470
Exchange Differences	(9,332)
Additions	7,168
Disposals	-
As at 31 March 2023	79,306
As at 1 April 2023	79,306
Exchange Differences	7,323
Additions	1,833
Disposals		(457)
As at 31 March 2024	88,005
Depreciation
As at 1 April 2022	52,929
Charge for the year	3,208
Disposals	-
Exchange differences	(2,422)
As at 31 March 2023	53,715
As at 1 April 2023	53,715
Charge for the year	4,021
Disposals		(441)
Exchange differences	9,121
As at 31 March 2024	66,416
Net book value as at 31 March 2023	25,591
Net book value as at 31 March 2024	21,589

 

 

 

 

 

7.   Intangible assets

Intangible assets comprise exploration and evaluation costs. The movement on the exploration and evaluation assets was as follows:

		Group
Exploration & Evaluation Assets - Cost and Net Book Value		$
Cost
As at 31 March 2022		4,556,210
Additions		287,688
Exchange differences		(392,087)
As at 31 March 2023		4,451,811
Additions		436,175
Exchange differences		444,485
As at 31 March 2024		5,332,471

 

All exploration and evaluation assets relate to Group subsidiaries and the Eastern Minerals Project in Sri Lanka.

 

The Directors undertook a review of the impairment indicators, and none were identified. In performing their review, the Directors noted the following:

 

·      the Group has formally applied for the renewal of DEL licence EL430.

·      the GSMB formally reinstated the IMLs that had previously been subject to a suspension and notice of cancellation.

·      EML has been granted an extension on licence EL199 of up to two years by the GSMB which enables the extension for one year from the date of the first-year retention fee payment, being 10 July 2024, and a further year thereafter on payment of the annual extension fee.

·      the EIA process for EL199 is now underway and is expected to be concluded before the end of 2024, at which time EML will make IML applications.

·      Preparation for drilling programme and resource extension to start in 2024

·      Mineral sands prices continue to support the economics of the Project.

 

It is also noted, the total resource of the Eastern Minerals Project, comprises 47 1x1km grids in EL168 and 37 1x1km grids in EL199. There are nine outstanding IML applications in coverage of all of the 47 grids in EL168.

 

Management is of the judgement that there is a reasonable expectation, that the remaining IML applications will be approved in due course

 

Following their assessment, the Directors concluded that no impairment charge was required at 31 March 2024.

 

8.   Investments in subsidiaries

	Company
	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
At beginning of period	32,988,373	35,030,108
Additions	-	-
Impairment charge	-	-
Foreign exchange differences	670,139	(2,041,735)
Investment at end of period	33,658,512	32,988,373

 

Investments in Group undertakings are stated at cost, which is the fair value of the consideration paid, less any impairment provision.

 

Subsidiaries

Name of subsidiary	Country of incorporation and place of business	Company number	Parent company	Proportion of ordinary shares held by the Group (%)	Nature of business
Capital Metals Limited	British Virgin Islands	1890161	Capital Metals plc	100%	Holding company
Brighton Metals Limited	British Virgin Islands	1893384	Capital Metals Limited	100%	Holding company
Redgate Lanka (Pvt) Limited	Sri Lanka	119784	Brighton Metals Limited	100%	Holding/Investment
Damsila Exports (Pvt) Limited	Sri Lanka	PV8591	Keynes Investments Lanka (Pvt) Limited	60.01%	Exploration
	Sri Lanka	PV8591	Redgate Lanka (Pvt) Limited	39.99%	Exploration
Eastern Minerals (Pvt) Limited	Sri Lanka	PV81273	Redgate Lanka (Pvt) Limited	100%	Exploration
Green Tech Minerals (Pvt) Limited	Sri Lanka	00277939	Brighton Metals Limited	100%	Holding/Investment

 

All subsidiary undertakings are included in the consolidation.

 

Keynes Investments Lanka (Pvt) Limited was disposed as part of the Group restructure during the prior year. Please refer to Notes 10 and 18 for further details.

 

Green Tech Minerals (Pvt) Limited was incorporated as part of the Group in June 2023.

 

The proportion of the voting rights in the subsidiary undertakings held directly by the parent company do not differ from the proportion of ordinary shares held.

 

Following an assessment, the Directors concluded that, in the context of the current market capitalisation, with a year-end cash balance of approximately $3 million, the Company is now both well-funded and in the best position to unlock material shareholder value, therefore no impairment was required at 31 March 2024.

 

9.   Loans to subsidiaries

	Company
	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
At beginning of period	2,278,546	1,834,904
Additions	440,658	533,627
Foreign exchange differences	77,473	(89,985)
Loan at end of period	2,796,677	2,278,546

 

The fair value of all receivables is the same as their carrying values stated above and are repayable on demand. Interest on the principal of the loans is charged at a rate of 2% per annum.

 

The Directors have assessed that there are no expected credit losses to recognise in respect of the loans to subsidiaries as at the balance sheet date, based on their assessment of the recovery strategies, which indicate that the Company would fully recover the outstanding balance of the loans. As such the Directors concluded that no impairment was required at 31 March 2024. Please refer to Note 7 for further details.

 

At 31 March 2024 Management reassessed the recovery profile of the Company loans to subsidiaries and note the updated project development timetable would mean that it is unlikely that repayments from subsidiaries would commence in the next 12 months and accordingly the loans continue to be classified as non-current receivables in the current year.

 

 

10. Other loans

	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
Keynes Investment Lanka (Pvt) Limited	137,569	124,897
KPRS Resources (Pvt) Limited	4,576	467
Other loans	-	7
Loans at end of period	142,145	125,371

 

The loan to Keynes Investment Lanka (Pvt) Limited has arisen due to the restructure of the Group, which took place in the prior year (please refer to Note 18). As such Keynes have been deconsolidated from the Group. The loan balance is a loan balance held with Damsila Exports (Pvt) Limited that had previously been eliminated on consolidation.

 

11. Trade and other receivables

	Group			Company
Current	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $		For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
Trade receivables	-	-		417,070	198,339
Prepayments	20,439	10,022		19,344	9,050
VAT receivable	22,767	26,333		22,767	26,333
Other receivables	1,431	3,662		-	1,988
Total	44,637	40,017		459,181	235,710

 

The fair value of all receivables is the same as their carrying values stated above. The Directors have assessed that there are no expected credit losses to recognise in respect of the trade and other receivables.

 

 

12. Cash and cash equivalents

	Group			Company
	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $		For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
Cash at bank and in hand	3,087,329	216,213		3,045,465	174,707

 

All of the UK entities cash at bank is held with institutions with high credit ratings. The Sri Lankan entities cash at bank is held with institutions whose credit rating is unknown. $3,315 (2023: $2,588) is held as a fixed deposit by Damsila Exports Private Limited.

 

13. Trade and other payables

	Group			Company
	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $		For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
Current
Trade payables	156,747	90,191		36,346	79,832
Accrued expenses	91,650	155,738		90,077	154,494
Social security and other taxation	5,490	2,212		-	-
Deferred consideration	593,750	593,750		-	-
Total current liabilities	847,637	841,891		126,423	234,326
Non-current
Deferred consideration	600,000	600,000		-	-
Total non-current liabilities	600,000	600,000		-	-

 

Deferred consideration represents amounts payable in respect of the acquisitions of Damsila Exports (Pvt) Limited and Eastern Minerals (Pvt) Limited. The amounts fall due and payable upon completion of certain milestones within the Group, being for each of Damsila Exports (Pvt) Limited and Eastern Minerals (Pvt) Limited: $625,000 in cash (recognised at 95% of face value) upon completion of feasibility studies and all approvals on the relevant project and $750,000 in cash (recognised at 80% of face value) upon commencement of first commercial production from the relevant project.  Management anticipates the completion of these milestones to take place within 12 months of the balance date, and accordingly the deferred consideration in respect of this milestone is classified as a current liability.

At the reporting period end, the probability estimated for the likelihood of completion of Tranche 2 and 3 was considered, and management continue to estimate 95% probability for Tranche 2 and 80% probability for Tranche 3. If these estimates prove incorrect then the amounts payable in respect of the acquisition may be different to those stated within the financial statements. The total deferred consideration payable if all milestones are achieved would be $1,375,000. The value of deferred consideration recognised as at 31 March 2024 was $1,193,750 (2023: $1,193,750).

 

14.  Financial Instruments by Category

The notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents and trade and other payables) are assumed to approximate their fair value.

 

Group

 

				31 March 2024				31 March 2023
				Amortised cost		Total		Amortised cost		Total
Assets per Statement of Financial Performance				$		$		$		$
Cash and cash equivalents				3,087,329		3,087,329		216,213		216,213
				3,087,329		3,087,329		216,213		216,213
		31 March 2024							31 March 2023
	Amortised cost		Fair value through profit and loss		Total		Amortised cost	Fair value through profit and loss			Total
Liabilities per Statement of Financial Performance	$		$		$		$	$			$
Trade and other payables	248,397		-		248,397		245,930	-			245,930
Deferred consideration	-		593,750		593,750		-	593,750			593,750
	248,397		593,750		842,147		245,930	593,750			839,680

 

Company

 

	31 March 2024		31 March 2023
	Amortised cost	Total	Amortised cost	Total
Assets per Statement of Financial Performance	$	$	$	$
Trade and other receivables (excluding prepayments)	439,838	439,838	226,660	226,660
Loans to subsidiaries	2,796,677	2,796,677	2,278,546	2,278,546
Cash and cash equivalents	3,045,465	3,045,465	174,707	174,707
	6,281,980	6,281,980	2,679,913	2,679,913

 

 

 

	31 March 2024		31 March 2023
	Amortised cost	Total	Amortised cost	Total
Liabilities per Statement of Financial Performance	$	$	$	$
Trade and other payables	126,423	126,423	234,326	234,326
	126,423	126,423	234,326	234,326

 

 

15. Share capital and premium

Group and Company	Number of shares			Share capital
	No.	Nominal value	£		$
Ordinary shares	344,806,209	0.0020	689,612		903,344
Deferred shares	356,277,502	0.0099	3,527,147		5,552,000
Total	701,083,711		4,216,759		6,455,344

 

Issued at 0.02 pence per share	Number of Ordinary shares	Share capital $	Share premium $	Total $
As at 31 March 2023	189,103,432	510,403	48,946,676	49,457,079
Issue of new shares - 20 June 2023	50,000,000	126,183	504,732	630,915
Cost of capital - 20 June 2023	-	-	(31,675)	(31,675)
Issue of new shares - 17 July 2023	36,470,566	92,039	368,157	460,196
Cost of capital - 17 July 2023	-	-	(13,945)	(13,945)
Issue of new shares - 1 August 2023	2,047,600	5,168	20,670	25,838
Exercise of warrants - 23 October 2023	1,625,000	4,101	16,404	20,505
Issue of new shares - 6 December 2023	14,741,647	37,203	753,359	790,562
Issue of new shares - 11 December 2023	14,705,882	37,113	751,531	788,644
Cost of capital - 11 December 2023	-	-	(78,980)	(78,980)
Issue of shares - 11 December 2023	737,082	1,860	37,668	39,528
Expiration of warrants - 13 January 2024	-	-	2,149,690	2,149,690
Exercise of warrants - 15 January 2024	875,000	2,208	8,833	11,041
Issue of new shares - 15 March 2024	34,500,000	87,066	1,490,221	1,577,287
As at 31 March 2024	344,806,209	903,344	54,923,341	55,826,685

 

 

On 20 June 2023, the Company issued 50,000,000 new ordinary shares of 0.2 pence at a price of 1p per share for gross proceeds of £500,000.

 

On 17 July 2023, the Company issued 36,470,566 new ordinary shares of 0.2 pence at a price of 1p per share for gross proceeds of £364,705.

 

On 1 August 2023, the Company issued 2,047,600 ordinary shares of 0.2 pence each at a price of 1p per share to various service providers as consideration for services rendered.

 

On 6 December 2023, the Company issued 14,741,647 new ordinary shares of 0.2 pence at a price of 4.25p per share for gross proceeds of £626,520.

 

On 11 December 2023, the Company issued 14,705,882 new ordinary shares of 0.2 pence at a price of 4.25p per share for gross proceeds of £625,000.

 

On 11 December 2023, the Company issued 737,082 new ordinary shares of 0.2 pence at a price of 4.25p per share to satisfy commissions payable.

 

On 13 January 2024, 14,770,832 warrants expired, and the initial amount recognised was recycled through the share premium account.

 

On 15 March 2024, the Company issued 34,500,000 new ordinary shares of 0.2 pence at a price of 3.623p per share for gross proceeds of £1,250,000.

 

Deferred Shares (nominal value of 0.0099 pence per share)	Number of Deferred shares	Share capital $
As at 31 March 2023	356,227,502	5,552,000
As at 31 March 2024	356,227,502	5,552,000

 

 

16. Share based payments

Options

 

The Company has established a share option scheme for Directors, employees and consultants to the Group. Share options outstanding and exercisable at the end of the period have the following expiry dates and exercise prices:

					Options
Grant Date	Vesting Date	Exercise price	Exercise price hurdle	Expiry Date	31 March 2024	31 March 2023
13/01/2021	13/01/2021	12.0p	18.0p	13/01/2026	666,667	3,916,667
13/01/2021	13/07/2021	12.0p	18.0p	13/01/2026	666,667	3,916,667
13/01/2021	13/01/2022	12.0p	24.0p	13/01/2026	666,667	3,916,666
15/09/2021	15/09/2025	12.0p	-	15/09/2025	1,000,000	500,000
01/08/2023	01/08/2023	3.0p	-	01/08/2028	3,683,333	-
01/08/2023	01/08/2024	3.0p	-	01/08/2028	3,683,333	-
01/08/2023	01/08/2025	3.0p	-	01/08/2028	3,683,333	-
25/03/2024	25/03/2024	5.0p	-	25/03/2029	250,000	-
25/03/2024	25/03/2025	5.0p	-	25/03/2029	250,000	-
25/03/2024	25/03/2026	5.0p	-	25/03/2029	250,000	-
					14,800,000	12,250,000

 

The Company and Group have no legal or constructive obligation to settle or repurchase the options or warrants in cash.

 

The fair value of the share options was determined using the Black Scholes valuation model. The parameters used are detailed below:

               

	2021 Options	2022 Options
Granted on:	13 January 2021	15 September 2021
Estimated Life (years)	5 years	4 years
Share price (pence per share)	19.05p*	9.75p
Risk free rate	1.05%	1.71%
Expected volatility	120%	7.94%
Total fair value ($)	1,459,455	694

 

	2023 Options	2024 Options
Granted on:	01 August 2023	25 March 2024
Estimated Life (years)	5 years	5 years
Share price (pence per share)	1.15p	4.75p
Risk free rate	4.02%	4.02%
Expected volatility	37.24%	45.54%
Total fair value (£)	11,564	12,408

 

* This is the volume weighted average share price. In determining the expected volatility, consideration is usually given to the historical company volatility. However, given prior to 13 January 2021 the Company was operating as an investment vehicle, as opposed to a mineral sands company, as such the future share price volatility pattern of the Company, will be materially different from the historic volatility. It has been deemed appropriate to use the median 5-year monthly volatility of a basket of listed comparable companies with exposure to mineral sands.

 

The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life.

 

 A reconciliation of options granted over the year to 31 March 2024 is shown below:

 

	31 March 2024			31 March 2023
	Number	Weighted average exercise price (£)		Number	Weighted average exercise price (£)
Outstanding at beginning of period	12,250,000	12.0p		12,250,000	12.0p
Expired	-	-		-	-
Cancelled	(9,250,000)	-		-	-
Exercised	-	-		-	-
Granted	11,800,000	3.0p		-	-
Outstanding as at period end	14,800,000			12,250,000
Exercisable at period end	3,933,333			8,333,333

 

The options outstanding at 31 March 2024 have a weighted average contractual life of 3.8 years (2023: 2.8 years).

 

The options granted on 13 January 2021 vest in three tranches of one-third on 13 January 2021 ("Tranche 1"), one-third on 13 July 2021 ("Tranche 2") and one-third on 13 January 2022 ("Tranche 3").  Tranche 1 and Tranche 2 have a market based vesting condition (i.e. the Company's shares having traded any time following Admission at a 50% premium to the exercise price). Tranche 3 has a market based vesting condition (i.e., the Company's shares having traded any time following Admission at a 100% premium to the exercise price).

 

Of the options granted on 1 August 2023, 6,000,000 vest in 3 tranches of 2,000,000 each with tranche 1 and 2 vesting upon the fulfilment of certain performance conditions and tranche 3 vesting with market based vesting conditions (i.e., when the 30-day volume weighted average share price of the Company exceeds 5 pence).

 

During the period there was a charge of $30,122 (2023: $Nil) in respect of share options. The full charge has been recognised.

 

Warrants

 

As at 31 March 2024, there were 2,568,627 warrants outstanding by the Company (2023: 18,275,904).

 

			Warrants
Grant Date	Exercise price	Expiry Date	31 March 2024	31 March 2023
08/09/2020	£0.080	08/09/2023	-	250,000
13/01/2021	£0.080	13/01/2024	-	5,000,000
13/01/2021	£0.120	13/01/2024	-	833,333
13/01/2021	£0.156	13/01/2024	-	8,687,499
13/01/2021	£0.156	13/01/2024	-	2,423,848
13/01/2021	£0.156	13/01/2024	-	247,891
15/02/2022*	£0.075	15/02/2025	833,333	833,333
01/08/2023***	£0.030	01/08/2028	1,000,000	-
10/12/2023****	£0.042	10/12/2026	735,294	-
			2,568,627	18,275,904

 

The fair value of the warrants was determined using the Black Scholes model. The parameters used are detailed below:

 

	2022 Warrants	2023 Warrants
Granted on:	15 February 2022	1 August 2023
Life (years)	3 years	5 years
Price at grant	7.75p	1.15p
Risk free rate	1.71%	4.02%
Volatility	88.90%	37.24%

 

 

*The estimated fair value of the warrants granted on 15 February 2022 was assessed as $13,000 and charged to the share premium to recognise the cost of issuing the warrants. The expected volatility was determined by reference to the historical volatility of the Company's share price.

 

**On 20 June 2023 warrants to subscribe for 2,500,000 shares were issued to the Company Broker. The Warrants were exercisable at the Placing Price for a period of 3 years from the date of Admission. 1,625,000 warrants were subsequently exercised on 23 October 2023 and 875,000 on 15 January 2024. Please refer to Note 15 for further details.

 

***The estimated fair value of the warrants granted on 1 August 2023 was assessed as $1,320 and charged to the share premium to recognise the cost of issuing the warrants. The expected volatility was determined by reference to the historical volatility of the Company's share price.

 

****735,294 warrants were issued to the Company Broker as part of the placing which took place on 11 December 2023. The Warrants are exercisable at the placing price of 4.25p for a period of 3 years from the date of Admission. 

 

A reconciliation of the movement of warrants over the year to 31 March 2024 is shown below:

 

	31 March 2024			31 March 2023
	Number	Weighted average exercise price (£)		Number	Weighted average exercise price (£)
Outstanding at beginning of period	18,275,904	11.0p		18,275,904	11.0p
Expired	(17,442,571)	-		-	-
Cancelled	-	-		-	-
Exercised	(2,500,000)	-		-	-
Granted	4,235,294	3.0p		-	-
Outstanding as at period end	2,568,627			18,275,904
Exercisable at period end	2,568,627			18,275,904

 

17. Other reserves

 

Group
	Capital contribution  reserve $	Deferred share reserve $	Merger reserve $	Reverse acquisition reserve $	Share warrants and options reserve $		Foreign currency translation reserve $	Total $
At 31 March 2022	1,250,000	1,968,750	35,633,822	(75,441,159)	4,170,967	(3,089,427)			(35,507,047)
Currency translation differences	-	-	-	-	-	(513,992)			(513,992)
Transfer to NCI	-	-	-	-	-	103,430			103,430
At 31 March 2023	1,250,000	1,968,750	35,633,822	(75,441,159)	4,170,967	(3,499,989)			(35,917,609)
At 1 April 2023	1,250,000	1,968,750	35,633,822	(75,441,159)	4,170,967	(3,499,989)			(35,917,609)
Currency translation differences	-	-	-	-	-	443,897			443,897
Issue of options/warrants	-	-	-	-	31,442	-			31,442
Foreign exchange on options/warrants	-	-	-	-	126	-			126
Cancelled options	-	-	-	-	(1,103,946)	-			(1,103,946)
Expired warrants	-	-	-	-	(2,495,891)	-			(2,495,891)
Transfer to NCI	-	-	-	-	-	(29,538)			(29,538)
At 31 March 2024	1,250,000	1,968,750	35,633,822	(75,441,159)	602,698	(3,085,630)			39,071,519

 

 

Company
	Merger reserve $	Share warrants and options reserve $	Foreign currency translation reserve $	Total $
At 1 April 2022	35,633,822	4,195,967	(2,415,405)	37,414,384
Currency translation differences	-	-	(2,258,901)	(2,258,901)
At 31 March 2023	35,633,822	4,195,967	(4,674,306)	35,155,483
At 1 April 2023	35,633,822	4,195,967	(4,674,306)	35,155,483
Currency translation differences	-	-	733,084	733,084
Issue of options/warrants	-	31,442	-	31,442
Foreign exchange on options/warrants	-	126	-	126
Cancelled options	-	(1,103,946)	-	(1,103,946)
Expired options	-	(2,495,891)	-	(2,495,891)
At 31 March 2024	35,633,822	627,698	(3,941,222)	32,320,298

 

 

 

18. Group Restructure

On 10 February 2023, following receipt of the notice from Sri Lanka's GSMB to the Company's Sri Lankan IML-holding subsidiary Damsila Exports (Pvt) Limited ("Damsila"), the Company had been in frequent and productive dialogue with senior GSMB and other officials in Colombo seeking to resolve concerns around the ownership structure of Damsila. While the Company's legal position remained that the ownership structure conformed with the relevant requirements, the Board's objective had been to derive a pragmatic solution to satisfy the GSMB that the spirit of the law requiring local ownership of mining and primary processing activities was reflected. This resulted in a restructuring of the Group.

 

Under the Restructuring, an effective 60 percent of the ownership of Damsila has been issued to a Sri Lankan national who is known to, and who has worked with, the Company since 2015.  As the Company will continue to fund the capital and operations of the Project, the Restructuring has been completed without materially impacting the Company's economic value in the Project.

 

Prior to the restructure, Damsila had 26,354,812 shares in issue. The Restructuring involved Damsila issuing 39,548,694 new shares to Keynes Investment Lanka (Pvt) Limited ("Keynes"), which is 99.98% owned by a Sri Lankan national, Mr Dinal Peiris, who is well known to the Company, with the remaining 0.02% owned by an existing Capital Metals shareholder, giving Keynes a 60.01 percent interest in Damsila and the Sri Lankan national an effective 60.0 percent of Damsila. The consideration for the above issue of ordinary shares in Damsila to Keynes is 1 Sri Lankan rupee per share (equivalent to US$108,353 at 365 SLR: 1 USD).

If an entity with a 40% shareholding has a contractual arrangement that gives it the power to direct the relevant activities of the other entity, it can maintain control and is required to consolidate the financial statements of the other entity in accordance with IFRS 10. After the restructure of the Group, the contractual arrangements in place to determine whether they have the power to direct the relevant activities of another entity and, as a result, maintain control were carefully assessed. It was concluded that as Directors have the majority of the voting rights, the Company will benefit from all future production of any offtake agreements and that Redgate Lanka maintains control of Damsila. As such Damsila shall remain consolidated within the Group accounts. Damsila is now accounted for as a non-controlling interest. No NCI has been recognised on the net assets of Damsila as the Group has full rights to returns from the subsidiary. An equity transfer has been made only in relation to historic OCI movements through the foreign exchange reserve.

As a result of the restructure, Keynes Investment Lanka (Pvt) Limited was deconsolidated and is no longer part of the Group. There was no material impact on the financial statements. A loan to Keynes Investment Lanka (Pvt) Limited has arisen due to the restructure of the Group (please refer to Note 10). The loan balance is a loan balance held with Damsila that had previously been eliminated on consolidation.

 

19. Employee benefit expense

	Group			Company
Staff costs (excluding Directors)	Year ended 31 March 2024 $	Year ended 31 March 2023 $		Year ended 31 March 2024 $	Year ended 31 March 2023 $
Salaries and wages	94,426	201,043		-	-
Social security costs	-	-		-	-
Other employment costs	-	-		-	-
	94,426	201,043		-	-

 

The average monthly number of employees for the Group during the year was 14 (year ended 31 March 2023: 18).

 

 

20. Directors' and Key Management remuneration

	Salaries & fees	Share based payments	Year ended 31 March 2024	Year ended 31 March 2023
	$	$	$	$
Executive Directors
Michael Frayne*	4,500	-	4,500	158,224
Gregory Martyr	207,066	7,892	207,066	72,941
Non-executive Directors
James Leahy	38,731	2,630	38,731	31,543
Teh Kwan Wey	21,365	15,594	21,365	18,083
Key Management
Iranga Dunuwille	78,000	-	78,000	96,000
	349,662	26,116	349,662	376,791

 

*Michael Frayne resigned on 30 June 2023.

 

As at 31 March 2024, there were no directors receiving defined contribution pension schemes benefits (2023: Nil).

 

Of the above costs, $138,266 (year ended 31 March 2023: $61,318) has been capitalised in accordance with IFRS 6 as exploratory related costs and are shown as an intangible addition in the year.

 

Details of fees paid to companies of which the Directors detailed above are Directors have been disclosed in Note 25.

 

The remuneration of Directors and key management is determined by the remuneration committee having regard to the performance of individuals and market trends.

 

There are no current year director's fees/remuneration paid through the issuance of shares.

 

 

21. Income tax expense

No charge to taxation arises due to the losses incurred.

 

The tax on the Group's loss before tax, applicable to the losses of the consolidated entities, is as follows:

	Group
	For the year ended 31 March 2024 $	For the year ended 31 March 2023 $
Loss before tax	(931,577)	(1,138,538)
Tax at the applicable rate of 25% (2023: 19%)	(232,894)	(216,322)
Effects of:
Expenditure not deductible for tax purposes	13,579	7,821
Deferred tax asset not recognised	219,315	208,501
Tax charge	-	-

 

No deferred tax assets have been recognised in relation to the historic losses in the year (2023: nil), this is as a result of the uncertainty of future profits within the Group.

 

On 1 April 2023, the UK corporation tax rate increased to 25%.

 

The Company has tax losses of approximately $12,467,638 (31 March 2023: $11,590,377) available to carry forward against future taxable profits.

                                                                                  

22. Loss per share

Group

The calculation of the total basic loss per share of 0.15 cents (2023: 0.21 cents) is based on the total comprehensive loss attributable to equity holders of the parent company of $931,577 (2023: $1,138,538) and on the weighted average number of ordinary shares of 622,139,698 (2023: 545,380,934) in issue during the year.

 

In accordance with IAS 33, basic and diluted earnings per share are identical for the Group as the effect of the exercise of share options would be to decrease the earnings per share. Details of share options that could potentially dilute earnings per share in future periods are set out in Note 16.

 

23. Expenses by nature

	Group
	Year ended 31 March 2024 $	Year ended 31 March 2023 $
Operations	130,071	188,665
Director fees & employment tax contributions	211,396	315,473
Audit	110,598	95,947
Accountancy	79,329	109,952
Exchange related costs	130,159	188,897
Professional & consultancy fees	132,621	115,503
Office expenses	14,196	31,016
Insurance	2,189	8,298
Depreciation	4,021	3,208
Travel & entertainment	34,005	31,595
Acquisition related costs	18,852	37,953
Other expenses	32,036	5,991
Total administrative expenses	899,473	1,132,498

 

 

Services provided by the Company's auditor and its associates

During the year, the Group (including overseas subsidiaries) obtained the following services from the Company's auditors and its associates:

	Group
	Year ended 31 March 2024 $	Year ended 31 March 2023 $
Fees payable to the Company's auditor and its associates for the audit of the Parent Company and Consolidated Financial Statements	81,692	74,202

 

24. Commitments

License commitments

Capital Metals plc through its subsidiaries owns two mineral exploration licenses and two IMLs in Sri Lanka. These licences include commitments to pay annual licence fees and minimum spend requirements.

 

As at 31 March 2024 these are as follows:

 

		2024					2023
Group	Licence fees $		Minimum spend requirement $		Total $	Licence fees $	Minimum spend requirement $	Total $
Not later than one year		-		-	-	-	-	-
Later than one year and no later than five years		-		602,406	602,406	-	548,450	548,450
Total		-		602,406	602,406	-	548,450	548,450

 

New regulations regarding minimum spend requirements were implemented in January 2023.

 

The minimum spend requirement is for the 24 grids previously covered by EL430. The renewal application is for six grids only.

 

25. Related party transactions

Loans to Group undertakings

Amounts receivable as a result of loans granted to subsidiary undertakings are as follows:

 

	Company
	31 March 2024 $	31 March 2023 $
Brighton Metals Limited	1,461,044	1,130,448
Capital Metals Limited	915,837	875,672
Damsila Exports Private Ltd	419,796	272,426
At 31 March 2024	2,796,677	2,278,546

 

These amounts are unsecured and repayable in US Dollars on demand from the Company. Interest on the principal of the loan is charged at a rate of 2% per annum.

 

All intra Group transactions are eliminated on consolidation.

 

Other transactions

The Group defines its key management personnel as the Directors of the Company as disclosed in the Directors' Report.

 

Limerston Pty Limited, a limited company of which Michael Frayne is a director, was paid a fee of $15,773 for the year ended 31 March 2024 (31 March 2023: $158,224) for the provision of corporate management and consulting services to the Company. There was a balance of $Nil owing at year end (31 March 2023: $15,069).

 

Hogan's Bluff Capital Pty Ltd, a limited company of which Greg Martyr is a director, was paid a fee of $236,468 for the year ended 31 March 2024 (31 March 2023: $72,941) for consulting services to the Company and expenses. There was a balance of $Nil owing at year end (31 March 2023: $34,365).

 

KL-Kepong International Ltd, a limited company of which is fully owned by Kuala Lumpur Kepong Berhad Ltd of which Teh Kwan Wey is an employee of, was paid a fee of $16,652 for the year ended 31 March 2024 (31 March 2023: $18,083) for consulting services to the Company. There was a balance of $Nil owing at year end (31 March 2023: $3,014).

 

 

 

Ventureflex (Pvt) Ltd, a limited company of which Iranga Dunuwille is a director, was paid a fee of $43,000 for the year ended 31 March 2024 (31 March 2023: $36,000) for consulting services to the Company. There was a balance of $Nil owing at year end (31 March 2023: $Nil).

 

Related party transactions were made on terms equivalent to those that prevail in arm's length transactions only when such terms can be substantiated.

 

26. Ultimate controlling party

The Directors believe there is no ultimate controlling party.

 

27. Events after the reporting date

On 2 April 2024, Bruce Griffin was appointed as a Non-Executive Director of the Company.

 

On 26 June 2024, the Company announced it had been informed by Sheffield Resources Limited that it had placed on hold its transaction with Capital Metals to acquire a 50% interest in the Project.

 

On 15 July 2024, Stuart Forrester was appointed as Chief Operating Officer of the Company (non-Board) and was granted 6,000,000 options in the Company with a strike price of 3.22p.