TIDMKP2
RNS Number : 4745U
Kore Potash PLC
29 March 2019
29 March 2019
Kore Potash Plc
("Kore Potash" or the "Company")
AUDITED FINANCIAL REPORT FOR THE FINANCIAL YEARED 31 DECEMBER
2018
The Board of Kore Potash plc is pleased to announce the
publication of the annual financial report of the Company, the
potash exploration and development Group, whose flagship asset is
the Sintoukola Potash Project, located within the RoC, for the year
ended 31 December 2018.
The full financial report is available online at the Company's
website www.korepotash.com
A Glossary of Terms is available at the bottom of this
announcement.
Summary of key developments
-- On 9 February 2018, the Company through its subsidiary, SPSA,
was awarded the Sintoukola 2 Exploration Permit by the government
of the RoC. This permit covers areas the Company believes are
prospective for sylvinite mineralisation, and is valid for three
years, following which it may be renewed twice, each time for a
further period of two years.
-- On 29 March 2018, Kore Potash completed its listing on AIM as
well as the main board of the JSE, in addition to retaining its ASX
listing.
-- USD 13.14 million was raised through the placing and direct
subscription of new ordinary shares in the Company and through a
convertible loan note which was subsequently converted into
ordinary shares in the Company on 27 July 2018.
-- Appointment of Mr José Antonio Merino as a Non-Executive
Director on 23 May 2018. José Antonio was nominated by SQM and
replaced Pablo Altimiras, whose resignation was announced on 26
April 2018.
-- Appointment of Mr Brad Sampson as CEO and Executive Director,
effective from 4 June 2018, replacing Mr Sean Bennett, who resigned
with effect from the same date.
-- On 20 August 2018, a maiden Mineral Resource Estimate for the
Dougou Extension Deposit was announced, totalling 232 Mt with an
average grade of 38.1% KCl. The Dougou Extension Deposit is located
approximately 15 km southwest of the Company's Kola sylvinite
Deposit. The Mineral Resource Estimate was reported in accordance
with the JORC Code.
-- On 30 August 2018, a new DUP, which was previously signed by
the Ministry of Land Affairs and Public Domain, was gazetted. The
DUP covers the entire Project land area and provides the framework
of compensation arrangements required under RoC laws due to the
Group's intended activity on the land area.
-- A licence to use an offshore area for the transhipment of
potash and the discharge of waste brine was authorised by the
Minister of Transport, Civil Aviation and Merchant Marine of the
RoC and issued on 6 September 2018.
-- On 21 November 2018 Kore Potash announced two Exploration
Targets for sylvinite. The Exploration Targets were reported in
accordance with the JORC Code and are as follows:
o Kola South; the potential southward extension of the Kola
deposit has an Exploration Target of 95 to 175 Mt with an average
grade of between 34 and 42% KCl.
o Dougou Extension North; the potential northward extension of
the Dougou Extension Deposit has an Exploration Target of 320 to
600 Mt with an average grade of between 30 and 38% KCl.
The potential quantity and grade of an Exploration Target is
conceptual in nature and is an approximation. There has been
insufficient exploration at Kola South and Dougou Extension North
to estimate Mineral Resources and it is uncertain if further
exploration will result in the estimation of Mineral Resources.
-- The Mining Convention covering the proposed staged
development of the Kola and Dougou Mining Licenses was gazetted
into law on 29 November 2018 following ratification by the
Parliament of the RoC.
-- The Company completed its review of the Kola DFS and released
a summary of results to Shareholders on 29 January 2019. This
included the reporting of:
o Proved and Probable Ore Reserves for the Kola Deposit
totalling 152.4Mt with an average grade of 32.5% KCl.
o Post-tax, NPV(10) (real) of USD 1,452 million and a real
ungeared Internal Rate of Return of 17% on an attributable basis at
life-of-mine average MoP prices for granular of USD 360 per tonne
CFR Brazil and standard of USD 350 per tonne CFR Brazil.
Further details of the summary of the Kola DFS is available on
the Company's website.
-- The FC who undertook the DFS was contracted to provide the
Company with an EPC proposal, for the construction of Kola, within
3 months of the completion of the DFS. The FC submitted the EPC
proposal to the Company on 23 March 2019, which was past the due
date of 28 February 2019. The Company will now review the options
available to it for the way forward with the Kola Project.
-- The amended Kola ESIA was completed and submitted to the
regulator for review prior to submission to the Minister of
Environment for approval.
Summary of financials
-- During the year ended 31 December 2018, the Group incurred a
loss of USD 6.3 million and experienced net cash outflows from
operating and investing activities of USD 23.1 million. Cash and
cash equivalents totalled USD 6.2 million as at 31 December
2018.
-- The Directors have prepared a cash flow forecast for the
period ending 31 December 2020, which indicates that the Group will
not have sufficient liquidity to meet its working capital
requirements to the end of the going concern period, primarily
being corporate costs, exploration expenditure, and DFS costs
related to the Kola Project. Please refer to the Note 1 to the
financial statements for more detail on the going concern
statement.
-- Accordingly the Directors have resolved to undertake certain
mitigating actions including a capital raise in the second quarter
of 2019. The Company has begun discussions with its major
shareholders with regards to its near and mid-term funding
requirements.
Brad Sampson, Chief Executive Officer of Kore Potash
commented:
"I joined as Chief Executive of Kore Potash for one fundamental
reason - the extremely high quality of the assets in the Sintoukola
basin and the potential to bring an entirely new, globally
significant potash district into production.
I firmly believe that this a project that needs to be built, a
combination of our high grade, shallow depth, and proximity to the
coast means that we can produce MOP at, or amongst, the lowest
operating costs anywhere in the world. Combined with the huge size
of the resource this means that the basin can supply an increasing
global demand for fertiliser for decades, and longer, to come.
I know that our shareholders, the government of the Republic of
Congo, and our local communities wholeheartedly share the Company's
ambition to see Sintoukola in production as soon as it is possible
and I look forward to updating all stakeholders on our progress.
While there is still a significant amount of work ahead I am
confident that we will achieve our goals."
For further information, please visit www.korepotash.com or
contact:
Kore Potash Tel: +27 11 469 9140
Brad Sampson - CEO info@korepotash.com
Tavistock Communications Tel: +44 (0) 20 7920 3150
Jos Simson kore@tavistock.co.uk
Edward Lee
Canaccord Genuity - Nomad and Tel: +44 (0) 20 7523 4600
Broker korepotash@canaccordgenuity.com
Martin Davison
James Asensio
Corporate activities
-- On 29 March 2018 the Company successfully completed its
admission to AIM and a concurrent secondary listing of its ordinary
shares on the main board of the JSE as part of its strategy to
better access capital markets where there is a strong understanding
of large scale African mining projects and therefore attract a
broader investor base.
-- The Company also raised gross aggregate proceeds of USD 12.89
million, comprising a total of USD 12.89 million from the Placees
through the placing and direct subscription of 83,523,344 ordinary
shares in the Company at a placing price of AUD 0.20 per new
Ordinary Share. In addition, the Company raised USD 250,000 from
the Chairman, Mr David Hathorn, through a convertible loan note
that subsequently converted into ordinary shares upon shareholder
approval at the AGM of the Company held on 27 June 2018. The
Placees and the Chairman were granted 13,144,659 equity warrants on
the basis of one equity warrant for every USD 1.00 invested
exercisable at AUD 0.30 for one ordinary share with a 3 year
subscription period.
-- Brad Sampson was appointed as CEO and Executive Director on 4
June 2018. Brad, a mining engineer, has more than 25 years'
resources industry experience across numerous locations including
West and Southern Africa. In addition to significant mine
development and operating experience, Brad has held leadership
positions at several publicly listed companies. Brad was most
recently CEO of Australian Securities Exchange listed Tiger
Resources. Prior to this Brad held senior positions at Newcrest
Mining Ltd and was CEO at AIM/ASX listed Discovery Metals Ltd.
Other notable positions include General Manager at Goldfields
operations in South Africa and Australia.
-- Appointment of José Antonio Merino as a Non-Executive
Director nominated by SQM. José Antonio joined SQM in 2016 and is
currently Mergers and Acquisitions Director, prior to which he
worked at EPG partners as head of a mining private equity fund, at
Asset Chile, a Chilean boutique investment bank and at Santander
Investment. He is a qualified civil engineer having graduated from
Pontificia Universidad Catolica de Chile.
-- Appointment of SJCS, a London based specialist company
secretarial and corporate administration services provider, as
interim joint company secretary with effect from 1 October 2018.
SJCS joins current Joint Company Secretary, Henko Vos (based in
Perth, Western Australia). The Board received and accepted the
resignation of Francesca Wilson as Joint Company Secretary of the
Company with effect from 30 September 2018.
Operational and exploration activity
Kola Sylvinite Project
Mining Convention
-- The Mining Convention covering the proposed staged
development of the Kola and Dougou Mining Licenses was gazetted
into law on 29 November 2018 following ratification by the
Parliament of the RoC. The gazetting of the Mining Convention
provides security of title and the right to develop and operate the
Kola Project as well as the adjacent Dougou and Dougou Extension
deposits. Under the Mining Convention the RoC government will be
granted a 10% carried equity interest in the project companies (DPM
and KPM, which are wholly owned by SPSA).
-- The Mining Convention concludes the framework envisaged in
the 25-year renewable Kola and Dougou Mining Licences granted in
August 2013 and May 2017, respectively. The Mining Convention
provides certainty and enforceability of the key fiscal
arrangements for the development and operation of Kola and Dougou
Mining Licenses, which amongst other items include import duty and
VAT exemptions and agreed tax rates during mine operations. See
Note 7 to the financial statements for further details on the terms
and conditions of the Mining Convention.
-- The Mining Convention provides strengthened legal protection
of the Company's investments in the RoC through the settlement of
disputes by international arbitration.
ESIA
-- The Kola ESIA was performed during 2012 and approved on 10
October 2013 following the issuance of the certificate of
environmental compliance by the Minister of Environment of the RoC.
This constituted a key regulatory requirement to be granted the
Kola Mining License.
-- The Kola DFS design has incorporated a number of value-adding
design changes since the approval of the ESIA and the Company has
undertaken to amend the ESIA accordingly.
-- In December 2018, the amended ESIA was submitted to the
regulator for review, prior to the Minister of Environment's final
approval. The Company anticipates receipt of the approved amended
ESIA in H1 2019.
DFS Update
-- The Company completed its review of the Kola DFS and released
a summary of results to Shareholders on 29 January 2019. As part of
the DFS, Met-Chem, a division of DRA Americas Inc., (a subsidiary
of the DRA Group) completed an Ore Reserve Estimate for the Kola
Sylvinite Deposit. The Ore Reserves total 152.4 Mt with average
grade of 32.5% KCl. The estimate of Ore Reserves was completed by
Met-Chem DRA Global and was prepared in accordance with the JORC
Code. Table 1 on page 13 provides the Proved and Probable Kola
Sylvinite Ore Reserves. Further details of the summary of the Kola
DFS is available on the Company's website.
-- The announcement made on 29 January 2019, which is available
on the Company's website, included the following highlights from
the Kola DFS:
Business case highlights potential of the Kola asset
o Post-tax, NPV(10) (real) of USD 1,452 million and a real
ungeared Internal Rate of Return of 17% on an attributable basis at
life-of-mine average MoP prices for granular of USD 360 per tonne
CFR Brazil and standard of USD 350 per tonne CFR Brazil.
o Operating cash margin averaging 75%.
o Average annual EBITDA of approximately USD 585 million.
o 24% annual free cash return on invested capital.
o Average annual free cash flow, post-tax, post commissioning of
approximately USD 500 million.
o 4.3-year post-tax payback period from first production.
Industry leading operating costs and cost of sales
o Mine gate operating cost (pre-transshipment) averaging USD
61.71 per tonne, which is in the lowest cost quartile globally
based on equivalent CRU market data.
o Kola forecast to be the lowest cost potash supplier CFR Brazil
based on CRU market data.
o Average cost of MoP delivered to Brazil of USD 102.47 per
tonne.
Long life and high quality asset
o Nameplate production target of 2.2 Mtpa MoP over a 33 year
life, with a scheduled life of 23 years based primarily on Ore
Reserves and including 6% Inferred Mineral Resource and a further
10 years based entirely on Inferred Mineral Resources (in each
case, reported in accordance with the JORC Code).
o There is a low level of geological confidence associated with
inferred mineral resources and there is no certainty that further
exploration work will result in the determination of indicated
mineral resource or that the production target itself will be
realised.
o Kola Project Ore Reserves of 152.4 Mt with average KCl grade
of 32.5%, reported in accordance with the JORC Code.
Capital program aligned with industry averages
o Pre-production capital cost of USD 2.1 billion (on EPCM basis)
which includes USD 110 million contingency, USD 106 million of
escalation and USD 89 million EPCM margin.
o Pre-production capital intensity of USD 956 per tonne MoP
annual capacity is in second quartile relative to MoP industry
peers and suggests that further capital optimisation is
possible.
o 46-month construction period, with a commencement date to be
determined following advancement of construction contract
negotiations and project financing.
Upside potential
o Review of the DFS by Kore and its third party independent
consultants have identified opportunities to further improve and
optimise the project indicating that the work completed to date by
the FC has not fully optimised the Kola Project.
o Due to high operating margin and high free cash return on
invested capital the Company's financial advisors (Rothschild &
Co) has indicated that the project has a debt carrying potential of
up to USD 1.4 billion.
-- The FC was contracted to provide the Company with an EPC
proposal, for the construction of Kola, within 3 months of the
completion of the DFS. The FC submitted the EPC proposal to the
Company on 23 March 2019, which was past the due date of 28
February 2019. The Company will now review the options available to
it for the way forward with the Kola Project.
Workstreams initiated with RoC stakeholders and authorities
-- On 30 August 2018, a new DUP, which was previously signed by
the Ministry of Land Affairs and Public Domain, was gazetted. The
DUP covers the entire Project land area (mine, over land conveyor,
process plant and services corridors) provides the framework of
compensation arrangements required under RoC laws due to the
Group's activity on the land area.
-- On 12 September 2018, the Company announced final approval
from the Minister of Transport, Civil Aviation and Merchant Marine
for the use of the preferred transhipment zone. This confirms the
design assumption on the transhipment arrangement in accordance
with the Kola DFS design and costing.
-- On 16 October 2018, the Company received a letter of comfort
from the Ministry of Energy and Hydraulic of the RoC confirming the
Company's exclusive rights to operating the power transmission line
when financed and built by the Company for the mining project.
Exploration
Dougou Extension maiden Mineral Resource
Based on the drilling completed in 2017 and interpretation of
earlier drilling and seismic survey data the Company declared a
maiden Mineral Resource Estimate for the Dougou Extension Deposit,
first reported on 20 August 2018 and reported in accordance with
the JORC Code.
Total sylvinite Mineral Resources at Dougou Extension are 232 Mt
of sylvinite grading 38.1% KCl, comprised of:
-- Indicated Mineral Resource of 111 Mt sylvinite grading 37.2% KCl, and
-- Inferred Mineral Resource of 121 Mt sylvinite grading 38.9 %KCl.
The sylvinite at Dougou Extension is contained within two seams,
the Top Seam (TS) and the Hangingwall Seam (HWS), separated by
between 10 and 15 m of rock-salt. The seams are at a depth of
between 310 metres and 490 metres below surface. The Mineral
Resource Estimate was based upon data for 13 holes within or around
the deposit area, drilled by Kore or previous explorers. The
interpretation of approximately 160 line km of oil-industry 2D
seismic survey data aided modelling of surfaces between the
drill-holes. Table 1 includes the Mineral Resource Estimate for
Dougou Extension.
Exploration Targets at Dougou Extension North and Kola South
On 20 November 2018, the Company announced Exploration Targets
for sylvinite, as follows:
o 'Kola South', the potential southward extension to the Kola
Deposit; 95 to 175 Mt with average grade of between 34 and 42%
KCl,
o 'Dougou Extension North', the potential northward extension to
the Dougou Extension Deposit; 320 to 600 Mt with an average grade
of between 30 and 38% KCl,
An Exploration Target is not a Mineral Resource but a statement
of exploration potential. The Exploration Targets were based on an
interpretation of all available Company and historical drilling and
2D seismic survey data and the Company's understanding of the
controls on sylvinite mineralisation.
Changes to Potash Mineral Resources and Ore Reserves between
2017 and 2018
Table 1 provides a comparison of the Company's Mineral Resources
and Ore Reserves, year-on-year between 2017 and 2018, as per ASX
Listing rule 5.21.4. Since 2017 the Company has added the Dougou
Extension sylvinite Mineral Resource and the Kola deposit sylvinite
Ore Reserves.
Table 1. Comparison of Potash Mineral Resources and Ore Reserves
year-on-year between 2017 and 2018 (including Ore Reserves as
announced on 29 January 2019)
MINERAL RESOURCES 2017 2018
Category Million Grade Contained Million Grade Contained
Tonnes KCl KCl (Mt) Tonnes KCl KCl (Mt)
% %
Kola Sylvinite
Deposit Measured 216 34.9 75 216 34.9 75
-------------------- -------- ------ ---------- ------ ----------
Indicated 292 35.7 104 292 35.7 104
------------------------------------------- -------- ------ ---------- ------ ----------
Measured + Indicated 508 35.4 180 508 35.4 180
------------------------------------------- -------- ------ ---------- ------ ----------
Inferred 340 34.0 116 340 34.0 116
------------------------------------------- -------- ------ ---------- ------ ----------
TOTAL 848 34.8 295 848 34.8 295
------------------------------------------- -------- ------ ---------- ------ ----------
Dougou Extension
Sylvinite Deposit Measured - - - 0 0.0 0
--------------------
Indicated - - - 111 37.2 41
------------------------------------------- -------- ------ ---------- ------ ----------
Measured + Indicated - - - 111 37.2 41
------------------------------------------- -------- ------ ---------- ------ ----------
Inferred - - - 121 38.9 47
------------------------------------------- -------- ------ ---------- ------ ----------
TOTAL - - - 232 38.1 88
------------------------------------------- -------- ------ ---------- ------ ----------
Kola Carnallite
Deposit Measured 341 17.4 59 341 17.4 59
--------------------
Indicated 441 18.7 83 441 18.7 83
------------------------------------------- -------- ------ ---------- ------ ----------
Measured + Indicated 783 18.1 142 783 18.1 142
------------------------------------------- -------- ------ ---------- ------ ----------
Inferred 1,266 18.7 236 1,266 18.7 236
------------------------------------------- -------- ------ ---------- ------ ----------
TOTAL 2,049 18.5 378 2,049 18.5 378
------------------------------------------- -------- ------ ---------- ------ ----------
Dougou Carnallite
Deposit Measured 148 20.1 30 148 20.1 30
--------------------
Indicated 920 20.7 190 920 20.7 190
------------------------------------------- -------- ------ ---------- ------ ----------
Measured + Indicated 1,068 20.6 220 1,068 20.6 220
------------------------------------------- -------- ------ ---------- ------ ----------
Inferred 1,988 20.8 414 1,988 20.8 414
------------------------------------------- -------- ------ ---------- ------ ----------
TOTAL 3,056 20.7 634 3,056 20.7 634
------------------------------------------- -------- ------ ---------- ------ ----------
TOTAL MINERAL
RESOURCES Measured 705 23.3 165 705 23.3 165
--------------------
Indicated 1,653 22.8 377 1,764 23.7 419
------------------------------------------- -------- ------ ---------- ------ ----------
Measured + Indicated 2,358 23.0 542 2,469 23.6 583
------------------------------------------- -------- ------ ---------- ------ ----------
Inferred 3,594 21.3 3,715 21.9 813
------------------------------------------- -------- ------ ---------- ------ ----------
TOTAL 5,953 22.0 1,307 6,185 22.6 1,396
------------------------------------------- -------- ------ ---------- ------ ----------
ORE RESERVES 2017 2018
Category Million Grade Contained Million Grade Contained
Tonnes KCl KCl (Mt) Tonnes KCl KCl (Mt)
% %
-----------
Kola Sylvinite
Deposit Proved - - - 61.8 32.1 19.8
---------------- --------- ------- ------------ ------ ----------
Probable - - - 90.6 32.8 29.7
---------- --------- ------- ------------ ------ ----------
TOTAL - - - 152.4 32.5 49.5
---------- --------- ------- ------------ ------ ----------
Notes: The Kola Mineral Resource Estimate was reported 6 July
2017 in an announcement titled 'Updated Mineral Resource for the
High Grade Kola Deposit'. It was prepared by the Met-Chem division
of DRA Americas Inc., a subsidiary of the DRA Group. The Ore
Reserve Estimate for Kola was first reported 29 January 2019 in an
announcement titled 'Kola Definitive Feasibility Study' and was
prepared by Met-Chem. The Dougou carnallite Mineral Resource
Estimate was reported 9 February 2015 in an announcement titled
'Elemental Minerals Announces Large Mineral Resource Expansion and
Upgrade for the Dougou Potash Deposit'. It was prepared by
ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH. The
Dougou Extension sylvinite Mineral Resource Estimate was reported
20 August 2018 in an announcement titled 'Maiden Sylvinite Mineral
Resource at Dougou Extension'. It was prepared by Competent Person
Mr. Andrew Pedley a full-time employee of Kore Potash.
New Exploration Permit
SPSA was awarded a new Exploration Licence, Sintoukola 2, by
Presidential Decree 2018-34 dated 9 February 2018 granting
exploration rights for 3 years which can be renewed twice for
periods of 2 years each, covering an area of 294.4km2 adjoining the
Dougou Mining Lease, covering prospective ground for sylvinite to
the northwest of the latter.
Figure1. Location of the Sintoukola Project showing the Kola,
Dougou and Dougou Extension Projects
(image available in full report at www.korepotash.com)
Competent person statement
The information relating to Exploration Targets, Exploration
Results, Mineral Resources or Ore Reserves in this report is based
on, or extracted from previous reports referred to herein, and is
available to view on the Company's website www.korepotash.com The
Kola Mineral Resource Estimate was reported on 6 July 2017 in an
announcement titled 'Updated Mineral Resource for the High Grade
Kola Deposit'. It was prepared by Competent Person Mr. Garth
Kirkham, P.Geo., of Met-Chem division of DRA Americas Inc., a
subsidiary of the DRA Group, and a member of the Association of
Professional Engineers and Geoscientists of British Columbia. The
Ore Reserve Estimate for sylvinite at Kola was first reported on 29
January 2019 in an announcement titled 'Kola Definitive Feasibility
Study' and was prepared by Met-Chem; the Competent Person for the
estimate is Mr. Molavi, member of good standing of Engineers and
Geoscientists of British Columbia. The Dougou carnallite Mineral
Resource Estimate was reported on 9 February 2015 in an
announcement titled 'Elemental Minerals Announces Large Mineral
Resource Expansion and Upgrade for the Dougou Potash Deposit'. It
was prepared by Competent Persons Dr. Sebastiaan van der Klauw and
Ms. Jana Neubert, senior geologists and employees of ERCOSPLAN
Ingenieurgesellschaft Geotechnik und Bergbau mbH and members of
good standing of the European Federation of Geologists. The Dougou
Extension sylvinite Mineral Resource Estimate was reported on 20
August 2018 in an announcement titled 'Maiden Sylvinite Mineral
Resource at Dougou Extension'. It was prepared by Competent Person
Mr. Andrew Pedley a full-time employee of Kore Potash, a registered
professional natural scientist with the South African Council for
Natural Scientific Professions and member of the Geological Society
of South Africa. The Company confirms that it is not aware of any
new information or data that materially affects the information
included in the original market announcements and, in the case of
estimates of Mineral Resources or Ore Reserves that all material
assumptions and technical parameters underpinning
the estimates in the relevant market announcement continue to
apply and have not materially changed. The Company confirms that
the form and context in which the Competent Person's findings are
presented have not been materially modified from the original
market announcement.
Business model
The Company's business strategy for the financial year ahead
and, in the foreseeable future, is to continue exploration and
development activities on the Company's existing potash mineral
projects in the RoC. The Company's current activities do not
generate any revenues or positive operating cash flow. Future
development necessary to commence production will require
significant capital expenditures.
Position and principal risks
The Company's business strategy is subject to numerous risks,
some outside the Board's and management's control. These risks can
be specific to the Company, generic to the mining industry and
generic to the stock market as a whole. The key risks, expressed in
summary form, affecting the Group and its future performance
include but are not limited to:
o capital requirement and ability to attract future funding;
o country risk in Republic of Congo;
o change in potash commodity prices and market conditions;
o geological and technical risk posed to exploration and
commercial exploitation success;
o environmental and occupational health and safety risks;
o government policy changes; and
o retention of key staff.
This is not an exhaustive list of risks faced by the Company or
an investment in it. There are other risks generic to the stock
market and the world economy as a whole and other risks generic to
the mining industry, all of which can impact on the Company. The
management of risks is integrated into the development of the
Company's strategic and business plans and is reviewed and
monitored regularly by the Board. Further details on how the
Company monitors, manages and mitigates these risks are included as
part of the Audit and Risk Committee Report contained within the
Corporate Governance Report.
Key Performance Indicators
Given the nature of the business and that the Group is in an
exploration and development phase of operations, the Directors are
of the opinion that analysis using KPIs is not appropriate for an
understanding of the development, performance or position of our
businesses at this time.
Forward-looking statements
This report contains statements that are "forward-looking".
Generally, the words "expect," "potential", "intend, " "estimate,"
"will" and similar expressions identify forward-looking statements.
By their very nature and whilst there is a reasonable basis for
making such statements regarding the proposed placement described
herein; forward-looking statements are subject to known and unknown
risks and uncertainties that may cause our actual results,
performance or achievements, to differ materially from those
expressed or implied in any of our forward-looking statements,
which are not guarantees of future performance. Statements in this
report regarding the Company's business or proposed business, which
are not historical facts, are "forward looking" statements that
involve risks and uncertainties, such as resource estimates and
statements that describe the Company's future plans, objectives or
goals, including words to the effect that the Company or management
expects a stated condition or result to occur. Since
forward-looking statements address future events and conditions, by
their very nature, they involve inherent risks and uncertainties.
Actual results in each case could differ materially from those
currently anticipated in such statements.
Investors are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date they
are made.
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2018
Parent Consolidated Entity
Note Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Continuing Operations
Interest income - - 72,873 50,858
Net realised and unrealised
foreign exchange gains 6,679 - 2,886 2,864,226
Directors remuneration (158,733) - (812,575) (365,371)
Equity compensation benefits 2(a) (695,345) (75,546) (695,345) (1,919,924)
Salaries, employee benefits
and consultancy expense 2(c) (19,849) - (1,325,505) (1,595,607)
London listing and re-domicile
expenses (304,030) - (1,200,192) (1,549,554)
Administration expenses 2(b) (654,635) (16,774) (2,323,176) (1,746,603)
Fair value change in derivative
financial liability 110,114 - 110,114 -
Interest and finance expenses - - (81,407) (39,378)
------------- ---------- -------------- -----------
Loss before income tax expense (1,715,799) (92,320) (6,252,327) (4,301,353)
Income tax 3 - - (17,039) (42,969)
------------- ---------- -------------- -----------
Loss for the year from continuing
operations (1,715,799) (92,320) (6,269,366) (4,344,322)
============= ========== ============== ===========
Other comprehensive income/(loss)
Items that may be classified
subsequent to profit or
loss
Exchange differences on
translating foreign operations - - (7,104,236) 13,590,884
------------- ---------- -------------- -----------
Other comprehensive income/(loss)
for the year - - (7,104,236) 13,590,884
------------- ---------- -------------- -----------
TOTAL COMPREHENSIVE (LOSS)
/ INCOME FOR THE YEAR (1,715,799) (92,320) (13,373,602) 9,246,562
============= ========== ============== ===========
Loss attributable to:
Owners of the Company (1,715,799) (92,320) (6,249,696) (4,344,322)
Non-controlling interest - - (19,670) -
-------------
(1,715,799) (92,320) (6,269,366) (4,344,322)
------------- ---------- -------------- -----------
Total comprehensive (loss)/income
attributable to:
Owners of the Company (1,715,799) (92,320) (12,832,564) 9,246,562
Non-controlling interest - - (541,038) -
-------------
(1,715,799) (92,320) (13,373,602) 9,246,562
------------- ---------- -------------- -----------
Basic and diluted loss per
share (cents per share) 24 (0.00) (0.00) (0.75) (0.57)
The accompanying notes from pages 72 to 128 form part of these
financial statements.
STATEMENTS OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Parent Consolidated Entity
Note Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
CURRENT ASSETS
Cash and cash equivalents 4 - - 6,187,113 16,455,490
Trade and other receivables 5 12,681,197 58,857 345,155 281,136
----------- ----------- ------------
TOTAL CURRENT ASSETS 12,681,197 58,857 6,532,268 16,736,626
----------- ----------- ------------ ------------
NON CURRENT ASSETS
Trade and other receivables 5 - - 120,922 139,163
Property, plant and equipment 6 - - 302,255 413,801
Exploration and evaluation
expenditure 7 - - 149,863,323 140,254,520
Investment in subsidiary 8 139,350,094 139,350,094 - -
TOTAL NON CURRENT ASSETS 139,350,094 139,350,094 150,286,500 140,807,484
----------- ----------- ------------ ------------
TOTAL ASSETS 152,031,291 139,408,951 156,818,768 157,544,110
----------- ----------- ------------ ------------
CURRENT LIABILITIES
Trade and other payables 9 144,217 10,000 1,702,392 3,258,054
Derivative financial liability 10 503,398 - 503,398 -
----------- ----------- ------------ ------------
TOTAL CURRENT LIABILITIES 647,615 10,000 2,205,790 3,258,054
----------- ----------- ------------ ------------
TOTAL LIABILITIES 647,615 10,000 2,205,790 3,258,054
----------- ----------- ------------ ------------
NET ASSETS 151,383,676 139,398,951 154,612,978 154,286,056
=========== =========== ============ ============
EQUITY
Contributed equity - Ordinary
Shares 11 860,852 771,396 860,852 771,396
Redeemable Preference Shares - 65,631 - 65,631
Reserves 12 152,944,455 138,654,244 213,644,634 206,805,823
Accumulated losses (2,421,631) (92,320) (59,331,800) (53,356,794)
----------- ----------- ------------ ------------
EQUITY ATTRIBUTABLE TO OWNERS
OF THE COMPANY 151,383,676 139,398,951 155,173,686 154,286,056
Non-controlling interests - - (560,708) -
----------- ----------- ------------ ------------
TOTAL EQUITY 151,383,676 139,398,951 154,612,978 154,286,056
=========== =========== ============ ============
The accompanying notes from pages 72 to 128 form part of these
financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2018
Consolidated Equity
Entity Attributable
to the
Foreign Shareholders
Share-Based Share Currency Redeemable of Kore
Ordinary Payments Premium Translation Merger Preference Accumulated Potash Total
Shares Reserve Reserve Reserve Reserve Shares Losses plc NCI Equity
Note USD USD USD USD USD USD USD USD USD USD
----- ------------- ------------ ---------- ------------ ----------- ---------- ------------ ------------ --------- ------------
Balance at 1
January
2017 200,572,926 36,279,828 - (22,338,631) - - (75,637,134) 138,876,989 - 138,876,989
Loss for the
period - - - - - - (4,344,322) (4,344,322) - (4,344,322)
Other
comprehensive
income for the
year - - - 13,590,884 - - - 13,590,884 - 13,590,884
------------- ------------ ---------- ------------ ----------- ---------- ------------ ------------ --------- ------------
Total
comprehensive
(loss)/income
for the year - - - 13,590,884 - - (4,344,322) 9,246,562 - 9,246,562
------------- ------------ ---------- ------------ ----------- ---------- ------------ ------------ --------- ------------
Transfer of
previously
lapsed options 12(a) - (26,624,662) - - - - 26,624,662 - - -
Issue of
redeemable
preference
shares - - - - - 65,631 - 65,631 - 65,631
Share issue
(net
of costs) 3,937,270 239,680 - - - - - 4,176,950 - 4,176,950
Share based
payments 12(a) - 1,919,924 - - - - - 1,919,924 - 1,919,924
Scheme of
Arrangement 12(d) (203,738,800) - - - 203,738,800 - - - - -
------------- ------------ ---------- ------------ ----------- ---------- ------------ ------------ --------- ------------
Balance at
31 December
2017 771,396 11,814,770 - (8,747,747) 203,738,800 65,631 (53,356,794) 154,286,056 - 154,286,056
============= ============ ========== ============ =========== ========== ============ ============ ========= ============
Loss for the
period - - - - - - (6,249,696) (6,249,696) (19,670) (6,269,366)
Other
comprehensive
loss for the
year - - - (6,563,198) - - - (6,563,198) (541,038) (7,104,236)
------------- ------------ ---------- ------------ ----------- ---------- ------------ ------------ --------- ------------
Total
comprehensive
(loss)/income
for the year - - - (6,563,198) - - (6,249,696) (12,812,894) (560,708) (13,373,602)
------------- ------------ ---------- ------------ ----------- ---------- ------------ ------------ --------- ------------
Transfer of
previously
lapsed options 12(a) - (888,202) - - - - 888,202 - - -
Share issue
(net
of costs) 89,456 - 13,054,936 - - - - 13,144,392 - 13,144,392
Free-attaching
warrants - - - - - - (613,512) (613,512) - (613,512)
Redemption of
redeemable
preference
shares - - - - - (65,631) - (65,631) - (65,631)
Share based
payments 12(a) - 1,235,275 - - - - - 1,235,275 - 1,235,275
Balance at
31 December
2018 860,852 12,161,843 13,054,936 (15,310,945) 203,738,800 - (59,331,800) 155,173,686 (560,708) 154,612,978
============= ============ ========== ============ =========== ========== ============ ============ ========= ============
The accompanying notes from pages 72 to 128 form part of these
financial statements.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2018
Parent Equity
Attributable
to the
Share Shareholders
Based Share Redeemable of Kore
Ordinary Payments Premium Merger Reorganisation Preference Accumulated Potash Total
Shares Reserve Reserve Reserve Reserve Shares Losses plc NCI Equity
Note USD USD USD USD USD USD USD USD USD USD
----- -------- ---------- ---------- ----------- -------------- ---------- ----------- ------------ --- -----------
Balance at 25
August 2017
(date
of
incorporation) - - - - - - - - - -
Loss for the
period - - - - - - (92,320) (92,320) - (92,320)
Other
comprehensive
income for the
period - - - - - - - - - -
-------- ---------- ---------- ----------- -------------- ---------- ----------- ------------ --- -----------
Total
comprehensive
(loss)/income
for the period - - - - - - (92,320) (92,320) - (92,320)
-------- ---------- ---------- ----------- -------------- ---------- ----------- ------------ --- -----------
Issue of
redeemable
preference
shares - - - - - 65,631 - 65,631 - 65,631
Share issuance
under Scheme
of Arrangement 771,396 11,739,224 - 203,738,800 (76,899,326) - - 139,350,094 - 139,350,094
Share based
payments 12(a) - 75,546 - - - - - 75,546 - 75,546
Balance at 31
December 2017 771,396 11,814,770 - 203,738,800 (76,899,326) 65,631 (92,320) 139,398,951 - 139,398,951
======== ========== ========== =========== ============== ========== =========== ============ === ===========
Loss for the
period - - - - - - (1,715,799) (1,715,799) - (1,715,799)
Other
comprehensive
income for the
year - - - - - - - - - -
-------- ---------- ---------- ----------- -------------- ---------- ----------- ------------ --- -----------
Total
comprehensive
(loss)/income
for the year - - - - - - (1,715,799) (1,715,799) - (1,715,799)
-------- ---------- ---------- ----------- -------------- ---------- ----------- ------------ --- -----------
Transfer of
previously
lapsed options 12(a) - (888,202) - - 888,202 - - - - -
Share issue
(net
of costs) 89,456 - 13,054,936 - - - - 13,144,392 - 13,144,392
Free-attaching
warrants - - - - - - (613,512) (613,512) - (613,512)
Redemption of
redeemable
preference
shares - - - - - (65,631) - (65,631) - (65,631)
Share based
payments 12(a) - 1,235,275 - - - - - 1,235,275 - 1,235,275
Balance at 31
December 2018 860,852 12,161,843 13,054,936 203,738,800 (76,011,124) - (2,421,631) 151,383,676 - 151,383,676
======== ========== ========== =========== ============== ========== =========== ============ === ===========
The accompanying notes from pages 72 to 128 form part of these
financial statements.
STATEMENTS OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2018
Parent Consolidated Entity
Note 31 Dec 2018 31 Dec 2017 31 Dec 2018 31 Dec 2017
USD USD USD USD
CASH FLOWS FROM OPERATING
ACTIVITIES
Payments to suppliers and
employees (1,178,545) - (6,017,020) (4,957,110)
Income tax paid - - (37,030) -
------------ ----------- ------------ ------------
Net cash used in operating
activities 14 (1,178,545) - (6,054,050) (4,957,110)
------------ ----------- ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments for plant and equipment (8,452) (94,262)
Payments for exploration
activities - - (17,104,196) (28,023,569)
Interest received - - 68,528 50,858
------------ ----------- ------------ ------------
Net cash used in investing
activities - - (17,044,120) (28,066,973)
------------ ----------- ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issue of shares 12,894,392 - 12,894,392 5,000,000
Payment for share issue
costs - - - (823,050)
Proceeds from issue of convertible
loan note 250,000 - 250,000 -
Amounts advanced to related
parties (11,965,847) - - -
------------ ----------- ------------ ------------
Net cash provided by financing
activities 1,178,545 - 13,144,392 4,176,950
------------ ----------- ------------ ------------
Net (decrease)/increase
in cash & cash equivalents
held - - (9,953,778) (28,847,133)
Cash and cash equivalents
at beginning of financial
year - - 16,455,490) 42,609,786)
Foreign currency differences - - (314,599) 2,692,837)
------------ ----------- ------------ ------------
Cash and cash equivalents
at end of financial year 4 - - 6,187,113 16,455,490
============ =========== ============ ============
The accompanying notes from pages 72 to 128 form part of these
financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2018
Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company is a public company incorporated and registered in
England and Wales with primary dual listing on the AIM market and
on the ASX, and a secondary listing on the JSE. The consolidated
financial statements of the Company as at and for the year ended 31
December 2018 comprise the Company and its subsidiaries which are
disclosed in Note 8 (together referred to as the "Group"). The
Group is involved in mining exploration activity in the RoC.
On 31 August 2017, Kore Potash Limited announced that it
proposed to re-domicile in the United Kingdom by way of a scheme of
arrangement (Scheme) between Kore Potash Limited and its
shareholders. The Scheme was approved by the shareholders on 27
October 2017 and the Federal Court of Australia on 6 November 2017.
On 20 November 2017, the Scheme was implemented and as a result the
Company is the new parent and Kore Potash Limited is the
wholly-owned subsidiary of the Company.
The registered office of Kore Potash plc's head office in the
United Kingdom is 25 Moorgate, London, United Kingdom EC2R 6AY. The
registered office Kore Potash Limited in Australia is Level 3, 88
William Street, Perth 6000 WA.
Basis of Preparation
(a) Statement of Compliance
The annual financial statements of the Company and the Group
have been prepared in accordance with IFRS as adopted by the
European Union. The principal accounting policies adopted by the
Group and Company are set out below.
The financial statements were authorised for issue by the
Directors on 28 March 2019.
(b) Going Concern
During the year ended 31 December 2018, the Group incurred a
loss of USD 6,269,366 (2017: USD 4,344,322) and experienced net
cash outflows from operating and investing activities of USD
23,098,170 (2017: USD 33,024,083). Cash and cash equivalents
totaled USD 6,187,113 as at 31 December 2018 (USD 16,455,490 as at
31 December 2017). The Group has no current source of operating
revenue and is therefore dependent on both existing cash resources
and future fund raisings to meet overheads and future exploration
requirements as they fall due.
The Directors have prepared a cash flow forecast for the period
ending 31 December 2020, which indicates that the Group will not
have sufficient liquidity to meet its working capital requirements
to the end of the going concern period, primarily being corporate
costs, exploration expenditure, and costs related to the Kola
Project. Forecast costs in the next 12 months are approximately USD
10 million. However, a significant portion of this cost base is not
yet committed, pending completion of the fund raise, and further
steps can therefore be taken to reduce forecast overheads if
required.
The Directors have therefore considered mitigating actions,
which include:
(a) completion of a capital raising; and
(b) managing and deferring costs where applicable to coincide
with the capital raising activity outlined above to ensure all
obligations can be met.
The Directors are planning to raise additional capital in
quarter 2 of 2019 to enable the Group to continue to fund its
exploration and development programme and fulfill its working
capital requirements. The Directors have identified a number of
funding options available to the Group, and have begun discussions
with its major shareholders with regards to its near and mid-term
funding requirements. The Directors note the Group has a history of
successfully raising capital on the ASX and more recently on the
AIM and JSE.
The Directors have reviewed the Group's overall position and
outlook in respect of the matters identified above and are of the
opinion that there are reasonable grounds to believe that funding
will be secured and therefore that the operational and financial
plans in place are achievable and accordingly the Group will be
able to continue as a going concern and meet its obligations as and
when they fall due.
(b) Going Concern (Cont)
The ability of the Group to continue as a going concern is
dependent on achieving the matters set out above. These conditions
indicate a material uncertainty which may cast significant doubt as
to the Group's ability to continue as a going concern and therefore
it may be unable to realise its assets and discharge its
liabilities in the normal course of business.
The financial report does not include adjustments relating to
the recoverability and classification of recorded asset amounts or
to the amounts and classification of liabilities that might be
necessary should the Group not continue as a going concern.
(c) Basis of Measurement
The consolidated financial statements have been prepared on the
basis of historical cost, adjusted for the treatment of certain
financial instruments, as explained in the accounting policies
below. Historical cost is generally based on the fair values of the
consideration given in exchange for goods and services. Fair value
is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date, regardless of whether that
price is directly observable or estimated using another valuation
technique. In estimating the fair value of an asset or a liability,
the Group takes into account the characteristics of the asset or
liability if market participants would take those characteristics
into account when pricing the asset or liability at the measurement
date.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
-- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
(d) 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 of the ultimate parent entity (Kore Potash plc) is US
dollars. The functional currency of the subsidiaries are:
-- Kore Potash Limited - US dollars (USD)
-- Sintoukola Potash S.A. - CFA Franc BEAC (XAF)
-- Dougou Mining S.A. - CFA Franc BEAC (XAF)
-- Kola Mining S.A. - CFA Franc BEAC (XAF)
-- Kore Potash South Africa (Pty) Ltd - South African RAND (ZAR)
The presentational currency of the Group is US dollars.
(e) Foreign Currency Transactions and Balances
Transactions in foreign currencies are initially recorded in the
functional currency at the exchange rates ruling at the date of the
transaction. Where consideration is received in advance of revenue
being recognised the date of the transaction reflects the date the
consideration is received. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the rate of
exchange ruling at the reporting date.
All differences in the consolidated financial report are taken
to the Statement of Profit or Loss and Other Comprehensive
Income.
(e) Foreign Currency Transactions and Balances (Cont)
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate as at
the date of the initial transaction. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rate at the date the fair value was determined.
As at the reporting date, the assets and liabilities of the
foreign subsidiaries are translated into the reporting currency of
the Company at the rate of exchange ruling at the reporting date
and the profit or loss in the Statement of Profit or Loss and Other
Comprehensive Income are translated at the weighted average
exchange rates for the period. The exchange differences on the
retranslation are taken directly to a separate component of
equity.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity is recognised in the profit or loss in the
Statement of Profit or Loss and Other Comprehensive Income. The
functional currency for Sintoukola is expected to change to US
dollars upon the commencement of mining.
(f) Basis of Consolidation
Subsidiaries are entities controlled by the Group. The financial
statements of the subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting
policies.
Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above. 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, other than in the
event of a Group re-organisation as occurred during the year as
described below.
The acquisition of Kore Potash Limited by the Company on 20
November 2017 is considered outside the scope of IFRS 3 Business
Combinations and accordingly has been accounted for as a common
control transaction. The investment in Kore Potash Limited acquired
by the Company as a result of the internal reorganisation was
recognised at a value consistent with the carrying value of the
equity items in the Kore Potash Limited accounts immediately prior
to the Scheme. In the Parent entity, the difference between the
carrying amount of share capital and options issued by the Company
under the Scheme and the investment in Kore Potash Limited has been
recognised in a Reorganisation Reserve.
In preparing the consolidated financial statements, all
intercompany balances and transactions, income and expenses and
profit and losses resulting from intra-Group transactions have been
eliminated in full.
The acquisition of subsidiaries has been accounted for using the
purchase method of accounting, other than in the Group
re-organisation described above. The purchase method of accounting
involves allocating the cost of the business combination to the
fair value of the assets acquired and the liabilities and
contingent liabilities assumed at the date of acquisition.
Accordingly, the consolidated financial statements include the
results of subsidiaries for the period from their acquisition.
Non-controlling interests represent the portion of profit or
loss and net assets in subsidiaries not held by the Group and are
presented separately in the consolidated Statement of Profit or
Loss and Other Comprehensive Income and within equity in the
consolidated Statement of Financial Position.
In the Company's financial statements, investments in
subsidiaries are carried at cost. A list of controlled entities is
contained in Note 8 to the financial statements.
(g) Income Tax
The charge for current income tax expenses is based on the
profit for the year adjusted for any non-assessable or disallowed
items. It is calculated using tax rates that have been enacted or
are substantively enacted by the reporting date.
Deferred tax is accounted for using the balance sheet liability
method in respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the
financial statements. No deferred income tax will be recognised
from the initial recognition of an asset or liability, excluding a
business combination, where there is no effect on accounting or
taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or liability is
settled. Deferred tax is recognised in the profit or loss in the
Statement of Profit or Loss and Other Comprehensive Income except
where it relates to items that are recognised directly in equity,
in which case the deferred tax is adjusted directly against
equity.
Deferred income tax assets are recognised to the extent it is
probable that future tax profits will be available against which
deductible temporary differences can be utilised.
The amount of benefits brought to account or which may be
realised in the future is based on the assumption that no adverse
change will occur in income taxation legislation and the
anticipation that the Group will derive sufficient future
assessable income to enable the benefit to be realised and comply
with the conditions of deductibility imposed by the law.
(h) Property, Plant and Equipment
Property, plant and equipment is carried at cost less, where
applicable, any accumulated depreciation and impairment losses.
The carrying amount of property, plant and equipment is reviewed
at each reporting date to ensure it is not in excess of the
recoverable amount from those assets. The recoverable amount is
assessed on the basis of the expected net cash flows which will be
received from the assets employment and subsequent disposal.
Depreciation
The depreciable amount of all fixed assets is depreciated on a
straight line basis over their estimated useful lives to the Group
commencing from the time the asset is held ready for use. The
depreciation rates used for the plant and equipment is in the range
of 20% - 40%. The assets' residual values and useful lives are
reviewed, and adjusted if appropriate, at each reporting date.
Depreciation of property, plant and equipment in SPSA is included
in Capitalised Exploration and Evaluation Expenditure.
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. Gains and losses on disposals are
determined by comparing proceeds with the carrying amount. These
gains or losses are included in the profit or loss in the Statement
of Profit or Loss and Other Comprehensive Income. When revalued
assets are sold, amounts included in the revaluation reserve
relating to that asset are transferred to retained earnings.
(i) Financial Instruments
Financial assets and financial liabilities are recognised in the
statement of financial position when the Group becomes a party to
the contractual provisions of the instrument. See Note 1(m) for
further details on the recognition and measurement of trade and
other receivables and cash and cash equivalents.
(i) Financial Assets
Investments other than investments in subsidiaries are
classified as either held-for-trading or not at initial
recognition. At the year-end date all investments are classified as
not held for trading. An irrevocable election has been made to
recognise changes in fair value in other comprehensive income.
Trade and other receivables are initially measured at fair value
plus any direct attributable transaction costs. Subsequent to
initial recognition, trade and other receivables are measured at
amortised cost using the effective interest method, less any
impairment losses.
Trade receivables are held in order to collect the contractual
cash flows and are initially measured at the transaction price as
defined in IFRS 15, as the contracts of the Group do not contain
significant financing components. Impairment losses are recognised
based on lifetime expected credit losses in profit or loss.
Other receivables are held in order to collect the contractual
cash flows and accordingly are measured at initial recognition at
fair value, which ordinarily equates to cost and are subsequently
measured at cost less impairment due to their short term nature. A
provision for impairment is established based on 12-month expected
credit losses unless there has been a significant increase in
credit risk when lifetime expected credit losses are recognised.
The amount of any provision is recognised in profit or loss.
(ii) Financial Liabilities and Equity
Financial liabilities and equity instruments issued by the Group
are classified in accordance with the substance of the contractual
arrangements entered into and the definitions of a financial
liability and an equity instrument. An equity instrument is any
contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received, net of
direct issue costs.
All other loans including convertible loan notes are initially
recorded at fair value, which is ordinarily equal to the proceeds
received net of transaction costs. These liabilities are
subsequently measured at amortised cost, using the effective
interest rate method.
(iii) Effective Interest Rate Method
The effective interest rate method is a method of calculating
the amortised cost of a financial asset or liability and allocating
interest income or expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash flows through the expected life of the financial asset or
liability, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
(j) Impairment of Non-Financial Assets Other Than Exploration and Evaluation Assets
The carrying amounts of the Group's non-financial assets, are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists then the
asset's recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. An impairment loss is
recognised if the carrying amount of an asset or its
cash-generating unit exceeds its recoverable amount. Impairment
losses are recognised in the profit or loss in the Statement of
Profit or Loss and Other Comprehensive Income. In respect of other
assets, impairment losses recognised in prior periods are assessed
at each reporting date for any indications that the loss has
decreased or no longer exist. An impairment loss is reversed if
there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss has been
recognised.
(k) Revenue Recognition
Revenue is measured at the transaction price received or
receivable allocated to the performance obligation satisfied and
represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, VAT, GST and other
sales related taxes. As the expected period between transfer of a
promised good or service and payment from the customer is one year
or less then no adjustment for a financing component has been
made.
Sales of goods are recognised when goods are delivered and
control has passed.
Revenue arising from the provision of services is recognised
when and to the extent that the customer simultaneously receives
and consumes the benefits of the Group's performance or the Group
does not create an asset with an alternative use but has an
enforceable right to payment for performance completed to date.
Interest income is recognised in the Statement of Profit or Loss
and Other Comprehensive Income using the effective interest
method.
(l) Trade and Other Payables
These amounts represent liabilities for goods and services
provided to the entity prior to the end of the financial year and
which are unpaid. Trade and other payables are initially recognised
at fair value plus any directly attributable transaction costs.
Subsequent to initial recognition, trade and other payables are
measured at amortised cost using the effective interest rate
method.
(m) Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes
deposits at call with financial institutions and other highly
liquid investments with short periods to maturity which are readily
convertible to cash on hand and are subject to an insignificant
risk of changes in value.
(n) Fair Value Estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for disclosure
purposes.
The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at
the balance sheet date. The quoted market price used for financial
assets held by the entity is the current bid price; the appropriate
quoted market price for financial liabilities is the current ask
price.
The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. The Group uses a variety of
methods and makes assumptions that are based on market conditions
existing at each reporting date. Quoted market prices or dealer
quotes for similar instruments are used for long-term debt
instruments held. Other techniques, such as estimated discounted
cash flows, are used to determine fair value for the remaining
financial instruments.
The nominal value less estimated credit adjustments of trade
receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash
flows at the current market interest rate that is available to the
entity for similar financial instruments.
(o) Value-Added Tax ("VAT") / Goods and Services Tax ("GST")
Revenues, expenses and assets are recognised net of the amount
of VAT / GST, except where the amount of VAT / GST incurred is not
recoverable from the relevant jurisdiction's Tax Office. In these
circumstances the VAT / GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense.
Receivables and payables in the statement of financial position are
shown inclusive of VAT / GST.
Cash flows are presented in the Statement of Cash Flow on a
gross basis, except for the VAT / GST component of investing and
financing activities, which are disclosed as operating cash
flows.
(p) Capitalisation of Exploration and Evaluation Expenditure
Exploration and evaluation expenditures in relation to each
separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the
following conditions are satisfied:
-- the rights to tenure of the area of interest are current; and
-- at least one of the following conditions is also met:
o the exploration and evaluation expenditures are expected to be
recouped through successful development and exploration of the area
of interest, or alternatively, by its sale; or
o exploration and evaluation activities in the area of interest
have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or
in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploratory
drilling, trenching and sampling and associated activities and an
allocation of depreciation and amortised of assets used in
exploration and evaluation activities. General and administrative
costs are only included in the measurement of exploration and
evaluation costs where they are related directly to operational
activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances suggest that the carrying amount of an
exploration and evaluation asset may exceed its recoverable amount
at the reporting date. The recoverable amount of the exploration
and evaluation asset (for the cash generating unit(s) to which it
has been allocated being no larger than the relevant area of
interest) is estimated to determine the extent of the impairment
loss (if any). Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but only to the extent that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset in previous years.
Where a decision is made to proceed with development in respect
of a particular area of interest, the relevant exploration and
evaluation asset is assessed for impairment and the balance is
classified as a development asset. The point at which an area of
interest is considered developmental is based on finalisation of a
definitive feasibility study, a bankable feasibility study and the
finalisation of appropriate funding.
Accumulated costs in relation to an abandoned area are written
off in full against profit in the year in which the decision to
abandon the area is made. When production commences, the
accumulated costs for the relevant area of interest are amortised
over the life of the area according to the rate of depletion of the
economically recoverable reserves. A regular review is undertaken
of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of
interest.
Costs of site restoration are provided over the life of the
facility from when exploration commences and are included in the
costs of that stage. Site restoration costs include the dismantling
and removal of mining plant, equipment and building structures,
waste removal, and rehabilitation of the site in accordance with
clauses of the mining or petroleum permits. Such costs have been
determined using estimates of future costs, current legal
requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a
prospective basis. In determining the costs of site restoration,
there is uncertainty regarding the nature and extent of the
restoration due to community expectations and future legislation.
Accordingly the costs have been determined on the basis that the
restoration will be completed within one year of abandoning the
site.
(q) Share Based Payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The fair value grant rate is
independently determined using the different option pricing models
that takes into account the exercise price, the term of the option,
the market and non-market based vesting and performance criteria,
the impact of dilution, the tradeable nature of the option, the
share price at grant date and expected price volatility of the
underlying share, the expected dividend yield and the risk-free
interest rate for the term of the option.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
equity instruments that will eventually vest, with a corresponding
increase in equity.
When share options and performance rights are exercised, the
Company issues new shares. The proceeds received net of any
directly attributable transaction costs are credited to share
capital (nominal value) and share premium.
(r) Employee Benefits
(i) Wages, salaries and annual leave
Liabilities for wages, salaries and annual leave are recognised
in respect of employees' services up to the reporting date and are
measured at the amounts expected to be paid when the liabilities
are settled.
(ii) Pension contributions
Contributions are made by the Group to pension funds as
stipulated by statutory requirements and are charged as expenses
when incurred.
(iii) Employee benefit on costs
Employee benefit on costs, including payroll tax, are recognised
and included in employee benefits liabilities and costs when the
employee benefits to which they relate are recognised as
liabilities.
(s) Earnings per Share
(i) Basic earnings per share
Basic earnings per share is determined by dividing the net
profit after income tax attributable to members of the Company,
excluding any costs of servicing equity other than ordinary shares,
by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary
shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the
determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares and the weighted
average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary
shares.
(t) Issued Capital
Ordinary shares and CDIs are classified as equity.
Costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the
proceeds. Costs directly attributable to the issue of new shares or
options incurred in connection with a business combination, are
included in the cost of the acquisition as part of the purchase
consideration.
(u) Critical Accounting Judgements and Estimates
In the application of the Group's accounting policies, which are
described in this note, the directors are required to make
judgements (other than those involving estimations) that have a
significant impact on the amounts recognised and to make 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. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
The areas involving significant accounting judgment are set out
in the tables below:
Critical
accounting
judgement Details
Impairment The ultimate recovery of the value of exploration and
of exploration evaluation assets, the Company's investment in subsidiaries,
and evaluation and loans to subsidiaries is dependent on the successful
assets, recovery development and commercial exploitation, or alternatively,
of parent sale, of the exploration and evaluation assets.
company investments
and intercompany On a regular basis, management consider whether there
balances are indicators as to whether the asset carrying values
exceed their recoverable amounts. This consideration includes
assessment of the following:
(a) expiration of the period for which the entity has
the right to explore in the specific area of interest
with no plans for renewal;
(b) substantive expenditure on further exploration for
and evaluation of mineral resources in the specific area
is neither budgeted nor planned;
(c) exploration for and evaluation activities have not
led to the discovery of commercially viable quantities
of mineral resources and the entity has decided to discontinue
such activities in the specific area; and
(d) whether sufficient data exists to indicate that, although
a development in the specific area is likely to proceed,
the carrying amount of the exploration and evaluation
asset is unlikely to be recovered in full from successful
development or by sale.
Management judgement is required to determine whether
the expenditures which are capitalised as exploration
and evaluation assets will be recovered by future exploitation
or sale or whether they should be impaired. In assessing
this, management determines the possibility of finding
recoverable ore reserves related to a particular area
of interest, which is a subject to significant uncertainties.
Many of the factors, judgements and variables involved
in measuring resources are beyond the Group's control
and may prove to be incorrect over time. Subsequent changes
in resources could impact the carrying value of exploration
and evaluation assets.
Where an impairment indicator is identified, the determination
of the recoverable amount requires the use of estimates
and judgement in determining the inputs and assumptions
used in determining the recoverable amounts.
The key areas of judgement include:
* Recent exploration and evaluation results and
resource estimates;
* Environmental issues that may impact on the
underlying tenements;
* Fundamental economic factors that have an impact on
the operations and carrying values of assets and
liabilities.
Based on the information the Company has on the above,
it was concluded by management that amounts were recoverable,
and that no write down of exploration and evaluation assets,
the Company's investment in subsidiaries, and intercompany
balances was recognised. This may change as new information
becomes available.
---------------------------------------------------------------------------
(u) Critical Accounting Judgements and Estimates (Cont)
Critical
accounting
judgement Details
Classification Management judgement is required as to whether the assets
of capitalised associated with the Kola Project represents an exploration
exploration asset to be accounted for under IFRS 6 Exploration for
and evaluation and Evaluation of Mineral Resources, or a development
costs to asset to be accounted for under IAS 16 Property, Plant
date and Equipment or IAS 36 Impairment of Assets. A conclusion
that consideration is required under IAS 16 or IAS 36
would mean that a full impairment test of the assets associated
with the Kola Project would have been required during
2018.
In reaching the judgement that the assets associated with
the Kola Project should remain capitalised as exploration
and evaluation assets, management has assessed whether
technical and commercial viability of extracting mineral
resources has been demonstrated. Given the ongoing negotiation
with the FC over the final construction cost, and remaining
permits to be obtained from the RoC, the Group has concluded
that final technical and commercial viability of the Kola
Project has yet to be finalised.
----------------------------------------------------------------
(v) Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties at 31
December 2018 that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and
liabilities are set out in the table below.
Estimation
Uncertainty Details
Valuation The Group issues options and performance rights as share-based
of share-based payments arrangements to certain Directors, KMP and employees.
payments The fair values of the options and performance rights
and judgment are determined using the Black Scholes Option Pricing
on the probability Model, the Cox, Ross and Rubinstein Binomial Option Pricing
and timing Model or the Monte Carlo Option Pricing Model that takes
of achieving into account the exercise price, the term of the options
milestones and performance rights, the impact of dilution, the share
related to price at valuation date and expected price volatility
share-based of the underlying share, the expected dividend yield and
payment arrangements the risk-free interest rate for the term of the options
in existence and performance rights.
The share-based payments arrangements are expensed on
a straight line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest.
At each reporting date, vesting assumptions are reviewed
to ensure they reflect current expectations and immediately
recognises any impact of the revision to original estimates.
If fully vested share options are not exercised and expire
then the accumulated expense in respect of these is reclassified
to accumulated losses.
-----------------------------------------------------------------
(w) Segment Reporting
Operating segments are reported in a manner that is consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker has been
identified as the Board of Directors, which is responsible for
allocating resources and assessing performance of the operating
segments.
(x) New and Revised Accounting Standards and Interpretations Adopted
From 1 January 2018 the following standards and amendments are
effective in the Group's financial statements:
-- IFRS 9 Financial instruments; and
-- IFRS 15 Revenue from contracts with customers.
The impact of adoption of these standards and the key changes to
the accounting policies are disclosed below. Other amendments to
IFRSs that became effective for the period beginning on 1 January
2018 did not have any impact on the Group's accounting
policies.
Title of Standard IFRS 9 Financial instruments
Nature of IFRS 9 addresses the classification, measurement and
change derecognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment
model for financial assets.
---------------------------------------------------------------
Adoption date The Group adopted IFRS 9 from 1 January 2018 with no
and Impact changes to the carrying value of financial assets and
financial liabilities required. In accordance with the
transition provisions in the Standard, comparatives have
not been restated.
---------------------------------------------------------------
Classification IFRS 9 requires the use of two criteria to determine
of financial the classification of financial assets: the entity's
assets business model for the financial assets and the contractual
cash flow characteristics of the financial assets. The
Standard goes on to identify three categories of financial
assets - amortised cost; fair value through profit or
loss ("FVTPL"); and fair value through other comprehensive
income ("FVOCI").
There have been no changes to the categorisation of financial
assets following the adoption of IFRS 9 and all of the
Group's financial assets remain classified at amortised
cost.
---------------------------------------------------------------
Impairment IFRS 9 mandates the use of an expected credit loss model
to calculate impairment losses rather than an incurred
loss model, and therefore it is not necessary for a credit
event to have occurred before credit losses are recognised.
The new impairment model applies to the Group's financial
assets.
No changes to the impairment provisions were made on
transition to IFRS 9. Trade and other receivables are
generally settled on a short time frame and the Group's
other financial assets are due from counterparties without
material credit risk concerns at the time of transition.
---------------------------------------------------------------
Title of Standard IFRS 15 Revenue from contracts with customers
Nature of IFRS 15 replaced IAS 18 which covered revenue arising
change from the sale of goods and the rendering of services
and IAS 11 which covered construction contracts. IFRS
15 is based on the principle that revenue is recognised
when control of a good or service transfers to a customer.
The standard permits either a full retrospective or a
modified retrospective approach for the adoption
-----------------------------------------------------------------
Adoption date The Group adopted IFRS 15 from 1 January 2018. The implementation
and Impact of IFRS 15 has not had a material impact on the Group's
financial statements as it is currently a pre-revenue
business.
-----------------------------------------------------------------
(y) New and Revised Accounting Standards and Interpretations on Issue but not yet Adopted
Certain new accounting standards and interpretations have been
published that are not mandatory for the 31 December 2018 reporting
period. Those which may have a significant impact to the Group are
set out below. The Group does not plan to adopt these standards
early.
Title of Standard IFRS 16 Leases
Nature of IFRS 16 replaces the current IAS 17 Leases standard.
change IFRS 16 removes the classification of leases as either
operating leases or finance leases - for the lessee -
effectively treating all leases as finance leases. Most
leases will be capitalised on the balance sheet by recognising
a 'right-of-use' asset and a lease liability for the
present value obligation. This will result in an increase
in the recognised assets and liabilities in the statement
of financial position as well as a change in expense
recognition, with interest and deprecation replacing
operating lease expense. The only exceptions are short-term
and low-value leases.
Lessor accounting remains similar to current practice,
i.e. lessors continue to classify leases as finance and
operating leases.
---------------------------------------------------------------
Impact The Group has reviewed all of the Group's outstanding
leasing arrangements in light of the new lease accounting
rules in IFRS 16. The standard will affect primarily
the accounting for the Group's operating leases.
As at the reporting date, the Group has non-cancellable
operating lease commitments of USD 216,702 (see Note
18). Of these commitments, USD 3,377 relate to a short-term
lease which ended on 31 January 2019 which will be recognised
on a straight-line basis as expense in profit or loss.
For the remaining lease commitments the Group expects
to recognise right-of-use assets of approximately USD
208,453 on 1 January 2019 and lease liabilities of USD
208,453. No change is expected on the overall net assets
and net current assets of the Group. The Group expects
that net losses after tax will increase by approximately
USD 4,092 for 2019 as a result of adopting the new rules.
Operating cash flows will increase and financing cash
flows decrease by approximately USD 172,721 as repayment
of the principal portion of the lease liabilities will
be classified as cash flows from financing activities.
The Group does not have any activities as a lessor and
hence there will not be any impact on the financial statements
in this regard.
---------------------------------------------------------------
Date of adoption The changes in the Group's accounting policies from the
by group adoption of IFRS 16 will be applied from 1 January 2019
onwards.
---------------------------------------------------------------
There are no other standards that are not yet effective and that
would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future
transactions.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Note 2: LOSS FOR THE YEAR
Expenses
(a) Equity based payments - directors,
KMP
and other employees 695,345 75,546 695,345 1,919,924
-------- -------- ----------
695,345 75,546 695,345 1,919,924
======== ======== ========== =========
(b) Administration Expenses
Accounting, company secretarial
and audit fees 236,530 - 399,274 189,270
Insurance expenses 43,370 - 118,779 61,827
Legal fees - - 64,944 202,629
Compliance, registration and other
tax feese 155,299 6,774 584,808 239,558
Marketing and investor relations - - 169,591 127,926
Premises and office related costs - - 87,002 100,940
Professional fees - - 143,420 24,766
Recruitment fees 179,017 - 179,017 42,253
Travel and accommodation expenses 36,353 - 417,350 673,237
Other expenses 4,066 10,000 158,991 84,197
654,635 16,774 2,323,176 1,746,603
(c) Salaries, employee benefits
and consultancy expense
Salaries and wages - - 409,524 719,381
Termination payment - - - 100,436
Employee benefits - Health insurance
benefits - - 147,865 234,486
Consultants 19,849 - 768,116 541,304
-------- -------- ----------
19,849 - 1,325,505 1,595,607
======== ======== ==========
(d) Average number of employees Number Number Number Number
Operational - - 17 151
Head Office 1 - 26 21
-------- ---------
1 - 43 172
======== ======== ========== =========
Total staff costs for the Group in the year ended 31 December
2018 were USD 2,279,499 (2017: USD 3,433,660). The staff costs
incurred during the year at a subsidiary, SPSA, of USD 1,869,975
has been capitalised as Exploration and Exploration Asset (2017:
USD 2,714,279).
Note 3: INCOME TAX EXPENSE Parent Consolidated Entity
The components of tax expense Dec 2018 Dec 2017 Dec 2018 Dec 2017
comprise: USD USD USD USD
Current tax - foreign tax - - 17,039 42,969
Deferred tax - - - -
Total income tax expense - - 17,039 42,969
======== ======== ========== =========
The prima facie income tax expense on pre-tax accounting loss
from operations reconciles to the income tax expense in the
financial statements as follows:
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Loss before tax from continuing
operations (1,715,799) (92,320) (6,252,327) (4,301,353)
Parent company tax on loss from
continuing operations at the UK
corporation tax rate of 19% (2017:
19.25%) (326,002) (17, 541) - -
Group tax on loss from continuing
operations at the Australian corporation
tax rate of 30% (2017: 30%) - - (1,875,698) (1,290,406)
Different tax rates of subsidiaries
operating in different jurisdictions - - 509,939 (23,286)
----------- --------- ----------- -----------
(326,002) (17,541) (1,365,759) (1,313,692)
----------- --------- ----------- -----------
Tax effect of:
Net non-deductible expenses 195,462 14,354 811,221 (69,485)
Deferred tax asset not recognised 130,540 3,187 571,577 1,851,349
Prior year tax losses utilised - - - (425,203)
----------- --------- ----------- -----------
326,002 17,541 1,382,798 1,356,661
----------- --------- ----------- -----------
Income tax expense - - 17,039 42,969
=========== ========= =========== ===========
The statutory tax rate of Kore Potash plc is 19% (2017: 19.25%),
representing the UK corporation tax rate. The Group is subject to
varying statutory rates, primarily being Australia (30%), Congo
(see Note 7 regarding corporate tax concessions applicable under
the new mining convention) and South Africa (28%). The current tax
expense of USD 17,039 (2017: USD 42,969) arose on the pre-tax
income generated in South Africa for intercompany management
services.
No deferred tax has been recognised in respect of the Group's
tax losses of USD 11,499,637 (2017: USD 9,189,501) that are
available for offset against any future taxable profits in the
companies in which the losses arose. Of these tax losses, USD
10,801,215 arose from the Australian entity and USD 698,422 arose
from the parent entity (2017: USD 9,178,133 from the Australian
entity and USD 11,368 from the parent entity).
The tax losses which arose from the Australian entity can be
carried forward indefinitely to be offset against future years'
profits. A deduction for prior years' losses will be denied where
the Company cannot satisfy a 'continuity of ownership' test or,
failing this, the alternative 'same business test'.
With effect from 1 April 2017, new tax legislation has been
introduced in the UK with regard to the use of brought forward tax
losses. The impact of these rules means that the tax treatment of
brought forward losses may be different for losses arising before
and after 1 April 2017. The majority of the tax losses which arose
from the Parent entity arose after 1 April 2017, and therefore
there is a potential restriction on how much these can be used to
offset against any future years' profits. Generally, the amount of
profit which can be offset against losses carried forward is
restricted to 50% of the amount of profits in excess of GBP 5
million. Profits under the annual GBP 5 million group deduction
allowance can be offset by losses in full. Where a company is in a
group the USD 5 million allowance will apply to the group. Based on
the Parent entity's current income tax position the majority of its
tax losses can be offset against any future income in the Parent,
or can be group relieved.
Deferred tax assets have not been recognised in respect of the
losses arising from the Australian entity or the parent entity due
to the uncertainty around timing of generating sufficient taxable
profits in future to utilise the losses. These losses may also not
be utilised to offset taxable profits elsewhere in the group
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Note 4: CASH AND CASH EQUIVALENTS
Cash at bank - - 6,187,113 16,455,490
---------- -------- --------- ----------
- - 6,187,113 16,455,490
========== ======== ========= ==========
Note 5: TRADE AND OTHER RECEIVABLES
Current
Advance to employees - - 112,071 -
Amount due from directors in respect
of preference shares issued - 65,631 - 65,631
Interest receivable - - 4,345 -
Net GST, PAYE and VAT recoverable 135,121 - 82,739 28,768
Prepayments 47,073 - 56,400 91,569
Amounts due from / (due to) a
subsidiary 12,499,003 (6,774) - -
Other receivables - - 89,600 95,168
---------- -------- --------- ----------
12,681,197 58,857 345,155 281,136
---------- -------- --------- ----------
Non-Current
Deposits related to investments
in DPM and KPM - - 120,922 139,163
---------- -------- --------- ----------
- - 120,922 139,163
---------- -------- --------- ----------
Total Trade and Other Receivables 12,681,197 58,857 466,077 420,299
========== ======== ========= ==========
The amount due to a subsidiary is interest-free and is repayable
on demand.
Note 6: PROPERTY, PLANT AND EQUIPMENT
Plant and equipment - at cost -- 1,855,971 1,947,447
Less accumulated depreciation --(1,553,716) (1,533,646)
----------- -----------
-- 302,255 413,801
=========== ===========
Reconciliation:
Opening balance -- 413,801 374,316
Additions -- 8,452 97,091
Depreciation capitalised under
exploration and evaluation -- (90,023) (87,961)
Depreciation expensed -- (7,078) (16,612)
Disposals -- (5,500) -
Foreign exchange differences -- (17,347) 46,967
----------- -----------
Closing balance at period end -- 302,255 413,801
=========== ===========
Note 7: EXPLORATION AND EVALUATION Parent Consolidated Entity
EXPITURE
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Opening balance - - 140,254,520 95,798,269
Exploration and evaluation expenditure
capitalised during the year - - 16,107,446 30,688,177
Foreign exchange differences - - (6,498,643) 13,768,074
-------- -------- ----------- -----------
Closing balance at period end - - 149,863,323 140,254,520
======== ======== =========== ===========
Exploration and evaluation expenditure
relating to:
Kola mining project - - 128,878,868 118,082,437
Dongou mining project - - 20,984,455 22,172,083
-------- -------- ----------- -----------
- - 149,863,323 140,254,520
======== ======== =========== ===========
(i) On 8 June 2017, a new mining convention was signed by the
Group and the Government of the RoC. The convention governs the
conditions of construction, operation and mine closure of the Kola
and Dougou (including Dougou Extension) mining projects. The terms
and conditions of the mining convention include key investment
promotion provisions, including the following:
-- Corporate tax concessions applicable for the first 10 years
of each mining permit as production capacity is extended, which
includes zero corporation tax for the first five years from
profitability, and a corporation tax rate of 7.5% for the next five
years;
-- An ongoing corporation tax rate of 15% for the rest of the life of mine;
-- Exemptions from withholding taxes including interest,
dividends and capital gains during the term of the mining
convention;
-- VAT and import duty exemptions (including all subcontractors) during construction;
-- Royalties of 3% payable to the RoC, which is based on an equivalent to EBITDA;
-- Guarantee from the RoC that it will facilitate and support
the implementation of the project, as defined in the convention
(for example, in granting the necessary consents to permit export
of the final product through the use of a dedicated jetty); and
-- The RoC to be granted a 10% carried equity interest in the
project companies, which are currently wholly-owned by Kore Potash
Limited's subsidiary, SPSA.
The mining convention has a term which covers the life of the
Kola and Dougou mining permits including any extension (25 years
plus 15 year extension, renewable indefinitely upon proven mineable
ore resources). The Group was awarded the Sintoukola 2 Exploration
Permit dated 9 February 2018 by the government of the RoC.
(ii) The ultimate recoupment of costs carried forward for
exploration expenditure phases is dependent on the successful
development and commercial exploitation, or alternatively, the sale
of the respective areas of interest.
Note 8: CONTROLLED ENTITIES Percentage Percentage
Owned Investment Owned Investment
Country of 31 Dec 31 Dec 2018 31 Dec 31 Dec 2017
2018 2017
Controlled Entities Incorporation % USD % USD
Held directly:
Kore Potash Limited Australia 100 139,350,094 100 139,350,094
Held through Kore Potash
Limited:
Sintoukola Potash S.A. Republic of
("SPSA") Congo 97 9,387,413 97 9,387,413
Kore Potash South Africa
(Pty) Ltd South Africa 100 1,192 100 1,192
Held through Sintoukola
Potash S.A.:
Kore Potash Mining S.A. Republic of
("KPM") Congo 100 18,264 100 18,264
Dougou Potash Mining Republic of
S.A. ("DPM") Congo 100 18,264 100 18,264
The principal activity of Kore Potash Limited during the
financial year was for administrational and operational support for
the exploration for potash minerals prospects. The registered
office of Kore Potash Limited is Level 3, 88 William Street, Perth
WA 6000.
The principal activity of SPSA and its two subsidiaries, KPM and
DPM, during the financial year was exploration for potash minerals
prospect. The registered office for the three entities is 24 Avenue
Charles de Gaulle, Immeuble Atlantic Palace BP 662 Pointe Noire,
République du Congo.
The principal activity of Kore Potash South Africa (Pty) Ltd
during the financial year was for South African administrative and
operational support for the exploration for potash minerals
prospects. The registered office is 33 Ballyclare Drive, Ballywoods
Office Park, Cedarwood House, Bryanston 2021 South Africa.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Note 9: TRADE AND OTHER PAYABLES
Current
Trade and other creditors - - 388,350 502,684
Accruals 144,217 10,000 1,293,613 2,710,325
Income tax payable - - 20,429 45,045
-------- -------- ---------- ---------
Total Trade and Other Payables 144,217 10,000 1,702,392 3,258,054
======== ======== ========== =========
Trade and other creditors are non-interest bearing and are
normally settled on 30 day terms.
Note 10: DERIVATIVE FINANCIAL Parent Consolidated Entity
INSTRUMENTS
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Equity warrants exercisable at
AUD 0.30
each expiring on 29 March 2021 503,398 - 503,398 -
-------- -------- ---------- ---------
503,398 - 503,398 -
======== ======== ========== =========
The above amounts relate to the following:
The value of the free-attaching warrants provided to
shareholders who participated in the share issue completed on 29
March 2018 (83,523,344 shares issued at AUD 0.20 each). A total of
12,894,659 equity warrants exercisable at AUD 0.30 expiring 29
March 2021 were issued with a Black & Scholes valuation method
of USD 0.0476 per warrant.
The derivative financial liability was revalued at 31 December
2018 using the Black Scholes valuation method with the net change
in fair value of the derivative financial liability of USD 110,114
taken to the statement of profit or loss and other comprehensive
income.
The inputs used in the measurement of these warrants were as
follows:
Input into the At grant At 31 Dec
model date 2018
Spot price AUD 0.145 GBP 0.072
----------- -----------
Expected volatility 91.67% 110.60%
----------- -----------
Life of warrants 3 years 2.24 years
----------- -----------
Fair value per USD 0.0476 USD 0.039
warrant
----------- -----------
Note 11: ISSUED CAPITAL Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
860,852,693 Fully Paid Ordinary
Shares at par value of USD 0.001
each (31 December 2017: 771,395,766
Fully Paid Ordinary Shares at
par value of USD 0.001) 860,852 771,396 860,852 771,396
Fully Paid Ordinary Shares 860,852 771,396 860,852 771,396
======== ======== ========== =========
NOTE 11: ISSUED CAPITAL (CONT)
Movement in Share Capital of Consolidated Entity
Date Details No. of Shares) USD)
1 Jan 2017 Opening balance (i) 728,944,470 200,572,926
3 Feb 2017 Vesting of performance rights 4,850,060 -
27 Apr
2017 Share placement at AUD 0.25 each 26,504,000 5,000,000
Less: Costs of issuing free attaching
options - (239,680)
Less: Costs of raising capital - (1,646,050)
29 May Shares issued in relation to the balance
2017 of a consultant's fee at AUD 0.21 each 5,193,522 823,000
30 Jun
2017 Vesting of performance rights 2,666,090 -
20 Nov Balance prior to Scheme of Arrangement
2017 implementation (ii) 768,158,142 204,510,196
Recognition of surplus value over nominal
20 Nov value of Kore Potash plc shares in Merger
2017 Reserve (ii) (iii) - (203,738,800)
20 Dec
2017 Vesting of performance rights (ii) (iii) 3,237,624 -
-------------- -------------
31 Dec
2017 Balance at 31 Dec 2017 (ii) (iii) 771,395,766 771,396
29 Mar
2018 Capital raising at AUD 0.20 each (iv) 83,523,344 83,523
29 Mar Share-based capital raising costs at AUD
2018 0.12 each (v) 4,315,333 4,315
Conversion of USD 250,000 convertible
loan note calculated by reference to the
27 Jul price of shares being at AUD 0.20 per
2018 share (vi) 1,618,250 1,618
31 Dec
2018 Closing balance 860,852,693 860,852
-------------- -------------
(i) At 31 December 2016, Kore Potash Limited was the parent
company of the Group and had 728,944,470 Fully Paid Ordinary Shares
in issuance with a nominal value of USD 200,572,926.
(ii) The Company became the Group's parent company on 20
November 2017 in accordance with the Scheme of Arrangement with
Kore Potash Limited and its shareholders ('the Scheme'). In line
with UK Company Law, the Company's shares have a par value of USD
0.001. Under the Scheme, the Company issued 768,158,142 ordinary
shares (initially to be held in the form of Chess Depositary
Interests (CDIs)) as consideration for the transfer of Kore Potash
Limited shares to the Company. Subsequently on 20 December 2017,
3,237,624 ordinary shares (CDIs) were issued by the Company on
conversion of certain Performance Rights.
(iii) As a result, the Group's Fully Paid issued capital has a
nominal value of USD 771,396 at 31 December 2018. The shares in the
Company were issued on a 1:1 basis with shares in Kore Potash
Limited which had a nominal value of USD 204,510,196 at the date of
the commencement of the Scheme. The surplus value of USD
203,738,800 compared to the nominal value of the Company's shares
has been recognised in a new Merger Reserve. Please refer to Note
12(d) for details.
(iv) On 29 March 2018, a total of USD 12,894,659 was raised from
existing and new investors through the placing and direct
subscription of 83,523,344 ordinary shares in the Company at a
placing price of AUD 0.20 per new ordinary share. The par value of
the 83,523,344 ordinary shares was USD 83,523.
(v) On 29 March 2018, 4,315,333 ordinary shares were issued to
Canaccord Genuity Ltd and Rencap Securities (Pty) Limited as part
of their placing fee at a deemed issued price of AUD 0.12 per
ordinary share. The par value of the 4,315,333 ordinary share was
USD 4,315.
(vi) On 26 March 2018, the Company entered into a convertible
loan note with the Chairman, David Hathorn, to lend USD 250,000 to
the Company. The convertible loan note did not attract interest and
was unsecured. At the Company's AGM on 27 June 2018, the
shareholders approved the conversion of the convertible loan note
into 1,618,250 shares at AUD 0.20 per share and 250,000
free-attaching warrants. The shares and warrants were issued on 27
July 2018.
Note 12: RESERVES Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
SBP reserve (a) 12,161,843 11,814,770 12,161,843 11,814,770
Share premium reserve (b) 13,054,936 - 13,054,936 -
Foreign currency translation reserve
(c) - - (15,310,945) (8,747,747)
Merger reserve (d) 203,738,800 203,738,800 203,738,800 203,738,800
Reorganisation reserve (e) (76,011,124) (76,899,326) - -
------------ ------------ ------------ -----------
Total Reserve 152,944,455 138,654,244 213,644,634 206,805,823
============ ============ ============ ===========
(a) SBP Reserve
Opening balance 11,814,770 - 11,814,770 36,279,828
Transfer from Kore Potash Limited
(i) - 11,739,224 - -
Value of lapsed options transferred
to
accumulated losses (ii) (888,202) - (888,202) (26,624,662)
Share based payment vesting expense
(iii) 1,235,275 75,546 1,235,275 1,919,924
Free attaching options issued
(iv) - - - 239,680
---------- ---------- ---------- ------------
Closing balance 12,161,843 11,814,770 12,161,843 11,814,770
========== ========== ========== ============
(i) In accordance with the Scheme of Arrangement between Kore
Potash Limited and its shareholders, 58,191,226 Unlisted Options
and 48,077,728 Performance Rights/Shares, valued at USD 11,739,224
were issued on 20 November 2017 from the Company to the holders of
Unlisted Options or Performance Rights/Shares in Kore Potash
Limited in consideration for the cancellation of those Kore Potash
Limited Unlisted Options and Performance Rights/Shares.
(ii) For further details, refer to Note 12(e).
(iii) The value of the above Parent entity's SBPs for the year
ended 31 December 2017 refer to the value of Performance Rights
vested/cancelled after the Unlisted Options and Performance
Rights/Shares were transferred from Kore Potash Limited to the
Company. On 20 December 2017, 3,237,624 Performance Rights and
Performance Shares vested and converted into 3,237,624 Chess
Depositary Interests (CDI's) and 2,245,000 Performance Rights
previously granted were cancelled following the resignation of
Werner Swanepoel (Project Director). The share based payments of
these Performance Rights and Shares was USD 75,546. Further details
of the SBP vesting expense for the year ended 31 December 2018 is
included in Note 23.
(iv) The cost of USD 239,680 in 2017 relates to the value of the
free attaching unlisted options provided to shareholders who
participated in the rights issue completed on 27 April 2017
(26,504,000 shares issued at AUD 0.25 each). A total of 5,000,000
unlisted options exercisable at AUD 0.30 expiring 15 November 2019
were issued with a Black Scholes valuation method of AUD 0.0642 per
option. The volatility used was 85.68% with risk-free interest rate
of 1.76%.
(v) For parameters used in the valuation of for the above
options and performance rights see Note 23.
(a) SBP Reserve (Cont)
Movement in SBP Reserve of the Consolidated Entity
Date Details No. of Options No. of Rights USD
1 Jan 2017 Opening balance 53,441,226 36,717,020 32,279,828
3 Feb 2017 Exercise of performance rights - (7,516,150) -
Issue of free attaching unlisted
27 Apr 2017 options 5,000,000 - 239,680
22 May 2017 Lapsing of unlisted options (250,000) - -
29 May 2017 Issue of performance rights - 18,216,858 -
1 Jun 2017 Issue of performance rights - 660,000 -
30 Jun 2017 SBP vesting expenses - - 906,265
20 Dec 2017 Exercise of performance rights - (3,237,624) -
Cancellation of performance
20 Dec 2017 rights - (2,245,000) -
1 Dec 2017 SBP vesting expenses - - 1,013,659
Transfer value of lapsed options
31 Dec 2017 to Accumulated Losses - - (26,624,662)
31 Dec 2017 Balance at 31 Dec 2017 58,191,226 42,595,104 11,814,770
Lapsing of unlisted options
(value of lapsed options transferred
30 Jun 2018 to Accumulated Losses) (8,191,226) - (888,202)
30 Jun 2018 SBP vesting expenses (vi) - - 676,255
1 Aug 2018 Issue of unlisted options (vii) 21,200,000 - -
Cancellation of performance
1 Aug 2018 rights (viii) - (14,000,000) -
Issue of performance rights
1 Aug 2018 (viii) - 4,500,000 -
Cancellation of performance
1 Aug 2018 rights (ix) - (1,025,000) -
31 Dec 2018 SBP vesting expenses - - 559,020
31 Dec 2018 Closing balance 71,200,000 32,070,104 12,161,843
-------------- ------------- ------------
(vi) The shareholders approved the issue of 500,000 and
1,050,000 Performance Rights to Sean Bennett at the Company's AGM
to recognise his contribution to the Company and the transition of
his position as CEO to a successor and his role in successfully
implementing the re-domicile of the Group in the United Kingdom,
the listing of the Company on the AIM and the JSE and the recent
completion of a capital raising. These Performance Rights vested
upon Mr Bennett's resignation. The Performance Rights are yet to be
issued and converted into shares. The SBP vesting expenses includes
the value of these Performance Rights of USD 115,785.
(vii) At the Company's AGM on 27 June 2018, the shareholders
approved the grant of 17,200,000 unlisted options to Brad Sampson
and the grant of 4,000,000 unlisted options to David Hathorn. The
unlisted options were subsequently issued on 1 August 2018. See
information on Option Series 31 and Option Series 32 in Note 23 for
further details on these options.
(viii) The shareholders also approved the cancellation of the
below existing Performance Rights and the grant of new Performance
Rights to the below Non-Executive Directors at the Company's
AGM.
Director Number of existing Number of new
Performance Performance
Rights Rights
David Hathorn 11,000,000 1,500,000
------------------- --------------
Jonathan Trollip 2,000,000 750,000
------------------- --------------
Leonard Math 1,000,000 750,000
------------------- --------------
David Netherway Nil 750,000
------------------- --------------
Timothy Keating Nil 750,000
------------------- --------------
The old Performance Rights were subsequently cancelled and the
new Performance Rights subsequently issued on 1 August 2018. See
information on Rights Series 16 to Rights Series 20 (inclusive) in
Note 23 for further details on these Performance Rights.
(ix) 1,025,000 Performance Rights were cancelled upon Mr
Bennett's resignation
(a) SBP Reserve (Cont)
The SBP reserve is used to accumulate proceeds received from the
issuing of options and accumulate the value of options and
performance rights issued in consideration for services rendered
and to record the fair value of options and performance rights
issued but not exercised. The reserve is transferred to accumulated
losses upon expiry or recognised as share capital if exercised.
(b) Share Premium Reserve Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Movements during the period USD USD USD USD
Opening balance - - - -
Capital raising on 29 March 2018
at AUD 0.20 each 12,810,869 - 12,810,869 -
Share-based capital raising costs
on 29 March 2018 at AUD 0.12 each 395,685 - 395,685 -
Less: Capital raising costs (400,000) - (400,000) -
Conversion of USD 250,000 convertible
loan note on 27 July 2018 calculated
by reference to the price of shares
being at AUD 0.20 per share 248,382 - 248,382 -
---------- -------- ----------- --------
Closing balance 13,054,936 - 13,054,936 -
========== ======== =========== ========
The share premium reserve is used to record the difference
between the monies received from capital raising and the par value
of the Company's shares, being USD 0.001 per fully paid ordinary
share (see Note 11).
(c) Foreign Currency Translation Parent Parent Consolidated Entity
Reserve
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Movements during the period USD USD USD USD
Opening balance - - (8,747,747) (22,338,631)
Currency translation differences
arising during the year - - (6,563,198) 13,590,884)
-------- -------- ------------ ------------
Closing balance - - (15,310,945) (8,747,747)
======== ======== ============ ============
The foreign currency translation reserve is used to record
currency differences arising from the translation of the financial
statements of the foreign subsidiary.
(d) Merger Reserve
As described above in Note 11, as part of the Scheme the Company
issued 771,395,768 shares with a par value of USD 0.001 each in
respect of the shares on Kore Potash Limited, which had issued
share capital at the date of the transaction with a value of USD
204,510,196. As a result of this transaction, a Merger Reserve of
USD 203,738,800 was created in both the Parent and Consolidated
Entity.
(e) Reorganisation Reserve
In accordance with the Scheme of Arrangement, the Company became
the new parent on 20 November 2017 and Kore Potash Limited is the
wholly-owned subsidiary of the Company. The Company elected to
account for the acquisition of Kore Potash Limited as a common
control transaction. As a consequence, no acquisition accounting
under IFRS 3 Business Combination has arisen. The investment in
Kore Potash Limited acquired by the Company as a result of the
internal reorganisation was recognised at a value consistent with
the carrying value of the equity items in the Kore Potash Limited
accounts immediately prior to the Scheme. In the Parent entity, the
difference between the carrying amount of share capital and options
issued by the Company under the Scheme and the investment in Kore
Potash Limited totalling USD 76,899,326 was recognised in a
Reorganisation Reserve in the parent company accounts during the
year ended 31 December 2017.
During the year, 8,191,226 SBP options expired during the year.
The value of the options of USD 888,802 was transferred to
Accumulated Losses in the Australian subsidiary Kore Potash
Limited, and to the Reorganisation Reserve in the Parent
company.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Movements during the period USD USD USD USD
Opening balance (76,899,326) - - -
Share issuance under Scheme of
Arrangement - (76,899,326) - -
Value of share-based payment options
expired during the year 888,202 - - -
------------ ------------ ---------- ---------
Closing balance (76,011,124) (76,899,326) - -
============ ============ ========== =========
Note 13: DIVIDS
No dividends have been proposed or paid during the year ended 31
December 2018 (2017: Nil).
Note 14: NOTES TO STATEMENT OF Parent Consolidated Entity
CASH FLOWS
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Reconciliation of cash flows from
operating activities:
Loss for the year (1,715,799) (92,320) (6,269,366) (4,344,322)
Adjustments for:
Depreciation expensed - - 7,078 16,612
Loss on asset disposals - - 5,974 -
Equity compensation benefits 695,345 75,546 695,345 1,919,924
Net realised foreign exchange gain - - 3,793 (2,864,226)
Interest received not classified
as operating activities cash inflow - - (72,873) (50,858)
Fair value change in derivative
financial liability (110,114) - (110,114) -
Operating loss before changes in
working capital
(Increase)/Decrease in receivables (149,775) - (150,283) (8,176)
Increase in tax payable - - (19,990) 42,970
Increase in payables 101,798 16,774 (143,613) 330,966
----------- ------------------------------- ----------- -----------
Net cash used in operating activities (1,178,545) - (6,054,050) (4,957,110)
=========== =============================== =========== ===========
Note 15: FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Overview
The Group has exposure to the following risks from their use of
financial instruments:
-- market risk,
-- credit risk, and
-- liquidity risks.
The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the financial performance of the
business. The Group will use different methods to measure different
types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange
and other price risks and ageing analysis for credit risk.
This note presents information about the Group's exposure to
each of the above risks, their objectives, policies and processes
for measuring and managing risk, and the management of capital. The
Board of Directors has overall responsibility for the establishment
and oversight of the risk management framework. Management monitors
and manages the financial risks relating to the operations of the
Group through regular reviews of the risks.
(a) Market Risk
Market risk is the risk that changes in market prices, such as
foreign exchange rates, interest rates and equity prices will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
(i) Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currency and are exposed to foreign currency risk through foreign
exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions
and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional
currency. The risk is measured using sensitivity analysis and
cashflow forecasting.
(a) Market Risk (Cont)
(i) Foreign currency risk (cont)
As a result of the operating activities in the RoC and the
ongoing funding of overseas operations from Australia, the Group's
Statement of Financial Position can be affected by movements in the
Australian Dollar (AUD) / US Dollar (USD) exchange rate, British
Pound (GBP) / US Dollar (USD) exchange rate, Congolese Franc (XAF)
/ US Dollar (USD) exchange rate, Euro (EUR) / US Dollar (USD)
exchange rate and the South African Rand (ZAR) / US Dollar (USD)
exchange rate. Funds in EUR is held to hedge the Definitive
Feasibility Study (DFS) payments.
A substantial portion of the Group's transactions are
denominated in USD, with historically, the majority of costs
relating to drilling activities also denominated in the unit's
functional currency.
The summary quantitative data about the Group's financial
instruments' exposure to significant currency risk as presented in
USD is as follows:
31 December 2018 31 December 2017
EUR GBP XAF ZAR EUR AUD ZAR GBP
FINANCIAL
ASSETS
Cash at
bank 1,143,346 - 309,789 61,406 13,805,462 49,158 100,778 -
Receivables - 102,702 321,103 9,302 - 47,031 - 65,631
FINANCIAL
LIABILITIES
Payables (553,000) (185,730) (300,369) (203,418) (2,184,134) (189,924) (846) (52,956)
Derivative
financial
liability - (503,398) - - - - - -
--------- --------- --------- --------- ----------- --------- ------- --------
Net exposure 590,346 (586,426) 330,523 (132,710) 11,621,328 (93,735) 99,932 12,675
========= ========= ========= ========= =========== ========= ======= ========
The Group did not have significant currency risk from net
exposure to financial instruments' denominated in AUD at 31
December 2018 (31 December 2017: no significant currency risk from
net exposure to financial instruments' denominated in XAF).
Sensitivity analysis (Group)
A reasonably possible strengthening (weakening) of the EUR, GBP,
XAF and ZAR against USD at 31 December 2018 would have affected the
measurement of financial instruments denominated in a foreign
currency and affected equity and profit or loss for the Group by
the amounts shown below. This analysis assumes all other variables,
in particular interest rates, remain constant. The impact of the
possible strengthening (weakening) of the AUD and any other
currencies against USD is minimal and is not analysed.
Equity Profit or Loss
Strengthening Weakening Strengthening Weakening
Gain/(Loss) Gain/(Loss) (Gain)/Loss (Gain)/Loss
USD USD USD USD
------------------- -------------- ------------ -------------- ------------
31 December 2018
EUR (5% movement) 29,517 (29,517) (29,517) 29,517
GBP (5% movement) (29,321) 29,321 29,321 (29,321)
XAF (5% movement) 16,526 (16,526) (16,526) 16,526
ZAR (5% movement) (6,636) 6,636 6,636 (6,636)
(a) Market Risk (Cont)
(i) Foreign currency risk (cont)
The summary quantitative data about the Parent's financial
instruments' exposure to significant currency risk as presented in
USD is as follows:
31 December 2018 31 December 2017
EUR GBP XAF ZAR EUR AUD ZAR GBP
FINANCIAL
ASSETS
Cash at - - - - - - - -
bank
Receivables - 102,702 - - - - - 65,631
FINANCIAL
LIABILITIES
Payables - (111,798) - - - - - (10,000)
Derivative
financial
liability - (503,398) - - - - - -
--- --------- --- --- --- --- --- --------
Net exposure - (512,494) - - - - - 55,631
=== ========= === === === === === ========
Sensitivity analysis (Parent)
A reasonably possible strengthening (weakening) of the GBP
against USD at 31 December 2018 would have affected the measurement
of financial instruments denominated in a foreign currency and
affected equity and profit or loss for the Parent by the amounts
shown below. This analysis assumes all other variables, in
particular interest rates, remain constant.
Equity Profit or Loss
Strengthening Weakening Strengthening Weakening
Gain/(Loss) Gain/(Loss) (Gain)/Loss (Gain)/Loss
USD USD USD USD
------------------- -------------- ------------ -------------- ------------
31 December 2018
GBP (5% movement) (25,625) 25,625 25,625 (25,625)
(ii) Interest rate risk
The Group is exposed to movements in market interest rates on
short term deposits.
The Group's exposure to interest rate risk and the effective
weighted average interest rate for each class of financial assets
and financial liabilities is set out in the following table:
Weighted Average
Effective Interest Fixed Floating Non-Interest
Rate Interest Rate Interest Rate Bearing
Dec 2018 Dec 2017 Dec 2018 Dec 2017 Dec 2018 Dec 2017 Dec 2018 Dec 2017
% % USD USD USD USD USD USD
FINANCIAL ASSETS
Cash at bank 1.45% 0.04% 4,000,000 - 2,187,113 16,455,490 - -
Receivables - - - - 409,677 346,993
---------- --------- ---------- ----------- ---------- ----------
Total financial
assets 4,000,000 - 2,187,113 16,455,490 409,677 346,993
========== ========= ========== =========== ========== ==========
FINANCIAL LIABILITIES
Payables
(non-derivative) - - - - 1,198,994 3,267,317
Derivative financial - - - - 503,398 -
liablity
---------- --------- ---------- ----------- ---------- ----------
Total financial
liabilities - - - - 1,702,392 3,267,317
========== ========= ========== =========== ========== ==========
Sensitivity analysis
A change of 100 basis point in interest rates at the reporting
date would have increased (decreased) equity or profit or loss by
the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant.
This analysis is performed the same basis for the Consolidated
Entity for 2017.
Profit or Loss
100bp 100bp
Increase Decrease
USD USD
-------------------------- --------- ----------
31 December 2018
Variable rate instrument 21,871 (21,871)
31 December 2017
Variable rate instrument 164,555 (164,555)
All receivables and payables in the Parent at 31 December 2018
and at 31 December 2017 are non-interest bearing.
Financial assets
Trade receivables from other entities are carried at cost less
any allowance for doubtful debts. Other receivables are carried at
cost. Interest is recorded as income using the effective interest
rate method.
Financial liabilities
Liabilities are recognised for amounts to be paid in the future
for goods and services received, whether or not billed to the
group.
Net fair value of financial assets and liabilities
The carrying amount of financial assets and liabilities at 31
December 2018 and 31 December 2017 is equivalent to the fair
value.
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's receivables from customers and cash and investment
deposits. The Group has adopted the policy of only dealing with
credit worthy counterparties and obtaining sufficient collateral or
other security where appropriate, as a means of mitigating the risk
of financial loss from defaults.
The Group does not have any significant credit risk exposure to
any single counterparty or any group of counterparties having
similar characteristics. The carrying amount of financial assets
recorded in the financial statements, net of any provisions for
losses, represents the Group's maximum exposure to credit risk.
(c) Liquidity and capital risk
The Group's total capital is defined as the shareholders' net
equity plus any net debt. The objectives when managing the Group's
capital is to safeguard the business as a going concern, to
maximise returns to shareholders and to maintain an optimal capital
structure in order to reduce the cost of capital.
The Group does not have a target debt / equity ratio, but has a
policy of maintaining a flexible financing structure so as to be
able to take advantage of investment opportunities when they arise.
There are no externally imposed capital requirements.
There have been no changes in the strategy adopted by management
to control the capital of the Group since the prior year.
(c) Liquidity and capital risk (cont)
The table below analyses the Group's financial liabilities into
maturity groupings based on the remaining period from the balance
date to the contractual maturity date.
Within 1
31 Dec 2018 Month 1-3 Months 3-12 Months
USD USD USD
Non-derivatives
Non-interest bearing
Trade and other payables 451,184 1,285,455 -
---------- ----------- ------------
Total Financial Liabilities 451,184 1,285,455 -
========== =========== ============
Within 1
31 Dec 2017 Month 1-3 Months 3-12 Months
USD USD USD
Non-derivatives
Non-interest bearing
Trade and other payables 3,267,317 - -
---------- ----------- ------------
Total Financial Liabilities 3,267,317 - -
========== =========== ============
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity is to ensure, as far as possible,
that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Group's reputation.
The Group manages liquidity risk by maintaining adequate
reserves by continuously monitoring forecast and actual cash
flows.
If the Group anticipates a need to raise additional capital
within 6 months to meet forecasted operational activities, then the
decision on how the Company will raise future capital will depend
on market conditions existing at that time.
(d) Fair Value of Financial Instruments
This note provides information about how the Group determines
fair values of various financial assets and financial
liabilities.
The Directors consider that carrying amounts at financial assets
and financial liabilities recognised in the consolidated financial
statements approximate to their fair value.
Fair value hierarchy as at 31 December
2018 Amortised
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
----------- ---------- ---------- --------- ----------
Financial assets
Financial assets held
at amortised cost
* Trade and other receivables - - - - 409,677
----------- ---------- ---------- --------- ----------
Total - - - - 409,677
----------- ---------- ---------- --------- ----------
Financial liabilities
Financial liabilities
held at amortised cost:
* Trade and other payables - - - - 1,702,392
Financial liabilities
held at fair value:
* Derivative financial liability - 503,398 - 503,398 -
----------- ---------- ---------- --------- ----------
Total - 503,398 - 503,398 1,702,392
----------- ---------- ---------- --------- ----------
Fair value hierarchy as at 31 December Amortised
2017
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
----------- ---------- ---------- --------- ----------
Financial assets
Financial assets held
at amortised cost
* Trade and other receivables - - - - 346,993
----------- ---------- ---------- --------- ----------
Total - - - - 346,993
----------- ---------- ---------- --------- ----------
Financial liabilities
Financial liabilities
held at amortised cost:
* Trade and other payables - - - - 3,267,317
----------- ---------- ---------- --------- ----------
Total - - - - 3,267,317
----------- ---------- ---------- --------- ----------
The information on the fair values of various financial assets
and financial liabilities for the Parent are as follows:
Fair value hierarchy as at 31 December
2018 Amortised
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
----------- ---------- ---------- --------- -----------
Financial assets
Financial assets held
at amortised cost
* Trade and other receivables - - - - 12,634,124
----------- ---------- ---------- --------- -----------
Total - - - - 12,634,124
----------- ---------- ---------- --------- -----------
Financial liabilities
Financial liabilities
held at amortised cost:
* Trade and other payables - - - - 144,217
Financial liabilities
held at fair value:
* Derivative financial liability - 503,398 - 503,398 -
----------- ---------- ---------- --------- -----------
Total - 503,398 - 503,398 144,217
----------- ---------- ---------- --------- -----------
Fair value hierarchy as at 31 December Amortised
2017
Level 1 Level 2 Level 3 Total Cost
USD USD USD USD USD
----------- ---------- ---------- --------- -----------
Financial assets
Financial assets held
at amortised cost
* Trade and other receivables - - - - 65,631
----------- ---------- ---------- --------- -----------
Total - - - - 65,631
----------- ---------- ---------- --------- -----------
Financial liabilities
Financial liabilities
held at amortised cost:
* Trade and other payables - - - - 16,774
----------- ---------- ---------- --------- -----------
Total - - - - 16,774
----------- ---------- ---------- --------- -----------
Note 16: SEGMENT INFORMATION
Management has determined that the Company and the Group has one
reporting segment being mineral exploration in Central Africa.
As the Group is focused on mineral exploration in Central
Africa, management make resource allocation decisions by reviewing
the working capital balance, comparing cash balances to committed
exploration expenditure and reviewing the current results of
exploration work performed. This internal reporting framework is
the most relevant to assist the Board with making decisions
regarding the Group and its ongoing exploration activities, while
also taking into consideration the results of exploration work that
has been performed to date and capital available to the
Company.
Note 17: EVENTS SUBSEQUENT TO REPORTING DATE
On 29 January 2019 the Company publicly announced the outcomes
of the Kola DFS on the AIM market, ASX and on JSE. The Kola DFS was
undertaken by the FC during 2017 and 2018. The highlights of the
Kola DFS are detailed on pages 10 to 11 of the Annual Report and
the full announcement can be found on the Company's website.
The FC who undertook the Kola DFS was contracted to deliver a
proposal for an EPC contract within 3 months of the completion of
the DFS. The FC submitted an EPC proposal on 23 March 2019 which
was past the agreed due date of 28 February 2019. The Company is
now assessing its options for the way forward on the Kola Project
which could include seeking competitive EPC proposals from European
companies.
On 13 February 2019, 1,886,996 Class C Performance Rights were
converted into 1,886,996 fully paid ordinary shares following
satisfaction of vesting conditions.
There are no other significant events that have occurred since
reporting date requiring separate disclosure.
Note 18: OPERATING LEASE ARRANGEMENTS
Leasing Arrangements
Operating leases relate to leases of offices and other property
with lease terms of up to 5 years. The Group does not have an
option to purchase the leased property at the expiry of the lease
periods.
Non-Cancellable Operating Lease Commitments
Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Not later than 1 year - - 176,097 115,483
Later than 1 year and not later
than 5 years - - 40,604 85,632
Later than 5 years - - - -
---------- ---------- --------- ---------------
- - 216,702 201,115
---------- -------------------------------------------- --------- ---------------
No liabilities have been recognised in respect of
non-cancellable operating leases.
Note 19: COMMITMENTS FOR EXPITURE
Exploration and Evaluation Expenditure Commitments
In order to maintain current rights of tenure to exploration
permits, the Group is required meet minimum expenditure
requirements by performing exploration and development work. As at
year end, the minimum expenditure requirement has not yet been
determined with respect to the Group's Sintoukola 2 exploration
permit. However, when the minimum expenditure requirement is
confirmed this will need to be satisfied over a period of 3
years.
The are no minimum expenditure requirements with respect to the
Group's mining licences. One of the key investment promotion
provisions for the Mining Convention includes that the RoC is to be
granted a 10% carried equity interest in the project companies,
which are currently wholly-owned by the Group's subsidiary,
SPSA.
If the Group decides to relinquish certain licences and/or does
not meet the obligations of the new mining convention, assets
recognised in the statement of financial position may require
review to determine the appropriateness of the carrying values. The
sale, transfer or farm-out of exploration rights to third parties
will reduce or extinguish these obligations.
Kola DFS Commitment
On 28 February 2017 the Company signed a contract with
TechnipFMC, VINCI Construction Grands Projets, Egis and Louis
Dreyfus Armateur (the FC), for the implementation of the DFS.
At the date of this report, the Group had the following DFS
commitment:
Parent Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Not later than 1 year - - 935,563 9,259,776
Later than 1 year and not later - - 1,575,750 -
than 5 years
Later than 5 years - - - -
---------- ----------
- - 2,511,313 9,259,776
---------- -------------------------------------------- ---------- ----------
Note 20: AUDITORS' REMUNERATION
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Fees payable to the Company's auditor
and their associates for the audit
of the Company's annual accounts
Deloitte - External Audit 105,000 35,000 165,108 103,679
-------- -------- ---------- ---------
Total audit fees 105,000 35,000 165,108 103,679
-------- -------- ---------- ---------
Fees payable to the Company's auditor
and their associates for other
non-audit services to the Group
Half-year review 39,217 - 57,665 40,763
Review of prior years for South
African subsidiary - - 6,546 -
Services in connection with the
AIM listing - - 148,632 411,015
Tax, Research and Development consulting - - 113,866 34,188
-------- -------- ----------
Total non-audit services 39,217 - 326,709 485,966
-------- -------- ---------- ---------
Total fees payable to the Company's
auditor and their associates 144,217 35,000 491,817 589,645
======== ======== ========== =========
Note 21: RELATED PARTY TRANSACTIONS
Directors remuneration
The expense of USD 812,575 recognised (2018: USD 365,371)
includes directors fees paid and remuneration for the current and
outgoing Chief Executive Officer.
The Company paid USD 6,050 (2017: USD 13,652) to Piaster Pty Ltd
as trustee for the Trollip Family Superannuation Fund for Mr
Jonathan Trollip's director fees. Mr Trollip is a director of and
has a beneficial interest in Piaster Pty Ltd.
On 27 June 2018, the shareholders approved the grant of
17,200,000 unlisted options to Brad Sampson, valued at a total of
USD 1,171,320 and 4,000,000 unlisted options to David Hathorn,
valued at a total of USD 145,600 at the Company's AGM.
The shareholders also approved the cancellation of the below
existing Performance Rights and the grant of new Performance Rights
to the below Non-Executive Directors at the Company's AGM.
Director Number of existing Number of new
Performance Performance
Rights Rights
David Hathorn 11,000,000 1,500,000
------------------- --------------
Jonathan Trollip 2,000,000 750,000
------------------- --------------
Leonard Math 1,000,000 750,000
------------------- --------------
David Netherway Nil 750,000
------------------- --------------
Timothy Keating Nil 750,000
------------------- --------------
The new Performance Rights have a total value of USD
336,150.
On 27 June 2018, the shareholders also approved the issue of
500,000 and 1,050,000 Performance Rights to Sean Bennett at the
Company's AGM to recognise his contribution to the Company and the
transition of his position as CEO to a successor and his role in
successfully implementing the re-domicile of the Group in the
United Kingdom, the listing of the Company on the AIM and the JSE
and the recent completion of a capital raising. These Performance
Rights have a total value of USD 115,785.
The details of the unlisted options and Performance Rights
granted are in the Company's Notice of General Meeting announced on
1 June 2018.
No other director has entered into a material contract (apart
from employment) with the Company since the incorporation of the
Company and there were no material contracts involving directors'
interests at the half-year end. Remuneration arrangements of KMP
are disclosed in the Directors' Remuneration Report on pages 27 to
29 of this Annual Report.
Loans to KMP and its related parties
David Hathorn (Chairman) and Sean Bennett (previous CEO) were
each issued with 25,000 Redeemable (Non-Voting) Preference Shares
at GBP 1.00 each in the Kore Potash plc (held directly). Under the
Scheme of Arrangement, both Directors gave an irrevocable
undertaking to pay the Company the sum of GBP 25,000 on or before
the date that is five years from the date of the undertaking or, if
sooner, immediately upon a written demand or demands by the
Company. At 31 December 2017, the amount owing by the two Directors
to the Company was USD 65,631 (GBP 50,000). Upon completion of the
Scheme of Arrangement, and upon the Company's capital raising on 23
March 2018, the Redeemable Preference Shares were redeemed and the
amounts payable by the Directors were offset by an amount payable
by the Company back to the Directors.
On 26 March 2018, the Company entered into a convertible loan
note agreement with the Chairman to lend USD 250,000 to the
Company. The convertible loan note did not attract interest and was
unsecured. At the Company's AGM on 27 June 2018, the shareholders
approved the conversion of the convertible loan note into 1,618,250
shares at AUD 0.20 per share and 250,000 free-attaching warrants.
The shares and warrants were issued on 27 July 2018.
Other transactions with the Company and the Group
No KMP has entered into a material contract (apart from
employment) with the Company and the Group. Please refer to the
Remuneration Report in the Directors' Report for the remuneration
paid to the KMP. No amount of remuneration is outstanding at 31
December 2018 (31 December 2017: nil).
Nexia Perth Pty Ltd is engaged to provide accounting,
administrative and company secretarial services for the Group on
commercial terms. Mr Henko Vos, who is based in Perth, Australia
has been appointed as joint company secretary and is also currently
an employee with Nexia Perth. During the year, the total amount
paid to Nexia Perth by the Group for providing accounting,
administration and company secretarial services was USD 163,445
(2017: USD 117,387).
FKW Consulting Ltd was engaged to provide company secretarial
services for the Company on commercial terms prior to Mrs Francesca
Wilson's resignation as joint company secretary on 30 September
2018. Mrs Francesca Wilson, who is based in London, UK was
appointed as joint company secretary up until 30 September 2018 and
is also currently an employee with FKW Consulting Ltd during the
year. During the year, the total amount paid to FKW Consulting Ltd
by the Group for providing company secretarial services was USD
11,134 (2017: 13,383).
Following Mrs Francesca Wilson's resignation as joint company
secretary on 30 September 2018, St James's Corporate Services
Limited was appointed on 1 October 2018, and engaged to provide
company secretarial services for the Company on commercial terms.
During the year, the total amount paid to St James's Corporate
Services Limited by the Group for providing company secretarial
services was USD 29,100.
There were no other transactions with KMP and its related
parties.
Note 22: KMP DISCLOSURES
The following were KMP of the Company and the Group at any time
during the reporting period and unless otherwise indicated were KMP
for the entire period.
Executive Directors
Brad Sampson Chief Executive Officer (appointed on 4 June
2018)
Sean Bennett Chief Executive Officer (appointed on 20 November
2015, resigned on 4 June 2018)
Non-Executive Directors
David Hathorn Non-Executive Chairman (appointed on 20 November
2015)
Jonathan Trollip Non-Executive Director (appointed on 21 April
2016)
Leonard Math Non-Executive Director (appointed on 24 April
2014)
Timothy Keating Non-Executive Director (appointed on 15 November
2016)
David Netherway Non-Executive Director (appointed on 12 December
2017)
José Antonio Non-Executive Director (appointed on 23 May 2018)
Merino
Pablo Altimiras Non-Executive Director (appointed on 15 November
2016, resigned on 23 May 2018)
Executives
Henko Vos Joint Company Secretary (appointed on 16 November
2016)
St James's Corporate Joint Company Secretary (appointed on 1 October
Services Limited 2018)
Francesca Wilson Joint Company Secretary (appointed on 29 November
2017,
resigned on 30 September 2018)
John Crews Chief Financial Officer (appointed on 22 May
2017)
Julien Babey Business Development and Head of RoC (appointed
on 1 January 2016)
Gavin Chamberlain Chief Operating Officer (appointed 1 October
2017)
Lawrence Davidson Chief Financial Officer and Risk Officer (resigned
on 1 January 2018)
Joint Company Secretary (resigned on 25 January
2018)
(i) David Hathorn and Sean Bennett were appointed as the
directors of Kore Potash plc on the date of incorporation of the
Company on 25 August 2017.
(ii) In accordance with the Scheme of Arrangement between Kore
Potash Limited and its shareholders, Jonathan Trollip, Leonard
Math, Timothy Keating and Pablo Altimiras were appointed as the
directors of the Company on 17 November 2017.
KMP compensation
The KMP compensation included in "Directors Remuneration",
"Equity Compensation Benefits" "Employee and Consultant Expenses"
and "Exploration Expenditure" is as follows:
Consolidated Entity
Dec 2018 Dec 2017
USD USD
Short-term employee benefits 1,807,001 1,510,100
Post-employment benefits 6,050 13,652
Termination benefits 325,705 256,986
Equity compensation benefits 981,042 1,286,133
---------- ----------
3,119,798 3,066,871
---------- ----------
There were seven directors who held office at the end of the
2018 and 2017 years. Details of directors' remuneration are
provided in the Directors' Remuneration Report on pages 27 to 44 of
this Annual Report.
Individual directors and executives compensation disclosures
Information regarding individual directors and executives'
compensation and equity instruments disclosures is provided in the
Remuneration Report section of the Directors' Report. Apart from
the details disclosed in this note, no director has entered into a
material contract with the Company or the Group since the end of
the previous financial year and there were no material contracts
involving directors' interests existing at year-end.
Note 23: SHARE-BASED PAYMENTS
Recognised share-based payments
The expense recognised for employee and consultant services
during the year is shown in the table below:
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Expense arising from equity-settled
share-based payment transactions 695,345 75,545 695,345 1,919,924
--------- -------- --------- -----------
In addition, the amounts capitalised to exploration and
evaluation expenditure from share-based payment transactions for
staff whose services are directly attributable to the operational
activities of the Kola and Dougou mining projects are as
follows:
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD USD USD USD
Amounts capitalised to exploration
and evaluation expenditure arising
from equity-settled share-based
payment transactions 539,930 - 539,930 -
--------- -------- ----------- --------
Parent
In accordance with the Scheme of Arrangement between Kore Potash
Limited and its shareholders, 58,191,226 Unlisted Options and
48,077,728 Performance Rights/Shares were issued on 20 November
2017 from the Company to the holders of Unlisted Options or
Performance Rights/Shares in Kore Potash Limited in consideration
for the cancellation of those Kore Potash Limited Unlisted Options
and Performance Rights/Shares.
The value of the above Parent entity's share-based payments in
2017 refer to the value of Performance Rights vested/cancelled
after the Unlisted Options and Performance Rights/Shares were
transferred from Kore Potash Limited to the Company. On 20 December
2017, 3,237,624 Performance Rights and Performance Shares vested
and converted into 3,237,624 Chess Depositary Interests (CDI's) and
2,245,000 Performance Rights previously granted were cancelled
following the resignation of Werner Swanepoel (Project Director).
The share based payments of USD 75,545 in 2017 relate to KMP.
Consolidated Entity
The Group granted shares rights and options to KMP and other
employees as part of as an incentive for future services and as a
reward for past services. The table above shows the vesting expense
recognised during the year of USD 695,345 (2017: USD 1,919,924) and
vesting expenses capitalised to exploration and evaluation
expenditure of USD 539,930 (2017: Nil).
Details of the share options outstanding during the year are as
follows:
2018 2017
Weighted Weighted
Number of average Number average
share exercise of share exercise
options price options price
Outstanding at beginning at
year 8,191,226 AUD 0.33 8,441,226 AUD 0.35
Granted during the year 21,200,000 GBP 0.11 - -
Forfeited during the year - - - -
Exercised during the year - - - -
Lapsed during the year (8,191,226) AUD 0.33 (250,000) AUD 0.90
------------ ----------- ------------ -----------
Outstanding at the end of the
year 21,200,000 GBP 0.11 8,191,226 AUD 0.33
============ =========== ============ ===========
The share options outstanding at 31 December 2018 had a weighted
average exercise price of GBP 0.11 and a weighted average
contractual life of 8 years.
Details of options and performance rights issued to KMP
Option Series 19 to 21
During the 2013 financial year, 250,000 options exercisable at
AUD 0.90 expiring 22 May 2017 were issued to a previous Director,
Mr Robert Franklyn, following shareholder approval at the AGM held
on 22 May 2013. The details of the options are as per below.
The options were valued using the Black Scholes Option Pricing
Model. The table below shows the fair value of the options and the
inputs used in determining the fair value.
Inputs into the Tranche Tranche Tranche
model 1 2 3
(Series (Series (Series
19) 20) 21)
Grant date 22 May 22 May 2013 22 May
2013 2013
----------- ------------ -----------
Share price at AUD 0.39 AUD 0.39 AUD 0.39
grant date
----------- ------------ -----------
Exercise price AUD 0.90 AUD 0.90 AUD 0.90
----------- ------------ -----------
Expiry date 22 May 22 May 2017 22 May
2017 2017
----------- ------------ -----------
Expected volatility 100% 100% 100%
----------- ------------ -----------
Dividend yield 0% 0% 0%
----------- ------------ -----------
Risk free rate 2.75% 2.75% 2.75%
----------- ------------ -----------
Vesting date 22 May 22 May 2015 22 May
2014 2016
----------- ------------ -----------
Vesting period
(years) 0.90 1.90 2.90
----------- ------------ -----------
Fair value per AUD 0.2181 AUD 0.2181 AUD 0.2181
option calculated
based on above
inputs
----------- ------------ -----------
Number of options 83,333 83,333 83,334
----------- ------------ -----------
The above options expired during the 2017 financial year on 22
May 2017.
Option Series 22 to 24
On 9 April 2014, the Company granted 6,509,013 Options
exercisable at AUD 0.33 expiring 15 April 2018 to employees under
the Group's Employee Share Option Plan.
The options were subject to the following vesting
conditions:
-- 1/3(rd) which vested on 15 April 2014;
-- 1/3(rd) which vested on 15 April 2015; and
-- 1/3(rd) which vested on 15 April 2016.
None of the options had any voting rights, any entitlement to
dividends or any entitlement to the proceeds of liquidation in the
event of a winding up.
The fair value of the equity-settled share options granted was
estimated as at the grant date using the Binomial Option Pricing
Model taking into account the terms and conditions upon which the
instruments were granted. Expected volatility was based on the
historical share price volatility over the previous years.
Details of options and performance rights issued to KMP
(cont)
Option Series 22 to 24 (Cont)
The input used in the measurement of the fair value at grant
date of equity settled share based payments plan were as
follows:
Inputs into the Tranche Tranche Tranche
model 1 2 3
(Series (Series (Series
22) 23) 24)
Grant date share AUD 0.26 AUD 0.26 AUD 0.26
price
----------- ----------- -----------
Exercise price AUD 0.33 AUD 0.33 AUD 0.33
----------- ----------- -----------
Expected volatility 100% 100% 100%
----------- ----------- -----------
Option life 4 years 4 years 4 years
----------- ----------- -----------
Dividend yield 0% 0% 0%
----------- ----------- -----------
Risk free interest
rate 2.5% 2.5% 2.5%
----------- ----------- -----------
Weighted average AUD 0.1242 AUD 0.1391 AUD 0.1522
grant date fair
value
----------- ----------- -----------
Number of options 2,169,671 2,169,671 2,169,671
----------- ----------- -----------
During the 2014 year, a total of 817,787 of options lapsed,
408,893 from Tranche 2 (Option Series 23) and 408,894 from Tranche
3 (Option Series 24).
The remaining options expired during the 2018 financial year on
15 April 2018.
Option Series 25 to 27
On 12 May 2014, the Company granted 1,000,000 options
exercisable at AUD 0.33 expiring 15 April 2018 to an employee under
the Group's Employee Share Option Plan.
The options were subject to the following vesting
conditions:
-- 1/3(rd) which vested on 15 April 2014;
-- 1/3(rd) which vested on 15 April 2015; and
-- 1/3(rd) which vested on 15 April 2016.
None of the options had any voting rights, any entitlement to
dividends or any entitlement to the proceeds of liquidation in the
event of a winding up.
The fair value of the equity-settled share options granted was
estimated as at the grant date using the Binomial Option Pricing
Model taking into account the terms and conditions upon which the
instruments were granted. Expected volatility was based on the
historical share price volatility over the past years.
Option Series 25 to 27 (Cont)
The input used in the measurement of the fair value at grant
date of equity settled share based payments plan were as
follows:
Inputs into the Tranche Tranche Tranche
model 1 2 3
(Series (Series (Series
25) 26) 27)
Grant date share AUD 0.22 AUD 0.22 AUD 0.22
price
----------- ----------- -----------
Exercise price AUD 0.33 AUD 0.33 AUD 0.33
----------- ----------- -----------
Expected volatility 100% 100% 100%
----------- ----------- -----------
Option life 4 years 4 years 4 years
----------- ----------- -----------
Dividend yield 0% 0% 0%
----------- ----------- -----------
Risk free interest
rate 2.5% 2.5% 2.5%
----------- ----------- -----------
Weighted average AUD 0.0948 AUD 0.1073 AUD 0.1194
grant date fair
value
----------- ----------- -----------
Number of options 333,333 333,333 333,333
----------- ----------- -----------
The above options expired during the 2018 financial year on 15
April 2018.
Option Series 28 to 30
On 30 May 2014, the Company issued 1,500,000 Options exercisable
at AUD 0.33 expiring 26 June 2018 to the following previous
Directors under the Group's Employee Share Option Plan
Mr John Iain Macpherson 1,100,000 Options
Mr Robert Samuel Middlemas 400,000 Options
The options were subject to the following vesting
conditions:
-- 1/3(rd) which vested on 15 April 2014;
-- 1/3(rd) which vested on 15 April 2015; and
-- 1/3(rd) which vested on 15 April 2016.
None of the options had any voting rights, any entitlement to
dividends or any entitlement to the proceeds of liquidation in the
event of a winding up.
The fair value of the unlisted options granted was estimated as
at the grant date using the Binomial Option Pricing Model taking
into account the terms and conditions upon which the instruments
were granted. Expected volatility was based on the historical share
price volatility over the previous years.
The input used in the measurement of the fair value at grant
date of equity settled share based payments plan were as
follows:
Inputs into the Tranche Tranche Tranche
model 1 2 3
(Series (Series (Series
28) 29) 30)
Grant date share AUD 0.25 AUD 0.25 AUD 0.25
price
----------- ----------- -----------
Exercise price AUD 0.33 AUD 0.33 AUD 0.33
----------- ----------- -----------
Expected volatility 100% 100% 100%
----------- ----------- -----------
Option life 4 years 4 years 4 years
----------- ----------- -----------
Dividend yield 0% 0% 0%
----------- ----------- -----------
Risk free interest
rate 2.5% 2.5% 2.5%
----------- ----------- -----------
Weighted average AUD 0.1177 AUD 0.1303 AUD 0.1432
grant date fair
value
----------- ----------- -----------
Number of options 500,000 500,000 500,000
----------- ----------- -----------
The above options expired during the 2018 financial year on 26
June 2018.
Option Series 31 and 32
At the Company's AGM on 27 June 2018, the Company's shareholders
approved the grant of 17,200,000 unlisted options to Brad Sampson
and 4,000,000 unlisted options to David Hathorn. The vesting
conditions for the unlisted options include milestones being
achieved in relation to the Kola Project, as follows:
Brad Sampson David Hathorn
(Option Series (Option Series
Vesting conditions 31) 32)
Completion of project
financing 5,733,333 4,000,000
---------------- ----------------
Completion of project 11,466,667 -
---------------- ----------------
Total 17,200,000 4,000,000
---------------- ----------------
Expiry 27/06/2028 27/06/2020
---------------- ----------------
The fair value at grant date of the unlisted options issued to
Brad Sampson and to David Hathorn was estimated at GBP 0.0518 and
GBP 0.0241 respectively, using the Black Scholes Option Pricing
Model taking into account the terms and conditions as set out
above. The input used in the measurement of the fair value at grant
date of the unlisted options were as follows:
Input into the Option Series Option Series
model 31 32
Grant Date Share GBP 0.06 GBP 0.06
Price
-------------- --------------
Expected Volatility 108.90% 108.90%
-------------- --------------
Options Life 10 years 2 years
-------------- --------------
Grant date fair GBP 0.0518 GBP 0.0241
value
-------------- --------------
Rights Series 4 to 6
On 17 September 2015, the Company issued 7,998,270 Performance
Rights to the following employees of the Group under the Group's
Employee Performance Rights Plan.
Employee Class A Class B Class C
Lawrence Davidson 376,374 376,374 376,374
---------- ---------- ----------
Julien Babey 521,957 521,957 521,957
---------- ---------- ----------
Other employees 1,767,759 1,767,759 1,767,759
---------- ---------- ----------
Total 2,666,090 2,666,090 2,666,090
---------- ---------- ----------
Rights and each class' vesting conditions is as follows:-
Rights Series 4 - Class A Performance Rights (Employee)
Performance Rights vest as one Share for each Performance Right
subject to the satisfaction of the following performance criteria
within 24 months from the date of issue:-
-- the Company's market capitalisation averaging over a period
of 60 consecutive days of trading a daily average of not less than
AUD 85 million; and
-- completing 12 months of continuous service with the Company.
Rights Series 5 - Class B Performance Rights (Employee)
Performance Rights vest as one Share for each Performance Right
subject to the satisfaction of the following performance criteria
within 36 months from the date of issue:
-- the Company's market capitalisation averaging over a period
of 60 consecutive days of trading a daily average of not less than
AUD 100 million; and
-- completing 24 months of continuous service with the Company.
Rights Series 6 - Class C Performance Rights (Employee)
Performance Rights vest as one Share for each Performance Right
subject to the satisfaction of the following performance criteria
within 48 months from the date of issue:
-- the Company's market capitalisation averaging over a period
of 60 consecutive days of trading a daily average of not less than
AUD 120 million; and
-- completing 36 months of continuous service with the Company.
The fair value of the performance rights granted was estimated
as at the grant date using the Monte-Carlo Pricing Model taking
into account the terms and conditions upon which the instruments
were granted.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the model Series 4 - Class Series 5 - Class Series 6 - Class
A B C
Grant date share price AUD 0.185 AUD 0.185 AUD 0.185
----------------- ----------------- -----------------
Expected volatility 80% 80% 80%
----------------- ----------------- -----------------
Rights life 2 years 3 years 4 years
----------------- ----------------- -----------------
Grant date fair value AUD 0.1451 AUD 0.1507 AUD 0.1510
----------------- ----------------- -----------------
During the 2017 and 2018 years, the Class A, Class B and Class C
Performance Rights vested and the following shares were
subsequently issued to the following employees of the Group:
Employee Shares (i) Shares (ii) Shares (iii)
Lawrence Davidson 376,374 376,374 376,374
----------- ------------ -------------
Julien Babey 521,957 521,957 521,957
----------- ------------ -------------
Other employees 1,767,759 1,767,759 1,767,759
----------- ------------ -------------
Total 2,666,090 2,666,090 2,666,090
----------- ------------ -------------
(i) The shares from Class A Performance Rights were issued during the 2017 year.
(ii) The shares from Class B Performance Rights were issued
during the 2018 year.
(iii) The shares from Class C Performance Rights were issued
subsequent to year end on 13 February 2019.
Rights Series 7 - Performance Rights (Previous Project
Director)
On 29 February 2016, the Company granted 5,000,000 Performance
Rights to Mr Werner Swanepoel, Project Director, under the Group's
Employee Performance Rights Plan. The rights were contractually
agreed to on 7 December 2015 pursuant to Mr Swanepoel's employment
agreement. The Performance Rights vest as one Share for each
Performance Right subject to the satisfaction of the following:
Vesting Conditions
Joining K2P
(1) - sign on bonus 250,000
(1) - allocated after 1 year service 250,000
(1) - allocated after 2 years service 250,000
(1) - allocated after 3 years service 250,000
Kola Resource & Mine
(2) - DFS Completion 1,000,000
(3) - Off-take secured to support
debt finance for mine build 500,000
(4) - Complete finance package for
mine build 500,000
Dougou Resource
(5) - Development advanced to commencement
of DFS 500,000
Yangala Resource
(6) - Development advanced to completion
of PFS 500,000
Share Price Allocation Matrix 1,000,000
25% initial tranche (Note 1(a)) 250,000
straight line between AUD 0.50 and
AUD 2.00 (Note 1(b))
100% 1,000,000
--------------------------------------------
TOTAL 5,000,000
-------------------------------------------- ----------
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each
Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the
number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more,
the Initial Tranche plus 500 Shares for each one tenth of a cent
that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years),
the number of Shares to be issued at the end of each Vesting Period
(6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day
average daily VWAP for the current Vesting Period is AUD 0.50 or
more, the Initial Tranche plus 500 Shares for each one tenth of a
cent that the 30 day average daily VWAP exceeds AUD 0.50 on the
basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day
average daily VWAP for any pervious Vesting Period, nil.
(iii) where the 30 day average daily VWAP is equal to or more
than the highest previous 30 day average daily VWAP, 500 Shares for
each one tenth of a cent that the 30 day average daily VWAP exceeds
the highest previous 30 day average daily VWAP.
The fair value of the operational performance rights granted
(4,000,000) is calculated based on the share price at grant date.
The fair value of these operational performance rights is AUD
0.19.
The fair value of the remaining performance rights granted with
a share price threshold (1,000,000) is estimated as at the grant
date using the Monte-Carlo Pricing Model taking into account the
terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the Series 7
model
Grant date share AUD 0.19
price
-----------
Expected volatility 80%
-----------
Rights life 5 years
-----------
Grant date fair AUD 0.1167
value
-----------
On 29 February 2016, 250,000 Fully Paid Ordinary Shares were
issued following the vesting of the Performance Rights as a sign on
bonus for the Project Director. In addition, subsequent to year end
on 3 February 2017, 250,000 Fully Paid Ordinary Shares were issued
to the Project Director following the vesting of the Performance
Rights due to one year of service being completed on 7 December
2016. On 18 December 2017, 2,245,000 Performance Rights was
cancelled upon Mr. Swanepoel's resignation. The remaining 2,255,000
Performance Rights were outstanding as at 31 December 2018.
Rights Series 8 - Performance Rights (Chairman)
On 2 March 2016, following shareholders' approval, the Company
granted 13,000,000 Performance Rights to Mr David Hathorn under the
Group's Employee Performance Rights Plan. Performance Rights vested
as one Share for each Performance Right subject to the satisfaction
of the following:
Vesting Conditions
Joining K2P
(1) - allocated after 1 year service 1,000,000
(1) - allocated after 2 years service 1,000,000
(1) - allocated after 3 years service 1,000,000
Share Price Allocation Matrix 10,000,000
20% 2,000,000
straight line between AUD 0.50 and
AUD 2.00 (Note 1(b))
100% 10,000,000
---------------------------------------
TOTAL 13,000,000
--------------------------------------- -----------
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each
Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the
number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil.
(ii) where the 30 day average daily VWAP is AUD 0.50 or more,
the Initial Tranche plus 5,333 Shares for each one tenth of a cent
that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years),
the number of Shares to be issued at the end of each Vesting Period
(6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day
average daily VWAP for the current Vesting Period is AUD 0.50 or
more, the Initial Tranche plus 5,333 Shares for each one tenth of a
cent that the 30 day average daily VWAP exceeds AUD 0.50 on the
basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day
average daily VWAP for any previous Vesting Period, nil.
(iii) where the 30 day average daily VWAP is equal to or more
than the highest previous 30 day average daily VWAP, 5,333 Shares
for each one tenth of a cent that the 30 day average daily VWAP
exceeds the highest previous 30 day average daily VWAP.
The fair value of the operational performance rights granted
(3,000,000) was calculated based on the share price at grant date.
The fair value of these operational performance rights was AUD
0.20.
The fair value of the remaining performance rights granted with
a share price threshold (10,000,000) is estimated as at the grant
date using the Monte-Carlo Pricing Model taking into account the
terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant
date of these performance rights were as follows:
Inputs into the Series 8
model
Issue date share AUD 0.165
price
-----------
Expected volatility 80%
-----------
Rights life 5 years
-----------
Grant date fair AUD 0.1475
value
-----------
On 3 February 2017 and on 20 December 2017, 2,000,000 Fully Paid
Ordinary Shares were issued to the Chairman following the vesting
of the Performance Rights due to his one and two years of service
being completed on 20 November 2016 and 20 November 2017,
respectively.
The remaining 11,000,000 Performance Rights were cancelled
following shareholder approval at the Company's AGM on 27 June
2018.
Rights Series 9 - Performance Rights (Previous CEO)
On 2 March 2016, following shareholders' approval, the Company
granted 8,500,000 Performance Rights to Mr Sean Bennett under the
Group's Employee Performance Rights Plan. Performance Rights vest
as one Share for each Performance Right subject to the satisfaction
of the following:
Vesting Conditions
Joining K2P
(1) - sign on bonus 531,250
(1) - allocated after 1 year service 531,250
(1) - allocated after 2 years service 531,250
(1) - allocated after 3 years service 531,250
Kola Resource & Mine
(2) - DFS Completion 850,000
(3) - Off-take secured to support
debt finance for mine build 850,000
(4) - Complete finance package for
mine build 850,000
Dougou Resource
(5) - Development advanced to commencement
of DFS 850,000
Yangala Resource
(6) - Development advanced to completion
of PFS 850,000
Share Price Allocation Matrix 2,125,000
25% initial tranche (Note 1(a)) 531,250
straight line between AUD 0.50 and
AUD 2.00 (Note 1(b))
100% 2,125,000
--------------------------------------------
TOTAL 8,500,000
-------------------------------------------- ----------
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each
Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the
number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more,
the Initial Tranche plus 1,062 Shares for each one tenth of a cent
that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years),
the number of Shares to be issued at the end of each Vesting Period
(6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day
average daily VWAP for the current Vesting Period is AUD 0.50 or
more, the Initial Tranche plus 1,062 Shares for each one tenth of a
cent that the 30 day average daily VWAP exceeds AUD 0.50 on the
basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day
average daily VWAP for any pervious Vesting Period, nil.
(iii) where the 30 day average daily VWAP is equal to or more
than the highest previous 30 day average daily VWAP, 1,062 Shares
for each one tenth of a cent that the 30 day average daily VWAP
exceeds the highest previous 30 day average daily VWAP.
The fair value of the operational performance rights granted
(6,375,000) is calculated based on the share price at grant date.
The fair value of these operational performance rights is AUD
0.20.
The fair value of the remaining performance rights granted with
a share price threshold (2,125,000) is estimated as at the grant
date using the Monte-Carlo Pricing Model taking into account the
terms and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the Series 9
model
Issue date share AUD 0.165
price
-----------
Expected volatility 80%
-----------
Rights life 5 years
-----------
Grant date fair AUD 0.1469
value
-----------
The following Fully Paid Ordinary Shares were issued to the
previous CEO during the 2017 and 2018 years:
Date Shares
2 March 2016 531,250 Following vesting due to sign-on bonus.
---------- ---------------------------------------------
3 February 2017 531,250 Following 1 year of service being completed
on 20 November 2016.
---------- ---------------------------------------------
20 November 2017 531,250 Following 2 years of service being completed
on 20 November 2017.
---------- ---------------------------------------------
Total 1,593,750
---------- ---------------------------------------------
On 4 June 2018, 1,025,000 Performance Rights were cancelled
following the resignation of the previous CEO. The remaining
5,881,250 was outstanding at year end.
Rights Series 10 - Performance Rights (Non-Executive Director -
J Trollip)
On 6 July 2016, following shareholders' approval, the Company
granted 2,000,000 Performance Rights to Mr Jonathan Trollip under
the Group's Employee Performance Rights Plan. Performance Rights
vest as one Share for each Performance Right subject to the
satisfaction of the following:
Vesting Conditions
Share Price Allocation Matrix 2,000,000
25% initial tranche (Note 1(a)) 500,000
straight line between AUD 0.50 and
AUD 2.00 (Note 1(b))
100% 1,500,000
------------------------------------
TOTAL 2,000,000
------------------------------------ ----------
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each
Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the
number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more,
the Initial Tranche plus 1,000 Shares for each one tenth of a cent
that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years),
the number of Shares to be issued at the end of each Vesting Period
(6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day
average daily VWAP for the current Vesting Period is AUD 0.50 or
more, the Initial Tranche plus 1,000 Shares for each one tenth of a
cent that the 30 day average daily VWAP exceeds AUD 0.50 on the
basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day
average daily VWAP for any pervious Vesting Period, nil.
(iii) where the 30 day average daily VWAP is equal to or more
than the highest previous 30 day average daily VWAP, 1,000 Shares
for each one tenth of a cent that the 30 day average daily VWAP
exceeds the highest previous 30 day average daily VWAP.
The fair value of the performance rights granted with a share
price threshold (2,000,000) was estimated as at the grant date
using the Monte-Carlo Pricing Model taking into account the terms
and conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the Series 10
model
Issue date share AUD 0.190
price
-----------
Expected volatility 80%
-----------
Rights life 5 years
-----------
Grant date fair AUD 0.1258
value
-----------
The above Performance Rights were cancelled following
shareholder approval at the Company's AGM on 27 June 2018.
Rights Series 11 - Performance Rights (Non-Executive Director -
L Math)
On 6 July 2016, following shareholders' approval, the Company
granted 1,000,000 Performance Rights to Mr Leonard Math under the
Group's Employee Performance Rights Plan. Performance Rights vest
as one Share for each Performance Right subject to the satisfaction
of the following:
Vesting Conditions
Share Price Allocation Matrix 1,000,000
----------
25% initial tranche (Note 1(a)) 250,000
straight line between AUD 0.50 and
AUD 2.00 (Note 1(b))
100% 750,000
----------
TOTAL 1,000,000
----------
Note 1: Share Price Allocation Matrix
Performance Rights vest on the basis of one Share for each
Performance Right vesting, calculated as follows:
(a) For the first Vesting Period (6 months) following issue, the
number of Shares to be issued is:
(i) where the 30 day average daily VWAP is less than AUD 0.50, nil;
(ii) where the 30 day average daily VWAP is AUD 0.50 or more,
the Initial Tranche plus 500 Shares for each one tenth of a cent
that the 30 day average daily VWAP exceeds AUD 0.50.
(b) For the remainder of the Performance Rights Term (5 years),
the number of Shares to be issued at the end of each Vesting Period
(6 months) is:
(i) where the Initial Tranche has not been issued and the 30 day
average daily VWAP for the current Vesting period is AUD 0.50 or
more, the Initial Tranche plus 500 Shares for each one tenth of a
cent that the 30 day average daily VWAP exceeds AUD 0.50 on the
basis of one Share for each Performance Right.
(ii) where the 30 day average daily VWAP is less than the 30 day
average daily VWAP for any pervious Vesting Period, nil.
(iii) where the 30 day average daily VWAP is equal to or more
than the highest previous 30 day average daily VWAP, 500 Shares for
each one tenth of a cent that the 30 day average daily VWAP exceeds
the highest previous 30 day average daily VWAP.
The fair value of the performance rights granted with a share
price threshold (1,000,000) is estimated as at the grant date using
the Monte-Carlo Pricing Model taking into account the terms and
conditions upon which the instruments were granted.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the Series 11
model
Issue date share AUD 0.190
price
-----------
Expected volatility 80%
-----------
Rights life 5 years
-----------
Grant date fair AUD 0.1258
value
-----------
The above Performance Rights were cancelled following
shareholder approval at the Company's AGM on 27 June 2018.
Rights Series 12
On 29 May 2017, the Group granted 2,000,000 performance rights
to its employees, under the Group's Employee Performance Rights
Plan, to recognise their overall contribution and performance
during 2016. These performance rights vest as one fully paid
ordinary share for each performance right in 2 years on 31 May
2019, on the condition that the employee is still employed by the
Group.
The fair value of the performance rights was estimated at AUD
0.17 per performance rights, calculated based on the share price at
grant date using the Cox, Ross and Rubinstein Binomial Option
Pricing Model.
The inputs used in the measurement of the fair value at grant
date of these performance rights were as follows:
Inputs into the Rights Series
model 12
Grant date spot AUD 0.17
price
--------------
Expected volatility 75%
--------------
Life of performance 2 years
share
--------------
Grant date fair AUD 0.17
value
--------------
Rights Series 13
In addition, following shareholders' approval at the Group's
2017 AGM on 31 May 2017, the Group granted 660,000 performance
rights to Mr Sean Bennett, the Group's previous CEO, under the
Group's Employee Performance Rights Plan. These performance rights
were granted on the same basis as the 2,000,000 Performance Shares
as detailed above. The 660,000 performance rights vested in full
upon Mr Bennett's resignation on 4 June 2018.
The fair value of the performance rights was estimated at AUD
0.17 per performance rights, calculated based on the share price at
grant date using the Cox, Ross and Rubinstein Binomial Option
Pricing Model.
The inputs used in the measurement of the fair value at grant
date of these performance rights were as follows:
Inputs into the Rights Series
model 13
Grant date spot AUD 0.17
price
--------------
Expected volatility 75%
--------------
Life of performance 2 years
share
--------------
Grant date fair AUD 0.17
value
--------------
Rights Series 14
On 29 May 2017, the Group announced that under an STIP the Board
resolved and agreed to issue up to 4,482,005 performance rights for
employees for 2017. Under the STIP, the final amount of performance
rights issued may be reduced by the Board (in its sole discretion)
depending upon each employee's performance during the 2017 year.
Under the STIP, in accordance with the Group's remuneration
strategy, the employee's performance is assessed by the Board
against a range of objectives including delivery of the Kola DFS on
time and in budget, progressing the Kola ESIA and maintaining
control of costs within the business. The performance rights vest a
third on award, a third after 1 year of continuous service and a
third after 2 years continuous service, as one fully paid ordinary
share for each performance right.
The fair value of the performance rights was estimated at AUD
0.17 per performance right, calculated based on the share price at
grant date using the Cox, Ross and Rubinstein Binomial Option
Pricing Model.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the Rights Series
model 14
Grant date spot AUD 0.17
price
--------------
Expected volatility 75%
--------------
Life of performance 2 years
share
--------------
Grant date fair AUD 0.17
value
--------------
During the 2018 year, the Board approved the allocation of
2,845,314 STIP performance rights to various KMP and other
employees. In addition, during the 2017 year, at the Board's
discretion, 735,000 was allocated to two employees (including Mr
Werner Swanepoel, who was allocated 490,000 STIP performance
rights), which vested immediately and were converted into fully
paid ordinary shares upon their resignation.
Rights Series 15
On 29 May 2017, the Group announced that the Board resolved and
agreed to issue up to 11,734,853 performance rights available to
employees under the LTIP. These performance rights vest as one
fully paid ordinary share for each performance right, of which the
final amount issued may be reduced by the Board (in its discretion)
depending upon the employee's performance against the following
objectives:
Non-market performance conditions
-- Completing the DFS in line with the Group's objectives and milestones
-- Successful completion of the financing of the Kola Project
-- Achieving the appropriate level of off-take for the Kola Project
Market performance conditions
-- The Company's share price being between AUD 0.50 and AUD 2.00
(or GBP equivalent), vesting on the basis of one fully paid
ordinary share for each performance right vesting, and calculated
using a Share Price Allocation Matrix (straight-line basis).
The fair value of the performance rights attached to the
non-market performance conditions is estimated at AUD 0.17 per
performance right, calculated based on the share price at grant
date using the Cox, Ross and Rubinstein Binomial Option Pricing
Model.
The input used in the measurement of the fair value at grant
date of the performance rights attached to non-market performance
conditions were as follows:
Inputs into the Rights Series
model 15
Grant date spot AUD 0.17
price
--------------
Expected volatility 75%
--------------
Life of performance 5 years
share
--------------
Grant date fair AUD 0.17
value
--------------
The fair value of the performance rights attached to the market
performance condition is estimated at AUD 0.104 per performance
right at grant date, using the Monte-Carlo Simulation Model, and
taking into account the terms and conditions upon which the
performance rights were granted.
The input used in the measurement of the fair value at grant
date of the performance rights attached to market performance
conditions were as follows:
Inputs into the Rights Series
model 15
Grant date spot AUD 0.17
price
--------------
Expected volatility 75%
--------------
Life of performance 5 years
share
--------------
Grant date fair AUD 0.104
value
--------------
As at reporting date, the Board has not yet determined the
allocation of the LTIP performance rights. The allocation will be
determined against each objective for each employee on a case by
case basis.
Rights Series 16 to 20
At the Company's AGM on 27 June 2018, the Company's shareholders
approved the grant of performance rights to the following
Non-Executive Directors:
Number of
Performance
Series Director Rights
Rights Series
16 David Hathorn 1,500,000
------------------ -------------
Rights Series
17 Jonathan Trollip 750,000
------------------ -------------
Rights Series
18 Leonard Math 750,000
------------------ -------------
Rights Series
19 David Netherway 750,000
------------------ -------------
Rights Series
20 Timothy Keating 750,000
------------------ -------------
The performance rights are a one-off award and will
unconditionally vest in three equal tranches on the first, second
and third anniversary of the Company's admission to the AIM market.
They will vest as one fully paid ordinary share for each
performance right, and will expire on 22 May 2022.
The fair value of the performance rights granted was estimated
as at the grant date at GBP 0.0564 per performance right, using the
Black Scholes Option Pricing Model taking into account the terms
set out above.
The input used in the measurement of the fair value at grant
date of the performance rights were as follows:
Inputs into the Rights Series Rights Series Rights Series
model 16 17 18
Grant date share GBP 0.06 GBP 0.06 GBP 0.06
price
-------------- -------------- --------------
Expected volatility 90.12% 90.12% 90.12%
-------------- -------------- --------------
Rights life 4 years 4 years 4 years
-------------- -------------- --------------
Grant date fair GBP 0.0564 GBP 0.0564 GBP 0.0564
value
-------------- -------------- --------------
Inputs into the Rights Series Rights Series
model 19 20
Grant date share GBP 0.06 GBP 0.06
price
-------------- --------------
Expected volatility 90.12% 90.12%
-------------- --------------
Rights life 4 years 4 years
-------------- --------------
Grant date fair GBP 0.0564 GBP 0.0564
value
-------------- --------------
Rights Series 21 and 22
At the Company's AGM on 27 June 2018, the Company's shareholders
approved the grant 500,000 (Rights Series 21) and 1,050,000 (Rights
Series 22) performance rights to Sean Bennett, the Company's
previous CEO, to recognise his contribution to the Company and the
transition of his position as CEO to a successor and his role in
successfully implementing the re-domicile of the Group in the
United Kingdom, the listing of the Company on the AIM and JSE and
the recent completion of a capital raising.
The performance rights have no vesting conditions and will be
exercisable on and from the date of their issue, with each
performance right being convertible into one fully paid ordinary
share.
At reporting date, both parcels of performance rights were yet
to be issued and converted to shares.
The fair value at grant date of the performance rights was
estimated at GBP 0.0564 per performance right, using the Black
Scholes Option Pricing Model. The input used in the measurement of
the fair value at grant date of the performance rights were as
follows:
Input into the Rights Series Rights Series
model 21 22
Grant date share GBP 0.06 GBP 0.06
price
-------------- --------------
Expected volatility 90.12% 90.12%
-------------- --------------
Rights life 4 years 4 years
-------------- --------------
Grant date fair GBP 0.0564 GBP 0.0564
value
-------------- --------------
The following options from share based payment arrangements were
in existence during the current and prior periods:
Fair Value
Grant Vesting Number at Grant Exercise
Date Date of Options Expiry Date Date Price
-------------- ----------- ------------ ------------ ------------ ----------- ---------
Option Series 22/05/2013 22/05/2014 83,333 22/05/2017 AUD 0.2181 AUD 0.90
19 *
Option Series 22/05/2013 22/05/2015 83,333 22/05/2017 AUD 0.2181 AUD 0.90
20 *
Option Series 22/05/2013 22/05/2016 83,334 22/05/2017 AUD 0.2181 AUD 0.90
21 *
Option Series 9/04/2014 10/04/2014 2,169,671 15/04/2018 AUD 0.1242 AUD 0.33
22 **
Option Series 9/04/2014 10/04/2015 1,760,778 15/04/2018 AUD 0.1391 AUD 0.33
23 **
Option Series 9/04/2014 10/04/2016 1,760,777 15/04/2018 AUD 0.1522 AUD 0.33
24 **
Option Series 12/05/2014 10/04/2014 333,333 15/04/2018 AUD 0.0948 AUD 0.33
25 **
Option Series 12/05/2014 10/04/2015 333,333 15/04/2018 AUD 0.1073 AUD 0.33
26 **
Option Series 12/05/2014 10/04/2016 333,334 15/04/2018 AUD 0.1194 AUD 0.33
27 **
Option Series 30/05/2014 10/04/2014 500,000 26/06/2018 AUD 0.1177 AUD 0.33
28 **
Option Series 30/05/2014 10/04/2015 500,000 26/06/2018 AUD 0.1303 AUD 0.33
29 **
Option Series 30/05/2014 10/04/2016 500,000 26/06/2018 AUD 0.1432 AUD 0.33
30 **
Option Series 27/06/2018 Refer below 17,200,000 27/06/2028 GBP 0.0518 GBP 0.11
31 ***
Option Series 27/06/2018 Refer below 4,000,000 27/06/2020 GBP 0.0241 GBP 0.11
32 ***
* Option Series expired during the previous financial year.
** Option Series expired during the current financial year.
*** These options were issued to Brad Sampson (Option Series 31)
and David Hathorn (Option Series 32). The vesting conditions for
these Options include milestones being achieved in relation to the
Kola Project. The fair value of the options granted was estimated
as at the grant date using the Black Scholes Option Pricing Model
taking into account the terms and conditions upon which the
instruments were granted. The input used in the measurement of the
fair value at grant date of the options were as follows:
Input into Option Series Option Series
the model 31 32
Grant Date GBP 0.06 GBP 0.06
Share Price
-------------- --------------
Expected Volatility 108.90% 108.90%
-------------- --------------
Options Life 10 years 2 years
-------------- --------------
Grant date GBP 0.0518 GBP 0.0241
fair value
-------------- --------------
The following Performance Rights from share based payment
arrangements were in existence during the current and prior
periods:
Number of Fair Value at
Grant Date Vesting Date Rights Expiry Date Grant Date
------------- ---------- ------------ ---------- ----------- -------------
Rights Series 17/09/2015 1 Dec 2016 2,666,090 16/09/2017 AUD 0.1451
4 (1)
Rights Series 17/09/2015 Refer below 2,666,090 16/09/2018 AUD 0.1507
5 (2)
Rights Series 17/09/2015 Refer below 2,666,090 16/09/2019 AUD 0.1510
6 (3)
Rights Series 07/12/2015 Refer below 5,000,000 06/12/2020 AUD 0.1753
7 (4)
Rights Series 20/11/2015 Refer below 13,000,000 01/03/2021 AUD 0.1596
8 (5)
Rights Series 20/11/2015 Refer below 8,500,000 01/03/2021 AUD 0.1867
9 (6)
Rights Series 6/07/2016 Refer below 2,000,000 30/06/2021 AUD 0.1258
10 (7)
Rights Series 6/07/2016 Refer below 1,000,000 30/06/2021 AUD 0.1258
11 (7)
(1) Fully vested on 1 December 2016 pursuant to the satisfaction
of performance criteria. Performance Rights were converted to fully
paid ordinary shares on 3 February 2017.
(2) On 3 February 2017, 402,720 Performance Rights vested and
were converted into fully paid ordinary shares. In addition, on 30
June 2017, 2,263,370 Performance Rights vested and were converted
into fully paid ordinary shares.
(3) On 30 June 2017, 402,720 Performance Rights vested and were
converted into fully paid ordinary shares. In addition, on 20
December 2017, 376,374 Performance Rights vested and were converted
to fully paid ordinary shares on the resignation of Mr Lawrence
Davidson. The remaining 1,886,996 Performance Rights vested on 17
May 2018 pursuant to the satisfaction of performance criteria and
were converted into fully paid ordinary shares on 13 February
2019.
(4) 250,000 Performance Rights vested and were converted to
fully paid ordinary shares on 29 February 2016. In addition, on 3
February 2017, 250,000 fully paid ordinary shares were issued to Mr
Werner Swanepoel following the vesting of the Performance Rights
due to one year of service being completed on 7 December 2016. On
20 December 2017, 2,245,000 of these Performance Rights were
cancelled following his resignation. The remaining 2,255,000
Performance Rights of this series has not yet vested.
(5) On 3 February 2017, 1,000,000 fully paid ordinary shares
were issued following vesting of one year service conditions on 20
November 2016. On 20 December 2017, 1,000,000 fully paid ordinary
shares were issued to Mr David Hathorn following the vesting of the
Performance Rights due to his two years of service being completed
on 20 November 2017. The remaining 11,000,000 Performance Rights
were cancelled on 27 June 2018 following shareholder approval at
the Company's AGM.
(6) 531,250 performance rights vested and converted to fully
paid ordinary shares on 2 March 2016. In addition, on 3 February
2017, 531,250 fully paid ordinary shares were issued to Mr Sean
Bennett following vesting of one year service condition on 20
November 2016. On 20 December 2017, 531,250 Fully Paid Ordinary
Shares were issued to him following the vesting of the Performance
Rights due to two years of service being completed on 20 November
2017. On 4 June 2018, 1,025,000 of these Performance Rights were
cancelled following his resignation. Out of the remaining 5,881,250
Performance Rights of this series, 531,250 vested on 4 June 2018
(upon resignation) and is yet to be converted into shares, and the
remaining has not yet vested.
(7) These Performance Rights were cancelled on 27 June 2018
following shareholder approval at the Company's AGM.
The following Performance Rights from share based payment
arrangements were in existence during the current and prior periods
(cont):
Number of Fair Value at
Grant Date Vesting Date Rights Expiry Date Grant Date
------------- ---------- ------------ ---------- ----------- --------------
Rights Series 29/05/2017 Refer below 2,000,000 31/05/2019 AUD 0.1700
12 (8) (9)
Rights Series 31/05/2017 4 June 2018 660,000 31/05/2019 AUD 0.1700
13 (8) (10)
Rights Series 29/05/2017 Refer below 4,482,005 31/05/2020 AUD 0.1700
14 (8) (11)
Rights Series 29/05/2017 None vested 11,734,853 31/05/2022 AUD 0.17 / AUD
15 (12) 0.104
(8) The fair value of the performance rights granted was
estimated as at the grant date using the Cox, Ross and Rubinstein
Binomial Option Pricing Model taking into account the terms and
conditions upon which the instruments were granted. The input used
in the measurement of the fair value at grant date of the
performance rights were as follows:
Input into Rights Series Rights Series Rights Series
the model 12 13 14
Grant date AUD 0.17 AUD 0.17 AUD 0.17
share price
-------------- -------------- --------------
Expected volatility 75.00% 75.00% 75.00%
-------------- -------------- --------------
Rights life 2 years 2 years 2 years
-------------- -------------- --------------
Risk free rate 1.66% 1.66% 1.66%
-------------- -------------- --------------
Grant date AUD 0.1700 AUD 0.1700 AUD 0.1700
fair value
-------------- -------------- --------------
(9) The On 20 December 2017, 595,000 Performance Rights vested
and were converted into ordinary shares following the resignation
of certain employees.
(10) These Performance Rights fully vested on 4 June 2018
following Mr Sean Bennett's resignation, and are yet to be
converted into fully paid ordinary shares as at 31 December
2018.
(11) On 20 December 2017, 735,000 Performance Rights vested and
were converted into ordinary shares following the resignation of
certain employees. In addition, 948,438 Performance Rights vested
on 21 May 2018 following Board assessment and approval of the award
portion of these rights, and are yet to be converted into fully
paid ordinary shares at reporting date. The remaining 2,798,567
Performance Rights have not yet been vested.
(12) The fair value of the performance rights granted was
estimated as at the grant date using the Cox, Ross and Rubinstein
Binomial Option Pricing Model (for performance rights with
performance conditions) and the Monte Carlo Simulation Model (for
performance rights with market conditions) taking into account the
terms and conditions upon which the instruments were granted. The
input used in the measurement of the fair value at grant date of
the performance rights were as follows:
Input into Rights Series Rights Series
the model 15 15
(Performance (Market
Conditions) Conditions)
Grant date AUD 0.17 AUD 0.17
share price
-------------- --------------
Expected volatility 75.00% 75.00%
-------------- --------------
Rights life 5 years 5 years
-------------- --------------
Risk free rate 2.05% 2.05%
-------------- --------------
Grant date AUD 0.1700 AUD 0.1040
fair value
-------------- --------------
The following Performance Rights from share based payment
arrangements were in existence during the current and prior periods
(cont):
Number of Fair Value at
Grant Date Vesting Date Rights Expiry Date Grant Date
------------- ---------- ------------ --------- ----------- -------------
Rights Series 27/06/2018 None vested 1,500,000 22/05/2022 GBP 0.0564
16 (13)
Rights Series 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
17 (13)
Rights Series 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
18 (13)
Rights Series 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
19 (13)
Rights Series 27/06/2018 None vested 750,000 22/05/2022 GBP 0.0564
20 (13)
(13) These performance rights were issued to the following
Non-Executive Directors following shareholder approval at the
Company's AGM on 27 June 2018:
Series Director Number
Rights Series
16 David Hathorn 1,500,000
----------------- ----------
Rights Series Jonathan
17 Trollip 750,000
----------------- ----------
Rights Series
18 Leonard Math 750,000
----------------- ----------
Rights Series
19 David Netherway 750,000
----------------- ----------
Rights Series
20 Timothy Keating 750,000
----------------- ----------
The performance rights are a one-off award and will
unconditionally vest in three equal tranches on the first, second
and third anniversary of the Company's admission to the AIM market.
These performance rights will expire on 22 May 2022.
The fair value of the performance rights granted was estimated
as at the grant date using the Black Scholes Option Pricing Model
taking into account the terms and conditions upon which the
instruments were granted. The input used in the measurement of the
fair value at grant date of the performance rights were as
follows:
Input into Rights Series
the model 16 to 20
(Inclusive)
Grant date GBP 0.06
share price
--------------
Expected volatility 90.12%
--------------
Rights life 4 years
--------------
Grant date GBP 0.0564
fair value
--------------
The Performance Rights outstanding at 31 December 2018 had a
weighted average remaining contractual life of 1.3 years.
Note 24: LOSS PER SHARE
Classification of securities as ordinary shares
The Company has only one category of ordinary shares included in
basic earnings per share.
Classification of securities as potential ordinary shares -
share options and rights outstanding
The Company has granted share options in respect of a total of
71,200,000 ordinary shares at 31 December 2018 (31 December 2017:
58,191,226), 13,144,659 equity warrants (31 December 2017: None)
and 32,070,104 performance rights (31 December 2017: 42,595,104).
Options, equity warrants and rights are considered to be potential
ordinary shares. However, as the Company and Group are in a loss
position they are anti-dilutive in nature, as their exercise will
not result in a diluted earnings per share that shows an inferior
view of earnings performance of the Company and Group than is shown
by basic earnings per share. The options, warrants and performance
rights have not been included in the determination of basic
earnings per share.
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
USD Cents USD Cents USD Cents USD Cents
Basic and diluted loss per share
from continuing operations (0.00) (0.00) (0.75) (0.57)
========== ========== ========== ==========
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Earnings reconciliation USD USD USD USD
Loss attributable to ordinary
shareholders (1,715,799) (92,320) (6,249,696) (4,344,322)
=========== ======== =========== ===========
Parent Consolidated Entity
Dec 2018 Dec 2017 Dec 2018 Dec 2017
Number Number Number Number
Weighted average number of ordinary
shares used as the denominator
in calculating basic earnings
per share 838,752,968 756,305,819 838,752,968 756,305,819
=========== =========== =========== ===========
Headline earnings/loss per share
It is a JSE listing requirement to disclose headline
earnings/loss per share, a non-IFRS measure. It is considered to be
a useful metric as it presents the earnings/loss per share after
removing the effect of re-measurements to assets and liabilities
(for example impairment of property, plant and equipment) otherwise
recognised in the profit/loss for the year. During the current and
prior year there was no difference between earnings/loss per share
and headline earnings/loss per share and therefore no
reconciliation between the two measures has been presented.
Note 25: CONTINGENT LIABILITIES AND ASSETS
As at the date of this report, the Company's subsidiary, SPSA,
has been in litigation before the Administrative Chamber of the
Supreme Court of the Republic of Congo and before the Labour
Tribunal. These two proceedings result from an action taken by a
former employee, as well as a group of 30 claimants following the
retrenchment of these 31 employees on 20 November 2014.
On 14 June 2018 the Supreme Court confirmed that the
retrenchments had followed due process and cancelled the previous
decision of the Minister of Labour against SPSA. The Labour
Tribunal action is anticipated to be favourably concluded following
the Supreme Court findings. In order to bring to a conclusion the
litigation and ensure equitable treatment following the amicable
settlement with 4 employees, who waived any further recourse
whatsoever, SPSA proposed to make an offer to remaining employees.
This offer was made and was subject to acceptance by all staff
within a set timeframe. The offer lapsed on 5 September 2018 as the
criteria were not met.
On 28 August 2018, 25 former employees working on the
exploration site from 2009 to 2013 instituted further action before
the Labour Tribunal, claiming compensation for unpaid overtime and
damages. The legal proceedings are ongoing, with the next scheduled
court date being on 13 May 2019.
The Directors have concluded that any possible exposure and cash
flow out from the Group as a result of the two legal proceedings
would be immaterial.
There are no other significant contingent liabilities or
assets.
GLOSSARY
Acronym Stands For / Meaning Definition and/or Additional Information
/ Term
$ Denotes USD or United States The USD is the functional and
dollars. presentation currency of the Company
and the Group.
------------------------------------ -------------------------------------------
2016 UK 2016 UK Corporate Governance The UK corporate governance code
Code Code that is applicable to this reporting
period.
------------------------------------ -------------------------------------------
2018 UK 2018 UK Corporate Governance The UK corporate governance code
Code Code that came into effect on 1 January
2019 and applies to accounting
reference periods commencing on
and after that date.
------------------------------------ -------------------------------------------
AGM Annual General Meeting The mandatory yearly gathering
of the Company's interested shareholders.
The latest AGM was held on 27
June 2018.
------------------------------------ -------------------------------------------
AIM Alternative Investment Market AIM (formerly the Alternative
Investment Market) is a sub-market
of the LSE.
------------------------------------ -------------------------------------------
ASX Australian Securities Exchange The ASX is Australia's primary
securities exchange.
------------------------------------ -------------------------------------------
AUD Australian dollars The official currency of the Commonwealth
of Australia.
------------------------------------ -------------------------------------------
Board The board of directors of As listed on page 18 of the Annual
Kore Potash plc Report.
------------------------------------ -------------------------------------------
Carnallitite A rock type comprised predominantly Carnallitite may be replaced by
of the potash mineral carnallite the word carnallite for simplicity.
(KMgCl3--6H2O) and halite
(NaCl).
------------------------------------ -------------------------------------------
CDIs CHESS Depositary Interests CDIs are instruments traded on
the ASX that allow non-Australian
companies to list their shares
on the exchange and use the exchange's
settlement systems. In the Company's
case, one CDI is equivalent to
one share traded on the AIM market
or on the JSE.
------------------------------------ -------------------------------------------
CEO Chief Executive Officer As listed on page 18 of the Annual
Report.
------------------------------------ -------------------------------------------
CFR Cost and Freight "Cost and Freight" means that
the seller must pay the costs
and freight necessary to bring
the goods to the named port of
destination but the risk of loss
of or damage to the goods, as
well as any additional costs due
to events occurring after the
time the goods have been delivered
on board the vessel is transferred
from the seller to the buyer when
the goods pass the ship's rail
in the port of shipment.
------------------------------------ -------------------------------------------
Company Kore Potash plc Kore Potash plc is public company
incorporated and registered in
England and Wales (registered
number 10933682).
------------------------------------ -------------------------------------------
CRU Commodity Research Unit
------------------------------------ -------------------------------------------
DFS Definitive Feasibility Study A DFS is an evaluation of a proposed
mining project to determine whether
the mineral resource can be mined
economically.
------------------------------------ -------------------------------------------
Dougou Denotes the Dougou Project The Dougou Project (including
the Dougou Extension Project)
is part of the Sintoukola Potash
Project.
------------------------------------ -------------------------------------------
DPM Dougou Potash Mining S.A. DPM is one of the subsidiaries
of SPSA.
------------------------------------ -------------------------------------------
DUP Déclaration d'Utilité A DUP, or, translated as a "declaration
Publique of public utility", is a formal
recognition in Congolese law that
a proposed project has public
benefits.
------------------------------------ -------------------------------------------
EBITDA Earnings Before Interest,
Taxes, Depreciation and
Amortization
------------------------------------ -------------------------------------------
EPC Engineering, Procurement A particular form of contracting
and Construction arrangement used in some industries
where the EPC contractor is made
responsible for all the activities
from design, procurement, construction,
commissioning and handover of
the project to the end-user or
owner.
------------------------------------ -------------------------------------------
EPCM Engineering, Procurement As opposed to EPC which the Contractor
and Construction Management is responsible for the construction
directly, not only the management
of it.
------------------------------------ -------------------------------------------
ESIA Environmental and social A process for predicting and assessing
impact assessment the potential environmental and
social impacts of a proposed project,
evaluating alternatives and designing
appropriate mitigation, management
and monitoring measures.
------------------------------------ -------------------------------------------
FC The French Consortium of The FC is a consortium of engineering
Engineering Companies companies who undertook the DFS
on the Kola Project. The FC consists
of TechnipFMC, VINCI Construction
Grands Projets, Egis and Louis
Dreyfus Armateur.
------------------------------------ -------------------------------------------
GBP British pound sterling The official currency of the United
Kingdom.
------------------------------------ -------------------------------------------
Granular The selling description
MoP for compacted MoP.
------------------------------------ -------------------------------------------
Group Kore Potash plc and its A list of the controlled entities
controlled entities within the Group are on page 88
under Note 8.
------------------------------------ -------------------------------------------
Insoluble Here refers to clays, organic Low insoluble content is considered
material material and other insoluble advantageous.
components of the sylvinite.
------------------------------------ -------------------------------------------
JORC Australasian Joint Ore Reserves JORC is sponsored by the Australian
Committee mining industry and its professional
organisations.
------------------------------------ -------------------------------------------
JORC Code The Australasian Code for The JORC Code is one of the most
Reporting of Exploration accepted standards for the reporting
Results, Mineral Resources of a company's Mineral Resources
and Ore Reserves and Ore Reserves.
------------------------------------ -------------------------------------------
JSE Johannesburg Stock Exchange The exchange operated by JSE Limited.
------------------------------------ -------------------------------------------
KCI Potassium Chloride
------------------------------------ -------------------------------------------
KMP Key Management Personnel Refers to those persons having
authority and responsibility for
planning, directing and controlling
the activities of the Group, directly
or indirectly, including any director
(whether executive or otherwise)
of the Group.
------------------------------------ -------------------------------------------
Kola Denotes the Kola Project. The Kola Project is part of the
Sintoukola Potash Project.
------------------------------------ -------------------------------------------
Kore Potash Kore Potash plc See definition for "Company" above.
------------------------------------ -------------------------------------------
KPM Kola Potash Mining S.A. KPM is one of the subsidiaries
of SPSA.
------------------------------------ -------------------------------------------
LSE London Stock Exchange The LSE is the primary stock exchange
in the United Kingdom.
------------------------------------ -------------------------------------------
LTIP Long Term Incentive Plan
------------------------------------ -------------------------------------------
Mt Million tonnes
------------------------------------ -------------------------------------------
Mining Convention Denotes the mining convention The mining convention governs
signed by the Group and the conditions of construction,
the government of RoC. operation and mine closure of
the Kola and Dougou (including
Dougou Extension) mining projects.
------------------------------------ -------------------------------------------
MoP Muriate of Potash The saleable form of potassium
chloride (KCl), comprising of
a minimum 95% KCl.
------------------------------------ -------------------------------------------
NPV Net Present Value NPV(10) denotes the Net Present
Value calculated at a 10% discount
rate.
------------------------------------ -------------------------------------------
Placees Denotes the existing and
new investors through which
the Company raised USD 12.89
million on 26 March 2018.
------------------------------------ -------------------------------------------
Placing Denotes the placing and
Shares direct subscription of 83,523,344
ordinary shares in the Company
on 26 March 2018.
------------------------------------ -------------------------------------------
Potash Refers to potassium compounds, Refer to MoP and SoP for the definitions
especially those of potassium on the two main types of potash.
chloride (MoP) or sulfate
(SoP)
------------------------------------ -------------------------------------------
RoC Republic of Congo The RoC is where the Group's exploration
activities are located.
------------------------------------ -------------------------------------------
Rock-salt In this case, a rock comprised
predominantly of the mineral
halite (NaCl)
------------------------------------ -------------------------------------------
SBP Share-Based Payment(s)
------------------------------------ -------------------------------------------
SGRF The State General Reserve SGRF, is a sovereign wealth fund
Fund of Oman in Oman, and is one of the Company's
substantial shareholders. Their
investment in the Company is held
in the name of Princess Aurora
Company Pte.
------------------------------------ -------------------------------------------
Sintoukola Denotes the large potash The Sintoukola Potash Project
Potash Project project operated by the includes the Kola Project, the
Group through SPSA located Dougou Project and the Dougou
in the Kouilou Province Extension Project (previously
of the Republic of Congo. known as the Yangala Project).
------------------------------------ -------------------------------------------
SJCS St James's Corporate Services SJCS, together with Henko Vos,
Limited is the Company's joint company
secretary.
------------------------------------ -------------------------------------------
SoP Sulfate of Potash Also called potassium sulphate,
arcanite, or archaically known
as potash of sulfur. SoP is the
inorganic compound with formula
K2SO4. It is a white water-soluble
solid. It is commonly used in
fertilizers, providing both potassium
and a source of sulfur.
------------------------------------ -------------------------------------------
SPSA Sintoukola Potash S.A. SPSA is the Company's 97%-owned
subsidiary located in the RoC,
owned through the Company's Australian
subsidiary.
------------------------------------ -------------------------------------------
SQM Sociedad Quimica y Minera SQM is a New York listed Chilean
de Chile S.A. lithium & potash company and is
one of the Company's substantial
shareholders.
------------------------------------ -------------------------------------------
Standard The selling description
MoP for uncompacted MoP.
------------------------------------ -------------------------------------------
STIP Short Term Incentive Plan
------------------------------------ -------------------------------------------
Sylvinite A rock type comprised predominantly
of the potash mineral sylvite
(KCl) and halite (NaCl)
------------------------------------ -------------------------------------------
Transshipment Transshipment or transhipment
is the shipment of goods
or containers to an intermediate
destination, then to another
destination.
------------------------------------ -------------------------------------------
USD United States dollars The official currency of the United
States of America and its territories,
as well as being the functional
and presentation currency of the
Company and the Group.
------------------------------------ -------------------------------------------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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March 29, 2019 06:15 ET (10:15 GMT)
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