REG - African Pioneer PLC - Annual Financial Report
30/06/2022 17:00
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RNS Number : 9018Q African Pioneer PLC 30 June 2022
30 June 2022
African Pioneer Plc
("African Pioneer" or the "Company")
Final Results for period to 31 December 2021
African Pioneer plc ("APP" or the "Company"), the exploration and resource
development company with projects located in Namibia, Botswana and Zambia,
reports its full year results for the year ended 31 December 2021.
The Annual Report and Financial Statements for the year ended 31 December 2021
will shortly be available on the Company's website at
https://africanpioneerplc.com/ (https://africanpioneerplc.com/) . A copy of
the Annual Report and Financial Statements will also be uploaded to the
National Storage Mechanism where it will be available for viewing at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Please note that page references in the text below refer to the page numbers
in the Annual Report and Financial Statements.
This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) regulations (SI 2019/310).
For further information, please contact:
African Pioneer Plc
Colin Bird
+44 (0) 20 7581 4477
Executive Chairman
Beaumont Cornish (Financial Adviser) +44 (0) 20 7628 3396
Roland Cornish
Novum Securities Limited (Broker)
Jon Belliss +44 (0) 20 7399 9400
+44 (0) 20 7581 4477
Beaumont Cornish (Financial Adviser)
Roland Cornish
+44 (0) 20 7628 3396
Novum Securities Limited (Broker)
Jon Belliss
+44 (0) 20 7399 9400
or visit https://africanpioneerplc.com/ (https://africanpioneerplc.com/)
KEY HIGHLIGHTS
· Consolidated total assets - £ 6,148,119 (2020 - £ 186,987)
· Consolidated Profit/(Loss) - Profit - £ 395,693 (2020 - Loss -
(£90,156))
· Raised gross proceeds of £1,750,000 at listing
· The Group reports its results and raises funds in Pounds Sterling
(GBP).
· Its primary assets are in Namibia, Botswana and Zambia
CHAIRMAN' STATEMENT
Dear Shareholder
African Pioneer has made very positive start as a listed entity and we are
pleased with the progress made with the Company's African copper and gold
assets.
The Company's 85% owned Ongombo project in Namibia has benefited from a
resource upgrade during the period under review and a mining licence
application has been submitted for this project to the ministry of mines and
energy in Namibia. A drilling programme is currently underway aimed at
testing our prognosis that close to surface mineralisation exists at
Ongombo. I am pleased to report that thedrill programme is progressing well
and that several drill holes within 10m of surface have intersected strong
visual mineralisation. The drill programme is on-going and we are eagerly
awaiting assay results for both copper and gold. We are optimistic that we
will have continued success with the drilling and that we will be able to
potentially increase strike and identify an open pit production project with
2-3 year mine-life at Ongombo.
In Zambia, our North-western licences, are subject to an option agreement with
First Quantum Minerals Corp. ("First Quantum"), who are one of the largest
copper producers in the world and have a strong presence in Zambia. First
Quantum have a world class copper producing project (Sentinel Mine) some 80
kilometres away from our licence area and have excellent knowledge of the area
as well as many years of experience as mine operators in North Western Zambia
where our exploration licences are located. The geology in these licences
appears to resemble the geology usually encountered in the Democratic Republic
of Congo rather than what would be traditionally expected in the Copperbelt,
and consequently the possibility of associated cobalt credits is potentially
high. First Quantum has carried out significant field work and we anticipate
that they will commence drilling in the third quarter of this year. We are
very excited for the potential for our Zambian licences and we are confident
that our partner, First Quantum, will do their best endeavours to fast-track
the exploration programme.
We are indeed fortunate that Sandfire Resources Limited ("Sandfire")
subscribed for a 15% equity stake in African Pioneer Plc when the Company
listed on 1 June 2021. During the year, we entered into a two-year option
agreement with Sandfire in relation to 4 of our 8 Botswana prospecting
licences for a cash payment of US$500,000 and the issue of 107,272 Sandfire
shares and plus a 24 months exploration expenditure commitment from Sandfire
of US$1 Million on the optioned licences.
The Option Agreement with Sandfire has allowed us to accelerate exploration
activities on the 4 Kalahari Copper Belt prospecting licences that are subject
of this Agreement whilst preserving the Company's cash reserves. The funds
received as part of the Option Agreement has allowed us to accelerate
exploration activities on the Company's 4 other prospecting licences in
Botswana and the projects in Namibia and Zambia.
We have several other prospecting licences which we intend to explore
ourselves and plans have been made for drilling to commence on some of these
prospects during the second half of this year.
The Company's assets are very well placed in Southern Africa and we are of the
opinion that both Botswana and Namibia are sources of tomorrow's copper
production. Furthermore, all our exploration projects have significant
by-product potential, being cobalt in Zambia, silver in Botswana and gold in
Namibia.
The global outlook for copper is probably at its most favourable for many
years and there is a dearth of new projects to meet the anticipated demand.
The shortage is exacerbated by the projects that are on the drawing board
which are generally very large and have a development period of more than 10
years and a huge capital requirement, often in the billions of dollars, which
is a challenge even for the major mining companies.
At time of writing this report, the world is challenged by war, famine,
inflation, pandemics and is probably in the worst position it has been in for
many years. Despite the gloom, most commodities are priced at the higher end
of the spectrum, suggesting that the economic outlook will improve going
forward, and the commodity producers will again be dominant in the foreseeable
future. Inflationary times are always positive for commodity prices and as
such we can expect that current metal prices will be resilient and will
possibly increase over the coming years.
In our opinion, African Pioneer is very well positioned, with projects located
in the right part of the world and in the right commodities and should provide
our shareholders with the potential to achieve good returns on investment. I
would like to thank my fellow directors and management for their efforts in
this post listing phase and look forward to advancing all our projects and
releasing the value that they undoubtedly contain.
Colin Bird, Chairman
African Pioneer Plc
30 June 2022
BOARD OF DIRECTORS AND SENIOR MANAGEMENT
Colin Bird - Executive Chairman
Colin Bird is a chartered engineer and a Fellow of the Institute of Materials,
Minerals and Mining with more than 40 years' experience in resource operations
management, corporate management and finance. The formative part of his career
was spent with the National Coal Board in England where he was assistant
underground manager. He moved to the Zambian Copper Belt in 1970 as an
assistant underground manager before joining Anglo America Coal Division in
1974 as section manager. He then moved to Botswana in 1979 to be mine manager
of the BCL Nickel Copper Mine, a joint venture between Anglo American
Corporation, Amax and the Botswana Government. On his return to the UK, he
worked with Hampton Gold Mine areas as a director of their coal mines in
Scotland before joining Costain Mining Ltd as technical director in 1987 and
thereafter Plateau Mining Plc as managing director in 1989. In 1993 he was
appointed operations and technical manager for Petromin, Saudi Arabia, of
their gold mining activities with responsibility for an underground mine
producing 175,000oz of gold and three gold mines in various stages of
feasibility study and development. In October 1995 he joined Lion Mining
Finance Ltd in London as technical manager and is now managing director and
majority shareholder of that company. Colin Bird founded and floated Jubilee
Metals Group Plc. He is Chairman and CEO of Galileo Resources Plc and Chairman
to Xtract Resources Plc. Colin serves on the board of directors of Tiger
Royalties and Investments Plc as Chairman, an AIM listed Investment Company
and shareholder in the Company. He is also a member of the board of the TSX
listed exploration company, Revelo Resources Corp, formerly known as Polar
Star Mining Corp, where he served as CEO for a period as well. Mr Bird serves
as Executive Chairman of Bezant Resources Plc and Kendrick Resources Plc. He
founded and floated Kiwara Plc which discovered copper in northwest Zambia.
The company was sold for US$260 million to First Quantum Corp. within 30
months of formation.
Raju Samtani - Finance Director
Raju is currently finance director of Tiger Royalties and Investments Plc,
listed on AIM. His previous experience includes three years as Group Financial
Controller at marketing services agency WTS Group Limited, where he was
appointed by the Virgin Group to oversee their investment in the WTS Group
Ltd. More recently he was finance director of Kiwara Plc which was acquired by
First Quantum Minerals Ltd in January 2010. Over the last few years, he has
been involved in senior managerial positions for several AIM/Johannesburg
Stock Exchange listed companies predominantly in the resource sector and has
also been involved in FCA compliance work within the investment business
sector.
Christian Cordier - Business Development Director
Christian has had considerable involvement in corporate finance and
investments in both public and private mining and exploration companies for
over 22 years. His portfolio includes joint ventures with major international
mining houses, investments in listed companies in the United Kingdom,
Australia and Southern Africa as well as private mining operations. He has
extensive experience in sourcing natural resource projects 1 12.1. a 40 and
nurturing them through the value curve by packaging and arranging venture
funding, managing the permitting and exploration process, negotiating off-take
agreements and the formation of a strong management team. He worked as CFO and
senior accountant as well as company secretary for private and public
companies and is a member of SA Institute for Professional Accountants
("SAIPA"). Christian has done transactions in Coal, Platinum Group Metals,
Chrome, Copper, Potash, Phosphates, Diamonds, Gold, Lithium and Manganese.
Christian focuses on business development and wealth creation for private and
publicly listed companies in the mining and exploration sector.
Kjeld Thygesen - Independent Non-Executive Director
Kjeld Thygesen is mining investment veteran of more than 45 years. After being
a mining analyst at James Capel in the latter half of the 1970's he was
manager of the commodities department at Rothschild Asset Management between
1980-89. In 1990 he formed Lion Resource Advisors as a specialist adviser in
the mining and natural resource sectors. LRA was the advisor to the Midas Fund
in the US between 1992 - 2000, which was one of the top performing finds
during that period. From 2002-2008 he was Investment director of Resources
Investment Trust, a London listed investment trust which returned a threefold
investment during that period. He has served on several mining company boards
over the past twenty years.
James Cunningham-Davis - Non-Executive Director
James Cunningham-Davis is a qualified Solicitor and a Fellow of the Chartered
Institute for Securities & Investment, founder of the law firm Buckingham
Legal and founder and Managing Director of Cavendish Trust Company Ltd, and
Cavendish Secretaries Limited, all of which are headquartered in the Isle of
Man. Cavendish Trust and Cavendish Secretaries provide professional services
to many private companies and various listed companies, across a number of
sectors of industry and finance in many jurisdictions, though particularly in
the Natural Resources/Mining, Technology and Property sectors. James has
worked within the international legal and corporate finance/service sectors
for more than 25 years and has held many directorships in both private and
listed companies.
FINANCIAL CORPORATE AND OPERATIONAL REVIEW
INTRODUCTION
African Pioneer Plc a company engaging in development of natural resources
exploration projects in Sub-Saharan Africa presents its year-end results for
the year ended 31 December 2021.
The Directors are required to provide a year-end report in accordance with the
Financial Conduct Authorities ("FCA") Disclosure Guidance and Transparency
Rules ("DTR"). The Directors consider this Financial, Corporate and
Operational Review along with the Chairman's Report, the Strategic Review and
the Director's Report provides details of the important events which have
occurred during the period and their impact on the financial statements as
well as the outlook for the Company going forward.
The Company's short to medium term strategic objectives are to enhance the
value of its mineral resource Projects through exploration and technical
studies conducted by the Company or through joint venture or other
arrangements (such as the Option Agreement of selected Botswanan Projects with
Sandfire Resources Limited and also the more recent the option agreement with
First Quantum Corp on its 4 North-West Zambian licences) with a view to
establishing the Projects can be economically mined for profit. With a
positive global outlook for both base and precious metals, the Directors
believe that the Projects provide a base from which the Company will seek to
add significant value through the application of structured and disciplined
exploration.
Financial Review
Financial highlights:
· Consolidated 396k profit after tax (2020: £(90)k - loss)
· Approximately £1.19M cash at bank at the period end (2020: £88K).
· The basic and diluted profit (losses) per share are summarised in the
table below
Profit (Loss) per share (pence)
Basic Note 6 0.34p (0.77)p
Diluted Note 6 0.29p (0.77)p
· Net asset value as at 31 December 2021 was £6.06m (31 December 2020
£87,114)
Fundraisings:
On 11 March 2021, the Company entered into a Convertible Loan Note
Subscription Agreement with Sandfire Exploration Limited, listed on the
Australian Stock Exchange ("Sandfire") under which Sandfire subscribed for
US$500,000 of interest free unsecured loan notes, which upon listing was
converted into Ordinary Shares constituting 15 per cent. of the Company's
issued share capital.
At Listing the Company raised £1,750,000 (before expenses) through the issue
of 50,000,000 new ordinary shares of no par value in the capital of the
Company ("Ordinary Shares") at 3.5 pence per Ordinary Share.
The funds raised on Admission provided the Group with sufficient money to
undertake the exploration and assessment of the Company's licences in Namibia
and Zambia and also in Botswana. Details of these work programmes are set out
in the Company's Prospectus dated 26 May 2021. As noted below, the funds
received by the Company under the Option Agreement with Sandfire for the
Botswanan licences are also available for the development of the Namibian and
Zambian Projects and the Botswanan licences retained by African Pioneer Plc
and/or further acquisitions as and when any may be identified.
Corporate Review
Company Board: The Board of the Company comprises Colin Bird, Executive
Chairman Raju Samtani, Finance Director Christian Cordier, Business
Development Director Kjeld Thygesen, Independent Non-executive Director James
Nicholas Cunningham-Davis, Non-executive Director.
Listing: The Company was admitted to the Official List (Standard Segment) and
commenced trading on the Main Market for listed securities of the London Stock
Exchange on 1 June 2021 (the "Listing" or "IPO") .
Corporate Acquisitions: At Listing the Company completed the acquisition of
projects based in Namibia, Zambia, and Botswana by acquiring:
1) 100% of Zamcu Exploration Pty Ltd ("Zamcu"), for £521,500 which was
settled by the issue of 10M Ordinary Shares at 3.5 pence per Share and a
further 4.9M Ordinary Shares at 3.5 pence per Share at Listing and in turn,
Zamcu financed via a loan from APP paid a cash sum of £149,149 plus
£166,000 settled through for the issue of 4,742,857 Ordinary Shares in APP at
3.5 pence per shareacquired a 70 per cent. interest in Manmar Investments 129
(Pty) Ltd and Manmar Investments 136 (Pty) Ltd incorporating two Namibia
Exclusive Prospecting Licenses ("EPLs") located within the Matchless
amphibolite Belt of central Namibia (the "Namibian Projects");
2) 80% of African Pioneer Zambia Limited ("APZ"), for £1,925,000 which was
settled by the issue of Ordinary Shares at 3.5 pence per share at Listing. APZ
holds a 100 per cent. interest in five Zambian Prospecting Licenses (PLs)
located in two areas namely the Central Africa Copperbelt (Copperbelt), which
comprises four PLs and the Zambezi area which comprises one PL (the "Zambian
Projects"); and
3) 100% of Resource Capital Partners Pty Ltd ("RCP"), for £350,000 which was
settled by the issue of Ordinary Shares at 3.5 pence per Share at Listing. RCP
which holds a 100 per cent. interest in eight Botswana Prospecting Licenses
("PLs") located in two areas namely (1) the Kalahari Copperbelt (KC), which
comprises six PLs and (2) the Limpopo Mobile Belt (Limpopo), which comprises
two PLs (the "Botswanan Projects") (together the "Projects") (the
"Subsidiaries") (together the "Group").
Post Listing Agreements:
1) On 27 August 2021, Zamcu acquired a further 15% interest in Manmar
Investments 129 (Pty) Ltd and Manmar Investments 136 (Pty) Ltd for a total
consideration of AUS$528,000 in cash and the issue of 2,248,295 Ordinary
Shares in APP.
2) On 19 January 2022, the Company and its 80% owned subsidiary African
Pioneer Zambia Ltd ("African Pioneer Zambia") entered into an option agreement
with First Quantum Minerals Corp. ("First Quantum") (listed on the Toronto
Stock Exchange) in relation to 4 of the 5 Zambian exploration licences held by
African Pioneer Zambia (the "Option Agreement").
Lock Up and Orderly Market: All the Ordinary Shares issued to vendors at
Listing to acquire Zamcu, APZ and RCP were subject to a 12 month lock up from
the IPO followed by a 12-month orderly market arrangement.
Revised arrangements for exploration and potential Sale of Kalahari Copper
Belt Licences
On 2 October 2021, in place of the existing arrangements, APP entered into a
two year option agreement with ASX listed Sandfire Resources Limited (ASX:SFR)
("Sandfire") in relation to 4 of its 8 Botswana prospecting licences for a
cash payment of US$500,000 and the issue of 107,272 Sandfire shares and a 24
months exploration expenditure commitment of US$1,000,000 (the "Option
Agreement"). The Company entered into the Option Agreement to allow an
acceleration of exploration activities on the 4 Kalahari Copper Belt
prospecting licences the subject of the Option Agreement (the "Included
Licences") funded by Sandfire.
Highlights of Option Agreement:
Pursuant to the Option Agreement on 8 October 2021 Sanddfire made the
following payments to African Pioneer:
1) US$500K was paid to the Group in cash in relation to the cash
component of the option fee for the right to acquire the Included Licences;
and
2) 107,272 Sandfire Ordinary shares ("Sandfire Shares") were issued to
the Company with a market value A$565K (approx. US$407K) based on the closing
Sandfire share price of A$5.27 per Sandfire share on 1 October 2021 to settle
the share component of the option fee and a guarantee fee due to the Company.
The Sandfire Shares do not have any trading restrictions.
Exercise and Option Period: The option can be exercised within 2 years of the
Option Agreement (the "Option Period") to acquire the Included Licences for
US$1. Sandfire has the right to extend the Option Period by 1 year by the
payment of a US$500,000 option extension fee.
Exploration Commitment: Sandfire to fund US$1 million of exploration
expenditure by the Company on the Included Licences (the "Exploration
Commitment") within the Option Period and if the US$1 million is not spent,
any shortfall will be paid to African Pioneer. Sandfire can withdraw from the
Option Agreement at any time after meeting the Exploration Commitment.
A Success Payment: a one-off success payment to be paid to the Company for
the first ore reserve reported under JORC Code 2012 edition on the Included
Licences which exceeds 200,000 tonnes of contained copper (the "First Ore
Reserve") in the range of US$10 million to US$80 million depending on the
amount of contained copper in the First Ore Reserve (the "Success Payment").
Termination of Conditional Licence Sale Agreement: As a result of entering
into the Option Agreement the parties have terminated the Conditional Licence
Sale Agreement dated 12 March 2021 under which Sandfire was due to acquire all
8 of the Company's 8 Botswana prospecting licences for a cash payment of
US$500,000 and the issue of 107,272 Sandfire shares to the Company (the
"Conditional Licence Sale Agreement").
Further Information on Assets the subject of the Option Agreement
The Company acquired its Botswanan Projects comprising 8 prospecting licences
for £350,000 by acquiring Resources Capital Partner Pty Ltd on 1 June 2021.
Although unexplored, these licences are located in an highly prospective area
for copper projects and it was the Company's original intention to conduct an
initial 18 month exploration work programme to assess the prospectively of the
Botswanan Projects and assess the best way of developing them and had
earmarked US$176,000 in the Group's 18 month budget for this purpose. The
Option Agreement provides for Sandfire to fund US$1,000,000 of exploration
expenditure within 24 months on the Included Licences which are the subject of
the Option Agreement which will significantly accelerate and increase the
exploration work undertaken on the Botswanan Projects.
Included Licences the subject of Retained Licences not the subject
the Option Agreement of the Option Agreement
PL 100/2020 PL 096/2020
PL 101/2020 PL 097/2020
PL 102/2020 PL 098/2020
PL 103/2020 PL 099/2020
Use of Option Payments: The payments from Sandfire under the Option Agreement
will allow the Group to concentrate its increased financial resources and its
management capabilities on its remaining two projects in Namibia and Zambia
and the 4 Botswana prospecting licences that are not the subject of the Option
Agreement.
Operational Review
The period under review has been transformatory for the Company in that the
Company completed an Initial Public Offering (IPO) on the Standard List of
the London Stock Exchange and the acquisition of its projects in Namibia,
Zambia and Botswana more details of which are provided in the Corporate
Highlights section of this review.
From the IPO the Group has been engaged in the advancement of its natural
resources exploration projects in Sub-Saharan Africa.
Technical review of Projects: After the IPO and having acquired its projects
in Namibia, Zambia and Botswana,the Company commenced technical reviews and /
or programmes on its the projects located in Namibia and Zambia. The primary
metal in all countries is copper with by-product potential in all of our
projects. In Zambia we have potential for cobalt, in Botswana for silver and
in Namibia for gold.
Namibia:
On 27 August 2021, the Group acquired a further 15% interest in its Ongombo
Project and Ongeama Project in Namibia (the "Namibian Projects") increasing
its interest in the Namibian Projects to 85%. On 20 December 2021 the Company
announced a 3.76 Mt increase in the Measured & Indicated Mineral Resources
of the Ongombo Project Mineral Resources to 10.47Mt @ 1.4% Cu, 7g/t Ag at a
cut-off of 1.0% Cu, with 0.35g/t Au categorised as Inferred following a JORC
(2012) compliant review by external consultant, Red Bush Analytics, the
submission of a mine application and a positive scoping study by Practara
Consulting.
· Positive Scoping Study Conclusions: The base case of the Scoping
Study by Mine design specialists, Practara Consulting, generated a post-tax
NPV of US$39 million using a 10% discount rate and an IRR of 27.7%,with
payback from first production estimated to be 2.4 years. Practara considers
that the economic study for Ongombo meets the "Criteria for Reasonable
Prospects for Eventual Economic Extraction".
· Mining Licence submitted: A Mining Licence application has been
submitted to the Ministry of Mines and Energy of Namibia. Follow-up detailed
mine layout and mine scheduling review is being undertaken by external
consultants Practara Consulting and Nurizon Consulting Engineers with emphasis
on assessing the initial Life of Mine and the development of the Central Shoot
· Metallurgical test work: Metallurgical test work has commenced on
historic samples and new samples will be taken as part of the planned drill
programme
Environmental and Social Impact Assessment (ESIA): More detailed ESIA studies
completed and we have commenced community consultation.
On 24 May 2022, a shallow diamond drilling programme commenced on the
Ongombo Project, Namibia.
Highlights of the programme are as follows:
· 25 to 30-hole shallow diamond drill programme has commenced on the
Ongombo Project
· 6 holes completed to date with all holes intersecting encouraging
sulphide mineralisation with chalcopyrite at shallow depths
· Visual estimates of chalcopyrite content in the mineralised zones
indicate notable quantities of copper sulphide to date
· Drill programme designed to test near-surface oxide and sulphide
copper-gold mineralisation
· Work also underway to resample historic drill core to test for
elevated gold values in and around copper mineralisation
Ongombo Project Near-surface Drill Programme
Six holes have been completed to date. Assessment of the potential of the
mineralised zone at this stage in the evaluation process is based on visual
estimates of copper sulphide content, occurring as chalcopyrite and relies on
the experience of the geologist managing the drilling programme and logging
core to assess the proportion of visible chalcopyrite relative to pyrite and
other minerals making up the mineralised horizon.
Visual estimates of copper content do not reflect the expected assay grade of
the mineralised horizon but do indicate the extent of chalcopyrite
mineralisation.
Table 1: Mineralised Widths of First Six Drillholes Completed on Near-Surface
Drill Programme on the Ongombo Project
Hole ID From To Mineralised* Width End Of Hole
(m) (m) (m) (m)
APD001 11.81 14.81 3.0 17.45
APD002 21.27 22.27 1.0 29.78
APD003 7.30 11.86 4.56 17.86
APD004 20.59 21.50 0.91 26.83
APD005 11.4 13.05 1.65 17.81
APD006 36.5 38.1 1.60 56.99
The gossanous outcrop at Ongombo has been assumed to be the surface expression
of the mineralisation drilled at depth to generate the current Ongombo Mineral
Resource Estimate. African Pioneer has projected this same mineralisation to
extend to surface through to the gossan outcrop. It has been assumed that
previous exploration drilling ignored the near-surface potential on the basis
that copper oxide mineralisation, at the time that Gold Fields Namibia Limited
was exploring, was not conducive to good metal recover. Today however,
flotation processing has the capacity to recover economic quantities of oxide
and sulphide copper in parallel in the same flotation processing plant making
any shallow mineralisation a valid target for development. African Pioneer
will test the shallow mineralisation potential over a strike length of
approximately 1 kilometre and down dip of the gossan outcrop to the point
where historic drilling occurs.
Assessment of Gold Grades in Historic Drill Core
Approximately 80 drillholes have been found that were completed by previous
explorers including Gold Fields Namibia Limited. The Company intends to
resample the drill core in and around the mineralised horizon in each case in
order to assess the distribution of gold attributable to the existing Mineral
Resource Estimate.
Historically limited gold assaying was undertaken, so only low-grade gold
values have been reported as any grade less than 1g/t Au was considered
insignificant, particularly when exploration was being undertaken by South
African companies more used to significantly higher gold grades on their deep
level gold mines and as a consequence, only. At the current gold price, and in
conjunction with known copper grades, there is scope for an important
by-product addition of gold in the Mineral Resource. A greater density of gold
assay data covering the existing Mineral Resource generated by resampling of
available core has the scope to add to the value of each tonne of ore defined
to date.
Zambia:
Post year-end, On 19 January 2022 the Company's 80% owned subsidiary African
Pioneer Zambia Ltd ("African Pioneer Zambia") entered into an option agreement
with First Quantum Minerals Ltd ("First Quantum") (listed on the Toronto Stock
Exchange FM.TO) in relation to 4 of the 5 Zambian exploration licences held by
African Pioneer Zambia (the "Option Agreement").
Highlights of the Option Agreement:
· The four exploration licences the subject of the Option Agreement are
in the highly prospective Central Africa Copperbelt in northwest Zambia which
is the largest and most prolific mineralized sediment- hosted copper province
in the world and are located less than 100km from First Quantum's giant
Sentinel copper mine.
· The exploration licenses include geological formations similar in age
and rock type to that hosting the major copper deposits of the Copperbelt.
· During the initial 18 month option period First Quantum has the right
but not the obligation to spend US500,000 on each of the exploration licences
27767-HQ-LEL, 27768-HQ-LEL, 27770-HQ-LEL, and 27771-HQ-LEL (the "Zambian
Projects"). At this stage First Quantum will not have earned any shares in
African Pioneer Zambia, just the right to proceed to take one or more of the
properties into the First Earn In Period by issuing an Option Exercise Notice.
· During the First Earn In Period, First Quantum then has 2 years when
it has the right but not the obligation to prepare a Technical Report in
respect of the Zambian Projects demonstrating an Indicated Mineral Resource of
at least 300,000 tonnes of contained copper (the "Technical Report
Requirement"). First Quantum is to fund the Technical Report. Once the
Technical Report is issued First Quantum has the right to be issued shares
equal to a 51% shareholding in African Pioneer Zambia. This will also trigger
the Second Earn-In Period.
· In the Second Earn-In Period First Quantum shall have the right but
not the obligation to complete all necessary mining, metallurgical and
development studies to establish a mine at the Property and make a public
announcement that it intends to proceed towards commercial development of a
Mine on the Property (a "Decision to Mine"). First Quantum is to fund
FINANCIAL CORPORATE AND OPERATIONAL REVIEW (Continued)
all costs related to the Decision to Mine. Once First Quantum announces a
Decision to Mine First Quantum has the right to be issued shares in African
Pioneer Zambia to increase their 51% shareholding in African Pioneer Zambia to
75%.
Botswana:
On 4 October 2021 the Company announced that in place of the existing
arrangements, it had on 2 October 2021 entered into a two-year option
agreement with ASX listed Sandfire Resources Limited (ASX:SFR) ("Sandfire") in
relation to 4 of its 8 Botswana prospecting licences for a cash payment of
US$500,000 and the issue of 107,272 Sandfire shares (share price on 3 May 2022
- A$5.60 - approx. £3.17) and a 24 months exploration expenditure commitment
of US$1,000,000 (the "Option Agreement"). The Company has entered into the
Option Agreement to allow an acceleration of exploration activities on the 4
Kalahari Copper Belt prospecting licences the subject of the Option Agreement
(the "Included Licences") funded by Sandfire. Funds received will also allow
the Company to accelerate exploration activities on the Company's 4 other
prospecting licences in Botswana and its projects in Namibia and Zambia.
Outlook
Outlook for Copper: Although the price of copper has corrected slightly in the
period post year-end as a result of higher interest rates recently implemented
by western governments and due to the ongoing geopolitical tensions,
forecasts for the price of copper and its by-product metals remain positive.
The outlook for copper supply is quite bleak and we are likely to see more
smaller mines being developed since most large copper mining projects have
been shelved as a result of political or economic reasons. As a result, the
Company is well positioned with all its projects, to take part in a potential
acquisition boom or alternatively to attract financing which might not
otherwise have been available.
The major mining companies are seeking new projects for acquisition and all
our projects have the fundamentals which may attract the attention of larger
companies. We have already entered into an agreement with Sandfire in relation
to the Botswana Projects.
We feel that there is a strong possibility that the current inflationary
pressures and higher interest rates may slow down stock markets but these
conditions will be beneficial for the smaller metal producers who have
historically outperformed under these economic conditions.
The Board feels the Group has assembled an enviable portfolio of projects and
we are pleased that Sandfire has taken an equity position in the Company. We
look forward to advancing all our projects in the second half and providing
our shareholders with the prospects of enhanced value flowing into next year.
By Order of the Board
30 June 2022
DIRECTORS' REPORT
The directors present their report on the affairs of African Pioneer Plc (the
"Company") for the year ended 31 December 2021. The Company was incorporated
on 20 July 2012.
PRINCIPAL ACTIVITIES
The principal activity of the Company and its subsidiaries (the "Group") is
the exploration for base metals in Zambia, Namibia and Botswana.
Investing in small natural resource projects and mineral exploration projects
can be very rewarding, but because of the issues and uncertainties arising
from exploration, resource estimation, commodity price volatility, politics
and the financing of such projects, there is a significant possibility of such
reward not materialising. As a result of the nature and size of the Company it
will, in the early years particularly, be exposed to a concentration of risk
either by sector or geographically, or possibly both. These risks are outlined
in more detail in the Strategic Report.
REVIEW OF THE BUSINESS
During the year, the Group made a profit of £395,693 - 2020: loss of £
(90,156).
A review of the current and future development of the Group's business are
included in the Strategic Report.
The Directors do not recommend the payment of a dividend.
SUBSEQUENT EVENTS
Details of subsequent events after the year end are disclosed in note 17 to
the financial statements
DIRECTORS
The names of the Directors who served throughout the period and subsequent to
the year end, except where shown otherwise, are as follows:
C Bird
R. Samtani
C Cordier (appointed 1 June 2021)
K Thygesen (appointed 1 June 2021)
J Cunningham-Davis
Directors' interests in the ordinary share capital of the Company at the date
of this report are disclosed within the Directors Remuneration Report
DIRECTOR'S REMUNERATION
The Directors' remuneration is detailed in the Directors' Remuneration Report
on pages 17 to 19
DIRECTORS' AND OFFICERS' INDEMNITY INSURANCE
The Group has purchased Directors' and Officers' liability insurance which
provides cover against liabilities arising against them in that capacity.
USE OF FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Details of the use of financial instruments and associated risk management by
the Group are included in note 3 to the financial statements.
SUBSTANTIAL SHAREHOLDINGS
Other than Directors interests which are set out below on a separate table in
this report, the following shareholders held 3% or more of the issued share
capital of the Company at 31 December 2021. These holdings are extracted as
they appear in the relevant custodian account in the Company's share register.
Party Name Number of ordinary shares % of share capital
The Bank of New York (Nominees) Limited* 41,732,143 21.77
Sandfire Resources Limited 28,418,932 14.82
HSBC Global Custody Nominee (UK) Limited* 22,014,641 11.48
JIM Nominees Limited* 21,272,474 11.09
Mohamad Ahmad 15,000,000 7.82
ISI Nominees Limited* 9,285,714 4.84
Wilhelm Shali 7,124,675 3.72
*Nominee shareholder; not beneficial owner.
ENERGY CONSUMPTION
The Company consumed less than 40MWh during the period and as such is a Low
Energy User as defined in the Environmental Reporting Guidelines Including
streamlined energy and carbon reporting guidance March 2019 (Updated
Introduction and Chapter 1) and as such is not required to provide detailed
disclosures of energy and carbon information. The company was below this
threshold in 2020.
POLITICAL DONATIONS
The Group made no political donations during the year (2020: none).
STATEMENT AS TO THE DISCLOSURE OF INFORMATION TO THE AUDITORS
The Directors (being Colin Bird, Raju Samtani, Christian Cordier, Kjeld
Thygesen and James Cunningham-Davis, who were in office at the date of
approval of this report, confirm that, so far as they are aware, there is no
relevant audit information of which the Company's auditor is unaware of and
that they have taken all reasonable steps to take themselves aware of any
relevant audit information and to establish that the Company's auditor is
aware of that information.
The Directors are responsible for preparing the financial statements in
accordance with the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority ("DTR") and with International Financial Reporting
Standards as adopted by the United Kingdom.
The Directors confirm to the best of their knowledge that:
• the financial statements have been prepared in accordance
with the relevant financial reporting framework and give a true and fair view
of the assets, liabilities, financial position and profit or loss of the Group
and the Company; and
• the Strategic Report and Directors' Report include a fair
review of the development and performance of the business and the financial
position of the Group and the Company, together with a description of the
principal risks and uncertainties that it faces; and
• the annual report and financial statements, taken as a
whole, are fair, balanced, and understandable and provide the information
necessary for shareholders to assess the Group's position, performance,
business model and strategy.
AUDITORS
The auditors, Shipleys LLP have indicated their willingness to continue in
office. A resolution to re-appoint them will be proposed at the forthcoming
Annual General Meeting.
Signed on behalf of the Board:
30 June 2022
Colin Bird
Raju
Samtani
Non-Executive
Chairman
Director
DIRECTORS' REMUNERATION REPORT
This Remuneration Report sets out the Group's policy on the remuneration of
Directors, together with details of Directors' remuneration packages and
service contracts for the year ended 31 December 2021.
The Company's policy is to maintain levels of remuneration to attract,
motivate, and retain Directors and Senior Executives of the highest calibre
who can contribute their experience to deliver industry-leading performance
with the Company's operations. The Company is nonetheless mindful of the need
to balance this objective with the fact that it is pre-revenue.
Since listing on 1 June 2021, the Company's Directors have largely remunerated
through a combination of modest salaries and/or fees and where relevant,
equity positions as founders and as a result the total salaries and fees
payable to directors has been relatively modest.
As the Company grows, and increasingly makes hires, it will become necessary
to move to a more long-term and sustainable policy, which continues to align
the interests of Directors and senior staff with those of shareholders while
recognising that new hires will not initially have a significant equity
position.
Accordingly, it is likely that compensation packages for Executive Directors
will need to move over time to a level more consistent with the market.
Currently, Directors' remuneration is not subject to specific performance
targets. The Company is sufficiently small that the Board does not consider
that it is necessary to impose such targets as a matter of principle but
believes that exceptional performance can be rewarded on an ad hoc basis.
The Board intends to adopt a share option scheme which to incentivise both
Executive and non-Executive Directors as well individuals holding positions of
responsibility in the Company.
The Board considers the remuneration of Directors and senior staff and their
employment terms and makes recommendations to the Board of Directors on the
overall remuneration packages. No Director takes part in any decision directly
affecting their own remuneration.
There has been no correspondence to date from shareholders relating to
Directors' remuneration matters and therefore no such matters have been
considered by the Board in formulating the Company's remuneration policy.
In determining Executive Director remuneration policy and practices, the Board
aims to address the following factors:
• Clarity - remuneration arrangements should be transparent and
promote effective engagement with shareholders and the workforce;
• Simplicity - remuneration structures should avoid complexity and
their rationale and operation should be easy to understand;
• Risk - remuneration arrangements should ensure reputational and
other risks from excessive rewards, and behavioural risks that can arise from
target-based incentive plans, are identified and mitigated;
• Predictability - the range of possible values of rewards to
individual directors and any other limits or discretions are identified and
explained at the time of approving the policy;
• Proportionality - the clarity of the link between individual
awards, the delivery of strategy and the long-term performance of the company
should be clear; and
• Alignment to culture - incentive schemes, when implemented will
drive behaviours consistent with company purpose, values and strategy.
Directors' remuneration
Remuneration of the Directors for the years ended 31 December 2021 and 2020
was as follows:
2021 2021 2021 2020
Total Total
Emoluments
Emoluments
Consulting Fees
Directors' Fees
£ £ £ £
C. Bird 10,500 24,500 35,000 -
R. Samtani 10,500 18,669 29,169 -
C Cordier 10,500 6,000 16,500 -
K Thygesen 10,500 - 10,500 -
James Cunningham-Davis 9,300 - 9,300 3,600
Total 51,300 49,169 100,469 3,600
Each of the Directors entered into service agreements at the time of the Company's admission to the market on 1 June 2021. Details of Directors' Letters of Appointment and Service Agreements as disclosed in Note 16 of these Financial Statements.
There were no pensions or other similar arrangements in place with any of the
Directors during the years ended 31 December 2021 or 2020.
Payments to past directors
The Company has not paid any compensation to past Directors.
DIRECTORS' INTERESTS
The beneficial interest of the directors, their spouses and minor children in
the share capital of the Company are as follows:
Ordinary Shares of No Par Value
31 December 2021 31 December 2020
C Bird* 21,061,728 1,061,728
R Samtani 16,061,728 1,061,728
J Cunningham-Davis*** - -
C Cordier** 15,000,000 -
K Thygesen 200,000 -
* Colin Bird's shareholding includes 5,000,000 ordinary shares held by Campden
Park Trading, a company owned and controlled by Colin Bird , the Company's
Chairman
** Christian Cordier's shareholding includes 4,000,000 ordinary shares held by
Tonehill Pty Ltd and 3,000,000 ordinary shares held by Coreks Super Pty Ltd
both of which companies are owned and controlled by Christian Cordier. It also
includes 8,000,000 ordinary shares held by Breamline Pty Ltd of which
Christian Cordier is a director and which is a trustee company for Breamline
Ministries.
*** 230,000 warrants are held by Cavendish Trust of which James Cunningham
-Davis is a director
There have been no further changes in directors' interests since the year end.
Other matters
The Company does not currently have any annual or long-term incentive schemes in place for any of the Directors and as such there are no disclosures in this respect.
Approved by the Board on 30 June 2021.
GOVERNANCE REPORT
Corporate Governance
The Board guides and monitors the business and affairs of the Company on
behalf of the Shareholders to whom it is accountable and is responsible for
corporate governance matters. While certain key matters are reserved for the
Board, it has delegated responsibilities for the day-to-day operational,
corporate, financial and administrative activities to the Business Development
Director, the Executive Chairman and the Finance Director.
In assessing the composition of the Board, the Directors have had regard to
the following principles:
· the role of the Executive Chairman and the other directors should not
be exercised by the same person;
· the Board should include at least one independent non-executive
director, increasing where additional expertise is considered desirable in
certain areas, or to ensure a smooth transition between outgoing and incoming
non-executive directors; and
· the Board should comprise of directors with an appropriate range of
qualifications and expertise.
The Company believes it complies with each of these principles.
Both James Cunningham-Davis and Kjeld Thygesen are the Non-Executive Directors
of the Company. James Cunningham-Davis is one of the directors of Cavendish
Secretaries Limited, a subsidiary of Cavendish Trust Company Limited, which
provides secretarial services to the Company in the Isle of Man and is
therefore for these purposes not considered independent.
Kjeld Thygesen has a holding of Ordinary Shares representing 0.14 per cent. of
the Enlarged Share Capital on Admission but he is considered independent given
this holding is de minimis.
Directors appointed by the Board are subject to election by shareholders at
the Annual General Meeting of the Company following their appointment and
thereafter are subject to re-election in accordance with the Company's
Articles of Association.
The QCA Corporate Governance Code, as published by the Quoted Companies
Alliance, is tailored for small and mid-size quoted companies in the United
Kingdom. The Company will, to the extent practicable for a company of its size
and nature, follow the QCA Corporate Governance Code. The Directors are aware
that there are currently certain provisions of the QCA Corporate Governance
Code that the Company is not in compliance with, given the size and early
stage nature of the Company. These include, inter alia:
· The Company does not currently have a remuneration, nomination or
risk committee. The Board as a whole will review remuneration, nomination and
risk matters, on the basis of adopted terms of reference governing the matters
to be reviewed and the frequency with which such matters are considered. The
Board as a whole will also take responsibility for the appointment of auditors
and payment of their audit fee, monitor and review the integrity of the
Company's financial statements and take responsibility for any formal
announcements on the Company's financial performance.
· Unless further independent non-executive directors are appointed, the
Board will not comply with the provision of the QCA Corporate Governance Code
that at least to members of the Board, excluding the Chairman, should comprise
non-executive directors determined by the Board to be independent.
· The Executive Chairman of the Company is an executive director rather
than an independent non-executive director as suggested by the QCA corporate
governance code.
Share Dealing Code
The Company has adopted, with effect from Admission, a share dealing policy
regulating trading and confidentiality of inside information for the Directors
and other persons discharging managerial responsibilities (and their persons
closely associated) which contains provisions appropriate for a company whose
shares are admitted to trading on the Official List (particularly relating to
dealing during closed periods which will be in line with the Market Abuse
Regulation). The Company will take all reasonable steps to ensure compliance
by the Directors and any relevant employees with the terms of that share
dealing policy.
Audit Committee
The Audit Committee is chaired by James Cunningham-Davis and its other member
is Christian Cordier. The Audit Committee meets at least twice a year, or more
frequently if required. The Audit Committee is be responsible, amongst other
things, for making recommendations to the Board on the appointment of auditors
and the audit fee, monitoring and reviewing the integrity of the Company's
financial statements and any formal announcements on the Company's financial
performance as well as reports from the Company's auditors on those financial
statements.
In addition, the Audit Committee considers and reviews the Company's internal
financial control and risk management systems to assist the Board in
fulfilling its responsibilities relating to the effectiveness of those
systems, including an evaluation of the capabilities of such systems in light
of the expected requirements for any specific acquisition target.
Meetings of the Directors
The number of meetings of the board of directors of the Company and its
committees held during the year ended 31 December 2021 and the number of
meetings attended by each director is tabled below. The audit committee was
formed on 26 May 2021 prior to the Company's listing on the London Stock
Exchange
2021
Meetings whilst in office No. of meetings attended
Board Audit Board Audit
C. Bird 3 - 3 -
R. Samtani 3 - 3 -
J. Cunningham-Davis 3 1 3 1
K Thygesen * 2 - 2 -
C. Cordier * 2 1 2 1
· Appointed 26 May 2021
Diversity Policy
The Board operates a policy whereby Directors and other individuals considered
for employment and professional services across the Group are selected on the
basis of their experience, professional qualifications and ability and a such
the Company does not discriminate on aspects such as age, gender or
educational and professional background.
The Company's employees comprising of the 5 Board Directors are all male.
Internal control
The Board is responsible for establishing and maintaining the Group's system
of internal control. Internal control systems manage rather than eliminate the
risks to which the Group is exposed and such systems, by their nature, can
provide reasonable but not absolute assurance against misstatement or loss.
There is a continuous process for identifying, evaluating and managing the
significant risks faced by the Group. The key procedures which the Directors
have established with a view to providing effective internal control, are as
follows:
¨Identification and control of business risks The Board identifies the major
business risks faced by the Group and determines the appropriate course of
action to manage those risks.
¨ Budgets and business plans Each year the Board approves the business plan
and annual budget. Performance is monitored and relevant action taken
throughout the year through the regular reporting to the Board of changes to
the business forecasts.
¨ Investment appraisal Capital expenditure is controlled by budgetary process
and authorisation levels. For expenditure beyond specified levels, detailed
written proposals must be submitted to the Board. Appropriate due diligence
work is carried out if a business or asset is to be acquired.
Environment, health, safety and community statement
The Group is committed to providing a safe working environment for all its
employees and to responsibly manage all of the environmental interactions of
its business. Its objective is to perform and achieve at a level notably in
excess of the regulatory minima required by the host countries in which it
does business.
The following specific principles are adhered to by the Group:
Health & Safety
• Provision of health and safety training to all employees;
• All necessary measures are taken to minimise workplace injuries, and
• Establishment of management and advisory programmes for the prevention of
transmissible diseases.
Environment
The Group prides itself on being a skilled and responsible operator. It
functions with the clear mandate of being in full compliance with corporate
standards, applicable environmental laws, regulations and permit requirements.
It has an internal monitoring programme in place that plays a critical role in
continuously improving its environmental performance.
The Group strives to minimise its environmental effects wherever and to:
• Comply with applicable laws, regulations and commitments wherever
it operates;
• Ensure it has the necessary resources, procedures, training
programmes and responsibilities in place to achieve its environmental
objectives;
• Strive to protect air and water quality, minimise consumption of
water and energy, and protect natural habitats and biodiversity;
• Promote an ongoing environmental dialogue with its stakeholders in
the communities where it conducts business;
• Collaborate with stakeholders to define environmental priorities
and to protect the environment, and
• Consider the requirement for environmental protection in all
aspects of exploration and development.
Communities
As well as recognising the need to protect the natural environment the Group
will follow Best Practices in:
• its interactions with local communities,
• respecting customs and cultural practices, and • minimising intrusion
upon lifestyles and traditions.
The Group will not violate human rights and will, wherever possible, favour
employment for local people when it recruits. It will strive to be recognised
as a socially aware and responsible business
STRATEGIC REPORT
The Directors present their strategic report on the group for the year ended 31 December 2021.
PRINCIPAL ACTIVITY
African Pioneer Plc ("the Company") is a public limited company which is
listed on the main market of the London Stock Exchange and incorporated and
domiciled in the Isle of Man. The Company's registered address is 34 North
Quay, Douglas, Isle of Man, IM1 4LB.
The Company is the parent company of African Pioneer Zambia Ltd, Resource
Capital Partners Pty Ltd and Zamcu Exploration Pty Ltd, which has an 85%
equity holding in Manmar Investments One Hundred and Twenty Nine (Pty) Ltd and
Manmar Investments One Hundred and Thirty Six (Pty) Ltd. (see note 10 for
further details).
The principal activity of the Company and its subsidiaries (the "Group") is
the exploration for base metals in Zambia, Namibia and Botswana.
GOING CONCERN
As disclosed in Note 2, the Directors have a reasonable expectation that the
Company has adequate resources to continue in operational existence for a
period of at least, but not limited, 12 months from the date of approval of
the financial statements. For these reasons, the Directors continue to adopt
the going concern basis in preparing the financial statements
KEY PERFORMANCE INDICATORS
The key performance indicators in assessing the completion of this activity
are monitored on a regular basis:
• Progress with exploration, monitoring licence commitments and
environmental compliance; and
• Cash management - ensuring that the Company is well funded and has
adequate cash to meet to meet its obligations as they fall due.
REVIEW OF THE BUSINESS
Details of the Company's strategy, results and prospects are set out in the
Chairman's Statement and in the Operations Report on pages 7 to 13.
On 1 June 2022 the Company completed the placing of 50,000,000 new Ordinary
Shares and raised gross proceeds of £1,750,000.
Financial highlights:
· £395k consolidated profit after tax (2020: £(90)k - loss)
· Approximately £1.19M cash at bank at the year-end (2020: £88k).
· The basic and diluted losses per share are summarised in the table
below
Profit/(Loss) per share (pence)
Basic Note 6 0.34p (0.77)p
Diluted Note 6 0.29p (0.77)p
· The net asset value of the Group at as at 31 December 2021 was £6.1M
(31 December 2020 - £87K)
INVESTMENTS HELD BY THE COMPANY FOR RESALE
At year-end, the Group held investments in five companies classified as
available-for-sale investments and valued at £502,456 and had a cash balance
of £1,190,979. The Group is able to raise additional cash at short notice by
selling its investments which are liquid. It is the Group's intention not to
purchase any new investments and to hold its residual portfolio as realisable
investments as a source of liquidity to cover explorations costs and general
overheads of the Group.
PORTFOLIO HOLDING AT 31 December 2021
Number Cost Valuation Valuation
31/12/21 31/12/21 31/12/21 31/12/20
Jubilee Metals Group Plc 217,802 8,266 35,393 27,770
Galileo Resources Plc 2,500,000 50,000 24,500 41,250
Sandfire Resources Ltd 107,272 302,960 379,489 -
South 32 Limited 13,845 28,607 30,044 19,297
Xtract Resources Plc 606,060 20,217 33,030 10,788
TOTAL FOR AFRICAN PIONEER PLC 410,050 502,456 99,105
PRINCIPAL RISKS AND UNCERTAINTIES
This business carries a high level of risk and uncertainty, although the
potential rewards can be outstanding. The Directors have identified the
following principal risks in regards to the Group's future. The relative
importance of risks faced by the Group can, and is likely to, change as the
Group executes its strategy and as the external business environment evolves.
Strategic risk
The Group's strategy may not deliver the results expected by shareholders. The Directors regularly monitor the appropriateness of the strategy, taking into account both internal and external factors, together with progress in
implementing the strategy and modify the strategy as may be required based on developments and exploration results. Key elements of this process are the Group's monthly reporting and regular Board meetings.
Exploration risk
Exploration at the Namibia, Zambia and Botswana Projects may not result in success.
Whilst the Directors endeavour to apply what they consider to be the latest technology to assess projects, the business of exploration for and identification of minerals and metals, is speculative and involves a high degree of risk. The mineral and metal potential of the Group's initial projects, Namibia and Zambia, may not contain economically recoverable volumes of
minerals, base metals, or precious metals of sufficient quality or quantity. To mitigate this risk, the Group has acquired the rights to carry out exploration and earn an interest in certain licences in the specific areas.
Even if there are economically recoverable deposits, delays in the construction and commissioning of mining projects or other technical difficulties may make the deposits difficult to exploit. The exploration and development of any project may be disrupted, damaged or delayed by a variety of risks and hazards which are beyond the control of the Group. These include (without limitation) geological, geotechnical and seismic factors, environmental hazards, technical failures, adverse weather conditions, acts of God and government regulations or delays.
Exploration is also subject to general industrial operating risks, such as equipment failure, explosions, fires and industrial accidents, which may result in potential delays or liabilities, loss of life, injury, environmental damage, damage to or destruction of property and regulatory investigations. The Group may also be liable for the mining activities of previous miners and previous exploration works. Although the Group intends, itself or through its operators, to maintain insurance in accordance with industry practice, no assurance can be given that the Group or the operator of an exploration project will be able to obtain insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims. The Group may elect not to become insured because of high premium costs or may incur a liability to third parties (in excess of any insurance cover) arising from pollution or other damage or injury.
Environmental and other regulatory risks
In relation to the Group's existing projects the environmental impact to date is limited to activities associated with exploration. The ultimate development of any project into a mining operation will inevitably impact considerably on the local landscape and communities. These projects sit in an area of considerable natural beauty and therefore there is likely to be opposition to mining by some parties. This may impact on the cost and/or Group's ability to sell or move these projects into production.
While the Group believes that its operations and future projects are currently, and will be, in substantial compliance with all relevant material environmental and health and safety laws and regulations, including relevant international standards, there can be no assurance that new laws and regulations, or amendments to, or stringent enforcement of, existing laws and regulations will not be introduced.
Nevertheless, the Group will continue to vigorously apply international standards to the design and execution of any and all of its activities, including engagement and consultation with local communities, and non-governmental and Governmental organisations to ensure any impacts of current and future activities are minimised and appropriately managed. The Group has organisations to ensure any impacts of current and future activities are minimised and appropriately managed. The Group has established a comprehensive suite of health, safety, environmental and community policies which will underpin all future activities.
Financing
The successful exploration or exploitation of natural resources on any project will require significant capital investment. The only sources of financing currently available to the Group are through the issue of additional equity capital in the
Company or through bringing in partners to fund exploration and development costs. The Group's ability to raise further funds will depend on the success of their investment strategy and conditions in financial and commodity markets. The
Group may not be successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is unavailable, the Group may be required to reduce the scope of its investments or anticipated expansion.
Political, economic and regulatory regime
The licences and operations of the Group are in jurisdictions outside the United Kingdom and accordingly there will be a number of risks which the Group will be unable to control. Whilst the Group will make every effort to ensure it has robust commercial agreements covering its activities, there is a risk that the Group's activities will be adversely affected by economic and political factors such as the imposition of additional taxes and charges, cancellation or suspension of licences and changes to the laws governing mineral exploration and operations.
The Group's activities will be dependent upon the grant of appropriate licences, concessions, leases, permits, and regulatory consents that may be withdrawn or made subject to limitations. There can be no assurance that they will be granted or renewed or if so, on what terms. There is also the possibility that the terms of any licence may be changed other than as represented or expected.
The current focus of the Group's activities, offer stable political frameworks and actively support foreign investment. The countries have well-developed exploration and mining code and proactive support for foreign companies. Through a programme of proactive engagement with each Government at all levels the Group is able to partially mitigate these risks by establishing professional working relationships.
Dependence on key personnel
The Group is dependent upon its executive management team and various technical consultants. Whilst it has entered into contractual agreements with the aim of securing the services of these personnel, the retention of their services cannot be guaranteed. The development and success of the Group depends on its ability to recruit and retain high quality and experienced staff. The loss of the service of key personnel or the inability to attract additional qualified personnel as the Group grows could have an adverse effect on future business and financial conditions. Nevertheless, through programmes of incentivising staff, appropriate succession planning, and good management these risks can be largely mitigated.
Uninsured risk
The Group, as a participant in exploration and development programmes, may become subject to liability for hazards that cannot be insured against or third party claims that exceed the insurance cover. The Group may also be disrupted by a variety of risks and hazards that are beyond its control, including geological, geotechnical and seismic factors, environmental hazards, industrial accidents, occupation and health hazards and weather conditions or other acts of God.
Other business risks
In addition to the current principal risks identified above and those
disclosed in note 3 to the financial statements, the Group's business is
subject to risks relating to the financial markets and commodity markets. The
buoyancy of both the aforementioned markets can affect the ability of the
Group to raise funds for exploration. The Group has identified certain risks
pertinent to its business including:
Strategic and Economic:
• Business environment changes
• Limited diversification
Operational:
• Difficulty in obtaining / maintaining / renewing Licences / approvals
Commercial:
• Failure to maximise value from its Namibia/Zambia/Botswana projects
• Loss of interest in key assets
• Regulatory compliance and legal
Human Resources and Management:
• Failure to recruit and retain key personnel
• Human error or deliberate negative action
• Inadequate management processes
Financial:
• Restrictions in capital markets impacting available financial resources
• Cost escalation and budget overruns
• Fraud and corruption
The Directors regularly monitor such risks, using information obtained or
developed from external and internal sources, and will take actions as
appropriate to mitigate these. Effective risk mitigation may be critical to
the Group in achieving its strategic objectives and protecting its assets,
personnel and reputation. The Group assesses its risk on an ongoing basis to
ensure it identifies key business risks and takes measures to mitigate these.
Other steps include regular Board review of the business, monthly management
reporting, financial operating procedures and antibribery management systems.
The Group reviews its business risks and management systems on a regular basis
PROMOTION OF THE COMPANY FOR THE BENEFIT OF THE MEMBERS AS A WHOLE
The Director's believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as detailed below.
- Consider the likely consequences of any decision in the long term
- Act fairly between the members of the Company,
- Maintain a reputation for high standards of business conduct,
- Consider the interests of the Company's employees,
- Foster the Company's relationships with suppliers, customers, and
others, and
- Consider the impact of the Company's operations on the community
and the environment.
Our Board of Directors remain aware of their responsibilities both within and
outside of the Group. Within the limitations of a Group with so few employees
we endeavour to follow these principles, and examples of the application of
the s172 are summarised and demonstrated below.
The Group operates as a mining exploration and development business which is
speculative in nature and at times may be dependent upon fund-raising for its
continued operation. The nature of the business is well understood by the
Company's members, employees and suppliers, and the Directors are transparent
about the cash position and funding requirements.
The Company is investing time in developing and fostering its relationships
with its key suppliers.
As a mining exploration company with future operations based in Scandinavia,
the Board intends to take seriously its ethical responsibilities to the
communities and environment in which it works.
The interests of future employees and consultants are a primary consideration
for the Board, and we have introduced an inclusive share-option programme
allowing them to share in the future success of the company. Personal
development opportunities are encouraged and supported.
OUTLOOK
Outlook for Copper:
Although the price of copper has had a slight set-back in the period post the
year-end as a result of higher interest rates implemented by western economies
and also due to geopolitical tensions. However the future price forecast for
copper and other base metals remains positive as is the forecast for the
by-product metals. The outlook for copper supply is quite bleak and we are
likely to see more smaller mines being developed since most large mining
copper projects have been shelved for political or economic reasons. Thus, the
Company is well positioned with all its projects, to take part in an
acquisition boom or alternatively be a subject which attracts financing which
might not have been available over the last few years..
The major mining companies are seeking new projects for acquisition and all
our projects have fundamentals which could attract the attention of larger
companies. The Group has already entered into an Option Agreement with
Sandfire Resources Limited in relation to four of its Botswanan Projects and
with First Quantum Corp. on 4 of its licences located in North Western Zambia.
The current inflationary pressures coupled with higher interest rates may slow
down the global economy and stock markets, but these prevailing conditions are
ideal for the smaller metal producer which has historically outperformed under
these economic conditions.
The Board feels African Pioneer Plc has assembled an enviable portfolio of
projects and we are pleased that Sandfire elected to take an equity position
in the Company. We look forward to advancing all our projects in the months
ahead and providing our shareholders with the prospects of enhanced value
flowing into next year.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Report of the Directors and
the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under the law the directors have prepared the financial
statements in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Under company law the directors must
not approve the financial statements unless they are satisfied that the
financial statements give a true and fair view of the state of affairs and
profit or loss of the Company for that period. In preparing these financial
statements, the directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Company will continue in business;
· state whether applicable IFRS's have been followed, subject to any
material departures disclosed and explained in the financial statements.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The directors confirm that:
· so far as each director is aware, there is no relevant audit
information of which the Company's auditor is unaware; and
· the directors have taken all the steps that they ought to have taken
as directors in order to make themselves aware of any relevant audit
information and establish that the auditors are aware of that information.
Legislation in the Isle of Man governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Signed on behalf of the Board:
30 June 2022
Colin
Bird
Non-Executive
Chairman
Independent Auditor's Report TO THE MEMBERS OF AFRICAN PIONEER PLC FOR THE
YEAR ENDED 31 DECEMBER 2021
Opinion
We have audited the financial statements of African Pioneer Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31 December
2021 which comprise the consolidated statement of comprehensive income, the
consolidated statement of changes in equity, the company statement of changes
in equity, the consolidated statement of financial position, the company
statement of financial position, the consolidated statement of cash flows, the
company statement of cash flows and the related notes 1 to 17, including a
summary of significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the EU.
In our opinion, the financial statements:
· give a true and fair view of the state of the group's and of
the parent company's affairs as at 31 December 2021 and of the group's result
for the year then ended;
· have been properly prepared in accordance with IFRSs.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC's Ethical
Standard, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Director's
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the entity's ability to continue
as a going concern for a period of at least twelve months from when the
financial statements are authorized for issue.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matters Description of the risk How the scope of our audit addressed the risk
Revenue recognition There is a risk of fraud in revenue recognition giving rise to material Our work examined sources of income and no evidence of fraud or other
misstatements in the accounts. understatement in revenue was identified.
Risk that management is able to override controls Risk that inappropriate accounting journals may be posted giving rise to We examined journals posted around the year end, specifically focusing on
material misstatement in the accounts. areas, which are more easily manipulated.
We identified no evidence of management override in respect of inappropriate
manual journals recorded in any section of the financial statements.
IFRS6 Mining and Exploration rights Risk that mining exploration and licensing costs are inappropriately Our work examined licenses and other capitalised expenditure to ensure it fell
capitalised with respect to the criteria set out in IFRS 6. within the capitalisation criteria under IFRS6 and no evidence of impairment
was identified.
Public Limited Company listing status By virtue of the Company's listing status and its public profile, the Company The listing regulations were reviewed and all filings required of the Company
has enhanced regulatory supervision and therefore any non-compliance with such were seen to have been correctly made on time. No instance of non-compliance
regulations could affect the entities ability to trade and therefore its going was identified.
concern status
Overseas group entities Risk that as the group has overseas entities that the accounting records may The finance function and controls are all centralized from the UK, no evidence
not be easily obtainable. of issues with overseas entities identified.
Our application of materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
Group's financial statements as a whole to be £85,392. In determining this,
we considered a range of benchmarks with specific focus on the net assets at
the balance sheet date. This materiality level represents 1.4% of net assets.
Based on our professional judgement, we determined overall materiality for the
Parent Company's financial statements as a whole to be £85,392. In
determining this, we considered a range of benchmarks with specific focus on
the net assets at the balance sheet date. This materiality level represents
1.6% of net assets.
We report to the Audit Committee all identified unadjusted errors in excess of
£4,270. Errors below that threshold would also be reported if, in our opinion
as auditor, disclosure was required on qualitative grounds.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its
environment, including controls, and assessing the risks of material
misstatement.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. In connection with our audit of the financial
statements, our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements
or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the directors' report for the financial year
for which the financial statements are prepared is consistent with the
financial statements; and
· the directors' report has been prepared in accordance with applicable
legal requirements.
Matters on which we report by exception
In the light of the knowledge and understanding of the company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the directors' report. We have nothing to report in
respect of the following matters if, in our opinion:
· adequate accounting records have not been kept, or returns adequate
for our audit have not been received from branches not visited by us; or
· the financial statements are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit; or
· the directors were not entitled to prepare the financial statements
in accordance with the small companies regime and take advantage of the small
companies' exemptions in preparing the directors' report and from the
requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out
on page 11, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. In preparing the financial
statements, the directors are responsible for assessing the company's ability
to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the company or to cease operations, or
have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
We identify and assess the risks of material misstatement contained within the
financial statements, whether due to fraud or error, and then design and
perform audit procedures responsive to those risks, including obtaining audit
evidence that is sufficient and appropriate to provide a basis for our
opinion.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of
irregularities, including fraud and non-compliance with laws and regulations,
we considered the following:
· the nature of the industry and sector, control environment and
business performance;
· results of our enquiries of management about their own identification
and assessment of the risks of irregularities;
· any matters we identified having obtained and reviewed the Company's
documentation of their policies and procedures relating to:
· identifying, evaluating and complying with laws and regulations and
whether they were aware of any instances of noncompliance;
· detecting and responding to the risks of fraud and whether they have
knowledge of any actual, suspected or alleged fraud;
· the internal controls established to mitigate risks of fraud or
non-compliance with laws and regulations;
· the matters discussed among the audit engagement team regarding how
and where fraud might occur in the financial statements and any potential
indicators of fraud.
As a result of these procedures, we considered the opportunities and
incentives that may exist within the organisation for fraud. In common with
all audits under ISAs (UK), we are also required to perform specific
procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that
the Company operates in, focusing on provisions of those laws and regulations
that had a direct effect on the determination of material amounts and
disclosures in the financial statements. The key laws and regulations we
considered in this context included the Isle of Man Companies Act and local
tax legislation.
Audit response to risks identified
As a result of performing the above, our procedures to respond to risks
identified included the following:
· reviewing the financial statement disclosures and testing to
supporting documentation to assess compliance with provisions of relevant laws
and regulations described as having a direct effect on the financial
statements;
· enquiring of management concerning actual and potential litigation
and claims;
· performing analytical procedures to identify any unusual or
unexpected relationships that may indicate risks of material misstatement due
to fraud;
· reading minutes of meetings of those charged with governance;
· obtained an understanding of provisions and held discussions with
management to understand the basis of recognition or non-recognition of tax
provisions; and
· in addressing the risk of fraud through management override of
controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting
estimates are indicative of a potential bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members including internal specialists and
significant component audit teams and remained alert to any indications of
fraud or noncompliance with laws and regulations throughout the audit.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx
(https://www.frc.org.uk/Our-Work/Audit/Audit-and-assurance/Standards-and-guidance/Standards-and-guidance-for-auditors/Auditors-responsibilities-for-audit/Description-of-auditors-responsibilities-for-audit.aspx)
This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body. Our audit
work has been undertaken so that we might state to the company's members those
matters we are required to state in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's members, as
a body, for our audit work, for this report, or for the opinion we have
formed.
Robert Wood (Senior Statutory Auditor)
For and on behalf of
Shipleys LLP
Chartered Accountants & statutory auditor
10 Orange Street
Haymarket
London
WC2H 7DQ
Date: 30 June 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
Notes Year ended 31 December 2021 Year ended 31 December 2020
£ £
CONTINUING OPERATIONS
Income:
Option fees received re licenses 668,599 -
Interest receivable - -
Dividend receivable 691 341
Realised (loss) on sale of investments - (81,707)
Unrealised gain on investments 100,391 138,231
Total Income 769,681 56,865
Administrative expenses
Administrative expenses 4 (291,690) (37,894)
Listing related costs (79,925) (63,045)
Mining licenses and rights - (41,323)
Total Administrative Expense (371,615) (142,262)
OPERATING PROFIT/(LOSS) FOR THE YEAR 398,066 (85,397)
Interest expense (2,373) (4,760)
Interest income - 1
PROFIT/(LOSS) BEFORE TAX 395,693 (90,156)
Taxation 7 - -
NET PROFIT/(LOSS) FOR THE YEAR 395,693 (90,156)
Other comprehensive income:
Other comprehensive income - -
Profit/(Loss) for the financial year
Items that may be reclassified to profit or loss:
Foreign currency reserve movement 34,339 -
Total comprehensive profit/(loss) for the financial year 430,032 (90,156)
Attributable to: 430,031 (90,156)
Owners of the Company
Non-controlling interest - -
430,031 (90,156)
Basic loss per share 6 0.34 p (0.77) p
Diluted loss per share 6 0.29 p (0.77) p
All results are derived from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Notes 31 December 2021 31 December 2020
£ £
NON-CURRENT ASSETS
Available-for-sale investments 8 502,456 99,105
Exploration and evaluation assets 10 4,432,962 -
Total Non-Current Assets 4,935,418 99,105
CURRENT ASSETS
Trade and other receivables 11 21,722 420
Cash and cash equivalents 1,190,979 87,462
Total Current Assets 1,212,701 87,882
TOTAL ASSETS 6,148,119 186,987
CURRENT LIABILITIES
Trade and other payables 12 (83,949) (50,730)
Total Current Liabilities (83,949) (50,730)
NET CURRENT ASSETS / (LIABILITIES) 1,128,752 37,152
NON-CURRENT LIABILITIES
Loans 13(i) - (49,143)
Total Non-Current Liabilities - (49,143)
TOTAL LIABILITIES (83,949) (99,873)
NET ASSETS 6,064,170 87,114
EQUITY
Share capital 14 5,490,271 452,983
Capital contribution (13)(i)(ii) - 186,446
Warrant reserve 15 8,834 -
Foreign exchange reserve 34,339 -
Retained earnings (156,622) (552,315)
5,376,822 87,114
Non controlling interest 687,348 -
TOTAL EQUITY 6,064,170 87,114
The notes on pages 45-67 are an integral part of these financial statements.
The financial statements of African Pioneer Plc (registered number 008591V)
were approved by the board on 30 June 2022 and signed on its behalf by:
C
Bird
R Samtani
Non-Executive
Chairman
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Share capital Capital contribution Retained earnings Foreign exchange reserve Warrant reserve Non Total equity
Controlling interest
£ £ £ £ £ £ £
As at 1 January 2020 452,983 61,446 (462,159) - - - 52,270
Convertible loan notes issued - 125,000 - - - - 125,000
(Loss) for the year - - (90,156) - - - (90,156)
As at 31 December 2020 452,983 186,446 (552,315) - - - 87,114
As at 1 January 2021 452,983 186,446 (552,315) - - - 87,114
Net proceeds from shares issued 2,030,877 - - - - - 2,030,877
Acquisition of subsidiaries 2,962,500 - - - - - 2,962,500
Acquisition of additional 15% of Manmar subsidiaries 52,745 - - - 52,745
Loan notes converted into shares - (186,446) - - - - (186,446)
Profit for the year - - 395,693 34,339 430,032
Share based payment charge (8,834) - - - 8,834 - -
Non-controlling interests on acquisition of subsidiary - - - - - 687,348 687,348
As at 31 December 2021 5,490,271 - (156,622) 34,339 8,834 687,348 6,064,170
The notes on pages 45-67 are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Notes Year ended Year ended
31 December 2021 31 December 2020
£ £
CASH FLOW FROM OPERATIONS
Profit/(Loss) before taxation 395,693 (90,156)
Adjustments for:
Interest received - (1)
Dividends received (691) (341)
Loss on disposal - 81,707
Unrealised gain on investments 8 (100,391) (138,231)
Interest expense - 4,760
Operating (loss) before movements in working capital 294,611 (142,262)
Increase in receivables (21,302) -
Increase in payables 33,219 38,918
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 306,528 (103,344)
TAXATION PAID
CASH FLOW FROM INVESTING ACTIVITIES
Interest received - 1
Dividends received 691 341
Investments purchased (302,960) -
Investments sold - 63,888
Purchases of Exploration and evaluation assets (303,206) -
Purchase of Exploration and Evaluation (427,163) -
assets on Acquisition of subsidiaries
NET CASH INFLOW FROM INVESTING ACTIVITIES (1,032,638) 64,230
CASH FLOW FROM FINANCING ACTIVITIES
Issue of convertible loan notes - 125,000
Proceeds from Issue of shares, net of issue costs 1,844,431 -
Loan repayment (49,143) -
NET CASH INFLOW FROM FINANCING ACTIVITIES 1,795,288 125,000
Net increase/(decrease) in cash and cash equivalents in the period 1,069,178 85,886
Effect of foreign exchange rate changes 34,339 -
Cash and cash equivalents at the beginning of the period 87,462 1,576
1,190,979 87,462
Cash and cash equivalents at the end of the period
The notes on pages 45-67 are an integral part of these financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Notes 31 December 2021 31 December 2020
£ £
NON-CURRENT ASSETS
Available-for-sale investments 8 502,456 99,105
Investment in subsidiaries 10 2,796,500 -
Total Non-Current Assets 3,298,956 99,105
CURRENT ASSETS
Trade and other receivables 11 898,541 420
Cash and cash equivalents 1,190,969 87,462
Total Current Assets 2,089,510 87,882
TOTAL ASSETS 5,388,466 186,987
CURRENT LIABILITIES
Trade and other payables 12 (42,472) (50,730)
Total Current Liabilities (42,472) (50,730)
NET CURRENT ASSETS / (LIABILITIES) 2,047,038 37,152
NON-CURRENT LIABILITIES
Loans 13(i) - (49,143)
Total Non-Current Liabilities - (49,143)
TOTAL LIABILITIES (42,472) (99,873)
NET ASSETS 5,345,994 87,114
EQUITY
Share capital 14 5,490,271 452,983
Capital contribution 13(i)(ii) - 186,446
Warrant reserve 15 8,834 -
Retained earnings (153,111) (552,315)
TOTAL EQUITY 5,345,994 87,114
The notes on pages 45-67 are an integral part of these financial statements.
The financial statements of African Pioneer Plc (registered number 008591V)
were approved by the board on 30 June 2022 and signed on its behalf by:
C
Bird
R Samtani
Non-Executive
Chairman
Director
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Share capital Capital contribution Retained earnings Warrant reserve Total equity
£ £ £ £ £
As at 1 January 2020 452,983 61,446 (462,159) - 52,270
Convertible loan notes issued - 125,000 - - 125,000
(Loss) for the year - - (90,156) - (90,156)
As at 31 December 2020 452,983 186,446 (552,315) - 87,114
As at 1 January 2021 452,983 186,446 (552,315) - 87,114
Net proceeds from shares issued 2,030,877 - - - 2,030,877
Acquisition of subsidiaries 2,962,500 - - - 2,962,500
Acquisition of additional 15% of Manmar subsidiaries 52,745 - - - 52,745
Loan notes converted into shares - (186,446) - - (186,446)
Share based payment charge (8,834) - - 8,834 -
Profit for the year - - 399,204 399,204
As at 31 December 2021 5,490,271 - (153,111) 8,834 5,345,994
The notes on pages 45-67 are an integral part of these financial statements.
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
Notes Year ended Year ended
31 December 2021 31 December 2020
£ £
CASH FLOW FROM OPERATIONS
Profit/(Loss) before taxation 399,204 (90,156)
Adjustments for:
Interest received - (1)
Dividends received (691) (341)
Loss on disposal - 81,707
Unrealised (gain)/loss on investments 8 (100,391) (138,231)
Interest expense - 4,760
Operating (loss) before movements in working capital 298,122 (142,262)
Increase in receivables (20,559) -
Increase in payables (8,258) 38,918
Increase in loans to subsidiaries (230,173)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 39,132 (103,344)
TAXATION PAID
CASH FLOW FROM INVESTING ACTIVITIES
Interest received - 1
Dividends received 691 341
Investments purchased 8 (302,960) -
Investments sold - 63,888
Acquisition of subsidiaries (428,644) -
- -
NET CASH INFLOW FROM INVESTING ACTIVITIES (730,913) 64,230
CASH FLOW FROM FINANCING ACTIVITIES
Issue of convertible loan notes - 125,000
Proceeds from Issue of shares, net of issue costs 1,844,431 -
Loan repayment (49,143) -
NET CASH INFLOW FROM FINANCING ACTIVITIES 1,795,288 125,000
Net increase/(decrease) in cash and cash equivalents in the period 1,103,507 85,886
Cash and cash equivalents at the beginning of the period 87,462 1,576
1,190,969 87,462
Cash and cash equivalents at the end of the period
The notes on pages 45-67 are an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
1. GENERAL INFORMATION
This financial information is for African Pioneer Plc ("the Company") and its
subsidiary undertakings. The principal activity of African Pioneer Plc (the
'Company') and its subsidiaries (together the 'Group') is the development of
natural resources exploration projects in Sub-Saharan Africa.
The Company is a public limited company and was listed on to the Official List
(Standard Segment) and commenced trading on the Main Market for listed
securities of the London Stock Exchange on 1 June 2021. The Company is
domiciled in the Isle of Man and was incorporated on 20th July 2012 under the
Isle of Man Companies Act 2006 with company registration number 00859IV, and
with registered address being 34 North Quay, Douglas, Isle of Man, IM1 4LB.
2. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared under the historical cost
convention except for the measurement of certain non-current asset investments
at fair value. The measurement basis and principal accounting policies of the
Group are set out below. The financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) issued by
the International Accounting Standards Board (IASB) and endorsed by the
European Union.
New and amended IFRS Standards that are effective for the current year
A number of new standards and interpretations have been adopted by the Group
for the first time in line with their mandatory adoption dates, but none are
applicable to the Group and hence there would be no impact on the financial
statements.
New and revised IFRS Standards in issue but not yet effective
At the date of approval of these financial statements, the Group has not
applied the following new and revised IFRS Standards that have been issued but
are not yet effective:
IFRS 17 (including the June 2020 amendments to IFRS 17) Insurance Contracts
IFRS 10 and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest rate benchmark
Amendment to IFRS 16 Covid rent concessions
IFRS 3 Conceptual framework
Amendments to IAS 1 Classification of Liabilities as Current or Non-current
Amendments to IFRS 3 Reference to the Conceptual Framework
Amendments to IAS 16 Property, Plant and Equipment-Proceeds before Intended Use
Amendments to IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
Amendments to IAS 1 and IFRS Disclosure of Accounting Policies
Practice Statement 2
Amendments to IAS 8 Definition of Accounting Estimates
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single
Transaction
Amendments to IAS 41 Agriculture
The directors do not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of the Company in
future periods.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries). Control
is achieved where 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 results of subsidiaries acquired or disposed of are included in the
consolidated Statement of Comprehensive Income from the effective date of
acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used in line with those used by
other members of the Group.
All intragroup assets and liabilities, equity, income, expenses, and cash
flows relating to transactions between members of the Group are eliminated in
full on consolidation.
Profits/(losses) attributable to non-controlling interests are shown
separately in the Statement of Comprehensive income and the portion of net
assets attributable to non-controlling interest is shown on the Statement of
Financial Position.
Going concern
The Group made a profit from all operations for the year ended 31 December
2021 after tax of £396,000 (2020: loss of £90,000), On 2 October 2021 the
Company entered into a two-year option agreement with ASX listed Sandfire
Resources Limited in relation to 4 of its 8 Botswana prospecting licences
whereby the Company received a cash payment amounting to US$500,000 plus
107,272 Sandfire Resources Limited shares as part of the agreement with
Sandfire. As a result of the option fee received, the Company made a profit
during the year. During the period, the Company raised £1,750,000 at the time
of its Listing on 1 June 2021and £365,000 by way of a share subscription from
Sandfire Resources Limited. Cash and cash equivalents were £1.19 million as
at 31 December 2021, which will enable the Company to carry out its planned
exploration activities on its newly acquired projects. An operating loss is
expected in the year subsequent to the date of these accounts and as a result
the Company will need to raise funding to provide additional working capital
to finance its ongoing activities. The management team has successfully raised
funding for exploration projects in the past, but there is no guarantee that
adequate funds will be available when needed in the future.
Based on its current reserves and the Board's assessment that the Company will
be able to raise additional funds, as and when required, to meet its working
capital and capital expenditure requirements, the Board have concluded that
they have a reasonable expectation that the Group can continue in operational
existence for the foreseeable future. For these reasons the financial
statements have been prepared on the going concern basis, which contemplates
continuity of normal business activities and the realisation of assets and
discharge of liabilities in the normal course of business.
Exploration assets accounting policy
The Company's exploration assets accounting policy is in line with IFRS6.
Exploration, evaluation and development expenditure incurred is accumulated in
respect of each identifiable area of interest. These costs are only carried
forward to the extent that they are expected to be recouped through the
successful development of the area or where activities in the area have not
yet reached a stage which permits reasonable assessment of the existence of
economically recoverable reserves. Accumulated costs in relation to an
abandoned area are written off in full 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 transferred to development assets and
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.
Valuation of investments
The company has adopted the provisions of IFRS9 and has elected to treat all
available for sale investments at fair value with changes through the profit
and loss.
Available-for-sale investments under IFRS9 are initially measured at fair
value plus incidental acquisition costs. Subsequently, they are measured at
fair value in accordance with IFRS 13. This is either the bid price or the
last traded price, depending on the convention of the exchange on which the
investment is quoted. All gains and losses are taken to profit and loss.
Equity and reserves
An equity instrument is any contract that evidences a residual interest in the
assets of a company after deducting all of its liabilities. Equity instruments
issued are recorded at the proceeds received net of direct issue costs.
Share capital represents the amount subscribed for shares with no par nominal
value.
Any transaction costs associated with the issuing of shares are deducted from
share capital, net of any related income tax benefits.
Foreign exchange reserve - amounts arising on re-translating the net assets of
overseas operations into the presentational currency
The capital contribution reserve represents the value of the equity component
of loans made from parent undertakings.
The warrant reserve presents the proceeds from issuance of warrants, net of
issue costs. Warrant reserve is non-distributable and will be transferred to
share capital account and accumulated losses upon exercise of warrants. Shares
to be issued reserve arises on the timing difference between the Company
making a commitment to issue shares and the shares being issued. Once the
shares are issued a transfer is made to the share capital account. Accumulated
losses include all current and prior period results as disclosed in the
statement of comprehensive income, less dividends paid to the owners of the
parent.
Significant management judgement in applying accounting policies and
estimation uncertainty
When preparing the financial statements, management makes a number of
judgements, estimates and assumptions about the recognition and measurement of
assets, liabilities, income and expenses.
Functional and presentational currency
The presentation and functional currency of the Company is Sterling.
Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to
the statement of comprehensive income except for expenses incurred on the
acquisition of an investment, which are included within the cost of that
investment, expenses arising on the disposal of investments are deducted from
the disposal proceeds.
Cash and cash equivalents
This consists of cash held in the Company's bank account.
Financial liabilities
The Company has financial liabilities consisting of trade payables and accrued
expenses which are non-derivative financial liabilities recognised at
amortised cost.
Taxation
The Company is subject to taxation in the Isle of Man in the period at a rate
of 0% and accordingly, interest and gains payable to the Company are received
by the Company without any deduction relating to Isle of Man taxed.
Earnings per share
The earnings per share are calculated by dividing the net result attributed to
the equity shareholders by the weighted average number of participating shares
in issue in the period.
Geographical segments
A segment is a distinguishable component of the Company that is engaged either
in providing products or services (business segment) or in providing products
or services within a particular economic environment (geographical segment),
which is subject to risk and rewards that are different from those of other
segments. The internal management reporting used by the chief operating
decision maker consists of one segment. Hence in the opinion of the directors,
no separate disclosures are required under IFRS 8. The Company's revenue in
the year is not material and consequently no geographical segment information
has been disclosed.
Critical accounting estimates and judgements
The preparation of the Group's financial statements under IFRS requires the
Directors to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and
liabilities. Estimates and judgements are continually evaluated and are based
on historical experience and other factors including expectations of future
events that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates.
Details of the Group's significant accounting judgements used in the
preparation of these financial statements include:
Recoverability of intangible exploration and evaluation assets
Where a project is sufficiently advanced, the recoverability of intangible
exploration and evaluation assets is assessed by comparing the carrying value
to internal and operator estimates of the net present value of projects.
Intangible exploration assets are inherently judgemental to value. The amounts
for intangible exploration and evaluation assets represent active exploration
projects. These amounts will be written-off to the profit and loss as
exploration costs unless commercial reserves are established, or the
determination process is completed and there are no indications of impairment.
The carrying value of exploration assets in the consolidated financial
statements as at 31 December 2021 is £4,432,962. The recoverability of this
carrying value, and thus potential impairment, requires use of significant
judgments and estimates. The details of these assets are outlined in note 10.
Recoverability of investment in subsidiaries and intragroup receivables
In the Company financial statements, the carrying value of the Company's
investment in subsidiaries and intragroup receivables is £3,674,062. The
recoverability of this balance is driven by the same judgements and
uncertainties as the recoverability of the exploration and evaluation assets
held by the subsidiaries.
Valuation of share-based payments
Equity-settled share-based payment transactions with parties other than
employees are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty renders the service.
The share-based payment expense is recognised as deduction in share capital. A
corresponding increase in the warrant reserve is also recognised The fair
value of these payments is calculated by the Company using the Black Scholes
option pricing model. The model requires the Directors to make assumptions
regarding the share price volatility, risk free rate and expected life of
awards in order to determine the fair values of the awards at grant dates.
3. FINANCIAL RISK MANAGEMENT
The Company's objective is to achieve capital growth through investing in
selection of equity and other instruments. The Company's financial instruments
comprise:
· Available-for-sale investments
· Cash, short-term receivables and payables
Throughout the period under review, it was the Company's policy that no
trading in derivatives shall be undertaken. The main financial risks arising
from the Company's financial instruments are market price risk and liquidity
risk. The Board regularly reviews and agrees policies for managing each of
these risks and they are summarised below. These policies have remained
constant throughout the period.
Market risk
Market risk consists of interest rate risk, foreign currency risk and other
price risk. There are no foreign currency exposures. Hence, no foreign
currency risk. It is the Board's policy to maintain an appropriate spread of
investments in the portfolio whilst maintaining the investment policy and aims
of the Company. The Investment Committee actively monitors market prices and
other relevant information throughout the year and reports to the Board, who
is ultimately responsible for the Company's investment policy.
Interest rate risk
Changes in interest rates would affect the Company returns from its cash
balances. A floating rate of interest, which is linked to bank base rates, is
earned on cash deposits. The exposure to cash flow interest rate risk at 31
December 2021 for the Company was £1,190,969 (2020: £87,462). As the Company
does not have any borrowings and finances its operations through its share
capital and retained revenues, it does not have any interest rate risk except
in relation to cash balances.
Other price risk
Other price risk which comprises changes in market prices other than those
arising from interest rate risk or currency risk may affect the value of
quoted and unquoted equity investments. The Board of directors manages the
market price risks inherent in the investment portfolio by regularly
monitoring price movements and other relevant market information. The Company
accounts for movements in the fair value of its available-for-sale financial
assets in other comprehensive income. A 5% change in prices of investments
would result in increase/(decrease) of £25,123 in value of investments (2020:
£4,955).
Liquidity risk
The Company maintains appropriate cash reserves and the majority of the
Company's assets comprise of realisable securities, most of which can be sold
to meet funding requirements, if necessary. Given the Company's cash reserves,
it has been able to settle all liabilities on average within 1 month. Given
the current level of cash resources the liquidity risk is not considered to be
material.
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations.
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk as at 31 December 2021 is
detailed below:
For the Group, credit risk arises primarily from cash balances held at banks.
The risk is mitigated by using only reputable financial institutions with a
high credit rating.
The Company is additionally exposed to credit risk on the intercompany
balances with its subsidiaries. The recoverability of these balances is linked
directly to the success of the exploration activities of the Group.
As discussed in note 10, no impairment indicators exist on the exploration
assets and thus the balances are deemed to be recoverable. The Company and
Group do not hold any collateral as security
The credit rating bands are provided by independent ratings agencies:
As at 31 December 2021 Not rated /not readily available Total
Cash and cash equivalents 1,190,969 1,190,969
Total assets subject to credit risk 1,190,969 1,190,969
As at 31 December 2020 Not rated /not readily available Total
Cash and cash equivalents 87,462 87,462
Total assets subject to credit risk 87,462 87,462
Financial liabilities
There are no currency or interest rate risk exposures on financial liabilities
as they are denominated in £ Sterling.
Capital management
The Company actively reviews its issued share capital and reserves and manages
its capital requirements in order to maintain an efficient overall financing
structure whilst avoiding any leverage.
4. EXPENSES BY NATURE
31 December 2021 31 December 2020
Directors' fees 5 (100,469) (3,600)
Audit fees (32,220) (9,999)
Stock exchange related costs (14,813) -
Legal, professional and consultancy fees (64,359) (7,537)
Management services (11,800) (10,800)
Insurance (14,521) -
Other administration expenses (19,321) (5,958)
Investor relations (34,187) -
Total Expense (291,690) (37,894)
31 December 2021 31 December 2020
£ £
Auditor's remuneration
- Audit of the financial statements of the Company 32,220 9,999
5. DIRECTORS' EMOLUMENTS
Other than directors, there were no employees or key management personnel in
the year.
31 December 2021 31 December 2020
£ £
Colin Bird 35,000 -
Raju Samtani 29,169 -
Christian Cordier 16,500 -
Kjeld Thygesen 16,500 -
James Cunningham-Davis 9,300 3,600
Total 106,469 3,600
The emoluments paid to the directors relate to both the Company and the Group
Colin Bird and Raju Samtani did not receive any remuneration in the year ended
31 December 2020.
2021 2020
Number Number
Directors 4 3
Consultants 1 -
The average monthly number of employees 5 3
6. EARNINGS PER SHARE
31 December 2021 31 December 2020
Profit/(Loss) after tax for the purposes of earnings per share attributable to 395,692 £ (90,156)
equity shareholders
Weighted average number of shares 116,222,201 11,729,826
Weighted average number of shares and warrants 138,235,532 11,729,826
Basic profit/(loss) per ordinary share 0.34 p (0.77) p
Diluted profit per ordinary share 0.29 p (0.77) p
The use of the weighted average number of shares in issue in the period
recognises the variations in the number of shares throughout the period and is
in accordance with IAS 33. During the year, the company consolidated 10
existing shares to 1 (note 14).
7. TAXATION
The Company is subject to Isle of Man income tax at 0%, has suffered no
taxation in other jurisdictions, and has no capital allowances or deferred tax
implications. Accordingly, the Directors have made no provision for taxation
charges or liabilities and have not presented the formal reconciliation
required under IAS 12.
8. AVAILABLE FOR SALE INVESTMENTS
Group & Company Group & Company
31 December 2021 31 December 2020
£ £
Investments at fair value at 1 January 99,105 106,469
Additions 302,960 -
Disposals - (63,888)
Movements in fair value 100,391 56,524
Investments at fair value at 31 December 502,456 99,105
The book cost of the investments at 31 December 2021 was £410,050 (2020:
£107,090).
The Company's intention following its Listing is not to purchase any new
investments and to hold its residual portfolio as realisable investments as a
source of liquidity to cover explorations costs and general overheads of the
Company.
Financial instruments measured at fair value
The following table presents financial assets and liabilities measured at fair
value in the statement of financial position in accordance with the fair value
hierarchy. This hierarchy groups financial assets and liabilities into three
levels based on the significance of inputs used in measuring the fair value of
the financial assets and liabilities. The fair value hierarchy has the
following levels:
- Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities;
- Level 2: inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (i.e., as prices)
or indirectly (i.e., derived from prices); and
- Level 3: inputs for the asset or liability that are not based on
observable market data (unobserved inputs).
The level within which the financial asset or liability is classified is
determined based on the lowest level of significant input to the fair value
measurement.
The financial assets and liabilities measured at fair value in the statement
of financial position are grouped into the fair value hierarchy as follows:
Level 1 Level 2 Level 3 Total
31 December 2021 £ £ £ £
Assets 502,456 - 502,456
Total 502,456 - 502,456
Level 1 Level 2 Level 3 Total
£ £ £ £
31 December 2020
Assets 99,105 - - 99,105
Investments held at fair value
Total 99,105 - - 99,105
9. ACQUISITION OF SUBSIDIARIES
Acquisition of Zamcu Exploration Pty Limited (Namibian Projects)
On 1 June 2021 the Company completed the acquisition of 100% of Zamcu
Exploration Pty Ltd ("Zamcu"), which via its subsidiaries, held a 70 per cent.
interest in two Namibian Exclusive Prospecting Licenses ("EPLs") comprising
the Ongombo and Ongeama projects, located within the Matchless amphibolite
Belt of central Namibia that hosts copper-gold mineralisation. On 27 August
2021 the Company entered into an agreement to acquire a further 15% interest
in its Ongombo Project and Ongeama Project in Namibian (the "Namibian
Projects") increasing its interest in the Namibian Projects to 85% (see note
10)
The fair value of the assets and liabilities acquired were as follows:
£
Consideration
Equity consideration
- Ordinary shares (issued) 687,500
Cash consideration 149,149
836,649
Fair value of assets and liabilities acquired
- Assets -
- Liabilities (262)
(262)
Deemed fair value of 836,911
exploration assets acquired
Additional 15% acquired 331,240
Total 85% acquisition value 1,168,151
Attributable to non-controlling interest 206,098
Gross fair value of exploration assets acquired 1,374,249
Acquisition of African Pioneer Zambia Limited ("APZ") (Zambia Projects)
On 1 June 2021 the Company completed the acquisition of 80% of APZ, which
holds a 100 per cent. interest in five Zambian Prospecting Licenses (PLs)
located in two areas namely (i) the Central Africa Copperbelt (Copperbelt),
which is the largest and most prolific mineralized sediment- hosted copper
province known on Earth and which comprises four PLs and (ii) the Zambezi area
located within the Zambezi Belt of southern Zambia that hosts a lower Katanga
Supergroup succession which, although less studied than its northern
counterpart, also hosts a number of Copperbelt-style occurrences and which
comprises one PL
The fair value of the assets and liabilities acquired were as follows:
£
Ordinary shares (issued) 1,925,000
Fair value of assets and liabilities acquired
- Assets 743
- Loan for exploration licenses (41,205)
- (40,462)
Deemed fair value of 1,965,462
- exploration assets acquired
481,250
Attributable to non-controlling interest
Gross fair value of exploration assets acquired 2,446,712
Resource Capital Partners Pty Ltd ("RCP") (Botswana Projects)
On 1 June 2021 the Company completed the acquisition of 100% of Resource
Capital Partners Pty Ltd ("RCP"), which holds a 100 per cent. interest in
eight Botswana Prospecting Licenses ("PLs") located in two areas namely (i)
the Kalahari Copperbelt (KC) that contains copper-silver mineralisation and
which is generally stratabound and hosted in metasedimentary rocks that have
been folded, faulted and metamorphosed to greenschist facies during the Damara
Orogeny and which comprises six PLs and (ii) the Limpopo Mobile Belt
("Limpopo") set within the Motloutse Complex of eastern Botswana, a
transitional boundary between the Zimbabwe Craton to the north and the Limpopo
Mobile Belt to the south which comprises two Pls;
The fair value of the assets and liabilities acquired were as follows:
£
Consideration
Equity consideration
- Ordinary shares (issued) 350,000
Fair value of assets and liabilities acquired
- Assets -
- Liabilities -
-
Deemed fair value of 350,000
exploration assets acquired
10. EXPLORATION AND EVALUATION ASSETS
Group Company
Exploration and evaluation assets Investment in subsidiary Group and Company
31 December 2021 31 December 2021 31 December 2020
£ £ £
Balance at beginning of period - -
Acquisitions during the period
- Namibia Projects (note 9) 1,374,249 521,500 -
- Zambia Projects (note 9) 2,446,712 1,925,000 -
- Botswana Projects (note 9) 350,000 350,000 -
Exploration expenditure 262,001 - -
Carried forward 4,432,962 2,796,500 -
at end of year
Investments in subsidiaries are recorded at cost, which is the fair value of
the consideration paid less impairment.
The Company conducted an impairment review and is satisfied that the carrying
value of £2,796,500 is reasonable and no impairment is necessary. (2020-
Nil).
Principal Subsidiaries
Name & registered office address Country of incorporation and residence Nature of business Proportion of equity shares held by Company
Resource Capital Partners Pty Ltd Botswana Base Metals Exploration 100%
Plot 102, Unit 13
Gaborone International Commerce Park,
Gaborone, Botswana
African Pioneer Zambia Ltd Zambia Base Metals Exploration 80%
Plot No397/0/1
Chipwenupwenu Road
Makeni, Lusaka
PO Box 34033, Zambia
Zamcu Exploration Pty Ltd Australia Holding Company 100%
5 Eze Terrace
Hillarys
WA, 6025
AUSTRALIA
Manmar investments one hundred and twenty nine Pty Ltd Namibia Base Metals Exploration 85% via Zamcu
36 Simeon Kambo Shixungileni Street,
Windhoek, Namibia
Manmar investments one hundred and thirty six Pty Ltd Namibia Base Metals Exploration 85% via Zamcu
36 Simeon Kambo Shixungileni Street,
Windhoek, Namibia
The Company's principal business is to explore opportunities within the
natural resources sector in Sub-Saharan Africa, with a focus on base and
precious metals including but not limited to copper, nickel, lead and zinc.
The Company has acquired the Namibia Projects, Zambia Projects and Botswana
Projects (see Note 9 for details):
No current JORC 2012 compliant Mineral Resources exist for any of the Projects
and no Mineral Reserve estimates have been completed for the Projects.
The Company's' main focus following Admission is on evaluating and advancing
the Namibian and Zambian Projects as the Botswana Projects are the subject of
the Conditional Botswana Licence Sale Agreement described in the following
paragraph.
The Botswana Projects have been acquired at an attractive purchase price of
£350,000, as although unexplored, they are located in a highly prospective
area for copper projects and it was the Company's original intention to
conduct an initial 18 month exploration work programme to assess the
prospectively of the Botswanan Projects and assess the best way of developing
them. However, whilst working on the Admission, the Company was approached by
Sandfire Resources Limited, listed on the Australian Stock Exchange and
capitalised at approximately A$1 billion ("Sandfire"), who have a large
established presence in the Kalahari Copperbelt, with a proposal to acquire
the Botswanan Projects. The Company has seen this as an opportunity for
Sandfire to take over ownership and responsibility for the exploration stage
of the Botswanan assets whilst allowing the Group to share in the potential
upside should the exploration ultimately be successful in establishing a
mineable reserve. As a follow up to the initial proposal, on 2 October 2021
entered into a two year option agreement with Sandfire in relation to 4 of its
8 Botswana prospecting licences for a cash payment of US$500,000 and the issue
of 107,272 Sandfire shares and a 24 months exploration expenditure commitment
of US$1,000,000 (the "Option Agreement"). The Company has entered into the
Option Agreement to allow an acceleration of exploration activities on the 4
Kalahari Copper Belt prospecting licences the subject of the Option Agreement
(the "Included Licences") funded by Sandfire. Funds received will also allow
the Company to accelerate exploration activities on the Company's 4 other
prospecting licences in Botswana and its projects in Namibia and Zambia.
Sandfire has the in-country infrastructure and technical expertise and
financial resources to accelerate the rate of expenditure on the Botswanan
assets. In addition, as part of the relationship with Sandfire, they came in
as a cornerstone investor into the Company making a US$500,000 (£365,000)
investment in the Company by way interest free unsecured loan notes in March
2021, which on Listing converted into Ordinary Shares constituting 15 per
cent. of the Company's issued share capital.
11. TRADE AND OTHER RECEIVABLES
Group Company Group & Company
31 December 2021 31 December 2021 31 December 2020
£ £ £
Loans to subsidiaries - 877,562 -
Prepayments 20,979 20,979 420
Other debtors 743 - -
Total 21,722 898,541 420
Loans to subsidiaries are interest free and payable on demand.
Group Receivables and other current assets are all due within one year. The
fair value of all receivables is the same as their carrying values stated
above.
12. TRADE AND OTHER PAYABLES
Group Company Group & Company
31 December 2021 31 December 2021 31 December 2020
£ £ £
Creditors 4,846 4,846 26,953
Accrued expenses 37,626 37,626 5,392
Other creditors 272 - -
Loan from directors 41,205 - -
Bridging loan facility from parent - - 18,385
Total 50,730 42,472 50,730
In 2020, the company received an amount of £18,385 from its previous parent
(Tiger Royalties and Investments Plc) as part of a bridging loan facility of
£140,000. This loan was unsecured and carried an interest rate of 10%
accruing daily. The loan was repaid on 6 April 2021.
Carrying amounts of trade and other payables approximate their fair value.
13. LOANS
i. The Company owed £100,000 to Tiger Royalties and Investments Plc
('Tiger'), the previous parent company (note 14). The amount was unsecured,
interest free and was converted in to 2,857,143 New Ordinary Shares in the
Company as agreed between Tiger and the Company under a settlement letter,
dated 8 February 2021.
31 December 2021 31 December 2020
£ £
Net present value of loan classified as non-current liability - at inception - 38,554
Loan classified as equity contribution in accordance with IFRS 9 - 61,446
Total - 100,000
(ii).
31 December 2021 31 December 2020
£ £
Net present value of loan classified as non-current liability - at inception - 38,554
Interest for prior years - 10,182
Total at year end - 49,143
On 21 October 2020, the Company entered into a convertible loan note agreement
with Sanderson Capital Partners ("Sanderson") for a total investment of
£150,000. Sanderson advanced the sum of £125,000 under this agreement prior
to 31 December 2020 and the balancing £25,000 was received by the Company on
4 February 2021. The loan notes did not have a fixed term and carried a zero
coupon rate. The loan notes were converted by Sanderson into Ordinary shares
of zero par value at a conversion price 1.75p per share on 1 June 2021 at the
time of the listing. Sanderson received one warrant per each share received on
conversion of the loan notes into Ordinary share in African Pioneer Plc at a
strike price of 3.5 pence. These warrants are valid for a period of 3 years
from the date of issue of the convertible loan note 21 October 2023.
Equity contribution
31 December 2021 31 December 2020
Loan classified as equity contribution in accordance with IFRS 9 in (i) above - 61,446
Loan notes subscribed during the year in (ii) above - 125,000
Total at year end - 186,446
14. CALLED UP SHARE CAPITAL
The share capital of African Pioneer Plc consists only of fully paid ordinary
shares with no par value. All shares are equally eligible to receive dividends
and the repayment of capital and represent one vote at shareholders' meetings
of the Company.
Number £
Authorised:
1,000,000,000 ordinary shares of no par value 1,000,000,000 n/a
2021 2020
Issued equity share capital Number £ Number £
Issued and fully paid
Ordinary shares 191,707,845 5,946,610 11,729,826 452,983
Group and Company Number of shares Share
capital
£
As at 1 January 2021 11,729,826 452,983
Shares issued during the period 179,978,023 5,493,622
Share issue costs * - (447,500)
Share based payment charge (8,834)
As at 31 December 2021 191,707,849 5,490,271
Movement in shares issued during the period
Shares issued from placing on admission 01/06/2021 50,000,000 1,750,000
Shares issued on acquisition on subsidiaries 01/06/2021 84,642,857 2,962,500
Conversion of loans and share subscriptions 01/06/2021 39,847,503 615,000
Advisers' fees settled by shares 01/06/2021 3,239,364 113,377
Shares issued for additional 15% shareholding in Manmar companies 27/08/2021 2,248,299 52,745
Total 179,978,023 5,493,622
*includes transaction costs incurred in the listing process of £360,000
On 7 December 2020, the Company consolidated its Ordinary shares of zero par
value on a 10 existing shares to 1 new share basis which resulted in a
reduction of the total number of Ordinary shares in issue from 117,298,260 to
11,729,826 Ordinary shares of zero par value.
On the same date, the Company also increased its authorised shared capital
from 500,000,000 shares to 1,000,000,000 shares.
25,000,000 two year warrants were issued to the placees on 1 June
2021exercisable at 5.25p per ordinary share
8,571,428 three year warrants were issued to Sanderson Capital LLP on 1 June
2021 exercisable at 3.5p per ordinary share
A further 4,150,947 warrants were issued on 1 June 2021 for services carried
out as detailed in note 15.
15. WARRANTS AND SHARE BASED PAYMENT
On 1 June 2021 the Company granted the following warrants for services carried
out in relation to the listing of the Company on 1 June 2021 on the Standard
Listing on the Official List trading on the Main Market of the London Stock
Exchange.
To Number Date granted Exercise price Expiry Vesting conditions
Novum Securities Ltd 2,500,000 01/06/2021 3.5p 1 June 24 upon being granted
Quantum Capital and Consulting Ltd 1,420,947 01/06/2021 3.5p 1 June 24 upon being granted
Cavendish Trust 230,000 01/06/2021 3.5p 1 June 23 upon being granted
4,150,947
As a result of this the fair value of the share options was determined at the
date of the grant using the Black Scholes model, using the following inputs:
Share price at the date of
amendment
3.5p
Strike
price
3.5p
Volatility
50%
Expected
life
2/3
years
Risk free
rate
0.17%
The 50% volatility rate is based on the average volatility from historical
data in this sector
The resultant fair value of the warrants was determined to be £8,834, which
has been taken to the share-based payment reserve.
16. RELATED PARTY TRANSACTIONS
Cavendish Trust Company Limited (CTC) provides company administration and
secretarial services to the Company on normal commercial terms as part of
their normal business activity. As such it is not normally treated as a
related party. Fees paid to CTC during the year include £9,300 (2020:
£3,600), relating to director's fees for the services of J. Cunningham-Davis,
a director of CTC. At the year-end a balance of £Nil (2020: £900), was
outstanding.
Lion Mining Finance Limited, a company in which Colin Bird is director and
shareholder, has provided financial and technical services to the Company
amounting to £10,800 plus VAT in the year (2020 - £9,000 plus VAT). At the
year-end a balance of £Nil (2020: £900) was outstanding. The Board considers
this transaction to be on normal commercial terms and on an arm's length
basis.
On 20 June 2018, the Company entered into a loan agreement with its parent
company, Tiger Royalties and Investments Plc and was advanced the sum of
£100,000 under this agreement to settle outstanding fees due to the Company's
directors. See note 10 for the terms of the loan. The amount was paid directly
to its directors (£50,000 each to Raju Samtani and Colin Bird). This loan has
now been settled see note 13.
On 28 January 2021, the Company entered into a loan agreement with its parent
company, Tiger Royalties and Investments Plc for a bridging loan facility of
up to £140,000. See note 9 for details of the terms for this loan. A
pre-existing amount of £18,385 outstanding as at 31 December 2020 was
included in the 28 January 2021 facility. A further sum of £112,981 was
advanced on 29 January 2021 (post year-end) under this facility. This loan has
now been settled see note 13.
In October 2020 a loan of US$ 54,940 (£41,250) was advanced to African
Pioneer Zambia Ltd jointly by Colin Bird (US$ 27,470)and Raju Samtani (US$
27470) in order to acquire certain licenses
Intragroup Loans
Loans with group companies entered into during the year are as follows. Loans
are interest free and repayable on demand.
2021 2020
£ £
Zamcu Exploration Pty Ltd to African Pioneer Plc 749,952 -
Resource Capital Partners Pty Ltd to African Pioneer Plc 32,199 -
African Pioneer Zambia Ltd to African Pioneer Plc 95,411 -
Issue of shares at the IPO as disclosed in the Prospectus
(a) The Company entered into a Share Purchase Agreement, dated 29
October 2020 ("Zamcu SPA") with Tonehill Pty Ltd, Coreks Super Pty Ltd and
Breamline Pty Limited ("Zamcu Sellers") under which the Zamcu Sellers (which
are controlled by Christian Cordier) agreed to sell to the Company their
collective 100 per cent. ownership interests in Zamcu in return for 10,000,000
shares issued at the IPO with an issue price of 3.5 pence per share in the
Company ("Consideration Shares"). The sale is subject to a 12 month lock-in
during which the Zamcu Sellers are not permitted to sell their Consideration
Shares in the Company, followed by a 12 month orderly markets period during
which the Zamcu Sellers are required to work with the Company's broker for 30
days prior to making any sale.
(b) The Company entered into a Share Purchase Agreement, dated 29
October 2020 ("RCP SPA") with M&A Wealth Pty Ltd and Breamline Pty Limited
(a company controlled by Christian Cordier) ("RCP Sellers") under which the
RCP Sellers agreed to sell to the Company their collective 100 per cent.
ownership interests in RCP in return for 10,000,000 Consideration Shares in
the Company issued at the IPO, of which each RCP Seller received 5,000,000
Consideration Shares. The sale is subject to a 12 month lock-in during which
the RCP Sellers are not permitted to sell their Consideration Shares in the
Company, followed by a 12 month orderly markets period during which sellers
are required to work with the Company's broker for 30 days prior to making any
sale.
(c) The Company entered into a Share Purchase Agreement, dated 25
November 2020 ("APZ SPA") with Raju Samtani, Colin Bird, Mohamad Ahmad, Caleb
Amos Mulenga, Lukonde Makungu and Camden Park Trading (a company controlled by
Colin Bird) ("AP Zambia Sellers") under which the AP Zambia Sellers agreed to
sell to the Company their collective 80 per cent. ownership interests in
African Pioneer Zambia Pty Limited ("AP Zambia") in return for 55,000,000
Consideration Shares in the Company issued at the IPO, in proportion to their
existing holdings of which 15,000,000 Considerations Shares were issued to
each of Colin Bird and Raju Samtani and 5,000,000 Consideration Shares were
issued to Camden Park Trading. The sale is subject to a 12 month lock-in
during which the AP Zambia Sellers are not permitted to sell their
Consideration Shares in the Company, followed by a 12 month orderly markets
period during which sellers are required to work with the Company's broker for
30 days prior to making any sale.
2. Directors' Letters of Appointment and Service Agreements as disclosed in
the Prospectus
(a) Pursuant to an agreement dated 24 May 2021, the Company renewed the
appointment of James Cunningham-Davis as a Director. The appointment continues
unless terminated by either party giving to the other 3 months' notice in
writing. James Cunningham-Davis is entitled to director's fees of £12,000 per
annum for being a director of the Company plus reasonable and properly
documented expenses incurred during the performance of his duties which will
be invoiced by Cavendish Trust Company Ltd an Isle of Man Trust Company that
James Cunningham-Davis is a founder and managing director of. James
Cunningham-Davis is not entitled to any pension, medical or similar employee
benefits. The agreement replaces all previous agreements with James
Cunningham-Davis and/or Cavendish Trust Company Ltd in relation to the
appointment of James Cunningham-Davis as a director of the Company.
(b) Pursuant to an agreement dated 24 May 2021, the Company appointed
Kjeld Thygesen as a non-executive Director with effect from the date of the
IPO. The appointment continues unless terminated by either party giving to the
other 3 months' notice in writing and Kjeld Thygesen is entitled to director's
fees of £18,000 per annum for being a director of the Company plus reasonable
and properly documented expenses incurred during the performance of his
duties. Kjeld Thygesen is not entitled to any pension, medical or similar
employee benefits.
(c) Pursuant to an agreement dated 24 May 2021, the Company renewed the
appointment of Colin Bird as a Director. The appointment continues unless
terminated by either party giving to the other 3 months' notice in writing.
Colin Bird is entitled to director's fees of £18,000 per annum for being a
director of the Company plus reasonable and properly documented expenses
incurred during the performance of his duties. Colin Bird is not entitled to
any pension, medical or similar employee benefits. The agreement replaces all
previous agreements with Colin Bird in relation to his appointment as a
director of the Company.
(d) Pursuant to a consultancy agreement dated 24 May 2021, the Company
has, with effect from the date of the IPO, appointed Colin Bird as a
consultant to provide technical advisory services in relation to its current
and future projects including but not limited to assessing existing geological
data and studies, existing mine development studies and developing exploration
programs and defining the framework of future geological and mine study
reports (the "Colin Bird Services"). The appointment continues unless
terminated by either party giving to the other 3 months' notice in writing.
Colin Bird is entitled to fees of £3,500 per month for being a consultant to
the Company plus reasonable and properly documented expenses incurred during
the performance of the Colin Bird Services.
(e) Pursuant to an agreement dated 24 May 2021, the Company renewed the
appointment of Raju Samtani. The appointment continues unless terminated by
either party giving to the other 3 months' notice in writing. Raju Samtani is
entitled to director's fees of £18,000 per annum for being a director of the
Company plus reasonable and properly documented expenses incurred during the
performance of his duties. Raju Samtani is not entitled to any pension,
medical or similar employee benefits. The agreement replaces all previous
agreements with Raju Samtani in relation to his appointment as a director of
the Company.
(f) Pursuant to a consultancy agreement dated 24 May 2021, the Company
has ,with effect from the date of Admission, appointed Raju Samtani as a
financial consultant to provide financial advisory services to the Company
(the "Raju Samtani Services"). The appointment continues unless terminated
by either party giving to the other 3 months' notice in writing. Raju
Samtani is entitled to fees of £2,667 per month for being a consultant to the
Company plus reasonable and properly documented expenses incurred during the
performance of the Raju Samtani Services.
(g) Pursuant to an agreement dated 24 May 2021, the Company appointed
Christian Cordier as a Director with effect from the date of Admission. The
appointment continues unless terminated by either party giving to the other 3
months' notice in writing. Christian Cordier is entitled to director's fees of
£18,000 per annum for being a director of the Company plus reasonable and
properly documented expenses incurred during the performance of his duties.
Christian Cordier is not entitled to any pension, medical or similar employee
benefits.
(h) Pursuant to a consultancy agreement dated 24 May 2021, with Mystic
Light Pty Ltd a personal service company of Christian Cordier the Company has
secured the services of Christian Cordier, with effect from the date of the
IPO, as a business development consultant to provide business development l
advisory services to the Company in relation to its existing and future
projects (the "Christian Cordier Services"). The appointment continues
unless terminated by either party giving to the other 3 months' notice in
writing. Mystic Light Pty Ltd is entitled to fees of £1,000 per month for
providing the Christian Cordier Services plus reasonable and properly
documented expenses incurred during the performance of the Christian Cordier
Services.
17. POST BALANCE SHEET EVENTS
On 19 January 2022 the Company and its 80% owned subsidiary African Pioneer
Zambia Ltd ("African Pioneer Zambia") entered into an option agreement with
First Quantum Minerals Ltd ("First Quantum") (listed on the Toronto Stock
Exchange FM.TO) in relation to 4 of the 5 Zambian exploration licences held by
African Pioneer Zambia (the "Option Agreement").
The four exploration licences the subject of the Option Agreement are in the
highly prospective Central Africa Copperbelt in northwest Zambia which is the
largest and most prolific mineralized sediment- hosted copper province in the
world and are located less than 100km from First Quantum's giant Sentinel
copper mine.
The exploration licenses include geological formations similar in age and rock
type to that hosting the major copper deposits of the Copperbelt.·
During the initial 18 month option period First Quantum has the right but not
the obligation to spend US500,000 on each of the exploration licences. At
this stage First Quantum will not have earned any shares in African Pioneer
Zambia, just the right to proceed to take one or more of the properties into
the First Earn In Period by issuing an Option Exercise Notice.
During the First Earn In Period, First Quantum then has 2 years when it has
the right but not the obligation to prepare a Technical Report in respect of
the Zambian Projects demonstrating an Indicated Mineral Resource of at least
300,000 tonnes of contained copper (the "Technical Report Requirement"). First
Quantum is to fund the Technical Report. Once the Technical Report is issued
First Quantum has the right to be issued shares equal to a 51% shareholding in
African Pioneer Zambia. This will also trigger the Second Earn-In Period.
In the Second Earn-In Period First Quantum shall have the right but not the
obligation to complete all necessary mining, metallurgical and development
studies to establish a mine at the Property and make a public announcement
that it intends to proceed towards commercial development of a Mine on the
Property (a "Decision to Mine"). First Quantum is to fund all costs related to
the Decision to Mine. Once First Quantum announces a Decision to Mine First
Quantum has the right to be issued shares in African Pioneer Zambia to
increase their 51% shareholding in African Pioneer Zambia to 75%.
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