REG - AfriTin Mining Ltd - Audited Financial Results
31/08/2022 07:00
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RNS Number : 7181X AfriTin Mining Ltd 31 August 2022
31 August 2022
AfriTin Mining Limited
("AfriTin" or the "Company")
Audited Financial Results for the 12 months ended 28 February 2022
AfriTin Mining Limited (AIM: ATM), an African technology-metals mining company
with a portfolio of mining and exploration assets in Namibia, is pleased to
announce its final audited results for the 2022 financial year (FY2022) ended
28 February 2022.
Financial Highlights:
· Revenue of £13.6m (FY2021: £5.0m) up 178% driven by increased
production and higher FY2022 tin prices;
· Maiden group profit before tax of £0.4m (FY2021: loss of £5.8m), a
positive swing of £6.2m;
· Increase in EBITDA of 155% to £2.6m (FY2021: loss of £4.7m);
· Loss after tax of £0.474m (FY2021: loss of £5.796m);
· Average tin price achieved for the year of US$38,680/tonne (FY2021:
US$22,150/tonne); and
· Cash and cash equivalents at year end of £7.4m.
Key Operational Highlights:
· Annual tin concentrate production increased 70% to 804 tonnes after
ramp-up and expansion initiatives (FY2021: 473 tonnes);
· Tin production 12% above nameplate capacity reflecting strong
operational performance;
· Definitive Feasibility Study ("DFS") published for up to 67%
expansion on Phase 1 and commenced construction on this project;
· Advanced exploration and development into lithium and tantalum as
potential by-products; and
· Preliminary Economic Assessment ("PEA") published for a possible
Phase 2 expansion.
Post Year End Highlights:
· Construction for the Phase 1 Expansion completed, with commissioning
scheduled to be complete by the end of September 2022;
· Production to increase by up to 67% (up to 1,200 tonnes of tin
concentrate per annum); and
· Conditional, credit approved term sheet signed with the Development
Bank of Namibia to support the Company's growth strategy.
Anthony Viljoen, CEO of AfriTin, commented:
"I am pleased to report another year of strong operational delivery that has
seen AfriTin significantly increase production and generate its first
group-wide profit. Our production at Uis has exceeded nameplate capacity by
12% which is a testament to the operational excellence we have instilled in
Namibia and puts the Company in a good position to deliver our forthcoming
further expansion initiatives.
As we look forward, following commissioning of the Phase 1 expansion in
September 2022, we should see tin production rates increase by up to 67% (up
to 1,200 tonnes of concentrate per annum). Despite volatile global commodity
markets this year, management and the Board of Directors remain confident that
the market fundamentals for tin production will remain positive, giving
AfriTin's existing operations a relative competitive advantage in this
supply-constrained environment. The addition of various growth initiatives,
specifically the addition of lithium and tantalum production revenue streams,
will further drive future value for the Company. This should transition
AfriTin to a multi-commodity producing technology metals group, which is
tremendously exciting.
I would like to thank my supportive Board of Directors and all our employees
for their efforts in building these foundations to deliver further success in
the coming years"
Annual General Meeting
A Notice of Annual General Meeting ("AGM") will be distributed to shareholders
today and is now available on the Company's website. The AGM is to be held at
11:00 am on 29 September 2022 at PO Box 282, Oak House, Hirzel Street, St
Peter Port, Guernsey GY1 3RH.
Annual Report
The Annual Report for the 2022 financial year ended 28 February 2022 is now
available on the Company's website at the following link:
https://afritinmining.com/investor-centre/company-reports/
(https://afritinmining.com/investor-centre/company-reports/) . Physical copies
of the Annual Report will also be posted to shareholders today, to those who
have elected to receive them.
AfriTin Mining Limited +27 (11) 268 6555
Anthony Viljoen, CEO
Nominated Adviser +44 (0) 207 220 1666
WH Ireland Limited
Katy Mitchell
Andrew de Andrade
Corporate Advisor and Joint Broker
H&P Advisory Limited +44 (0) 20 7907 8500
Andrew Chubb
Jay Ashfield
Nilesh Patel
Stifel Nicolaus Europe Limited +44 (0) 20 7710 7600
Ashton Clanfield
Callum Stewart
Tavistock Financial PR (United Kingdom) +44 (0) 207 920 3150
Emily Moss
Catherine Drummond
Adam Baynes
CHAIRMAN'S STATEMENT
The year in review marks a significant milestone for AfriTin and the team. I
congratulate all of our employees on this achievement. The fundamentals in
this financial year have been strong for tin, coupled with the ever-increasing
demand for the transition to a greener world. Our team has successfully
returned Uis to its rightful state as a producing mine. I congratulate all of
our employees on this achievement.
Since attaining our Namibian licences, we remain confident in the fundamentals
of producing a saleable tin concentrate and further unlocking future revenue
streams. Against the backdrop of surpassing nameplate production in November
2020 and building on this throughout 2021, AfriTin is well on its way to
becoming a globally significant producer of high demand strategic commodities.
We look forward to building on our existing platform through our various
expansion projects and complimentary metal streams.
As per most companies globally, AfriTin was not immune to the effects and
disruptions of the COVID-19 pandemic. While our teams were presented with
multiple logistical challenges, acts performed to overcome these are a
testament to the resilience and flexibility of our employees and management.
The health and safety of our staff, partners and stakeholders has been, and
always will be, of paramount importance to the Board.
AfriTin's commitment to strong Environmental, Social and Governance (ESG)
principles has been entrenched in our philosophy since inception and is
strongly supported by the Board and the entire organisation. We recognise the
need and duty to entrench good governance and ESG principles as early as
possible in our business development plan and to adopt necessary monitoring
and change to sustainably achieve these.
Looking to the future of AfriTin, we remain confident in our pursuit of
producing saleable commodities at Uis as well as our other license areas. The
positive, global momentum shift in the green tech revolution and a step-change
in demand for these strategic materials is the global opportunity that
presents itself to AfriTin. AfriTin's ability to economically deliver these
saleable products to what we believe is a pent up and ongoing future demand
for these minerals remains our focussed objective.
AfriTin is particularly proud of developing Uis in Namibia in conjunction with
our majority Namibian workforce at site, our local communities and local and
national government. Namibia is one of Africa's leading mining jurisdictions
according to the Policy Perspective Index, and we are proud to play our part
in its continued development. Listing on the Namibian Stock Exchange in March
2022 solidifies our commitment to the country and our desire to share our
success locally with those who played a part in it.
We consider AfriTin today to be a significantly different company to what it
was a year ago due to the change achieved and accelerated development progress
at Uis. There are considerable future strategic milestones we have set for our
teams, and whilst our tin success at Uis provides a proven underpinning
foundation on which to build, we are not resting on this.
I applaud the work completed and the foundations laid to secure our future and
would like to thank my fellow Board members, management teams, all
stakeholders and most of all our people and their families.
GLEN PARSONS
Chairman
31 August 2022
CHIEF EXECUTIVE OFFICER'S STATEMENT
AfriTin has had another successful year, serving as the foundation for the
rapid deployment of the Company's various growth initiatives over the coming
months. I believe AfriTin is poised to become a leading supplier of technology
metals, targeting a more diversified portfolio of production in the near
future. We find ourselves a part of a small, unique group of global tin
producers, with a differentiating factor being the prospect of underexplored
lithium and tantalum in the region, as well as additional historical open pit
mines which all form part of our exciting mining operations at our flagship
Uis asset.
The market fundamentals for tin provided the perfect backdrop for a mine
ramping up its production. Our positive production results coincided with a
period of unprecedented tin price highs triggered by low stocks and no sign of
relief from a constrained physical supply chain. The Company ended the
financial year with cash and cash equivalents of £7.365m (2021: £1.351m). A
£4.5 million senior secured term loan agreed with Standard Bank Namibia
marked a strong endorsement of the Company and the expansion of our tin
production. Our focus now turns to leveraging these cashflows from the tin
production, to bring the significant lithium and tantalum revenue streams into
production.
The Phase 1 pilot plant at Uis has performed strongly and provided a perfect
platform to propel AfriTin from a single commodity producer to a multi-tech
metal Company over the next five years. Production at our flagship asset
exceeded nameplate capacity with an annual production of 804 tonnes of tin
concentrate. A Definitive Feasibility Study for the expansion of the Phase 1
mining and processing facility was published during the year which served as
confirmation of the highly attractive economics associated with the low-cost
modular expansion of the current Phase 1 plant. The Phase 1 expansion project
is currently in progress and is estimated to increase tin concentrate
production by 67% by way of a modular expansion of the existing processing
facility. The bulk of the civil construction and steel fabrication has been
completed, with on-site steel construction currently in progress.
In line with our vision of diversification of our tech-metal exposure through
by-product production, raising equity funds of £13 million before expenses
has put the Company in a position to expedite the Phase 1 expansion and
further investigate lithium and tantalum by-product potential and exploration.
By-product production as well as the introduction of ore sorting technology,
which upgrades feed to the concentrator by up to four times the ROM grade,
could transform the overall economics and unit cost of production for Phase 1.
The Company is proceeding with the design and procurement of a pilot lithium
beneficiation facility as well as the implementation of a tantalum
concentrating circuit and ore sorting test circuit. By implementing the pilot
phase development of these additional products, the Company aims to take
advantage of the burgeoning technology metals market by fast-tracking the
by-product streams into production.
Turning to Phase 2, the results of the Phase 2 Preliminary Economic Assessment
(PEA) were announced during the year and demonstrated the economics and
returns for the expansion (see announcement dated 26 April 2022). Phase 2
should see AfriTin produce globally significant volumes of tin, lithium and
tantalum, which the Directors believe are vital in meeting the demands of the
transition to a new efficient and greener technology future.
The Directors consider the Damara region to be a metallogenic jewel with huge,
underexplored potential. The ore reserve declared at Uis represents a small
portion of the historically drilled area in the mining licence property. As a
route to expanding our footprint within the extended Uis project area, an
exploration drilling campaign commenced during the year with the aim of
verifying the historic resources and upgrading the resources to comply with
the JORC (2012) Codes. This could see the resource increase significantly from
1.54 Mt, however, at this stage there can be no guarantee what that resource
will be. We look forward to providing updates as we progress. The Company's
other licence areas in the region encompass additional historical mining areas
and there is potential for these to deliver sustained long-term value by
reopening a global significant-tech metals province for AfriTin. The
exploration of these remains a high priority for the Company. To this end, an
exploration programme is in progress to confirm the historical tin and
tantalum resource and investigate the spodumene (lithium) discovery announced
in March 2022 (after the period under review) at our B1/C1 mining licence. In
addition, an aggressive confirmatory drilling program at the historic
Brandberg West tin and tungsten mining operation, aims to verify the
historical drilling database at this site.
Our fully funded Phase 1 expansion project and the extensive exploration
programme currently underway are the fundamental building blocks to
positioning AfriTin as a globally significant tech metals producer. While the
volatility in the tin prices post year-end posed a challenge for the Group, we
are at the advanced stages of securing funding to continue with our growth
ambitions. A subsidiary of the Group has entered into a conditional, credit
approved, term sheet for a lending facility with the Development Bank of
Namibia Limited ("Development Bank of Namibia") to fund the Uis Phase 1 Stage
II Continuous Improvement Project. As announced on 5 July 2022, a Proposed
Lending Facility comprising a NAD 100 million (approximately £5.5 million)
Senior Secured Lending Facility has been signed with the Development Bank of
Namibia. Although the Lending Facility has been approved by the credit
committee and board of the Development Bank of Namibia, there are certain
conditions precedent that need to be adhered to, including completion of final
legal documentation. At this stage there can be no guarantee the Lending
Facility will be entered into, or that any funds will be drawn down, but
AfriTin Management have every confidence that it will be. The Company has
previously announced that the terms of this proposed lending facility would
expire by the end of July 2022 but the Directors confirm that this has now
been extended such that completion is anticipated around the end of September
2022. A further update will be provided at that time.
As an acknowledgment of our commitment to developing Namibia and its capital
markets further, AfriTin announced its dual listing on the NSX market of the
Namibian Stock exchange. We are acutely aware of the influence and impact we
can wield, and it is for this reason that the leadership team places great
emphasis on creating value for the wider community, our shareholders,
investors, and other stakeholders. Central to all decisions is the commitment
to reducing carbon emissions and limiting the environmental impact of our
operations. An Environmental, Social and Governance (ESG) system was
implemented during the course of the year, and we hope to present a strategy
to the market in H2 2022.
I would like to congratulate and thank our management teams, staff, and
stakeholders for their outstanding efforts, continued support, and for all
that we have achieved over the past year. In addition, I would like to thank
the other Directors for their guidance and advice. We are committed to
expanding and developing Uis, as well as our other Namibian exploration assets
as we embark on the route to becoming a significant African multi-commodity
tech metals producer. I look forward to updating the market on our progress.
ANTHONY VILJOEN
Chief Executive Officer
31 August 2022
FINANCIAL REVIEW
I am pleased to report the Company's annual revenue of £13.6m (2021: £5.0m)
from the sale of 760 tonnes of tin concentrate (2021: 473 tonnes). During the
year under review, 29 shipments (2021: 19 shipments) of tin concentrate left
the Uis Mine and were sold to our offtake partner, Thaisarco. The average tin
price achieved during the year under review was US$38 680 (2021: US$ 22 150).
The increase in tin price achieved resulted in a healthy gross profit margin
of 32% (2021: -0.05%).
Administrative expenses across the Group increased to £3.675m for the year
(2021: £2.540m). The increase is as a result of an increase in staff head
count given the growth phase of the business as well as increased support
services costs on site and at the corporate head office due to increased
operations.
The increase in finance cost for the year to £0.316m (2021: £0.184m) is as a
result of interest on the Group's lending facilities no longer being
capitalized to the mining asset post the achievement of commercial production
at Uis in November 2020. Furthermore, additional interest was charged on the
provisional payments that were received from Thaisarco due to exceptionally
long transit times caused by global shipping delays.
The Group's loss for the year totalled £0.474m (2021: £5.796m). Basic loss
per share from operations of 0.08 pence was recorded (2021: 0.76 pence). The
Group's EBITDA showed significant improvement, increasing from negative
£4.713m in the prior year to positive £2.589m in the current year.
Intangible asset additions amounted to £1.577m (2021: £0.982m) and property,
plant and equipment additions amounted to £5.213m (2021: £2.570m). Capital
expenditure occurred on a variety of growth projects, most notably the Uis
Phase 1 Stage II expansion. The construction of this expansion has been
completed subsequent to year end. During the year, £1.737m was transferred
from exploration and evaluation assets to the mining assets as per the
requirements of IFRS 6. Please see Note 12 and 13 for further details.
As at 28 February 2022, the Group had cash in the bank amounting to £7.365m
(2021: £1.351m). The inventory balance increased to £1.452m (2021: £0.997m)
as a result of increased production of tin concentrate. At year end, 75 tonnes
(2021: 36 tonnes) of tin concentrate was on hand, valued at £0.909m (2021:
£0.373m). This has been shipped subsequent to year end.
Trade receivables increased to £3.953m at year end (2021: £1.188m) as a
result of the higher production rates achieved as well as higher tin prices
achieved in the financial year. The balance incorporates a fair value
adjustment which was passed to reprice the shipments in transit at year end in
accordance with the requirements of IFRS. Trade and other payables increased
to £2.970m (2021: £1.484m) due to additional operating costs being incurred
as a result of increased operations.
Borrowings increased due to a £4.5 million term loan obtained from Standard
Bank for the construction of the Phase 1 Stage II expansion. The loan note
facility as well as the Nedbank working capital facility were fully settled
during the year.
Equity increased due to a £13 million equity raise that was completed in May
2021. The convertible loan note which had been classified as equity was also
fully settled in May 2021.
FUNDING
During the year, the Company completed a NAD 90 million (approximately £4.5
million) Term Loan Facility with Standard Bank Namibia. The loan term of 5
years ranked as senior secured debt at an interest rate of 3-month JIBAR plus
4.5%. In addition to the Term Loan, Standard Bank took over the existing
short-term banking facilities (working capital facilities) with Nedbank
Namibia totalling NAD 43 million (approximately £2.2 million). These
facilities will incur an interest rate of Namibian prime lending rate
(currently 7.50%) minus 1.00%. Furthermore, Standard Bank also
provided AfriTin Mining (Namibia) Pty Limited with a NAD 5 million guarantee
to Namibia Power Corporation Pty Limited in relation to a deposit for the
supply of electrical power.
Management and the Board of Directors have considered cash flow forecasts and
stress testing as a result of the recent decline in Tin prices, and have
concluded that the Company will be able to continue in operation for the
foreseeable future as a going concern as the group is at an advanced stage of
securing strategic funding for the business.
Notwithstanding the above, these circumstances indicate that a material
uncertainty exists that may cast significant doubt on the Group's ability to
continue as a going concern and, therefore, that the Group may be unable to
realise its assets or settle its liabilities in the ordinary course of
business. As a result of their review, and despite the aforementioned material
uncertainty, the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational existence
for the going concern assessment period and have therefore used the going
concern basis in preparing these consolidated financial statements. For
further details please see the going concern disclosure in Note 2.
HITEN OOKA
Chief Financial Officer
31 August 2022
DIRECTORS' REPORT
The Directors of AfriTin hereby present their report together with the
consolidated financial statements for the year from 1 March 2021 to 28
February 2022.
Principal Activities, Business Review and Future Developments
The principal activity of the Group (AfriTin and its subsidiaries) is mineral
exploration and the development of mining and exploration projects in Namibia.
A review of the Group's progress and prospects is given in the CEO's statement
in this Annual Report.
Principal Risks and Uncertainties
The Group is subject to a variety of risks, specifically those relating to the
mining and exploration industry. As an entrepreneurial business operating in
commodities and emerging markets, there is clearly an elevated risk which is
balanced by potentially greater rewards. The Board is mindful of, and
monitors, both its corporate risk and individual project risk. Outlined below
are the principal risk factors that the Board feels may affect performance.
The risks detailed below are not exhaustive, and further risks and
uncertainties may exist which are currently unidentified or considered to be
immaterial. The risks are not presented in any order of priority.
Risk and Impact Mitigation
Volatility of metal prices Tin, tantalum and lithium prices are subject to high levels of volatility and The Board and management constantly monitor the markets in which the Group
are impacted by numerous factors that are outside of the control of the Group. operates. Long-term financial planning is undertaken on a regular basis.
A low tin, tantalum or lithium price as well as commodity demand could affect
the financial performance of the Group and this may affect the ability of the
Group to fund future growth.
The Board approved the modular expansion of the Phase 1 to increase tin output
and leverage off current infrastructure and reduce unit costs through a 67%
planned increase in tin production.
The Board is supporting the exploration and metallurgical test work for the
extraction of lithium and tantalum at Uis. The benefits of extracting these
additional metals includes enhanced revenue and lowered unit costs.
Foreign exchange With AfriTin's operations mainly in Namibia and South Africa, but tin sales The Group holds the majority of its funds in major currencies. It attempts to
based in US Dollars and equity funding based in Pound Sterling, the volatility match cash held in a particular currency to the currency in which liabilities
and movement in the Rand/Namibian Dollar exchange rate could be a significant are incurred.
risk factor to the Group.
Exploration and mining risks The business of mineral exploration involves a high degree of risk. Whilst the Exploration projects are carefully managed with regular review by the Board of
discovery of a mineral deposit may result in substantial rewards, few progress against targets and expenditure. Funds are only expended in areas
properties at the exploration stage are ultimately developed into producing deemed prospective.
mines.
The Group adheres strictly to a health and safety programme. When constructing
The operations of the Group may be disrupted by a variety of risks and hazards a mine site, external geotechnical, environmental and geo-hydrological
which are beyond the control of the Group, including geological, geotechnical consultants are used to ensure all potential risks of this nature are
and seismic factors, environmental hazards, industrial accidents, occupational understood and mitigation plans are put in place.
and health hazards, technical failures, labour disputes, unexpected rock
properties, explosions, flooding, and extended interruptions due to inclement
or hazardous weather conditions and other acts of God.
Development projects Development projects have no operating history upon which to base estimates of The Group has appointed an experienced team of geoscientists and engineers,
future cash operating costs. For development projects, estimates of proven and complemented by experienced consultants in specialist areas. Any new capital
probable reserves and cash operating costs are, to a large extent, based on projects are supported by scoping, feasibility and intensive test work
the interpretation of geological data obtained from drillholes and other studies. The Uis Phase 1 pilot plant has provided an understanding of the
sampling techniques and feasibility studies. This derives estimates of cash metallurgy and processing elements of the project which will provide essential
operating costs based upon anticipated tonnage and grades of ore to be mined up-front information for the implementation of Phase 2. In addition, detailed
and processed, as well as the configuration of the orebody, expected metallurgical test work is being undertaken to assess the feasibility of
throughput and recovery rates, comparable facility and equipment operating extraction of Lithium and Tantalum prior to making any decision on the
costs and other factors. extraction of these metals. Third party experts are integral to the
metallurgical test work. The company is advancing exploration drilling
programmes to increase confidence levels for lithium and tantalum. All
resources and reserves need to be JORC compliant and signed off by competent
persons.
Capital budget overruns Whilst best estimates are used in preparing capital project budgets, these Capital expenditure and project execution are subject to pre-defined
budgets are dependent on a number of external factors which are beyond the governance and approval procedures, which include feasibility studies prior to
control of the Group, resulting in a risk of material overruns versus budget. implementation. Management and the Board regularly review project progress
and related expenditure on projects. This includes reviewing actual costs
against budgeted costs, updating working capital models, and assessing
potential impacts on future cash flow.
Power and water supply Power sources and water supply are key to the functioning of viable mining The Group has concluded a formal electrical power supply agreement with
operations. A lack of power or water, or uncertainties around their Namibia Power Corporation for power to the mining and processing facility at
uninterrupted supply, would adversely impact the feasibility of the operation. Uis and this will provide enough power for Phase 1 of the project. Diesel
generators will serve as backup power.
A geohydrological study, water drilling and test pumping programme has
demonstrated the viability of using groundwater sources for the Phase 1 pilot
plant. This was confirmed with the implementation and successful operation of
a water supply network.
Solutions for Phase 2 in terms of both electrical power and water supply are
in the process of being reviewed.
Financing The successful extraction of tin, tantalum and eventually lithium will require The Group has a supportive shareholder base, as well as significant future
significant capital investment. The Group's ability to raise further funds investor interest, to engage with for future funding rounds. The management
will depend on the success of existing operations. Market conditions may not are currently at an advance stage of securing strategic funding for the
be conducive to financing. The Group may not be successful in procuring the business. Refer to note 2 for details. The Group monitors cash flows on an
requisite funds. ongoing basis."
Key personnel risk The success and operational performance of the Group is dependent on the The Group has built a team of executives, scientists, engineers and support
skills, expertise and knowledge of management and qualified personnel. Group personnel who are experienced and versatile enough to address shortcomings
profitability could be impacted in the event that key personnel leave the that may arise from the loss of employees. In addition, the Group has
business. developed long-standing relationships with consulting firms in key specialist
areas. Remuneration arrangements, given the stage of the Group's development,
are intended to be sufficiently competitive to attract, retain and motivate
high-quality staff capable of achieving the Group's objectives, thereby
enhancing shareholder value.
Social license to operate Past environmental incidents in the extractive industry highlight risks such Our ability to maintain regulatory compliance in order to protect the
as water management, tailings storage facilities and other potential hazards environment, as well as the health and safety of host communities and workers,
to both the environment and community health and safety. remains our top priority. We seek to build partnerships with host governments
and local communities based on trust to drive shared long-term value while
working to minimise the social and environmental impacts of our activities.
The Board oversees the Group's environmental, safety and health, and corporate
social responsibility programmes, policies and performance and is in the
process of setting up an ESG board sub-committee to focus on these matters.
Climate change Climate change and regulatory actions to reduce its impact may affect our AfriTin is working towards implementing the recommendations of the Task Force
suppliers, customers and business model, and hence affect AfriTin's growth and on Climate-Related Financial Disclosures. Current risk mitigation around
profitability. This impact could be amplified by the perception that the climate change involves assessing exposure across a wide range of outcomes,
Company is undertaking activities that are harmful to the environment. monitoring government action around climate change and constantly striving to
reduce the environmental impact of our operations. The Board oversees the
Group's environmental, safety and health, and corporate social responsibility
programmes, policies and performance and is in the process of setting up an
ESG board sub-committee to focus on these matters.
COVID-19 COVID-19 resulted in widespread socio-economic disruption around the world. The countries in which the Group operates have all instituted measures to
The countries where the Group operates, namely Namibia, South Africa and the limit the spread of COVID-19. The Group is following the World Health
United Kingdom continue to be subject to varying levels of lockdown Organisation (WHO) guidelines and is complying with the regulations of
restrictions to contain the spread of the disease. Despite lockdowns, the Namibia, South Africa and the United Kingdom related to COVID-19. In addition,
Group's operation in Namibia remained open during the course of the reporting the Group has updated its health and safety policies and procedures to align
period (albeit with a temporary suspension on mining in April 2020) due to an with the above guidelines and to translate these guidelines into
exemption granted to the mining industry but did suffer supply-chain workplace-specific measures.
disruptions which delayed production ramp-up. The Group's operations are
continuing with minimal disruption now that the global lockdown measures have
eased. However, there continues to be a risk that lockdown measures return in
the event of further COVID-19 outbreaks, which may result in interruptions to The Group has adopted technological tools, such as online video conferencing
operations through supply chain disruption, illness amongst our workforce and and project and team management software, to enable office-bound staff to work
related personnel, together with potential volatility in tin, tantalum and remotely
lithium prices.
The countries in which the Group operates have rolled out COVID-19 vaccination
In addition to the above, COVID-19 restrictions have resulted in shipping programmes. All employees of the Group been encouraged to get vaccinated.
disruptions and congestion at container shipping ports. Despite this, the
shipping of tin concentrate to Thaisarco has continued.
Country and political risk AfriTin's operations are predominantly based in Namibia. Emerging-market The AfriTin team is experienced at operating in Africa. AfriTin routinely
economies are generally subject to greater risks including legal, regulatory, monitors political and regulatory developments in Namibia at both regional and
tax, economic and political risks, which are potentially subject to rapid local level.
change.
Results and Dividend
The Group's results are a loss of £0.474m. The Directors will not be
recommending a dividend.
Share Capital and Funding
Full details of the authorised and issued share capital, together with details
of the movements in the Company's issued share capital during the year, are
shown in Note 21. The Company has one class of ordinary shares which carry no
right to fixed income. Each share carries the right to one vote at general
meetings of the Company.
Directors
The Directors who served the Company during the year and to date are as
follows:
Anthony Viljoen Chief
Executive Officer
Glen Parsons
Chairman/Independent Non-Executive Director
Laurence Robb Independent
Non-Executive
Director
Terence Goodlace Independent
Non-Executive Director
Michael Rawlinson Independent
Non-Executive Director (Appointed 20(th) December 2021)
Directors' Interests
The Directors' beneficial interests in the shares of the Company at 28
February 2022 were:
Ordinary shares of no par value Share options
Anthony Viljoen 11 296 690 10 600 000
Glen Parsons 4 307 486 4 500 000
Laurence Robb 1 300 815 4 000 000
Terence Goodlace - 4 000 000
Michael Rawlinson 2 652 931
Directors' Indemnity Insurance
The Group has maintained insurance throughout the year for its directors and
officers against the consequences of actions brought against them in relation
to their duties for the Group.
Employee Involvement Policies
The Group places considerable value on the awareness and involvement of its
employees in the Group's exploration and development activities. Within the
bounds of commercial confidentiality, information is disseminated to all
levels of staff about matters that affect the progress of the Group, and that
are of interest and concern to them as employees.
Creditors Payment Policy and Practice
The Group's policy is to ensure that, in the absence of dispute, all suppliers
are dealt with in accordance with its standard payment policy to abide by the
terms of payment agreed with suppliers when agreeing the terms of each
transaction. Suppliers are made aware of the terms of payment.
Related-party Transactions
Details of related-party transactions are given in Note 27 of the consolidated
financial statements.
Events after Balance Sheet Date
Events after balance sheet date are detailed in Note 26 of the consolidated
financial statements.
Statement as to Disclosure of Information to Auditor
The Directors who were in office on the date of approval of these financial
statements have confirmed that, as far as they are aware, there is no relevant
audit information of which the auditor is unaware. Each of the Directors has
confirmed that they 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 to establish that it has been communicated to the auditor.
Auditor
The Directors will place a resolution before the Annual General Meeting to
reappoint BDO LLP as the Group's auditor for the ensuing year.
Electronic Communications
The maintenance and integrity of the Group's website is the responsibility of
corporate management and the Directors; the work carried out by the auditor
does not involve consideration of these matters and accordingly the auditor
accepts no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the website.
The Group's website is maintained in compliance with AIM Rule 26.
By order of the Board
MICHAEL RAWLINSON
Non-executive Director
31 August 2022
CORPORATE GOVERNANCE REPORT
As a listed company traded on the AIM market of the London Stock Exchange, we
recognise the importance of sound corporate governance throughout our
organisation, giving our shareholders and other stakeholders including
employees, customers, suppliers and the wider community confidence in our
business. We endeavour to conduct our business in an ethical and sensitive
manner irrespective of gender, race, colour or creed.
AfriTin has chosen to adopt the Quoted Companies Alliance (QCA) Corporate
Governance Code 2018 for Smaller Companies. Below we outline how we apply each
of the code's ten key principles to our business.
Principle Application
1. Establish a strategy and business model that promotes long-term value The Company is a pure tin company listed in London and its vision is to create
for shareholders. a portfolio of world-class, conflict-free, tin-producing assets. The Company's
flagship asset is the Uis brownfield tin mine in Namibia, formerly the world's
largest hard-rock tin mine.
The Company is managed by an experienced Board of Directors and management
team with a current two-fold strategy: fast-track Uis brownfield tin mine in
Namibia to commercial production (the intention is to ramp up to 10 000
tonnes of concentrate) and consolidate other quality African tin assets. The
Company strives to capitalise on the solid supply/demand fundamentals of tin
by developing a critical mass of tin resource inventory, achieving production
in the near term and further scaling-up production by consolidating tin assets
in Africa.
Sustainable development principles are integrated into corporate strategies
and decision-making processes by the Board of Directors and management team.
The Company endeavours to ensure that responsible health and safety,
environmental, human rights and labour practices and policies are adopted by
suppliers and contractors.
The Company is subject to a variety of risks, specifically those relating to
the mining and exploration industry. The principal risk factors facing the
business as well as mitigation of those risks are outlined in the Directors'
Report in this Annual Report.
2. Seek to understand and meet shareholder needs and expectations. The Board is committed to maintaining good communication and having a
constructive dialogue with all its shareholders.
Management, led by the CEO, undertake regular presentations and roadshows to
investors as appropriate. This enables them to develop a balanced
understanding of the issues and concerns of shareholders. The views of
shareholders are communicated to the rest of the Board.
Furthermore, the Company keeps shareholders informed on the Company's progress
through its public announcements and its website. All reports and press
releases are published in the 'Investors' section of the Company's website.
3. Take into account wider stakeholder and social responsibilities and The Board recognises that its prime responsibility is to promote the success
their implications for long-term success. of the Company for the benefit of its stakeholders and members as a whole.
This success is largely reliant on its relations with its stakeholders, both
internal (employees and shareholders) and external (customers, suppliers,
business partners and advisors).
Employees, community members and other stakeholders work in collaboration with
one another and with transparency and accountability. Open dialogue and
engagement with community members at our sites is central to maintaining a
successful relationship, and is essential to ensuring long-term sustainability
for all parties involved. The Company continually implements inclusive and
supportive approaches with local communities, to contribute to their economic
and social well-being.
The Company endeavours to systematically examine the environmental impact of
any of our operations and will adopt measures to mitigate this challenge. The
goal is to minimise the negative impacts on the environment of the different
processes related to the extraction of tin. At our operational project area,
Uis, the non-chemical nature of ore beneficiation, combined with an ore that
is largely free of deleterious elements, contributes to a reduced level of
environmental risk. Nonetheless, the Company ensures compliance with its
operational environmental management plan through continuous monitoring of
dust, water and waste management.
The Company maintains a regular dialogue with key suppliers.
Managing human capital equitably and sustainably is central to the Company's
project development strategy. The Company promotes an inclusive work
environment through its recruitment policies, management and remuneration
policies and development initiatives. Within the bounds of commercial
confidentiality, information is disseminated to all levels of staff about
matters that affect the progress of the Company and that are of interest and
concern to them as employees.
The Company has set up a share option scheme for key employees which gives
them a stake in the Company's long-term success.
4. Embed effective risk management, considering both opportunities and As an entrepreneurial business operating in emerging markets there is clearly
threats, throughout the organisation. an elevated risk which is balanced by potentially greater rewards. The Board
is mindful of and monitors both its corporate risks and individual project
risks.
The Board ensures that there is a risk-management framework in place which
identifies and addresses all relevant risks in order to execute and deliver
strategy. Key risks are reviewed by the Board regularly and disclosed in the
Directors' Report.
The Audit Committee receives feedback from the external auditor on the state
of the Company's internal controls, and reports their findings to the Board.
5. Maintain the Board as a well-functioning, balanced team led by the The Board is made up of the Chairman, three Non-Executive Directors and the
chair. CEO.
The roles of the Chairman and CEO are clearly separated.
The CEO is responsible for the day-to-day operational management of the
business and is supported by a Chief Financial Officer, a Chief Operating
Officer, geologists and engineers.
The Chairman is responsible for the leadership and effective working of the
Board, for the implementation of sound corporate governance, for setting the
Board agenda, and ensuring that Directors receive accurate, timely and clear
information.
The Chairman and Non-Executive Directors (Glen Parsons, Terence Goodlace,
Laurence Robb and Michael Rawlinson) are considered to be independent of
management and free to exercise independent judgement. It is acknowledged that
the Non-Executive Directors do have share options. However, the quantum of
these share options is not material and is too low to affect independence.
The Board meets at least every three months or at any other time deemed
necessary for the good management of the business. Every Director has attended
all Board meetings whilst being a Director of the Company.
6. Ensure that between them the Directors have the necessary up-to-date Directors who have been appointed to the Company have been chosen because of
experience, skills and capabilities. the skills, knowledge and experience they offer considering the stage of the
Company and the strategy that it is pursuing.
The composition of the Board as well as biographical details of Board members
can be found on the Board of Directors page on the Company website.
Furthermore, the Company has put in place an Audit Committee and a
Remuneration Committee.
The Directors have access to training (online training or external training
courses) to ensure that their skills are kept up to date. The Board and its
committees will also seek external expertise and advice where required.
As part of the induction programme conducted by the Company's nominated
adviser, Directors are briefed on regulations that are relevant to their role
as directors of an AIM-quoted company.
Hiten Ooka (Chief Financial Officer) and Frans van Daalen (Chief Operating
Officer) attend Board meetings by invitation to provide input from a financial
and operational perspective.
7. Evaluate Board performance based on clear and relevant objectives, The Board considers evaluation of its performance and that of its committees
seeking continuous improvement. and individual Directors to be an integral part of corporate governance to
ensure Board Members have the necessary skills, experience and abilities to
fulfil their responsibilities. The goal of the Board evaluation process is to
identify and address opportunities for improving the performance of the Board
and to solicit honest, genuine and constructive feedback.
The Chairman is responsible for ensuring the evaluation process is "fit for
purpose", as well as for dealing with matters raised during the process.
Succession planning is a vital task for boards and the management of
succession planning represents a key measure of the effectiveness of the
Board.
8. Promote a corporate culture that is based on ethical values and The Company has a strong ethical culture, which is promoted by the Board and
behaviours. the management team.
The Company endeavours to conduct its business in an ethical, professional and
responsible manner, treating all employees, customers, suppliers and partners
with equal courtesy irrespective of gender, race, colour or creed.
9. Maintain governance structures and processes that are fit for purpose The Board approves the Company's strategy and ensures that necessary resources
and support good decision-making by the Board. are in place in order for the Company to meet its objectives.
Whilst the Board has delegated the operational management of the Company to
the Chief Executive Officer and other senior management, a number of specific
matters are subject to the approval of the Board. These include:
· annual budget;
· interim and final financial statements;
· management structure and appointments;
· mergers, acquisitions and disposals;
· capital raising;
· joint ventures and investments;
· corporate strategy;
· projects of a capital nature; and
· major contracts.
The Non-Executive Directors have a particular responsibility to constructively
challenge the strategy proposed by the executive management team, to
scrutinise and challenge performance, to ensure appropriate remuneration, and
to ensure that succession planning is in place in relation to senior members
of the management team. The senior management team enjoy open access to the
Non-Executive Directors.
The Chairman is responsible for leadership of the Board and ensuring its
effectiveness. The Chairman with the assistance of the Chief Executive Officer
sets the Board's agenda and ensures that adequate time is available for
discussion of all agenda items, in particular strategic issues.
The roles of the Audit Committee and the Remuneration Committee are set out
further on in this report.
The governance structures will evolve over time in parallel with the Company's
objectives, strategy, and business model to reflect the development of the
Company.
10. Communicate how the company is governed and is performing by maintaining a The Board is committed to maintaining good communication and having
dialogue with shareholders and other relevant stakeholders. constructive dialogue with all of its stakeholders, including shareholders,
providing them with access to information to enable them to come to informed
decisions about the Company. The 'Investors' section on the Company's website
provides all required regulatory information as well as additional information
shareholders may find helpful, including:
· information on Board members, advisers and significant
shareholdings;
· a historical list of the Company's announcements;
· corporate governance information;
· historical Annual Reports and notices of Annual General Meetings;
and
· share price information and interactive charting facilities to
assist shareholders in analysing performance.
Results of shareholder meetings and details of votes cast will be publicly
announced through the regulatory system and displayed on the Company's website
with suitable explanations of any actions undertaken as a result of any
significant votes for or against resolutions.
The Board of Directors
The Board currently comprises:
Independent Non-Executive Chairman
· Glen Parsons (appointed 23 October 2017)
Independent Non-Executive Directors
· Laurence Robb (appointed 23 October 2017)
· Terence Goodlace (appointed 23 May 2018)
· Michael Rawlinson (appointed 20 December 2021)
Executive Director - Chief Executive Officer
· Anthony Viljoen (appointed 23 October 2017)
Operational management in South Africa and Namibia is led by Anthony Viljoen
supported by a Chief Financial Officer (Hiten Ooka), a Chief Operating Officer
(Frans van Daalen), geologists and engineers. Operational management is also
supported technically through various consultancy agreements that were in
place during the year under review.
The Board met formally four times during the year.
All press releases, including operational updates, are approved by the entire
Board.
The Audit Committee
The Audit Committee meets at least twice a year and is composed exclusively of
Non-Executive Directors: Glen Parsons (Chairman) and Michael Rawlinson. The
Chief Executive Officer, Anthony Viljoen, and the Chief Financial Officer,
Hiten Ooka, attend Audit Committee meetings by invitation. The committee is
responsible for:
· reviewing the annual financial statements and interim reports prior
to approval, focusing on changes in accounting policies and practices, major
judgemental areas, significant audit adjustments, going concern and compliance
with accounting standards, stock exchange requirements, and legal
requirements;
· receiving and considering reports on internal financial controls,
including reports from the auditor, and reporting auditor findings to the
Board;
· considering the appointment of the auditor and their remuneration,
including reviewing and monitoring their independence and objectivity;
· meeting with the auditor to discuss the scope of the audit, issues
arising from their work and any matters they wish to raise; and
· developing and implementing policy on the engagement of the external
auditor to supply non-audit services.
The Audit Committee is provided with details of any proposed related-party
transactions in order to consider and approve the terms and conditions of such
transactions.
The Audit Committee met three times during the year to consider the following
agenda items:
July 2021:
· Critical accounting estimates
· Going concern assessment
· Approval of the Annual Report for the period ended February 2021
September 2021:
· Approval of the half-year results and report to 31 August 2020
· Going concern assessment
February 2022:
· Auditor independence
· External audit plan for the year ended February 2022
The Remuneration Committee
The Remuneration Committee meets at least once a year and is composed
exclusively of Non-Executive Directors: Michael Rawlinson (Chair) and Glen
Parsons.
The Committee is responsible for reviewing the performance of senior
management and for setting the scale and structure of their remuneration,
determining the payment of bonuses, considering the grant of options under any
share option scheme and, in particular, the price per share and the
application of performance standards which may apply to any such grant, paying
due regard to the interests of shareholders and the performance of the Group.
The Remuneration Committee met formally once during the year to consider the
following agenda items:
February 2022:
· Initiation of STIP and Share Option plan for Organisation
(2021/2022)
· Review and implementation of Balance Score Card for organisation
performance (2021/2022)
The Environmental, Social and Governance Committee
The ESG committee comprises of the following Board of Directors: Terence
Goodlace (Chairman), Laurence Robb and Anthony Viljoen. Additional members of
the Board, Executive Management and the ESG team attend the committee meetings
by invitation.
The Committee ensures that ESG is embedded in the business' operations. We are
conscious of the impact ESG has on the long-term success of the business. Our
approach to ESG is one that is inclusive, intended to benefit all stakeholders
involved.
The ESG Committee's role to date has been to advise on the approach the
Company should implement to maintain a good ESG scorecard and Social Licence
to operate. This includes drafting of the ESG Strategy, policies, compliance
systems and monitoring the Company's performance against industry practices.
The ESG Committee met twice during the year to consider the following agenda
items:
August 2021:
· Governance Structure of the Committee and Organisation
· Identification of critical policies and procedures to be
implemented
· 4 x polices
o Occupational Health and Safety Policy
o Environmental Policy
o Sustainable Development Policy
o Risk Management Policy
February 2022:
· Climate change risk assessment
· Amendment of Group Diversity Policy
· Development of 5-year ESG Strategy
Internal Controls
The Board acknowledges its responsibility for the Group's systems of internal
controls and for reviewing their effectiveness. These internal controls are
designed to safeguard the assets of the Group and to ensure the reliability of
financial information for both internal use and external publication. Whilst
the Board is aware that no system can provide absolute assurance against
material misstatement or loss, in light of the increased activity and further
development of the Group, continuing reviews of internal controls will be
undertaken to ensure that they are adequate and effective.
Risk Management
The Board considers risk assessment and management to be important in
achieving its strategic objectives. Project milestones and timelines are
regularly reviewed.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors are responsible for preparing the Directors' Report and the
financial statements in accordance with applicable law and regulations.
The Companies (Guernsey) Law, 2008 requires the Directors to prepare the
Annual Report and Consolidated Financial Statements for each financial year in
accordance with UK Adopted International Accounting Standards and AIM Rules
for Companies.
The financial statements of the Group are required by law to give a true and
fair view of the state of the Group's affairs at the end of the financial year
and of the profit or loss of the Group for that year and are required by UK
Adopted International Accounting Standards to reflect fairly the financial
position and performance of the Group.
In preparing the Group financial statements, the Directors are required to:
i) Select suitable accounting policies and then apply them
consistently;
ii) Make judgements and accounting estimates that are reasonable and
prudent;
iii) State whether they have been prepared in accordance with UK
Adopted International Accounting Standards ; and
iv) Prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions, disclose with
reasonable accuracy at any time the financial position of the Group, and
enable them to ensure that the financial statements comply with the Companies
(Guernsey) Law, 2008. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Group's website.
Legislation in Guernsey governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
The Directors confirm they have discharged their responsibilities as noted
above.
Independent auditor's report to the members of AfriTin Mining Limited
Opinion on the financial statements
In our opinion the financial statements:
• give a true and fair view of the state of the Group's affairs as
at 28 February 2022 and of its loss for the year then ended;
• have been properly prepared in accordance with UK adopted
international accounting standards; and
• have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
We have audited the financial statements of AfriTin Mining Limited (the
'Company') and its subsidiaries (the 'Group') for the year ended 28 February
2022 which comprise the consolidated statement of comprehensive income, the
consolidated statement of financial position, the consolidated statement of
changes in equity, the consolidated statement of cash flows and notes to the
consolidated financial statements, including a summary of significant
accounting policies
The financial reporting framework that has been applied in their preparation
is applicable law and UK adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are
further described in the
Auditor's responsibilities for the audit of the financial statements section
of our report. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Material uncertainty related to going concern
We draw attention to note 2 to the financial statements, which indicates that
the Group will need to raise additional funding within twelve months from the
date of approval of financial statements to fund their working capital and
capital projects. As stated in note 2, these events or conditions, indicate
that a material uncertainty exists that may cast significant doubt on the
Group's ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Group and the Parent Company's ability to continue to adopt
the going concern basis of accounting and our audit procedures in response to
key audit matter included the following:
· We discussed with Directors and the Audit Committee their
assessment of potential risks and uncertainties, forecast commodity prices and
the availability of financing that are relevant to the Group's business model
and operations. We formed our own assessment of risks and uncertainties
based on our understanding of the business and mining sector and considered
these in performing our own sensitivities.
· We reviewed the latest board approved cash flow forecasts for the
Group to December 2023. We challenged management's assumptions in respect of
level of production, Forecast Tin prices, operating costs and capital
expenditure. In doing so, we considered factors such as empirical operational
performance, recent cost profile and market analyst commentary regarding
forecast commodity prices.
· We recalculated forecast covenant compliance calculations and
assessed the consistency of such calculations with the ratios stated in the
relevant lender agreements.
· We assessed the sensitivity analysis performed in respect of key
assumptions underpinning the forecasts and considered management's conclusions
as to whether such scenarios are reasonably possible based on our knowledge of
the business and operating environment.
· We discussed with management and the Board the Group's strategy
to access capital to fund its development plans and working capital needs. We
considered the Director's judgement that they had reasonable expectation of
securing necessary funding and the timing of such funding requirement.
· We reviewed and considered the adequacy of the disclosure within
the financial statements relating to Directors' assessment of the going
concern basis of preparation with the requirements of the financial reporting
framework, our understanding of the business and the Directors going concern
assessment.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Coverage 89% (2021: 89%) of Group total assets
99% (2021: 99%) of Group revenue
Key audit matters 2022 2021
Going concern Yes Yes
Carrying value of the Uis mining assets Yes Yes
Materiality Group financial statements as a whole
£370,000 (2021: £230,000) based on 1% of total assets (2021: 1% of total
assets)
Materiality
Group financial statements as a whole
£370,000 (2021: £230,000) based on 1% of total assets (2021: 1% of total
assets)
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
In approaching the Group audit we considered how the Group is organised and
managed. Whilst AfriTin Mining Limited is a Company registered in Guernsey and
listed on AIM in the UK and the NSX in Namibia, the Group's principal
operations are located in Namibia and South Africa. We assessed the business
as being principally a single project comprising of the Namibia subsidiaries
that operate the Uis Mine, a corporate head office function and an exploration
business unit.
The Namibia subsidiaries that operate the Uis Mine and the corporate head
office function were regarded as being significant components of the Group and
were subject to full scope audits.
The audits of each of the components were principally performed in the United
Kingdom, Namibia and South Africa. All of the audits were conducted by either
the group audit team or BDO network member firms.
The remaining components of the Group were considered non-significant and
these components were principally subject to analytical review procedures,
together with specified audit procedures over exploration and evaluation
related assets. This work was conducted by BDO network member firms.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of
involvement needed in order to be able to conclude whether sufficient
appropriate audit evidence has been obtained as a basis for our opinion on the
Group financial statements as a whole. Our involvement with component auditors
included the following:
• We held planning meetings with the component auditors
and local management.
• Detailed Group reporting instructions were sent to the
component auditors, which included significant areas to be covered by the
audits and set out the information to be reported to the Group audit team.
• The Group audit team was actively involved in the
direction of the audits performed by the component auditor for Group reporting
purposes, along with the consideration of findings and determination of
conclusions drawn. We performed our own additional procedures in respect of
certain of the significant risk areas that represented key audit matters in
addition to the procedures performed by the component auditor.
• We received and reviewed Group reporting submissions
and performed a review of the component auditors' file. Our review was
performed remotely using our online audit software as a result of travel
restrictions due to Covid-19.
• We held clearance meetings remotely with the component
auditors and local management to discuss significant audit and accounting
issues and judgements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
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. In addition to the matter
described in the Material uncertainty related to going concern section above,
we have determined the matters described below to be key audit matters.
Key audit matter How the scope of our audit addressed the key audit matter
Carrying value of the Uis mining assets Details of the carrying value of the Uis mining assets are disclosed in Note We reviewed and challenged management's impairment indicator assessment for
13: Property, Plant and Equipment. the Uis Mine mining assets which was carried out in accordance with relevant
accounting standards in order to determine whether there were any indicators
As disclosed in Note 2 Critical accounting estimates and judgements, of impairment. In doing so, our procedures included:
See Note 2 Critical accounting estimates and judgements and Note 13: Property, management have performed an impairment indicator review for Uis mining assets
Plant and Equipment. in accordance with the accounting standards. In undertaking this assessment · Reviewing the Competent Person's Report to support the mineral
management have prepared the underlying valuation model of the Uis mine. As reserve and performed an assessment of the independence and competence of
set out in Note 2, Management have concluded that no indicators of impairment managements expert.
have been identified at year-end.
· Critically reviewing the Life of Mine ('LoM') forecast by making
enquiries of operational management, evaluating it against our understanding
of the operations and historic performance, and evaluating the consistency of
The assessment of the recoverable value of the Uis mining assets requires available reserves with the Competent Person's Report.
significant judgement and estimates to be made by management - in particular
regarding the inputs applied in the models including; future tin prices, · Obtaining management's impairment model to confirm that headroom
production and reserves, operating and development costs and discount rates. existed over the asset carrying value as part of our assessment of potential
impairment indicators.
· Checking the mathematical accuracy of management's impairment model.
The carrying value of the Uis mining assets is therefore considered a key
audit matter given the level of judgement and estimation involved. · Challenging the significant inputs and assumptions used in the
managements impairment model and whether these were indicative of potential
bias. This included comparing forecast commodity prices to a range of
third-party independent market outlook reports and historical actual data,
comparing the forecast production to third party feasibility and resource
studies. We compared forecasted costs against the expected production profiles
in the mine plans and recent historical performance.
· Recalculating the discount rate and utilising BDO valuation experts
to assist us in assessing managements discount rate by recalculating it in
reference to external data.
· Review of management's sensitivity analysis and performance of our
own sensitivity analysis over individual key inputs including tin prices,
discount rate and plant recovery.
Key observation:
We found the key assumptions made by management in their impairment model to
be within an acceptable range and found management's conclusion that no
impairment indicator was present in respect of the Uis mining assets at 28
February 2022 to be appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements
2022 2021
Materiality £370,000 £230,000
Basis for determining materiality 1% of total assets 1% of total assets
Rationale for the benchmark applied We consider total assets to be the most significant determinant of the Group's
financial performance used by members given the Group.
The Group has invested significant sums on its production and non-production
mining assets and these are considered to be the key value driver for the
Group as its assets are an indicator of future value to shareholders.
Performance materiality £278,000 £172,500
Basis for determining performance materiality Performance materiality was set at 75% of the above materiality level based on
assessment of aggregation risk considering factors such as volume and nature
of errors in prior periods.
Component materiality
We set materiality for each component of the Group based on a percentage
between 18% and 83% (2021: 20% and 55%) of Group materiality dependent on the
size and our assessment of the risk of material misstatement of that
component. Component materiality ranged from £66,000 to £264,000 (2021:
£46,000 to £128,000). In the audit of each component, we further applied
performance materiality levels of 75% (2021: 75%) of the component materiality
to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £18,500 (2021:12,000). We also agreed to
report differences below this threshold that, in our view, warranted reporting
on qualitative grounds.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies (Guernsey) Law, 2008 reporting
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
• proper accounting records have not been kept by the Company; or
• the financial statements are not in agreement with the accounting
records; or
• we have failed to obtain all the information and explanations
which, to the best of our knowledge and belief, are necessary for the purposes
of our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors' Responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's and the Parent 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 Group or the Parent 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.
Extent to which the audit was capable of detecting irregularities, including
fraud
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· Holding discussions with the Directors and the Audit Committee
and made enquiries about whether they were aware of any known or suspected
instances of non-compliance with laws and regulations or fraud;
· Gaining an understanding of the of the laws and regulations
relevant to the Group and the industry in which it operates, through
discussion with Directors and our knowledge of the industry. These included
the listing rules, the financial reporting framework, Guernsey Companies Law,
tax legislation and the various Mining Regulations in Namibia;
· Communicating relevant identified laws and regulations and
potential fraud risks to all engagement team members and remaining alert to
any indications of fraud or non-compliance with laws and regulations
throughout the audit;
· Assessing the susceptibility of the Group's financial statements
to material misstatement, including how fraud might occur by making enquiries
of the Directors and the Audit Committee during the planning and execution
phases of our audit to understand where they considered there to be
susceptibility to fraud, considering the risk of management override of
controls and relevant controls established to address risks identified to
prevent or detect fraud.
We believed the areas in which fraud might occur were in the management
override of controls, recognition of revenue in the correct period, and bias
in accounting estimates. In response our procedures included, but were not
limited to;
- Agreeing the financial statement disclosures to underlying
supporting documentation;
- Addressing the fraud risk in relation to revenue recognition by
testing one hundred percent of revenue transactions to supporting
documentation, including testing the that revenue was recorded in the correct
period by testing revenue transactions in the period proceeding and preceding
year end.
- Addressing the risk of fraud through management override of
internal controls, by testing the appropriateness of journal entries made
throughout the year by applying specific criteria to select journals which may
be indicative of possible irregularities or fraud;
- Assessing areas of the Financial Statements which include
judgement and estimates, as set out in note 2 to the financial statements and
in our Key audit matters section above and evaluated whether there was
evidence of bias by the Directors;
- Made of enquiries of Directors as to whether there was any
correspondence from regulators in so far as the correspondence related to the
Financial Statements;
- Reading minutes from board meetings of those charges with
governance to identify any instances of non-compliance with laws and
regulations
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities
(http://insite.bdo.co.uk/sites/audit/Documents/www.frc.org.uk/auditorsresponsibilities)
. 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, in
accordance with Section 262 of the Companies (Guernsey) Law, 2008. Our audit
work has been undertaken so that we might state to the Company's members those
matters we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company and the Company's
members as a body, for our audit work, for this report, or for the opinions we
have formed.
Jack Draycott
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
31 August 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28 February 2022
Notes Year ended Year ended
28 February 2022 28 February 2021
£ £
Continuing operations
Revenue 5 13 615 045 4 985 107
Cost of Sales 6 (9 302 518) (4 987 696)
Gross profit / (loss) 4 312 527 (2 589)
Administrative expenses 7 (3 674 662) (2 539 762)
Impairment of exploration licences - (3 069 232)
Other income 61 753 -
Operating loss 699 619 (5 611 583)
Finance income 6 545 -
Finance cost 9 (316 365) (184 300)
Profit / (loss) before tax 389 798 (5 795 883)
Deferred tax movement 10 (864 199) -
Profit / (loss) for the year (474 401) (5 795 883)
Other comprehensive income / (loss)
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of share-based payment 767 (531)
reserve
Exchange differences on translation of foreign operations 526 779 (526 231)
Exchange differences on non-controlling interest (6 700) 1 390
Total comprehensive income for the year 46 445 (6 321 255)
Profit / (loss) for the year attributable to:
Owners of the parent (815 645) (5 694 962)
Non-controlling interests 24 341 244 (100 921)
(474 401) (5 795 883)
Total comprehensive profit / (loss) for the year attributable to:
Owners of the parent (288 098) (6 221 724)
Non-controlling interests 334 543 (99 531)
46 445 (6 321 255)
Loss per ordinary share
Basic loss per share (in pence) 11 (0.08) (0.76)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 28 February 2022
Notes 28 February 2022 28 February 2021
£ £
Assets
Non-current assets
Intangible assets 12 5 147 782 5 240 461
Property, plant and equipment 13 19 150 092 13 634 701
Total non-current assets 24 297 875 18 875 162
Current assets
Inventories 14 1 451 933 996 698
Trade and other receivables 15 3 953 382 1 188 152
Cash and cash equivalents 16 7 365 379 1 351 200
Total current assets 12 770 694 3 536 050
Total assets 37 068 569 22 411 212
Equity and liabilities
Equity
Share capital 21 38 655 078 25 608 001
Convertible loan note reserve - 2 170 645
Accumulated deficit (10 739 321) (10 030 679)
Warrant reserve 22 192 632 211 348
Share-based payment reserve 23 704 828 743 615
Foreign currency translation reserve (1 534 560) (2 061 339)
Equity attributable to the owners of the parent 27 278 657 16 641 591
Non-controlling interests 24 183 200 (151 344)
Total equity 27 461 857 16 490 247
Non-current liabilities
Environmental rehabilitation liability 19 295 151 180 917
Borrowings 17 4 095 405 -
Lease liability 20 167 216 260 512
Deferred tax liability 10 861 784 -
Total non-current liabilities 5 419 556 441 429
Current liabilities
Trade and other payables 18 2 969 833 1 484 482
Borrowings 17 1 024 736 3 869 489
Lease liability 20 192 586 125 565
Total current liabilities 4 187 155 5 479 536
Total equity and liabilities 37 068 569 22 411 212
The notes that follow in this report form part of these financial statements.
The financial statements were authorised and approved for issue by the Board
of Directors and authorised for issue on 31 August 2022.
MICHAEL RAWLINSON
Non-executive Director
31 August 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 28 February 2022
Share capital Convertible loan note reserve Accumulated deficit Warrant reserve Share-based payment reserve Foreign currency translation reserve Total Non-controlling interests Total equity
£ £ £ £ £ £ £ £ £
Total equity at 29 February 2020 20 487 239 3 770 645 (4 365 500) 78 651 559 534 (1 535 108) 18 995 461 (51 812) 18 943 649
Loss for the year - - (5 694 962) - - - (5 694 962) (100 921) (5 795 883)
Other comprehensive income / (loss) - - - - (531) (526 231) (526 762) 1 390 (525 372)
Transactions with owners:
Share-based payments - - - - 281 431 - 281 431 - 281 431
Issue of shares 3 774 079 - - - (96 819) - 3 677 260 - 3 677 260
Share issue costs (253 317) - - - - - (253 317) - (253 317)
Conversion of convertible loan notes 1 600 000 (1 600 000) - - - - - -
Warrants issued in the year - - - 162 480 - - 162 480 - 162 480
Warrants expired in the year - - 29 783 (29 783) - - - - -
Total equity at 28 February 2021 25 608 001 2 170 645 (10 030 679) 211 348 743 615 (2 061 339) 16 641 591 (151 344) 16 490 247
Loss for the year - - (815 645) - - - (815 645) 341 244 (474 401)
Other comprehensive income / loss - - - - 767 526 779 527 546 (6700) 520 846
Transactions with owners:
Issue of shares 13 039 102 - - - (10 000) - 13 029 102 - 13 029 102
Share issue costs (793 775) - - - - - (793 775) - (793 775)
Share-based payments - - - - 88 088 - 88 088 - 88 088
Share options exercised during the year 308 545 - 117 642 - (117 642) - 308 545 - 308 545
Warrants exercised in the year 63 150 - 18 716 (18 716) - - 63 150 - 63 150
Issue costs reclassified to retained earning - 29 355 (29 355) - - - - - -
Settlement of convertible loan note in shares 430 055 (430 055) - - - - - - -
Settlement of convertible loan note in cash - (1 769 945) - - - - (1 769 945) - (1 769 945)
Total equity at 28 February 2022 38 655 078 - (10 739 321) 192 632 704 828 (1 534 560) 27 278 657 183 200 27 461 857
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 28 February 2022
Notes Year ended Year ended
28 February 2022 28 February 2021
£ £
Cash flows from operating activities
Profit / (loss) before taxation 389 798 (5 795 883)
Adjustments for:
Fair value adjustment to customer contract 5 (137 019) (205 635)
Depreciation of property, plant and equipment 13 1 861 023 898 528
Depreciation of intangible assets 12 28 198 -
Impairment of exploration licences - 3 069 232
Share-based payments 55 793 217 407
Equity-settled transactions 66 101 618 260
Finance income (6 545) -
Finance costs 9 316 365 184 300
Changes in working capital:
Increase in receivables 15 (2 866 192) (352 953)
Increase in inventory 14 (418 556) (753 688)
Increase in payables 18 1 006 060 619 573
Net cash used in operating activities 569 064 (1 500 858)
Cash flows from investing activities
Purchase of intangible assets (1 442 774) (964 191)
Purchase of property, plant and equipment (4 543 884) (1 990 856)
Net cash used in investing activities (5 986 658) (2 955 047)
Cash flows from financing activities
Finance income 6 545 -
Finance costs 9 (224 061) (37 612)
Lease payments 20 (213 661) (128 600)
Net proceeds from issue of shares 21 12 548 248 2 796 683
Settlement of convertible loan notes 17 (1 769 945) -
Proceeds from borrowings 17 5 024 727 7 908 028
Repayment of borrowings 17 (3 907 086) (5 378 742)
Net cash generated from financing activities 11 464 767 5 159 757
Net increase in cash and cash equivalents 6 047 173 703 852
Cash and cash equivalents at the beginning of the year 1 351 200 574 600
Foreign exchange differences (32 994) 72 748
Cash and cash equivalents at the end of the year 16 7 365 379 1 351 200
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 28 February 2022
1. Corporate information and principal activities
AfriTin Mining Limited ("AfriTin") was incorporated and domiciled in Guernsey
on 1 September 2017, and admitted to the AIM market in London on 9 November
2017. The company's registered office is PO Box 282, Oak House, Hirzel Street,
St Peter Port, Guernsey GY1 3RH, and it operates from Illovo Edge Office Park,
2nd Floor, Building 3, Corner Harries and Fricker Road, Illovo, Johannesburg,
2116, South Africa.
These financial statements are for the year ended 28 February 2022 and the
comparative figures are for the year ended 28 February 2021.
The AfriTin Group comprises AfriTin Mining Limited and its subsidiaries as
noted below.
AfriTin Mining Limited ("AML") is an investment holding company and holds 100%
of Guernsey subsidiary, Greenhills Resources Limited ("GRL").
GRL is an investment holding company that holds investments in resource-based
tin and tantalum exploration companies in Namibia and South Africa. The
Namibian subsidiary is AfriTin Mining (Namibia) Pty Limited ("AfriTin
Namibia"), in which GRL holds 100% equity interest. The South African
subsidiaries are Mokopane Tin Company Pty Limited ("Mokopane") and Pamish
Investments 71 Pty Limited ("Pamish 71"), in which GRL holds 100% equity
interest.
AfriTin Namibia owns an 85% equity interest in Uis Tin Mining Company Pty
Limited ("UTMC"). The minority shareholder in UTMC is The Small Miners of Uis
who own 15%.
Mokopane owns a 74% equity interest in Renetype Pty Limited ("Renetype") and a
50% equity interest in Jaxson 641 Pty Limited ("Jaxson").
The minority shareholders in Renetype are African Women Enterprises
Investments Pty Limited and Cannosia Trading 62 CC who own 10% and 16%
respectively.
The minority shareholder in Jaxson is Lerama Resources Pty Limited who owns a
50% interest in Jaxson. Pamish 71 owns a 74% interest in Zaaiplaats Mining Pty
Limited ("Zaaiplaats"). The minority shareholder in Zaaiplaats is Tamiforce
Pty Limited who owns 26%.
AML holds 100% of Tantalum Investment Pty Limited, a company holding Namibian
exploration licenses EPL5445 and EPL5670 for the exploration of tin, tantalum
and associated minerals.
As at 28 February 2022, the AfriTin Group comprised:
Company Equity holding and voting rights Country of incorporation Nature of activities
AfriTin Mining Limited N/A Guernsey Ultimate holding company
Greenhills Resources Limited(1) 100% Guernsey Holding company
AfriTin Mining Pty Limited(1) 100% South Africa Group support services
Tantalum Investment Pty Limited(1) 100% Namibia Tin & tantalum exploration
AfriTin Mining (Namibia) Pty Limited(2) 100% Namibia Tin & tantalum operations
Uis Tin Mining Company Pty Limited(3) 85% Namibia Tin & tantalum operations
Mokopane Tin Company Pty Limited(2) 100% South Africa Holding company
Renetype Pty Limited(4) 74% South Africa Tin & tantalum exploration
Jaxson 641 Pty Limited(4) 50% South Africa Tin & tantalum exploration
Pamish Investments 71 Pty Limited(2) 100% South Africa Holding company
Zaaiplaats Mining Pty Limited(5) 74% South Africa Property owning
(1) Held directly by AfriTin Mining Limited
(2) Held by Greenhills Resources Limited
(3) Held by AfriTin Mining (Namibia) Pty Limited
(4) Held by Mokopane Tin Company Pty Limited
(5) Held by Pamish Investments 71 Pty Limited
These financial statements are presented in Pound Sterling (£) because that
is the currency in which the Group has raised funding on the AIM market in the
United Kingdom. Furthermore, Pound Sterling (£) is the functional currency of
the ultimate holding company, AfriTin Mining Limited.
The Group's key subsidiaries, AfriTin Namibia and UTMC, use the Namibian
Dollar (N$) as their functional currency. The year-end spot rate used to
translate all Namibian Dollar balances was £1 = N$20.33 and the average rate
for the financial year was £1 = N$20.27.
2. Significant accounting policies
Basis of accounting
The Consolidated Financial Statements have been prepared in accordance with UK
Adopted International Accounting Standards. The Consolidated Financial
Statements also comply with the AIM Rules for Companies, NSX Listing
Requirements and the Companies (Guernsey) Law, 2008 and show a true and fair
view.
The significant accounting policies applied in preparing these Consolidated
Financial Statements are set out below. These policies have been consistently
applied throughout the period. The Consolidated Financial Statements have been
prepared under the historical cost convention except as where stated.
Going concern
The Group closely monitors and manages its liquidity risk and day to day
working capital requirements. Cash forecasts are regularly produced,
considering the global logistical challenges around sales to ensure sufficient
cash within the Group to meet its obligations. The Group runs sensitivities
for different scenarios, including but not limited to changes in commodity
prices and exchange rates. The Group also routinely monitors the covenants
associated with the borrowing facilities and proactively engages with Standard
Bank, the lender, where there is any risk. Based on the year to date
production profile and latest forecast, the group will be able to meet its
covenant obligations for the testing period February 2023. For the purpose of
assessing going concern, the directors have prepared forecasts to December
2023.
The main sensitivities considered as part of management's going concern
assessment are production, tin prices, exchange rates and committed expansion
capital. The Group's ability to achieve its future production profile is
predicated on the successful completion of the Uis phase 1 expansion which
will increase the production capability up to 1,200 tonnes of tin concentrate
per annum.
Based on the forecasts, additional funding is likely to be required within the
next 12 months for the purpose of working capital and capital projects. The
Group believes it has several options available to it, including but not
limited to, use of the overdraft facility, restructuring of the debt,
additional debt or equity, cost reduction strategies as well as potential
offtake arrangements. Management is already at an advanced stage of securing
bank funding and other finance for the next 12 months, with a primary
allocation to capital expansion projects and by-product pilot facilities.
Accordingly, the Directors continue to adopt the going concern basis in
preparing the consolidated financial information.
Notwithstanding the above, these circumstances indicate that a material
uncertainty exists that may cast significant doubt on the Group's ability to
continue as a going concern and, therefore, that the Group may be unable to
realise its assets or settle its liabilities in the ordinary course of
business. As a result of their review, and despite the aforementioned material
uncertainty, the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational existence
for the going concern assessment period and have therefore used the going
concern basis in preparing these consolidated financial statements.
Basis of consolidation
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
Inter-company transactions, balances and unrealised gains/losses on
transactions between Group companies are eliminated. When necessary, amounts
reported by subsidiaries have been adjusted to conform with the Group's
accounting policies.
Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
present ownership interests entitling their holders to a proportionate share
of the net assets upon liquidation are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income
is attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the management
steering committee that makes strategic decisions.
Foreign currencies
Functional and presentational currency
The individual financial statements of each Group company are prepared in the
currency of the primary economic environment in which that company operates
(its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each group company are
expressed in Pound Sterling, which is the functional currency of the Company,
and the presentation currency for the consolidated financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation date where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when
deferred in other comprehensive income as qualifying cash flow hedges and
qualifying net investment hedges.
Group companies
The results and financial position of all the Group entities (none of which
has the currency of a hyper-inflationary economy) that have a financial
currency different from the presentation currency are translated into the
presentation currency as follows:
i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
ii) income and expenses for each income statement are translated at
average exchange rates, unless the average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of the
transactions; and
iii) all resulting exchange differences are recognised in other
comprehensive income.
Revenue recognition
IFRS 15 "Revenue from Contracts with Customers" establishes a comprehensive
framework for determining whether, how much, and when revenue is recognised.
The core principle is that an entity recognises revenue to depict the transfer
of promised goods and services to the customer of an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods or services. The Group generates revenue from its primary activity, the
sale of tin concentrate, and it continued to generate immaterial revenue from
the sale of sand.
The Group produces and sells tin concentrate from its Uis Tin Mine in Namibia.
Once concentrate has been produced at the Uis plant, it is sampled, bagged and
loaded into containers for transportation to the port in Walvis Bay for
shipment.
The company currently has an offtake agreement with its customer, Thailand
Smelting and Refining Company ("Thaisarco"), which was signed on 1 August
2019. This contract was renewed on 1 December 2020 for a further 3 years. As
per the contract, Thaisarco pays AfriTin on the basis of actual tin content in
the concentrate per Thaisarco's analysis, at the London Metal Exchange price
less treatment charges, unit deductions and impurity charges.
The Group can elect for the sale of each shipment to occur under the following
terms:
Option 1: Standard provisional payment
Thaisarco shall pay 90% provisional payment on the basis of actual tin content
as per their own analysis. Payment is to be made within 10 working days after
the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco
when the concentrate arrives at the Songkhla Port in Thailand.
Option 2: Provisional payment option against original bill of lading
Thaisarco shall pay 90% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original bill of lading. Title
shall pass to Thaisarco when UTMC receives the 90% provisional payment.
Option 3: Provisional payment option against warehouse holding certificate
Thaisarco shall pay 70% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original warehouse holding
certificate. Thaisarco shall pay an additional 20% provisional payment upon
presentation of the original bill of lading. Title shall pass to Thaisarco
when UTMC receives the 70% provisional payment.
During the financial year, the Group concluded sales under Option 3.
Revenue is recognised at a point in time when title and control of the goods
has transferred to the customer, which is when the concentrate arrives at
Songkhla Port in Thailand under Option 1 or when provisional payment is
received by UTMC under Option 2 and Option 3. There is limited judgement
needed to identify the point at which control passes: once physical delivery
of the products to the agreed location has occurred, the Group no longer has
physical possession of the products. At this point, the Group will have a
present right to payment and retains none of the significant risks and rewards
of the goods in question.
Pricing for the provisional payment is determined by the published tin price
on the date that title and control passes. Pricing for the final payment shall
be declared within 30 market days after arrival at Thaisarco's works. The
lower of the cash price and the 3-month forward-looking price is used in these
calculations.
Variable consideration relating to final assay results is constrained in
estimating revenue unless it is highly probable that there will not be a
future reversal in the amount of revenue recognised when the final assay has
been determined.
Revenue from the sale of sand is recognised at the point in time when control
of the goods has transferred to the customer, which is when the sand leaves
the Group's premises. At this point, the Group will have a present right to
payment and retains none of the significant risks and rewards of the goods in
question.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax charge is based on taxable profit for the period. The Group's
liability for current tax is calculated by using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the "balance sheet liability" method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax is calculated at the tax rates that
are expected to apply to the year when the asset is realised or the liability
is settled based upon rates enacted and substantively enacted at the reporting
date. Deferred tax is charged or credited to profit or loss, except when it
relates to items credited or charged to other comprehensive income, in which
case the deferred tax is also dealt with in other comprehensive income.
Intangible exploration and evaluation assets
All costs associated with mineral exploration and evaluation are capitalised
as intangible exploration and evaluation assets and subsequently measured at
cost. These include the costs of: acquiring prospecting licenses; mineral
production licenses and annual license fees; rights to explore; topographical,
geological, geochemical and geophysical studies; and exploratory drilling,
trenching, sampling and other activities to evaluate the technical feasibility
and commercial viability of extracting a mineral resource.
If an exploration project is successful, the related expenditures will be
transferred at cost to property, plant and equipment and amortised over the
estimated life of the commercial ore reserves on a unit of production basis
(with this charge being taken through profit or loss). Where capitalised costs
relate to both development projects and exploration projects, the Group
reclassifies a portion of the costs which are considered attributable to
near-term production based on a percentage of the ore resource expected to be
mined in the relevant phase. Where a project does not lead to the discovery of
commercially viable quantities of mineral resources and is relinquished,
abandoned, or is considered to be of no further commercial value to the Group,
the related costs are recognised in the income statement.
The recoverability of deferred exploration costs is dependent upon the
discovery of economically viable ore reserves, the ability of the Group to
obtain necessary financing to complete the development of ore reserves and
future profitable production or proceeds from the extraction or disposal
thereof.
Impairment of exploration and evaluation assets
Intangible exploration and evaluation assets are reviewed regularly for
indicators of impairment following the guidance in IFRS 6 "Exploration for and
Evaluation of Mineral Resources" and tested for impairment where such
indicators exist.
In accordance with IFRS 6, the Group considers the following facts and
circumstances in their assessment of whether the Group's exploration assets
may be impaired:
· whether the period for which the Group has the right to explore
in a specific area has expired during the period or will expire in the near
future, and is not expected to be renewed; or
· whether substantive expenditure on further exploration for and
evaluation of mineral resources in a specific area is neither budgeted for nor
planned for; or
· whether exploration for and evaluation of mineral resources in a
specific area have not led to the discovery of commercially viable deposits
and the Group has decided to discontinue such activities in the specific area;
or
· whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying amount of
the exploration and evaluation assets is unlikely to be recovered in full from
successful development or by sale.
If any such facts or circumstances are noted, the Group, as a next step,
performs an impairment test in accordance with the provisions of IAS 36
"Impairment of Assets". In such circumstances, the aggregate carrying value of
the mining exploration and evaluation assets is compared to the expected
recoverable amount of the cash-generating unit. The recoverable amount is the
higher of value in use and the fair value less costs to sell.
Share capital and reserves
i) Warrant reserve
The warrants issued by the Company are recorded at fair value on initial
recognition net of transaction costs. The fair value of warrants granted is
recognised as an expense or as share issue costs based on their nature, with a
corresponding increase in equity. The fair value of the warrants granted is
measured using the Black Scholes valuation model, taking into account the
terms and conditions under which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of warrants
that vest.
ii) Convertible loan note reserve
The proceeds received on issue of the Group's convertible loan notes are
allocated into their liability and equity components based on the terms of the
agreement.
The Group takes into account:
· whether there is a contractual obligation to settle in cash;
· whether there is a contractual obligation to issue a variable
number of shares; and
· whether the instrument's book value is variable.
Where none of the above criteria are met, the convertible loan notes are
allocated as equity.
iii) Share-based payment reserve
Where equity-settled share options are awarded to directors or employees, the
fair value of the options at the date of grant is charged to the statement of
comprehensive income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the statement of comprehensive
income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
statement of comprehensive income is charged with the fair value of goods and
services received.
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated
depreciation.
Depreciation is provided at rates calculated to write off the cost less the
estimated residual value of each asset over its expected useful economic life.
The applicable rates are:
· The mining assets are depreciated using the units of production
method from the point that commercial production was achieved. This reflects
the production activity in the period as a proportion of the total mining
reserve. Where the units of production method is used, the assets are
depreciated based on a rate determined by the tonnes of ore processed divided
by the estimate of the mineral reserve.
· Short-lived assets which are used in the mining and processing
plant are depreciated over a period of between one and ten years.
· Right-of-use assets are depreciated over the period of the lease
contract.
· Computer equipment is depreciated over three years.
· Furniture is depreciated over five years.
· Vehicles are depreciated over four years.
· Mobile equipment is depreciated over ten years.
Land and mining assets under construction are not depreciated.
The estimated useful lives, residual values and depreciation methods are
reviewed at each year end and adjusted if necessary.
Gains or losses on disposal are included in profit or loss.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Mining asset - stripping
In open pit mining operations, it is necessary to incur costs to remove
overburden and other mine waste materials in order to access the ore body
("stripping costs"). During the development of a mine, stripping costs are
capitalised and included in the carrying amount of the related mining
property. During the production phase of a mine, stripping costs will be
recognised as an asset only if the following conditions are met:
· It is probable that the future economic benefit (improved access
to the ore body) associated with the stripping activity will flow to the
entity;
· The entity can identify the component of the ore body (mining
phases) for which access has been improved; and
· The costs relating to the stripping activity associated with that
component can be measured reliably.
Stripping costs incurred and capitalised during the development and production
phase are depleted using the unit-of-production method over the reserves and,
in some cases, a portion of resources of the area that directly benefit from
the specific stripping activity. Costs incurred for regular waste removal that
do not give rise to future economic benefits are considered as costs of sales
and included in operating expenses.
Right-of-use asset
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset, for a period of time, in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses whether:
· the contract involves the use of an identified asset. The asset
may be specified explicitly or implicitly and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If
the supplier has a substantive substitution right, then the asset is not
identified;
· the Group has the right to obtain substantially all of the
economic benefits from use of the asset throughout the period of use; and
· the Group has the right to direct the use of the asset. The Group
has the right when it has the decision-making rights that are most relevant to
changing how and for what purposes the asset is used. In rare cases where the
decision about how and for what purposes the assets is used is predetermined,
the Group has the right to direct the use of the asset if either:
- the Group has the right to operate the asset; or
- the Group designed the asset in a way that predetermines how and
for what purposes it will be used.
At inception or on reassessment of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of its relative stand-alone price.
The right-of-use asset is initially measured at the present value of the
remaining lease payments, discounted using the incremental borrowing rate.
The right-of-use asset is subsequently depreciated using the straight-line
method from the commencement date to the end of the lease term. In addition,
the right-of-use asset is annually assessed for impairment and will be
adjusted for certain re-measurements of the lease liability.
Impairment of property, plant and equipment
At each statement of financial position date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss, if any. Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible
impairment in a cash-generating unit, the recoverability of the net book value
relating to that unit is assessed by comparison with the estimated discounted
future cash flows based on management's expectations of future commodity
prices and future costs.
The recoverable amount is determined on the fair value less cost to develop
basis. In assessing the recoverable amount, the expected future post-tax cash
flows from the asset are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. The Life of Mine ("LoM") plan is
the approved management plan at the reporting date for ore extraction and its
associated capital expenditure. The capital expenditure included in the
impairment model does not include capital expenditure to enhance the asset
performance outside of the existing LoM plan. The ore tonnes included in the
LoM plan are those as per the Reserve Statement, which management considers
economically viable.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried
at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease to the extent that it reverses gains previously
recognised in other comprehensive income.
Where conditions giving rise to impairment subsequently reverse, the effect of
the impairment charge is also reversed as a credit to the income statement,
net of any depreciation that would have been charged since the impairment.
Inventories
Inventory consists of tin concentrate on hand, the run of mine stockpile, and
consumable items.
The tin concentrate is carried at the lower of cost or net realisable value.
The cost of the concentrate includes direct materials, direct labour,
depreciation, and overhead costs relating to processing and engineering
activities. Net realisable value is the estimated selling price net of any
estimated selling costs in the ordinary course of business.
The run of mine stockpile is carried at the lower of cost or net realisable
value. The cost of the stockpile includes direct materials, direct labour,
depreciation, and overhead costs relating to mining activities. Net realisable
value is the estimated selling price net of necessary processing costs and any
estimated selling costs in the ordinary course of business.
Consumables are valued at the lower of cost (determined on the weighted
average basis) and net realisable value. Cost comprises all costs of purchase,
costs of conversion, and other costs incurred in bringing the inventories to
their present location and condition. Replacement cost is used as the best
available measure of net realisable value.
Financial instruments
Financial instruments are recognised in the Group's statement of financial
position when the Group becomes a party to the contractual provisions of the
instrument.
Financial assets
The Company classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at amortised cost, and
· those to be measured subsequently at fair value through profit or
loss.
The classification depends on the Company's business model for managing the
financial assets and the contractual terms of the cash flows.
Financial assets are classified as at amortised cost only if the asset is held
to collect the contractual cash flows and the contractual terms of the asset
give rise to cash flows that are solely payments of principal and interest. At
subsequent reporting dates, financial assets at amortised cost are measured at
amortised cost less any impairment losses.
For assets measured at fair value, gains and losses will be recorded in profit
or loss.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses,
defined as the difference between the contractual cash flows and the cash
flows that are expected to be received, associated with its assets carried at
amortised cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk. For trade receivables only,
the simplified approach permitted by IFRS 9 "Financial Instruments" is
applied, which requires expected lifetime losses to be recognised from initial
recognition of the receivables. Losses are recognised in the income statement.
When a subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through the income statement.
To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due.
The expected loss rates are based on the payment profiles of sales over a
period of 24 months before 28 February 2022 and the corresponding historical
credit losses experienced within this period. The historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of our customer to settle the receivables
balance.
Trade and other receivables
Trade and other receivables are initially recognised at the fair value of the
consideration receivable less any impairment.
Trade and other receivables are subsequently measured at amortised cost or at
fair value through profit or loss.
Under its offtake arrangement, the Group receives a provisional payment upon
satisfaction of its performance obligations based on the tin price at that
date. This occurs prior to the final price determination and the Group then
subsequently receives the difference between the final price and quantity and
the provisional payment. As a result of the pricing structure, the instrument
is classified at fair value through profit or loss and changes in fair value
are recorded as other revenue.
Trade and other receivables are classified as a current asset as these are
expected to be settled within a year.
Cash and cash equivalents
Cash and cash equivalents comprise cash at hand and deposits on a term of not
greater than three months.
Financial liabilities
Financial liabilities include trade and other payables, borrowings, and other
longer-term financing, classified into one of the following categories:
· Fair value through profit or loss: The liabilities are carried in
the statement of financial position at fair value with changes in fair value
recognised in the income statement. The Group currently has no financial
liabilities carried at fair value through profit or loss.
· Financial liabilities carried at amortised cost
Trade and other payables
Trade and other payables are initially recognised at fair value and are
subsequently measured at amortised cost, calculated using the effective
interest rate method.
Borrowings
Interest-bearing debt is initially recorded at fair value less transaction
costs, and is subsequently measured at amortised cost, calculated using the
effective interest rate method.
Borrowing costs are expensed as incurred except where they relate to the
financing of construction or development of qualifying assets in which case
they are capitalised up to the date when the qualifying asset is ready for its
intended use.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised when:
· The rights to receive cash flows from the asset have expired; or
· The company has transferred its right to receive cash flows from
the asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party, and either
- The company has transferred substantially all the risks and rewards of the
asset, or
- The company has neither transferred nor retained substantially all the
risks and rewards of the asset, but has transferred control of the asset.
A financial liability (in whole or in part) is derecognised when the Group has
extinguished its contractual obligations, it expires, or it is cancelled.
Any gain or loss on derecognition is taken to the profit or loss.
Rehabilitation provision
The net present value of estimated future rehabilitation costs is provided for
in the financial statements and capitalised within property, plant and
equipment on initial recognition. Rehabilitation will generally occur on or
after closure of a mine.
Initial recognition is at the time that the construction or disturbance
occurs, and thereafter as and when additional construction or disturbances
take place. The estimates are reviewed annually to take into account the
effects of inflation and changes in the estimated cost of the rehabilitation
works, and are discounted using rates that reflect the time value of money.
Annual increases in the provision due to the unwinding of the discount are
recognised in the statement of comprehensive income as a finance cost. The
present value of additional disturbances and changes in the estimate of the
rehabilitation liability are recorded to mining assets against an
increase/decrease in the rehabilitation provision.
The rehabilitation asset is amortised over the life of the mine once
commercial production commences. Rehabilitation projects undertaken, included
in the estimates, are charged to the provision as incurred. Environmental
liabilities, other than rehabilitation costs, which relate to liabilities
arising from specific events, are expensed when they are known, probable and
may be reasonably estimated.
Lease liability
The lease liability is initially measured at the present value of the
remaining lease payments, discounted using the interest rate implicit in the
lease. The liability is subsequently measured at amortised cost using the
effective interest rate method. Lease payments are apportioned between the
finance charges and reduction of the lease liability using the incremental
borrowing rate to achieve a constant rate of interest on the remaining balance
of the liability.
Critical accounting estimates and judgements
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates. In particular, information about
significant areas of estimation uncertainty considered by management in
preparing the financial statements is provided below.
Estimates and judgements are continually evaluated. Revisions to accounting
estimates are recognised in the year in which the estimates are revised if the
revision affects only that year, or in the year of revision and in future
years if the revision affects both current and future years.
i) Going concern and liquidity
Significant estimates were required in forecasting cash flows used in the
assessment of going concern including tin and tantalum prices, the levels of
production, operating costs, and capital expenditure requirements. For further
details, refer to going concern considerations laid out earlier in Note 2.
ii) Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation obligations is
complex and requires management to make estimates and judgements, as most of
the obligations will be fulfilled in the future and contracts and laws are
often not clear regarding what is required. The resulting provisions (see Note
19) are further influenced by changing technologies, and by political,
environmental, safety, business, and statutory considerations.
The Group's rehabilitation provision is based on the net present value of
management's best estimates of future rehabilitation costs. Judgement is
required in establishing the disturbance and associated rehabilitation costs
at period end, timing of costs, discount rates, and inflation. In forming
estimates of the cost of rehabilitation which are risk adjusted, the Group
assessed the Environmental Management Plan and reports provided by internal
and external experts. Actual costs incurred in future periods could differ
materially from the estimates, and changes to environmental laws and
regulations, life of mine estimates, inflation rates, and discount rates could
affect the carrying amount of the provision.
The carrying amount of the rehabilitation obligations for the Group at 28
February 2022 was £295 151 (2021: £180 917). In determining the amount
attributable to the rehabilitation liability, management used a discount rate
of 10% (2021: 12.8%), an inflation rate of 5% (2021: 6%) and an estimated
mining period of 17 years (2021: 18 years), being the Phase 1 expansion life
of mine. A 1% increase or decrease in the inflation rate used would result in
a £52 848 difference in the liability. A 2% increase or decrease in the
discount rate used would result in a £79 345 difference in the liability.
iii) Impairment indicator assessment for exploration and evaluation
assets
Determining whether an exploration and evaluation asset is impaired requires
an assessment of whether there are any indicators of impairment, including
specific impairment indicators prescribed in IFRS 6: Exploration for and
Evaluation of Mineral Resources. If there is any indication of potential
impairment, an impairment test is required based on value in use of the asset.
The valuation of intangible exploration assets is dependent upon the discovery
of economically recoverable deposits which, in turn, is dependent on future
tin prices, future capital expenditures, environmental and regulatory
restrictions, and the successful renewal of licences. The Group considers the
South African exploration and evaluation assets to be non-core as it continues
to primarily focus on developing its Namibian assets. Accordingly, the
capitalised exploration and evaluation expenditure relating to the South
African assets was impaired to nil in the prior year on the basis that the
Group did not intend on incurring any further expenditure on its South African
licences. The directors have concluded that there are no indications of
impairment in respect of the carrying value of Namibian intangible assets at
28 February 2022 based on planned future development of the Namibian projects,
and current and forecast tin prices. Exploration and evaluation assets are
disclosed fully in Note 12.
iv) Impairment assessment for property, plant and equipment
Management have reviewed the Uis mine for indicators of impairment and have
considered, among other factors, the operations to date at the Uis Tin Mine,
the Phase 1 Stage II expansion of the Uis operations, forecast commodity
prices, and market capitalisation of the Group. In undertaking the indicator
review, management have also reviewed the underlying LoM valuation model for
Uis and have concluded that no indicators of impairment have been noted at
year end. The LoM valuation model is on a fair value less cost to develop
basis and includes assessments of different scenarios associated with capital
development and expansion opportunities.
The forecasts required estimates regarding forecast tin prices, ore resources
and production, and operating and capital costs. The discounted cash flows use
a discount rate of 8% post tax nominal. Under the base case forecast using a
forecast tin price of $35 940 falling to $31 339 by 2025, the forecast
indicates headroom as at 28 February 2022.
As an additional test, management performed certain sensitivity calculations.
These included raising the discount rate to 12% post tax nominal, lowering the
forecast tin prices by 5%, lowering plant recovery by 5% and increasing
operating costs by 10%. In each of these circumstances, the forecast indicated
headroom as at 28 February 2022.
v) Depreciation
Judgement is applied in making assumptions about the depreciation charge for
mining assets when using the unit-of-production method in estimating the ore
tonnes held in reserves. The relevant reserves are those included in the
current approved LoM plan which relates to the Phase 1 expansion. Judgement is
also applied when assessing the estimated useful life of individual assets and
residual values. The assumptions are reviewed at least annually by management
and the judgement is based on consideration of the LoM plan, as well as the
nature of the assets. The reserve assumptions included in the LoM plan are
evaluated by management.
vi) Capitalisation and depreciation of waste stripping
The Group has elected to capitalise the costs of waste stripping activities as
these are necessary to allow improved access to the ore and, therefore, will
result in future economic benefits. The costs of drilling, blasting and load
& haul of waste material is capitalised until such time that the
underlying ore is used in production. These costs are then expensed on a
proportional basis. The capitalised costs are included in the mining asset in
property, plant & equipment and are expensed back into the statement of
comprehensive income as depreciation. Capitalisation of waste stripping
requires the Group to make judgements and estimates in determining the amounts
to be capitalised. These judgements and estimates include, amongst others, the
expected life of mine stripping ratio for each separate open pit, the
determination of what defines separate pits, and the expected volumes to be
extracted from each component of a pit for which the stripping asset is
depreciated.
vii) Determination of ore reserves
The estimation of ore reserves primarily impacts the depreciation charge of
evaluated mining assets, which are depreciated based on the quantity of ore
reserves. Reserve volumes are also used in calculating whether an impairment
charge should be recorded where an impairment indicator exists.
The Group estimates its ore reserves and mineral resources based on
information, compiled by appropriately qualified persons, relating to
geological and technical data on the size, depth, shape, and grade of the ore
body and related to suitable production techniques and recovery rates. The
estimate of recoverable reserves is based on factors such as tin prices,
future capital requirements and production costs, along with geological
assumptions and judgements made in estimating the size and grade of the ore
body.
There are numerous uncertainties inherent in estimating ore reserves and
mineral resources. Consequently, assumptions that are valid at the time of
estimation may change significantly if or when new information becomes
available.
viii) Valuation of inventories
Judgement is applied in making assumptions about the value of inventories and
inventory stockpiles, including tin prices, plant recoveries and processing
costs, to determine the extent to which the Group values inventory and
inventory stockpiles. The Group uses forecast tin prices to determine the net
realisable value of the ROM stockpile and the tin concentrate inventory on
hand at year end. Inventory stockpiles are measured using actual mining and
processing costs.
ix) Determining the lease term
In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise, or not to
exercise, an extension option. Extension options are only included in the
lease term where the company is reasonably certain that it will extend or
will not terminate the lease when the lease expires. For all leases, the most
relevant factors include:
· Historical lease durations;
· Costs incurred in replacing the leased asset;
· Possible business disruption due to replacing the leased asset;
· Likelihood of extension of the lease - if there are significant
penalties to terminate, then it's reasonably certain that the Group will
extend.
The lease term is reassessed on an ongoing basis, especially when the option
to extend becomes exercisable, or on occurrence of a significant event or a
significant change in circumstances which affects this assessment, and that is
within the control of the Group.
x) Determining the incremental borrowing rate to measure lease
liabilities
The interest rate implicit in leases is not available, therefore the Group
uses the relevant incremental borrowing rate (IBR) to measure its lease
liabilities. The IBR is estimated to be the interest rate that the Group would
pay to borrow:
· over a similar term;
· with similar security;
· the amount necessary to obtain an asset of a similar value to the
right of use asset; and
· in a similar economic environment.
The IBR, therefore, is considered to be the best estimate of the incremental
rate and requires management's judgement as there are no observable rates
available.
xi) Determining the fair value of trade receivables classified at fair
value through profit or loss
The consideration receivable in respect of certain sales for which performance
obligations have been satisfied at year end and for which the Group has
received prepayment under the terms of the offtake agreement, remain subject
to pricing adjustments with reference to market prices at the date of
finalisation. Under the Group's accounting policies, the fair value of the
consideration is determined, and the remaining receivable is adjusted to
reflect fair value. Management estimated the forward price based on the LME
3-month tin price that is expected when the open shipments will be finalised.
As at 28 February 2022 the Group recognised a receivable at fair value through
profit or loss of £812 594 (2021: £531 583).
3. Adoption of new and revised standards
A number of new and amended standards and interpretations issued by IASB have
become effective for the first time for financial periods beginning on (or
after) 1 March 2021 and have been applied by the Group in these financial
statements. None of these new and amended standards and interpretations had a
significant effect on the Group because they are either not relevant to the
Group's activities or require accounting which is consistent with the Group's
current accounting policies.
Accounting standards and interpretations not applied
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods and which have not been adopted early.
4. Segmental reporting
The reporting segments are identified by the management steering committee
(who are considered to be the chief operating decision-makers) by the way that
the Group's operations are organised. As at 28 February 2022, the Group
operated within two operating segments: tin exploration and mining activities
in Namibia and South Africa.
Segment results
The following is an analysis of the Group's results by reportable segment.
South Africa Namibia Total
£ £ £
Year ended 28 February 2022
Results
Revenue 34 444 13 580 600 13 615 045
Associated costs (30 843) (10 693 637) (10 724 480)
Segmental profit 3 601 2 886 963 2 890 564
Year ended 28 February 2021
Results
Revenue 34 863 4 950 244 4 985 107
Associated costs (8 786) (5 715 954) (5 724 740)
Impairment of exploration licence (3 069 232) - (3 069 232)
Segmental loss (3 043 155) (765 710) (3 808 865)
The reconciliation of segmental gross loss to the Group's loss before tax is
as follows:
Year ended Year ended
28 February 2022 28 February 2021
£ £
Segmental profit / (loss) 2 890 564 (3 808 865)
Unallocated costs (2 252 700) (1 802 718)
Other income 61 755 -
Finance income 6 545 -
Finance costs (316 365) (184 300)
Profit / (loss) before tax 389 798 (5 795 883)
Unallocated costs are mainly comprised of corporate overheads and costs
associated with being listed in London.
Other segmental information
South Africa Namibia Total
£ £ £
As at 28 February 2022
Intangible assets - exploration and evaluation 12 565 5 043 165 5 055 730
Other reportable segmental assets 70 564 24 119 470 24 190 033
Other reportable segmental liabilities (63 006) (4 038 840) (4 101 846)
Unallocated net liabilities - - 2 317 939
Total consolidated net assets 20 122 25 123 795 27 461 857
As at 28 February 2021
Intangible assets - exploration and evaluation 11 309 5 229 152 5 240 461
Other reportable segmental assets 76 460 15 494 907 15 571 367
Other reportable segmental liabilities (62 302) (1 651 016) (1 713 318)
Unallocated net liabilities - - (2 608 263)
Total consolidated net assets 25 467 19 073 043 16 490 247
Unallocated net assets/liabilities are mainly comprised of cash and cash
equivalents and the working capital facility which are managed at a corporate
level.
5. Revenue
Year ended Year ended
28 February 2022 28 February 2021
£ £
Revenue from the sale of tin 13 717 620 4 744 609
Revenue from the sale of sand 34 444 34 863
Total revenue from customers 13 752 064 4 779 472
Other revenue - change in fair value of (137 019) 205 635
customer contract
Total revenue 13 615 045 4 985 107
The revenue from the sale of tin and sand is recognised at the point in time
at which control transfers. Refer to Note 2 for further details.
Other revenue relates to the change in the fair value of amounts receivable
under the offtake agreement between the date of initial recognition and the
period end resulting from forecast market prices at the estimated final
pricing date. Refer to Note 2 for details of trade receivables recorded at
fair value through profit or loss.
6. Cost of sales
Year ended Year ended
28 February 2022 28 February 2021
£ £
Costs of production 8 057 083 4 531 697
Smelter charges 748 892 287 319
Logistics costs 126 086 48 578
Government royalties 370 457 120 102
9 302 518 4 987 696
7. Administrative expenses
The profit / (loss) for the year has been arrived at after charging:
Year ended Year ended
28 February 2022 28 February 2021
£ £
Staff costs 1 269 882 1 201 489
Depreciation of property, plant & equipment 221 948 275 987
Professional fees 621 379 127 902
Travelling expenses 96 956 44 793
Uis administration expenses 660 476 361 509
Auditor's remuneration 95 000 69 250
Other costs 709 022 458 832
3 674 662 2 539 762
Other costs are mainly comprised of corporate overheads necessary to run the
South African head office and the costs associated with being listed in
London.
8. Staff costs
Year ended Year ended
28 February 2020 28 February 2021
£ £
Staff costs capitalised under property, plant and 607 622 1 094 729
equipment
Staff costs capitalised under intangible assets 171 793 261 844
Staff costs recognised as administrative expenses 1 182 228 666 746
Staff costs included in cost of sales 1 317 548 285 216
Share-based payment charge capitalised under property, 18 892 45 820
plant and equipment
Share-based payment charge capitalised under 6 076 18 204
intangible assets
Share-based payment charge recognised as administrative expenses 80 253 207 407
Share issue charge 7 401 327 336
3 391 813 2 907 301
Key management personnel have been identified as the Board of Directors, Frans
van Daalen (Chief Operating Officer of the Group) and Robert Sewell (Chief
Financial Officer of the Group). Details of key management remuneration are
shown in Note 27.
The average number of staff during the period was 165 (2021: 108) with an
average total cost per employee for the year of £20 510 (2021: £26 862).
Emoluments of £183 712 including £13 258 of share options and shares to be
issued (2021: £289 104 including £172 323 of share options and shares to be
issued) were paid in respect of the highest-paid director during the year.
9. Finance cost
Year ended Year ended
28 February 2022 28 February 2021
£ £
Interest on lease liability 42 630 39 691
Interest on environmental rehabilitation liability 12 080 7 593
Bank interest 102 655 31 696
Interest on loan notes 68 836 49 863
Amortisation of warrant charge 37 594 49 541
Other interest 52 570 5 916
316 365 184 300
10. Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
Year ended Year ended
28 February 2022 28 February 2021
Factors affecting tax for the year: £ £
The tax assessed for the year at the Guernsey corporation
tax charge rate of 0%, as explained below:
Profit / (loss) before taxation 389 798 (5 795 883)
Profit/ (loss) before taxation multiplied by the Guernsey corporation - -
tax charge rate of 0%
Effects of:
Differences in tax rates (overseas jurisdictions) (525 598) (549 615)
Tax losses carried forward 525 598 549 615
Movement in deferred tax (864 199) -
Tax for the year (864 199) -
Accumulated losses in the subsidiary undertakings for which there is an
unrecognised deferred tax asset are £4 290 665 (2021: £3 244 873).
11. Loss per share from continuing operations
The calculation of a basic loss per share of 0.08 pence (2021: loss per share
of 0.76 pence), is calculated using the total loss for the year attributable
to the owners of the Company of £815 645 (2021: loss of £5 694 962) and the
weighted average number of shares in issue during the period of 1 064 247 295
(2021: 749 085 933).
Due to the loss for the year, the diluted loss per share is the same as the
basic loss per share. The number of potentially dilutive ordinary shares, in
respect of share options, warrants and shares to be issued as at 28 February
2022 is 76 261 762 (2021: 86 882 728). These potentially dilutive ordinary
shares may have a dilutive effect on future earnings per share.
12. Intangible assets
Exploration and evaluation assets Computer software Total
Cost £ £ £
As at 29 February 2020 7 324 494 116 523 7 441 018
Additions for the year - other expenditure 977 797 4 598 982 395
Impairment for the year (3 069 232) - (3 069 232)
Exchange differences (108 373) (5 347) (113 720)
As at 28 February 2021 5 124 686 115 775 5 240 461
Additions for the year - other expenditure 1 577 065 - 1 577 065
Transfer to mining asset (1 058 602) - (1 058 602)
Transfer to mining asset under construction (678 467) (678 467)
Exchange differences 91 047 4 397 95 443
As at 28 February 2022 5 055 729 120 172 5 175 901
Exploration and evaluation assets Computer software Total
Accumulated Depreciation £ £ £
As at 28 February 2021 - - -
Charge for the period - 28 198 28 198
Exchange differences - (79) (79)
As at 28 February 2022 - 28 119 28 119
Exploration and evaluation assets Computer software Total
Net Book Value £ £ £
As at 28 February 2022 5 055 729 92 053 5 147 782
As at 28 February 2021 5 124 686 115 775 5 240 461
As at 28 February 2020 7 324 494 116 523 7 441 018
For the purposes of impairment testing, the intangible exploration and
evaluation assets are allocated to the Group's cash-generating units, which
represent the lowest level within the Group at which the intangible
exploration and evaluation assets are measured for internal management
purposes, which is not higher than the Group's operating segments as reported
in Note 4.
The amounts for intangible exploration and evaluation assets represent costs
incurred on active exploration projects. Amounts capitalised are assessed for
impairment indicators under IFRS 6 at each year end as detailed in the Group's
accounting policy.
During the year, the Group transferred the costs incurred on the Phase 1 Stage
II Definitive Feasibility Study (DFS) from exploration & evaluation assets
to mining asset under construction. It was determined that the project had
reached the stage of being commercially viable and technically feasible,
therefore, the transfer from intangible assets to property, plant and
equipment was deemed necessary. Demonstration of commercial viability and
technical feasibility coincided with a board decision and approval to commence
development and construction of the project. As this expansion was still being
constructed at year-end, the cost of the study was transferred to the mining
asset under construction.
Furthermore, the Group transferred the purchase price of the Uis mining
licence ML134. The pegmatites covered by this mining licence are currently
being mined at the Uis Mine. As mining activities are actively taking place
and revenue is being generated from the ore that has been mined on this
licence area, management concluded that the value of this licence must be
moved to property, plant and equipment, in the mining asset category.
The Group considers the South African exploration and evaluation assets to be
non-core as it continues to primarily focus on developing its Namibian assets.
Accordingly, the capitalised exploration and evaluation expenditure relating
to the South African assets of £3.069m was impaired to nil in the prior year
on the basis that the Group does not intend to incur any further expenditure
on its South African licences.
The directors have concluded that there are no indicators of impairment in
respect of the carrying value of the Namibian exploration and evaluation
assets at 28 February 2022 based on planned future development of the projects
and current and forecast tin prices.
13. Property, plant and equipment
Land Mining asset under construction Mining asset Mining asset - Stripping Decommissioning asset Right-of-use Computer Equipment Furniture Vehicles Mobile equipment Total
Asset (crane)
Cost
As at 29 February 2020 12 438 12 000 929 - - 79 497 255 964 94 373 84 748 79 135 - 12 607 084
Additions for the year - 2 028 009 123 803 - 90 323 259 957 46 543 21 598 - - 2 570 233
Disposals for the year - - - - - - (1 955) - - - (1 955)
Transfer between categories of assets - (13 550 114) 13 550 114 - - - - - - - -
Foreign exchange differences (576) (478 824) 1 236 - (2 777) (9 250) (3 903) (3 681) (3 662) - (501 437)
As at 28 February 2021 11 862 - 13 675 153 - 167 043 506 671 135 058 102 665 75 473 - 14 673 925
Additions for the year - 2 600 997 728 150 1 335 861 95 585 129 982 73 337 72 991 - 176 273 5 213 176
Disposals for the year - - - - - - (15 891) - (12 523) - (28 414)
Transfer from exploration and evaluation asset (see note 11) - 678 467 1 058 602 - - - - - - - 1 737 069
Foreign exchange differences 450 304 389 147 863 (3 733) 6 076 18 877 4 968 3 674 2 901 (493) 484 972
As at 28 February 2022 12 312 3 583 853 15 609 768 1 332 128 268 704 655 530 197 472 179 330 65 851 175 780 22 080 728
Accumulated Depreciation
As at 29 February 2020 - - - - 53 887 40 339 18 610 26 380 139 216
Charge for the year - - 717 864 - 108 794 35 622 17 566 18 682 898 528
Foreign exchange differences - - 6 118 - (1 407) (1 528) (669) (1 034) 1 480
As at 28 February 2021 - - 723 982 - - 161 274 74 433 35 507 44 028 - 1 039 224
Charge for the year - - 1 115 292 489 372 9 461 165 689 40 445 28 329 9 204 3 231 1 861 023
Foreign exchange differences - - 20 501 (1 368) (26) 5 661 2 727 1 255 1 646 (9) 30 388
As at 28 February 2022 - 1 859 775 488 005 9 435 332 624 117 605 65 091 54 878 3 222 2 930 635
Net Book Value
As at 28 February 2022 12 312 3 583 853 13 749 993 844 123 259 269 322 906 79 867 114 239 10 973 172 558 19 150 092
As at 28 February 2021 11 862 - 12 951 171 167 043 345 397 60 625 67 158 31 445 13 634 701
As at 29 February 2020 12 438 12 000 929 - 79 497 202 077 54 034 66 138 52 755 12 467 868
The Uis Tin Mine reached commercial production during the previous financial
year, on 1 December 2020. Nameplate capacity (taking into account mining
volumes, plant throughput and recovery) of Stage I of Phase 1 was defined as
60 tonnes of tin concentrate at a grade of 60% tin in concentrate per month
(36 tonnes of contained tin). 63.9 tonnes of tin concentrate was produced in
November 2020 and production of 60 tonnes or more per month has been
consistently achieved subsequently. Management therefore determined that
commercial production was reached at this point. Up to this date, costs
directly related to the development of the mine were capitalised to the mining
asset.
In October 2020, the Company embarked on the Uis Phase 1 Stage II Definitive
Feasibility Study (DFS) with a view to expand the existing Phase 1 plant to
increase its nameplate production from 60 to 105 tonnes of tin concentrate per
month. This DFS has been approved by the Board, the necessary funding has been
obtained and construction has commenced to implement the expansion. All costs
associated with carrying out the study were previously capitalized as
exploration and evaluation assets under IFRS 6. During the financial year,
management performed an assessment and transferred the costs associated with
the study from exploration and evaluation assets to mining assets under
construction. It was determined that the project had reached the stage of
being commercially viable and technically feasible, therefore, the transfer
was deemed necessary. The capitalised costs of the study as well as the
construction costs of the expansion will remain in mining asset under
construction until the project has been completed.
Additions to the mining asset include capitalised costs and equipment
purchased as part of the Uis Phase 1 Continuous Improvement project as well as
the transfer of the cost of ML134 from exploration and evaluation assets to
PPE.
The Group has elected to capitalise the costs of waste stripping activities as
these are necessary to allow improved access to the ore and, therefore, will
result in future economic benefits. The costs of drilling, blasting and load
& haul of waste material is capitalised until such time that the
underlying ore is used in production.
Please refer to note 19 for further information on the right-of-use asset.
From 1 December 2020, depreciation of the mining asset commenced in accordance
with IAS 16. The total depreciation charge for the current financial year was
split between administrative expenses and cost of sales. £221 948 (2021:
£275 987) was included in administrative expenses, while the balance of
£1 639 075 (2021: £622 541) was included in cost of sales as it was a cost
that was incurred for mining and processing purposes.
14. Inventories
Year ended Year ended
28 February 2022 28 February 2021
£ £
Tin concentrate on hand 909 180 373 310
Run-of-mine stockpile 155 389 427 423
Consumables 387 364 195 965
1 451 933 996 698
15. Trade and other receivables
Year ended Year ended
28 February 2022 28 February 2021
£ £
Trade receivables 96 173 185 451
Trade receivables at fair value through profit 812 594 531 583
or loss
Other receivables 1 875 561 204 779
VAT receivables 1 169 053 266 339
3 953 382 1 188 152
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value due to their short-term nature. No allowance
for any expected credit losses against any of the trade receivables is
provided due to no history of default or non-payment from any of the Group's
customers.
Trade receivables at fair value through profit or loss relates to the change
in the fair value of trade receivables under the offtake agreement between the
date of initial recognition and the period end resulting from forecast market
prices at the estimated final pricing date.
Other receivables primarily consist of prepayments that the Group has made and
deposits that have been paid on items of equipment that are necessary for the
Phase 1 Stage II expansion.
The total trade and other receivables denominated in South African Rand amount
to £61 316 (2021: £79 888), denominated in Namibian Dollars amount to
£2 851 028 (2021: £429 819) and denominated in US Dollars amount to £812
594 (2021: 627 566).
16. Cash and cash equivalents
Year ended Year ended
28 February 2022 28 February 2021
£ £
Cash on hand and in bank 7 365 379 1 351 200
Cash and cash equivalents (which are presented as a single class of assets on
the face of the Statement of Financial Position) comprise cash at bank. The
Directors consider that the carrying amount of cash and cash equivalents
approximates their fair value. The total cash and cash equivalents denominated
in South African Rand amount to £80 463 (2021: £119 976), the total cash
and cash equivalents denominated in Namibian Dollars amount to £1 279 798
(2021: £13 156) and the total cash and cash equivalents denominated in US
Dollars amount to £3 450 626 (2021: £551 832).
17. Borrowings
Year ended Year ended
28 February 2022 28 February 2021
£ £
Standard Bank term loan facility 4 523 414 -
Standard Bank VAT facility 367 739 -
Standard Bank working capital facility 228 988
Nedbank working capital facility - 1 710 247
Loan note instrument - 2 159 242
5 120 141 3 869 489
On 18 November 2021, a term loan facility of N$90 000 000 (c. £4 428 000),
a VAT facility of N$8 000 000 (c. £394 000) and a working capital facility
of N$35 000 000 (c. £1 722 000) was entered into between the Company's
subsidiary, Uis Tin Mining Company (Pty) Ltd and Standard Bank Namibia.
The maturity date of the term loan facility is November 2026 and the capital
balance of the loan together with accrued interest will be repaid in quarterly
instalments over the next 5 years. Interest is charged on the outstanding
capital balance of the loan at a rate of 3-month JIBAR plus a margin of 4.5%.
The Group is required to meet the following covenants as part of the term loan
facility agreement:
· EBITDA ÷ total interest must not be lower than 4.5 times
· Total debt ÷ EBITDA must not exceed 4 times in year 1, 3.5 times
in year 2 and 3 times thereafter
· Free cash flow before Debt Service Cover ÷ Principal and
Interest Senior Debt Service Payments must not be lower than 1.3 times
· Free cash flow before Debt Service Cover + Total Cash Collateral
÷ Principal and Interest Senior Debt Service Payments must not be lower than
2 times
The Group met all the above covenant requirements at 28 February 2022.
The VAT facility is secured by assessed/audited VAT returns (refunds) which
have not been paid by Namibia Inland Revenue. Standard Bank Namibia provides a
facility amounting to the unpaid refunds. Any drawdowns against this facility
are repaid to the bank upon receipt of cash from Namibia Inland Revenue.
The VAT facility and the working capital facility have no fixed maturity date,
but are both renewed on an annual basis. Interest accrues on these facilities
at the Namibian prime rate less 1%.
Standard Bank Namibia have provided a N$ 4 117 500 (c. £195 000) guarantee
to the Namibia Power Corporation Pty Limited in relation to a deposit for the
supply of electrical power. As a result of the guarantee provided by Standard
Bank, no cash was paid over for the deposit.
The full working capital facility that was previously held with Nedbank
Namibia was repaid during the year as the Group's facilities were moved over
to Standard Bank.
On 5 May 2020, £2 050 000 financing was secured by way of a new loan note
facility. The notes, which were issued in tranches of £50 000, had an
interest rate of 10% per annum which was accrued and payable in full on
redemption. The notes had a 12-month term and were repaid along with the
accrued interest in May 2021.
Reconciliation of net cash flow to movement in borrowings
Balance as at 29 February 2020 1 230 961
Incoming cash flows
Proceeds from working capital facility 5 858 028
Proceeds from loan note instrument 2 050 000
Outgoing cash flows
Repayment of working capital facility (5 347 044)
Interest paid on working capital facility (31 696)
Non-cash flows
Interest accrued on loan note instrument 146 836
Warrants issued during the year (162 480)
Amortisation of warrant charge 124 886
Balance as at 28 February 2021 3 869 489
Incoming cash flows
Proceeds from term loan 4 428 000
Proceeds from VAT facility 367 739
Proceeds from working capital facility 228 988
Outgoing cash flows
Repayment of loan note instrument and interest (2 196 836)
Repayment of working capital facility (1 607 592)
Interest paid on working capital facility (102 655)
Non-cash flows
Interest accrued on term loan (capitalised to mining asset under construction) 95 414
Amortisation of warrant charge 37 594
Balance as at 28 February 2022 5 120 141
18. Trade and other payables
Year ended Year ended
28 February 2022 28 February 2021
£ £
Trade payables 2 293 471 1 094 390
Other payables 341 276 141 677
Accruals 335 087 248 415
2 969 833 1 484 482
Trade and other payables principally comprise amounts outstanding for trade
purchases and on-going costs. The average credit period taken for trade
purchases is 30 days.
The Group has financial risk management policies in place to ensure that
payables are paid within the pre-arranged credit terms. No interest has been
charged by any suppliers as a result of late payment of invoices during the
year.
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
The total trade and other payables denominated in South African Rand amount to
£124 904 (2021: £232 071) and £2 692 924 (2021: £1 185 802) is
denominated in Namibian Dollars.
19. Environmental rehabilitation liability
£
Balance as at 28 February 2020 86 005
Increase in provision 90 323
Interest expense 7 593
Foreign exchange differences (3 004)
Balance as at 28 February 2021 180 917
Increase in provision 95 585
Interest expense 12 080
Foreign exchange differences 6 569
Balance as at 28 February 2022 295 151
Provision for future environmental rehabilitation and decommissioning costs
are made on a progressive basis. Estimates are based on costs that are
regularly reviewed and adjusted appropriately for new circumstances. The
environmental rehabilitation liability is based on disturbances and the
required rehabilitation as at 28 February 2022.
The rehabilitation provision represents the present value of decommissioning
costs relating to the dismantling and sale of mechanical equipment and steel
structures related to the Phase 1 pilot plant, the demolishing of civil
platforms, and reshaping of earthworks. A provision for this requires
estimates and assumptions to be made around the relevant regulatory framework,
the magnitude of the possible disturbance, and the timing, extent and costs of
the required closure and rehabilitation activities. In calculating the
appropriate provision, cost estimates of the future potential cash outflows
based on current studies of the expected rehabilitation activities and timing
thereof are prepared. These forecasts are then discounted to their present
value using a risk-free rate specific to the liability. In determining the
amount attributable to the rehabilitation liability, management used a
discount rate of 10% (2021: 12.8%), an inflation rate of 5% (2021: 6%), and an
estimated mining period of 17 years (2021: 18 years). Actual rehabilitation
and decommissioning costs will ultimately depend upon future market prices for
the necessary rehabilitation works and timing of when the mine ceases
operation.
20. Lease liability
The Company assessed all existing and new rental agreements and concluded that
the following rentals fall within the scope of IFRS 16: Leases and therefore a
lease liability has been raised:
Lease term Option to extend/terminate Incremental borrowing rate
Office building 5 years Option to extend not specified in contract. Term of lease determined to be 5 13.75%
years.
Workshop facility 2 years Option to extend not specified in contract. Term of lease determined to be 2 7.5%
years.
Residential housing 5 years The lease will continue automatically after the initial period for an 8.5%
open-ended period. Either party must provide written notice if they wish to
terminate. Lease term determined to be 5 years.
Mobile Units 2 years The lessee is granted the option to purchase the units after the lease period 7.5%
of 2 years.
Office Workshop Housing Mobile units Total
Building
£ £ £ £ £
Balance at 28 February 2020 223 673 - - - 223 673
Additions - 108 252 151 705 - 259 957
Interest expense 24 419 3 923 11 349 - 39 691
Lease payments (64 201) (30 319) (34 080) - (128 600)
Foreign exchange differences (10 749) 818 1 287 - (8 644)
Balance at 28 February 2021 173 142 82 674 130 261 - 386 077
Additions 61 293 - - 68 689 129 982
Interest expense 25 103 4 259 9 857 3 411 42 630
Lease payments (95 317) (54 641) (36 811) (26 892) (213 661)
Foreign exchange differences 6 600 3 280 5 021 (126) 14 775
Balance at 28 February 2022 170 821 35 572 108 328 45 082 359 803
The following is the split between the current and the non-current portion of
the liability:
Year ended Year ended
28 February 2022 28 February 2021
£ £
Non-current liability 167 215 260 512
Current liability 192 588 125 565
359 803 386 077
Reconciliation of net cash flow to movement in leases
Balance as at 28 February 2021 386 077
Outgoing cash flows
Lease payments (213 661)
Non-cash flows
Additions 129 982
Interest expense 42 630
Foreign exchange differences 14 775
Balance as at 28 February 2022 359 803
21. Share capital
Number of ordinary shares of no par value issued and fully paid Share Capital
£
Balance at 29 February 2020 653 146 373 20 487 239
Capital Raise - 3 August 2020 145 238 089 3 050 000
Shares issued to suppliers 15 273 480 320 743
Share issue costs - (253 317)
Shares issued to directors/employees 16 133 440 403 336
Loan note conversion 44 898 630 1 600 000
Balance at 28 February 2021 874 690 012 25 608 001
Warrants exercised - 22 April 2021 1 686 666 63 150
Capital raise - 12 May 2021 216 666 667 13 000 000
Share issue costs - (823 447)
Convertible loan note settled - 25 May 2021 18 963 699 430 055
Shares issued to suppliers - 25 May 327 868 29 672
Shares issued to suppliers - 15 Dec 798 001 39 102
Exercising of employee share options - 14 Jan 2 185 087 72 059
Exercising of employee share options - 27 Jan 1 250 000 56 250
Exercising of employee share options - 22 Feb 5 273 684 180 236
Balance as at 28 February 2022 1 121 841 684 38 655 078
Authorised: 1 220 486 913 ordinary shares of no par value
Allotted, issued and fully paid: 1 121 841 684 ordinary shares of no par value
On 22 April 2021, warrant holders exercised 1 186 666 warrants at an
exercise price of 4.5 pence and 500 000 warrants at an exercise price of 1.95
pence.
On 12 May 2021, the Company completed an equity fundraising by way of a
placing and direct subscription of 216 666 667 ordinary shares of no par
value in the Company at a price of 6 pence per share.
On 25 May 2021, the holders of the outstanding 2019 Convertible Loan Notes
elected to convert a portion of the outstanding amount into fully paid
ordinary shares of no par value in the Company, with the remainder being
redeemed in cash. 18 963 699 ordinary shares of no par value were issued to
various holders to settle this loan.
On 25 May 2021, 327 868 ordinary shares of no-par value were issued to Hannam
& Partners Advisory Limited, in accordance with the terms of their broker
engagement letter with the Company. These shares were issued at a price of 6
pence per share.
On 4 January 2021, 16 133 440 ordinary shares of no par value were issued to
various directors and employees in lieu of payment of director fees and part
settlement of salaries. These shares were issued at a price of 2.5 pence per
share.
On 15 December 2021, 798 001 ordinary shares of no par value were issued to
settle a contractual liability at 4.90 pence in lieu of fees in relation to a
consulting agreement.
On 14 January 2022, the Company received notice from share option holders to
exercise 1 300 877 share options at an exercise price of 3 pence, 467 105
share options at an exercise price of 3.5 pence and 417 105 share options at
an exercise price of 4 pence.
On 27 January 2022, the Company received notice from share option holders to
exercise 1 250 000 share options at an exercise price of 4.5 pence.
On 22 February 2022, the Company received notice from share option holders to
exercise 2 336 842 share options at an exercise price of 3 pence,
1 468 421 share options at an exercise price of 3.5 pence, and 1 468 421
share options at an exercise price of 4 pence.
22. Warrants
The following warrants were granted during the year ended 28 February 2021:
Date of grant 10 December 2020 7 July 2020 31 May 2020 5 May 2020
Number granted 2 500 000 2 500 000 2 500 000 13 000 000
Contractual life 2.4 years 2.8 years 2.9 years 3 years
Estimated fair value per warrant (£) 0.0101 0.0122 0.0068 0.0069
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 10 December 2020 7 July 2020 31 May 2020 5 May 2020
Share price at grant date (pence) 2.35 3 1.8 1.8
Exercise price (pence) 1.95 1.95 1.95 1.95
Expected life 2.4 years 2.8 years 2.9 years 3 years
Expected volatility 60% 60% 60% 60%
Expected dividends Nil Nil Nil Nil
Risk-free interest rate 1.24% 1.24% 1.24% 1.24%
The warrants in issue during the year are as follows:
Outstanding at 29 February 2020 5 671 939
Exercisable at 29 February 2020 5 671 939
Granted during the year 20 500 000
Expired during the year (1 871 939)
Exercised during the year -
Outstanding at 28 February 2021 24 300 000
Exercisable at 28 February 2021 24 300 000
Granted during the year -
Expired during the year -
Exercised during the year (1 686 666)
Outstanding at 28 February 2022 22 613 334
Exercisable at 28 February 2022 22 613 334
The warrants outstanding at year end have an average exercise price of
£0.024, with a weighted average remaining contractual life of 1.13 years.
On 22 April 2021, notice was received from warrant holders to exercise
1 186 666 warrants at an exercise price of 4.5 pence and 500 000 warrants
at an exercise price of 1.95 pence. The charges previously raised on these
warrants was reversed, resulting in a movement in the warrant reserve. Please
refer to the statement of changes in equity for the reconciliation of the
warrant reserve.
23. Share-based payment reserve
Director share options
The director share options in issue during the year are as follows:
Outstanding at 29 February 2020 27 100 000
Exercisable at 29 February 2020 13 125 000
Granted during the year -
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 28 February 2021 27 100 000
Exercisable at 28 February 2021 8 389 999
Granted during the year -
Forfeited during the year -
Exercised during the year (1 250 000)
Expired during the year -
Outstanding at 28 February 2022 25 850 000
Exercisable at 28 February 2022 23 850 000
On 4 January 2021, 10 600 000 share options held by the Chief Executive
Officer, Anthony Viljoen were repriced by the Remuneration Committee to align
company and shareholder expectations with long-term incentivisation goals. The
exercise price and the first exercise date were changed, however, the
contractual life of the options remained unchanged. The fair value of the
repriced options (calculated using the Black Scholes method) decreased from
the initial fair valuation. As such, no adjustment to amortising of the
initial fair value over the vesting period was made.
A previous non-executive director elected to exercise his remaining 1 250 000
share options during the year. This resulted in a charge of £13 800 being
passed through the share-based payment reserve.
No new share options were issued during the year.
The director share options outstanding at year end have an average exercise
price of £0.045 (2021: £0.053), with a weighted average remaining
contractual life of 1.79 years (2021: 2.77 years).
A director must remain as a director of the Company for the share options to
vest. In the event that a director ceases to be a director during the vesting
period, the Board reserves the right to determine whether the share options
will be terminated or not. There are no market-based vesting conditions on the
share options.
Employee share options
The employee share options in issue during the year are as follows:
Outstanding at 29 February 2020 34 830 000
Exercisable at 29 February 2020 11 250 000
Granted during the year -
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 28 February 2021 34 830 000
Exercisable at 28 February 2021 26 610 001
Granted during the year -
Forfeited during the year -
Exercised during the year (7 458 771)
Expired during the year -
Outstanding at 28 February 2022 27 371 229
Exercisable at 28 February 2022 27 371 229
On 4 January 2021, 34 830 000 share options held by employees were repriced by
the Remuneration Committee to align company and shareholder expectations with
long-term incentivisation goals. The exercise price and the first exercise
date were changed, however the contractual life of the options remained
unchanged. The fair value of the repriced options (calculated using the Black
Scholes method) decreased from the initial fair valuation. As such, no
adjustment to amortising of the initial fair value over the vesting period was
made.
A number of employees elected to exercise their share options during the year.
This resulted in a charge of £103 824 being passed through the share-based
payment reserve.
The employee share options outstanding at the year end have an average
exercise price of £0.034 (2021: £0.034), with a weighted average remaining
contractual life of 1.96 years (2021: 2.96 years).
An employee must remain in employment with the Company for the share options
to vest. There are no market-based vesting conditions on the share options.
Director shares to be issued
Directors fees of £25 508 (2021: £16 342) are owing to the directors at the
end of the year. The Company may consider settling these fees by issuing
shares in the future.
Employee shares to be issued
Employee salaries of £4 182 (2021: £17 720) are owing to employees at the
end of the year. The Company may consider settling these salaries by issuing
shares in the future.
24. Non-controlling Interests
Non-controlling interest that is material in the Group relates to the Small
Miners of Uis ("SMU") who own 15% of UTMC. SMU is a non-profit association
incorporated in Namibia. The entity was set up by the Ministry of Mines and
Energy to act on behalf of small-scale miners across Namibia.
Other includes the following minority interests which are not material:
· Cannosia Trading 62 CC which own 16% of Renetype
· African Women Enterprise Investments (Pty) Ltd which own 10% of
Renetype
· Lerama Resources (Pty) Ltd which own 50% of Jaxson
· Tamiforce (Pty) Ltd which own 26% of Zaaiplaats
As at 28 February 2022
UTMC Other Total
Amount attributable to all shareholders:
Profit / (loss) after tax 2 281 762 (3 926) 2 277 836
Non-current assets 7 085 066 12 313 7 097 379
Current assets 8 862 468 - 8 862 468
Total assets 15 947 534 12 313 15 959 847
Non-current liabilities 12 843 653 44 967 12 888 620
Current liabilities 1 788 861 12 786 1 801 648
Total liabilities 14 632 514 57 753 14 690 267
Net assets / (liabilities) 1 315 020 (45 440) 1 269 580
Amount attributable to non-controlling interest:
Profit / (loss) after tax 342 264 (1 021) 341 243
Net assets / (liabilities) 196 230 (13 030) 183 200
As at 28 February 2021
UTMC Other Total
Amount attributable to all shareholders:
Loss after tax (659 673) (7 150) (666 822)
Non-current assets 2 678 021 15 233 2 693 254
Current assets 2 524 054 - 2 524 054
Total assets 5 202 076 15 233 5 217 308
Non-current liabilities 5 136 254 43 275 5 179 529
Current liabilities 997 620 11 964 1 009 584
Total liabilities 6 133 874 55 239 6 189 113
Net liabilities (931 798) (40 006) (971 804)
Amount attributable to non-controlling interest:
Loss after tax (98 951) (1 970) (100 921)
Net liabilities 139 770 11 574 151 344
25. Financial instruments
The Group is exposed to the risks that arise from its use of financial
instruments. This note describes the objectives, policies and processes of the
Group for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout
these financial statements.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising returns to shareholders.
In order to maintain or adjust the capital structure, the Group may issue new
shares or arrange debt financing.
The capital structure of the Group consists of cash and cash equivalents and
equity, comprising issued capital, issued convertible loan notes, borrowings
and retained losses.
The Group is not subject to any externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted including
the criteria for recognition, the basis of measurement, and the bases for
recognition of income and expenses for each class of financial asset,
financial liability, and equity instrument, are disclosed in note 2.
Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
· Borrowings
· Lease liability
Categories of financial instruments
The Group holds the following financial assets:
Year ended Year ended
28 February 2022 28 February 2021
£ £
Measured at amortised cost:
Trade and other receivables 1 971 734 390 230
Cash and cash equivalents 7 365 379 1 351 200
Measured at fair value through profit or loss:
Trade and other receivables 812 594 531 583
Total financial assets 10 149 708 2 273 013
Under its customer sale arrangement, the Group receives a provisional payment
upon satisfaction of its performance obligations based on the spot price at
that date. This occurs prior to the final price determination, with the Group
then subsequently receiving or paying the difference between the final price
and quantity and the provisional payment. As a result of the pricing
structure, the instrument is classified at fair value through profit or loss
and measured at fair value with resulting changes in fair value recorded as
other revenue.
Trade receivables at fair value through profit or loss fail the criteria for
being measured at amortised cost owing to the variability resulting from final
pricing adjustments. Financial instruments measured at fair value are
presented by level within which the fair value measurement is categorised. The
levels of fair value measurement are determined as follows:
· Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that
are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group's contract receivable at 28 February 2022 is recorded at fair value
through profit or loss and fair valued based on the estimated forward prices
that will apply under the terms of the sales contracts on the product reaching
the port of destination. The trade receivables fair value reflects amounts
receivable from the customer adjusted for forward prices expected to be
realised.
The forward price is based on the expected LME 3-month tin price on the date
of finalisation. Given the short period to final pricing, the time value of
money is not considered to be significant.
Fair value of this trade receivable at fair value through profit or loss is
categorised at Level 1. During the year there were no transfers between levels
of fair value hierarchy.
The Group holds the following financial liabilities:
Year ended Year ended
28 February 2022 28 February 2021
£ £
Measured at amortised cost:
Trade and other payables 2 969 833 1 484 482
Borrowings 5 120 141 3 869 489
Lease liability 359 803 386 077
Total financial liabilities 8 449 777 5 740 048
Maturity analysis of the contractual undiscounted cash flows:
Up to Between 3 Between 1 Between 2 Total
3 months and 12 months and 2 years and 5 years
Trade and other payables 2 969 833 - - - 2 969 833
Borrowings 139 694 885 042 1 031 067 3 064 338 5 120 141
Lease Liability 50 077 142 511 124 288 42 927 359 803
3 159 604 1 027 553 1 155 355 3 107 265 8 449 777
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The Board receives reports through which
it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below:
Credit risk
The Group's principal financial assets are bank balances and trade and other
receivables.
Credit risk arises principally from the Group's cash and trade and other
receivables balances. Credit risk is the risk that the counterparty fails to
repay its obligation to the Group in respect of amounts owed. The Group gives
careful consideration to which organisations it uses for its banking services
in order to minimise credit risk.
The concentration of the Group's credit risk is considered by counterparty,
geography and currency. The Group has split its cash reserves across multiple
banks in an effort to mitigate credit risk. The Pound Sterling and US Dollar
accounts are held with a bank in Mauritius which has a rating of Baa1
(Moody's), the Rand account is held with a bank in South Africa which has a
rating of Ba2 (Moody's) and the Namibian Dollar account is held with a bank in
Namibia with a rating of Ba2 (Moody's). The banks chosen remain stable and do
not present any further risks.
The concentration of credit risk was as follows:
Year ended Year ended
28 February 2022 28 February 2021
£ £
Currency
Sterling 2 554 492 666 236
USD 3 450 626 551 832
South African Rand 80 463 119 976
Namibian Dollars 1 279 798 13 156
7 365 379 1 351 200
Credit risk relating to trade & other receivables has also been
considered. Credit verification procedures are undertaken for all customers
with whom we trade on credit. This includes an assessment of the credit
quality of the customer, taking into account its financial position, past
experience and other factors. The trade account receivables comprise a limited
customer base. Ongoing credit evaluation of the financial position of
customers is performed and compliance with credit limits by customers is
regularly monitored by management. Please refer to note 15 for the
concentration of credit risk relating to trade receivables.
At 28 February 2022, the Group held no collateral as security against any
financial asset. The carrying amount of financial assets recorded in the
financial statements, net of any allowances for losses, represents the Group's
maximum exposure to credit risk without taking account of the value of any
collateral obtained. The Group applies IFRS 9 to measure expected credit
losses for receivables and these are regularly monitored and assessed. There
has been no impairment of financial assets during the year. Management
considers the above measures to be sufficient to control the credit risk
exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its financial obligations as they fall due. Ultimate responsibility for
liquidity risk management rests with the Board of Directors. The Board manages
liquidity risk by regularly reviewing the Group's gearing levels, cash-flow
projections and associated headroom and ensuring that excess banking
facilities are available for future use.
The Group maintains good relationships with its banks and its cash
requirements are anticipated via the budgetary process. At 28 February 2022,
the Group had £7 365 379 (2021: £1 351 200) of cash reserves.
Market risk
The Group's activities expose it primarily to the financial risk of changes in
foreign currency exchange rates and interest rates.
Interest rate risk
The Group has interest bearing assets in the form of cash & cash
equivalents. The Group does not earn significant interest on cash balances.
The Group has interest bearing liabilities in the form of bank loans and
facilities. These liabilities are exposed to variable interest rates. The
following table details the Group's sensitivity to a 1% increase and a 1 %
decrease in the interest rate.
Value Cash flow impact of a 1% increase in interest rate Cash flow impact of a 1% decrease in interest rate
£ £ £
Borrowings 5 120 141 (51 201) 51 201
Foreign exchange risk
The Group has foreign currency denominated assets and liabilities, and is
therefore exposed to exchange rate fluctuations. The carrying amounts of the
Group's foreign currency denominated monetary assets and liabilities, all in
Pound Sterling, are shown below.
Year ended Year ended
28 February 2022 28 February 2021
£ £
Cash and cash equivalents 4 810 887 684 964
Other receivables 2 555 885 1 137 272
Trade and other payables (2 550 860) (1 417 873)
Borrowings (5 120 141) (1 710 247)
304 229 (1 305 884)
The Company operates on an international basis, therefore, foreign exchange
risk exposures arise from transactions denominated in foreign currencies. The
Company is exposed to foreign currency risk on fluctuations related to
financial instruments that are denominated in British Pounds, US Dollars,
South African Rand and Namibian Dollars.
The Group does not enter into any derivative financial instruments to manage
its exposure to foreign currency risk.
The following table details the Group's sensitivity to a 10% increase and
decrease in the Pound Sterling against the Rand and the Namibian Dollar. 10%
is the sensitivity rate used when reporting foreign currency risk internally
to key management personnel and represents management's assessment of the
reasonable possible change in foreign currency rates. The sensitivity analysis
includes only outstanding foreign currency denominated monetary items and
adjusts their translation at year end for a 10% change in foreign currency
rates.
Rand denominated monetary items Rand currency impact Rand currency impact
£ Strengthening Weakening
£ £
Assets 141 779 155 957 127 601
Liabilities (124 904) (137 395) (112 414)
16 875 18 562 15 187
Namibian Dollar denominated monetary items Namibian Dollar currency impact Namibian Dollar currency impact
£ Strengthening Weakening
£ £
Assets 4 130 827 4 543 909 3 717 744
Liabilities (7 813 065) (8 594 372) (7 031 759)
(3 682 239) (4 050 462) (3 314 015)
26. Events after balance sheet date
Decline in Tin Price
The recent volatility in the tin prices has placed additional pressures on the
group with regards to funding of capital expansion project via internal
sources. Management had anticipated the declines and are already at advanced
stages of securing the funding in order to continue its growth ambitions.
Proposed Lending Facility
Uis Tin Mining Company (Pty) Limited ("UTMC"), a subsidiary of the Group has
entered into a conditional, credit approved, term sheet for a lending facility
with the Development Bank of Namibia Limited ("Development Bank of Namibia")
to fund the Uis Phase 1 Stage II Continuous Improvement Project.
As announced on 5 July 2022, a Proposed Lending Facility comprising a NAD 100
million (approximately £5.5 million) Senior Secured Lending Facility has been
signed with the Development Bank of Namibia. Although the Lending Facility has
been approved by the credit committee and board of the Development Bank of
Namibia, there are certain conditions precedent that need to be adhered to,
including completion of final legal documentation. At this stage there can be
no guarantee the Lending Facility will be entered into, or that any funds will
be drawn down, but AfriTin Management have every confidence that it will be.
The Company has previously announced that the terms of this proposed lending
facility would expire by the end of July 2022 but the Directors confirm that
this has now been extended such that completion is anticipated around the end
of September 2022. A further update will be provided at that time.
Issue of Share Options
On the 8th of April 2022, the Group has issued options of 54 310 000 ordinary
shares as part of its Long-Term Incentive Scheme to certain Directors, PDMRs
and employees of the Company. These are in line with the established share
option scheme of the Company to both reward and incentivise key employees, as
per the company's reward policies. These share options vest in three tranches
over three and are exercisable at a price of 9.8 pence, 10.3 pence and 10.8
pence. They are conditional only on the continued employment of the relevant
recipient as a director or employee of the company at the time of exercise.
Phase 1 Stage II Expansion: Construction Completed
Construction of the plant expansion circuits is now complete, allowing the
Project to advance to the commissioning stage. Commissioning of the new
circuits is being implemented in two stages: firstly, the commissioning of the
dry plant which has commenced and will be completed by end of August 2022, and
secondly the commissioning of the wet plant, which is scheduled for the month
of September 2022. The commissioning process has been designed to minimise
production disruption. There is a requirement to shutdown certain plant
circuits to facilitate tie-ins with the existing plant but due to stockpiling
and flexibility built into the current circuit, this is not expected to have a
material impact on the production performance of the Company.
Key management change
During the month of July 2022 Mr Robert Sewell stepped down as CFO of the
Company to pursue other opportunities. He remained as a consultant to the
Company in the short-term to ensure a smooth transition process with the newly
appointed CFO, Mr Hiten Ooka.
27. Related-party transactions
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.
Bushveld Minerals Limited ("Bushveld") is a related party due to Anthony
Viljoen, Chief Executive Officer, being a Non-Executive Director on the
Bushveld Board. During the period, Bushveld charged the Group £37 924 (2021:
£82 423) for the use of office space. At period end, the Group owed Bushveld
£71 040 (2021: £112 962).
The remuneration of the key management personnel of the Group, which includes
the Directors, as well as Frans van Daalen and Robert Sewell, is set out
below.
28 February 2022 Share Option Charge Shares Issued in Relation to Director Fees/Salary Shares Issued in Relation to Bonus Director Fees/ Salary Other Total
£ £ £ £ Fees £
£
Non-Executive Directors
Glen Parsons (Chairman) 5 524 - - 59 167 - 64 691
Terence Goodlace 5 524 - - 56 308 - 61 832
Laurence Robb 5 524 18 000 - 17 000 8 000 48 524
Michael Rawlinson (appointed 20 Dec 2021) - 3 500 - 4 000 49 102 56 602
Executive Director
Anthony Viljoen (Chief Executive Officer) 13 258 - - 170 454 - 183 712
Other key management personnel
Robert Sewell (Chief Financial Officer) 8 838 - - 110 326 - 119 164
Frans van Daalen (Chief Operating Officer) 8 838 - - 140 390 - 149 228
47 506 21 500 - 557 645 57 102 683 753
28 February 2021 Share Option Charge Shares Issued in Relation to Director Fees/Salary Shares Issued in Relation to Bonus Director Fees/ Salary Other Total
£ £ £ £ Fees £
£
Non-Executive Directors
Glen Parsons (Chairman) 10 893 40 000 - - - 50 893
Terence Goodlace 10 761 - - 28 750 - 39 511
Laurence Robb 10 761 13 000 - 12 000 - 35 761
Roger Williams (resigned 28 September 2020) 10 761 - - 14 583 - 25 344
Executive Director
Anthony Viljoen (Chief Executive Officer) 26 090 17 365 128 868 116 781 - 289 104
Other key management personnel
Robert Sewell (Chief Financial Officer) 19 599 - 65 919 86 745 - 172 263
Frans van Daalen (Chief Operating Officer) 22 099 - 81 178 112 322 - 215 599
110 964 70 365 275 965 371 181 - 828 475
28. Capital commitments
Significant capital expenditure contracted for at the end of the reporting
period but not recognised as liabilities is as follows:
Year ended
28 February 2022
£
Exploration and evaluation projects 1 021 297
Property, plant and equipment 1 695 932
2 717 228
The full balance of these commitments will be due within the next 12 months.
29. Reserves within equity
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Convertible loan note reserve
The convertible loan note reserve represents proceeds on issue of convertible
loan notes relating to equity component plus accrued interest on the
convertible loan notes. These notes were settled in full during the financial
year.
Warrant reserve
The warrant reserve represents the cumulative charge to date in respect of
unexercised share warrants at the balance sheet date.
Share-based payment reserve
The share-based payment reserve represents the cumulative charge to date in
respect of unexercised share options at the balance sheet date as well as
fees/salaries owed to directors/employees to be settled through the issuing of
shares.
Foreign currency translation reserve
The foreign currency translation reserve comprises all foreign exchange
differences arising from the translation of entities with a functional
currency other than Pound Sterling.
Retained earnings/accumulated deficit
The retained earnings/accumulated deficit represents the cumulative profit and
loss net of distribution to owners.
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