REG - Andrada Mining Ltd - Audited Financial Results
24/08/2023 08:30
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RNS Number : 3399K Andrada Mining Limited 24 August 2023
24 August 2023
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service (RIS), this inside information
will be in the public domain.
Andrada Mining Limited
("Andrada" or the "Company")
AUDITED FINANCIAL RESULTS FOR THE 12 MONTHS ENDED 28 FEBRUARY 2023
Successful Uis Mine expansion results in a 34% increase in concentrate
production
Andrada Mining Limited (AIM: ATM, OTCQB: ATMTF), an African technology metals
mining company with a portfolio of mining and exploration assets in Namibia is
pleased to announce the release of its audited financial results for the 2023
financial year ended 28 February 2023 (FY2023).
FINANCIAL HIGHLIGHTS
· Revenue of £9.8m (FY 2022: £13.6m) impacted by the decrease in tin prices.
· Cash costs (C1) decreased to US$19 762 per tonne of contained tin (FY
2022: US$21 839) due to higher tonnage.
· All-in sustaining cost decreased to US$24 939 per tonne of contained
tin (FY 2022: US$27 515) due to higher tonnage.
· EBITDA at £5.9m loss (FY2022: £2.6m loss) mainly due to a 34%
decrease in the tin price.
· Average tin price at US$25k per tonne (FY2022: US$39k per tonne).
· Cash and cash equivalents at year end at £8.2m.
· Cash balance at 23 August 2023 is £8.6m (unaudited).
OPERATIONAL HIGHLIGHTS
· Annual tin concentrate production increased 34% to 960 tonnes
(FY2022:780 tonnes).
· Exports increased to 33 shipments compared to 29 shipments in FY
2022.
· Processing plant production capacity increased by 70%.
LITHIUM HIGHLIGHTS
· Infill drilling at ML 133 mining licence area ("Lithium Ridge")
commenced in January 2023.
· Off-site lithium pilot testing commenced during the fourth quarter.
· Construction of the on-site lithium pilot plant commenced at the end
of the financial year.
· Exploration drilling programme completed on the ML129 mining licence
area ("Spodumene Hill") over 17 drill holes.
· Updated Mineral Resource Estimate ("MRE") in February 2023 for V1/V2
pegmatites on the Uis Mining Licence area (ML 134) increased the deposit by
13% to 81 million tonnes making Uis a globally significant lithium and tin
resource.
POST-PERIOD HIGHLIGHTS
· Binding documentation for the conditional US$25m (c£18m) funding
package signed in August 2023. The funding will expedite the lithium
implementation programme when approved by the shareholders at the Annual
General Meeting on 29 September 2023.
· Development Bank of Namibia N$100m (c £5.3m) funding intercreditor
agreement concluded in August. The associated security package the only
outstanding condition to concluding the agreement.
· Unsecured, convertible loan notes issued to raise £7.7m (c.US$10m)
primarily to fund the completion and commissioning of the lithium pilot plant
and tantalum circuit in July 2023.
· Initial saleable petalite concentrate, 85% pure and at a grade of
4.16% produced in May 2023.
· Barclays Bank was appointed the strategic adviser to seek out a
suitable partner to expedite the lithium strategy in May 2023.
· Upgraded listing on the New York OTCQB® in June 2023 to make the
Andrada shares accessible to the North American market that is known for its
appetite for investing in mining companies.
· First - pass Reverse Circulation drilling programme commenced at
Lithium Ridge in April 2023 to investigate the subsurface continuation of
lithium and tin mineralisation.
Anthony Viljoen, Chief Executive Officer, commented:
"In FY2023 we achieved, and in certain instances surpassed, our operational
milestones such as the successful expansion of the Uis Mine processing plant
resulting in cost efficiencies. The 70% increase in production capacity
enabled Uis to increase the tin concentrate output by 34% to 960 tonnes for
the financial year.
Post-period, we have achieved additional significant milestones such as the
production of the high purity, saleable petalite in May 2023 which has
escalated the engagement with potential offtakers. In June 2023 we completed
the lithium pilot plant construction thereby establishing Andrada as an
emerging, potential lithium producer. The £7.7m funding we raised in July
enabled us to commence the commissioning of the lithium pilot plant and the
tantalum circuit further accelerating our lithium production strategy. As we
progress in FY2024, the focus will be to expedite lithium development through
the strategic process, the lithium pilot plant, and the extensive exploration
programme. Our significantly strengthened balance sheet will enable us to
achieve these and other major milestones in the current financial year."
ANNUAL GENERAL MEETING
A Notice of Annual General Meeting ("AGM") will be distributed to shareholders
today and is now available on the Company's website:
https://andradamining.com/media/reports/
(https://andradamining.com/media/reports/) . The AGM will be held at 11.00am
on 29 September 2023, at PO Box 282, Oak House, Hirzel Street, St Peter Port,
Guernsey GY1 3RH.
ANNUAL REPORT
The Annual Report for the 2023 financial year ended 28 February 2023 is now
available on the Company's website at the following link:
https://andradamining.com/media/reports/
(https://andradamining.com/media/reports/) . Physical copies of the Annual
Report will also be posted today to shareholders who elected to receive them.
Andrada Mining Limited +27 (11) 268 6555
Anthony Viljoen, CEO investorrelations@andradamining.com
Sakhile Ndlovu, Investor Relations
Nominated Adviser
WH Ireland Limited +44 (0) 207 220 1666
Katy Mitchell
Corporate Adviser and Joint Broker
H&P Advisory Limited +44 (0) 20 7907 8500
Andrew Chubb
Jay Ashfield
Matt Hasson
Stifel Nicolaus Europe Limited +44 (0) 20 7710 7600
Ashton Clanfield
Calum Stewart
Varun Talwar
Tavistock Financial PR (United Kingdom) +44 (0) 207 920 3150
Jos Simson andrada@tavistock.co.uk
Catherine Drummond
Adam Baynes
CHAIRMAN'S STATEMENT
The 2023 financial year proved to be a successful one for Andrada, culminating
in significant milestones achieved. Unfortunately, the depressed tin prices
resulted in negative earnings as detailed in the financial review by the Chief
Finance Officer. Nonetheless, we further cemented the foundation by rounding
our production suite towards becoming a meaningful tech-metals producer. The
Company's stated Five-Year Growth Strategy and the tangible attributable value
of our assets, as displayed in the internally developed Preliminary Economic
Assessment, provide stakeholders with visibility on how Andrada will achieve
its goals.
Maintaining sufficient cash resources during this development and growth phase
is key to achieving all our stakeholder objectives and I am pleased to state
that the Andrada team has been managing this diligently in what has been a
challenging market. The support and success of the fundraising in September
2022 by our loyal, existing as well as, new shareholders highlight their
confidence in our strategy. Furthermore, it allows the Company to fast track
the development of the lithium and tantalum opportunities while accelerating
the expansion of the existing operations. For this, we are appreciative of
their continued support.
During the year, the Company began expanding beyond being a tin-only producer
to potentially becoming one of the first significant African lithium producers
on the AIM, a market of the London Stock Exchange. This important
transformational focus of the Company has meant that we identify ourselves as
a Company that will play a significant role in the energy transition space. It
is for this reason that we decided to rename the Company Andrada Mining.
The global rhetoric around the supply of critical metals continues to gain
momentum and there is a continued drive to transition to a greener world. We
are determined to play our part in this transition by sustainably contributing
to bridging the burgeoning supply gap by producing critical metals. We are
fully committed to observing strong Environmental, Social and Governance (ESG)
principles. The publication of Andrada's inaugural Sustainability Report for
the 2022 financial year demonstrates this commitment to our ESG best
practices. We are particularly proud of the role we have played in
redeveloping the town of Uis in conjunction with our majority Namibian
workforce, the local communities, as well as the government.
We recognise that the diversity and talent of our employees will ultimately
determine Andrada's success. By the end of FY 2023, 38% of our corporate team
were women, with six women on the Management Committee (40%) and one woman on
the executive team. As a Board, we are committed to continue striving to
maintain and improve on these global governance standards.
Looking to the future, we are hugely excited by the prospect of becoming a
multi-tech-metal producer. The immediate objective of the Board is to
accelerate the growth of Andrada. Therefore, we have embarked on seeking a
strategic partner with appropriate technical and financial capabilities to
assist the Company in accelerating the development of the lithium opportunity
on the Uis mining licence area. Simultaneously, we will start developing our
other licence areas through expansive exploration programmes. These programmes
will start bearing fruit if we are able to confirm the mineralisation
potential within all the mining licences, providing significant blue sky for
shareholders.
I congratulate the management team and employees on the work and goals
achieved during the year, especially against a backdrop of volatile financial
markets and a declining tin price. On behalf of the Board, I wish to express
my appreciation to all our valued investors, suppliers and customer for their
mutual trust and confidence in Andrada Mining. Along with this, I would like
to thank my fellow Board members for their tireless effort to ensure that
Andrada achieves its stated objectives.
Finally, I would like to welcome the newly appointed Board members who
complement the team, namely Ms Gida Sekandi as a Non-Executive Director and Mr
Hiten Ooka, the Company's Chief Financial Officer, as an Executive Director.
Gida's extensive regional and sustainability experience and Hiten's broad
financial experience enhance our team as we move forward to our next exciting
phase.
GLEN PARSONS
Chairman
24 August 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
INTRODUCTION
The adjective 'transformative' is often over-used in Company reporting, but it
is one which I believe to be truly befitting of Andrada's latest financial
year. It is a pleasure to reflect on our achievements this year, taking
advantage of our significant portfolio of tech-metals assets and laying the
foundation of a leading global mineral supplier.
Beginning with the discovery of lithium-bearing spodumene within our mining
licence ML129 ("Spodumene Hill"), we fully understood the significance of a
lithium revenue stream on the incremental returns for shareholders. This
discovery at Spodumene Hill in early March 2022 complemented the Company's
confirmed mineral resource on the lithium-bearing pegmatites within the
adjacent Uis licence area and set in motion our transformation from a tin
producer to a Company with a full suite of tech-metals assets.
This discovery motivated the name change from AfriTin Mining to Andrada
Mining. The AfriTin name served us excellently for five years, but it is
important to reflect the inclusion of our significant lithium assets in the
Company's new name. Therefore, we could think of no better way than a nod to
José Bonifácio de Andrada e Silva, the Brazilian mineralogist and professor
who first categorised petalite and spodumene, which are major lithium-bearing
minerals. We have continued the great work that we did as AfriTin and are
confident that the Andrada name will build on the strong market reputation of
AfriTin for many years to come.
HEALTH AND SAFETY
The Company understands the importance of its workforce in operational success
and is always focused on strengthening health and safety management. To
realise our vision of everyone going home uninjured every day, we have
integrated safety thinking into everything we do. During the reporting year we
recorded zero fatalities and three Lost Time Injuries (LTIs), resulting in a
Lost Time Injury Frequency Rate (LTIFR) of 3.04 (2022: 6.26). On 28 February
2023, our operations celebrated 500 000 LTI-free hours, a significant safety
milestone for the Group. In our most recent operational update, for the first
quarter of 2023, we announced a safety performance significantly improved to
0.95 LTIFR, amounting to 881 808 LTI-free hours. Additional measures to
improve our on-site health and safety include an online health and safety
system requiring each employee to complete a risk assessment at the start of
each shift. The system enables real-time reporting across the operation,
enabling us to better understand and respond to incidents with the ultimate
goal of preventing future incidents from occurring.
Furthermore, the Company introduced an initiative called 'Maintenance
Wednesdays' that involves the lockdown of the entire plant every Wednesday to
allow for uninterrupted maintenance work, while simultaneously involving our
entire workforce in occupational health and safety awareness activities.
OPERATIONAL REVIEW
In the first quarter of the financial year, we communicated and embarked on
our Five-Year Growth Strategy, aiming to become one of the lowest cost
tech-metal producers. The strategy is built on four pillars: unlocking the
resource in the existing tenements with the intent to expand into the rest of
Africa, driving operational excellence, implementation of sound ESG
principles, and best practice in project development. Our goal is to become a
10m tonnes per annum Run Of Mine (ROM) Company of global significance.
Recognising the magnitude of the goal, we decided on a phased approach in
implementing the strategy. During the period under review, we completed Phase
1a of the strategy that consisted of a modular expansion of the crushing and
screening circuit, as well as construction of a fines ore stockpile on the
existing plant. This successful expansion resulted in a 23% increase in tin
concentrate production to 960 tonnes and an 22% increase in contained tin to
586 tonnes year-on-year ("YoY"). The increased plant production capacity
enabled processing of significantly higher tonnage, which inevitably reduced
C1 operating costs and AISC (All-In Sustaining Cost) by 10% and 9% YoY
respectively. The improved costs confirm the view that large scale bulk mining
at Uis is amenable to favourable economies of scale.
We anticipate implementing the intermediate Phase 1b at 2.5Mtpa ROM production
with a partner who will be identified as part of by the current strategic
process. This phase will introduce the production of lithium and tantalum, as
these minerals will be extracted from existing processing streams. In
September 2022, we successfully raised approximately US$22.8m (c£18.1m)
gross, to further expand the Uis resource drilling programme, exploration
campaigns and for general corporate purposes. These funds enabled the Company
to complete the modular expansion within the targeted period.
Our tin assets remain an integral part of our tech-metals offering, and so we
were delighted to expand our resource estimate in February 2023 based on the
analysis of drill holes at Uis's Proximal Pegmatites. The additional results
from the Proximal Pegmatites, were added to the maiden resource derived solely
from the V1/V2 pegmatite, bringing the resource to approximately 138 Mt. The
occurrence of several minerals in the same pegmatites such as lithium and
tantalum, provide the opportunity for producing multiple tech-metals from the
same ore body. Therefore, the expansion of the resource made us the owner of
one of the largest tech-metals asset globally and moved us closer to our
internal target of a 200Mt resource. Andrada's primary strength currently lies
in its globally significant lithium resource.
LITHIUM DEVELOPMENT:
METALLURGICAL TESTWORK
All three mining licences contain prolific pegmatite occurrences, containing
lithium, tin, and tantalum mineralisation. Petalite and spodumene appear to be
the dominant lithium minerals present in the mineralised pegmatites.
Metallurgical test work to date has focused on the concentration of petalite
due to its prevalence in the current mining area on Uis. However, spodumene
beneficiation has been included in the future work programme, in response to
the discovery of spodumene occurrences on Spodumene Hill and Lithium Ridge
(ML133). We commenced a pilot test programme for lithium during the first
quarter of the 2023 calendar year, consisting of bulk sampling and pilot
processing.
LITHIUM PILOT TESTING PLANT
Construction of the on-site lithium bulk-sampling pilot plant commenced at the
end of the financial year and was completed within budget and on time in June
2023. Commissioning of the pilot plant and tantalum circuit started in July
2023. The pilot plant, consisting of a crusher, screen, dense medium
separator, and a gravity separation circuit is expected to expedite Andrada's
bulk pilot test work and to produce saleable lithium concentrate. The pilot
plant processing capacity will be 20 tonnes per hour with minimum annual
production targeted at 2 400 tonnes. Therefore, the pilot plant can
potentially generate revenue of US$5m, assuming an average grade of 4.0%
Li₂O and a petalite price of US$2 000.
EXPLORATION
An infill surface exploration programme started in January 2023 on the Lithium
Ridge licence area to enhance the data resolution and to confirm the
continuity of lithium mineralisation along an identified strike length of 6km.
In April 2023, a first-pass Reverse Circulation drilling programme commenced
to investigate the subsurface continuation of lithium and tin mineralisation
identified during the 2022 calendar year mapping and sampling programme. The
results of this drilling programme will be released as soon as the associated
assays are returned from the laboratory.
Furthermore, an exploration drilling programme was undertaken on Spodumene
Hill, resulting in 1159m of Diamond Drilling ("DD") being completed over 17
drill holes. The drill results, released in July 2023, indicate zones of
lithium enrichment within the pegmatite unit with the primary and only lithium
ore mineral identified as being spodumene.
SUSTAINABILITY UPDATE
The publication of Andrada's inaugural Sustainability Report for the 2022
financial year in January 2023 demonstrates our commitment to ESG best
practice. We are proud that we have further improved reporting on the
Company's ESG performance, as disclosed in the FY 2023 Sustainability Report
that has been released together with this Annual Report. We believe that a
strong ESG performance enhances shareholder value and investor confidence.
POST-PERIOD ACTIVITY
INITIAL SALEABLE LITHIUM CONCENTRATE
In May 2023 we produced half a tonne of 85% pure petalite concentrate at a
grade of 4.16%, making Andrada one of the few companies currently on AIM to
have produced a saleable sample. The concentrate was produced as part of the
Company's off-site pilot test programme to investigate the metallurgical
potential of the pegmatites from its Lithium Ridge mining licence area located
approximately 33km from the Uis Mine. We believe this moves us one step closer
to full-scale lithium production and with the completion of the on-site pilot
plant, we intend to expedite bulk pilot test work on all our mineral licences.
In May 2023 Andrada also announced the appointment of Barclays Bank
("Barclays") as a Strategic Adviser to seek out a suitable partner to
accelerate Andrada's lithium strategy. Barclays provides the optimal
combination of extensive experience in advising on strategic partnerships and
access to the global financial markets. The strategic process comes as a
result of numerous unsolicited approaches Andrada has received from
international entities.
The main objective of the process is to identify a partner with appropriate
technical and financial capabilities to accelerate the development of the
lithium opportunity on the Uis mining licence area. The Company will provide
updates on the process as it develops.
LISTING ON THE NEW YORK OTCQB®
Alongside great operational progress, the Company commenced trading on the US
OTCQB® platform in June 2023, which has been a key step in broadening our
shareholder register, making our shares more accessible to North American
retail and institutional investors. This investor base is known for its
understanding of, and strong appetite for, mining companies, particularly
lithium equities.
THANK YOU
I would like to thank all our stakeholders for their continued support, which
is never taken for granted. To our employees, thank you for your commitment
and dedication to Andrada's vision, shown by your diligence. To our investors,
we thank you for your support as we pursue our strategic objectives. To our
Board of Directors, your guidance and oversight have enabled us to achieve the
milestones to date.
In particular, I extend gratitude to our Chief Financial Officer and Executive
Director, Hiten Ooka for his sterling work on the successful fundraising in
September 2022 and the progress on the various financing packages. Since
joining in July 2022, Hiten's experience working for multinational
organisations, coupled with his technical finance and tax experience, has
proven invaluable to Andrada's operational progress.
In the same vein, the milestones we have enjoyed over the past year could not
have been possible without the efforts of Frans van Daalen, appointed to the
role of Chief Strategy Officer in March 2023, and Chris Smith as Chief
Operations Officer. Frans is a qualified engineer with over 20 years of
operational and technical experience across multiple commodities. He is well
placed to drive the Company's development as a significant global lithium
producer. Chris has significant experience in process optimisation and a
proven track record of stimulating operational performance. He has surpassed
the targets for plant expansion and will be instrumental in optimising the
operational processes for the next level of growth. Our collaboration as a
highly experienced C-suite has ensured that our multiple workstreams run
smoothly.
We have entered FY 2024 with confidence and look forward to delivering and
communicating our progress as we continue to unlock value from across our
portfolio. We have full confidence in achieving our ambitions to become a
global tech-metals champion.
CONCLUSION
As we progress in FY 2024, the key objectives will be to commence testing and
the production of lithium through the pilot plant. We aim to attain off-take
agreements for the petalite as we expedite the exploration programme at
Spodumene Hill and Lithium Ridge. We are also looking forward to the
development of the Brandberg West license area (EPL5445) following the receipt
of the Environmental Clearance Certificate. This project will potentially add
Tungsten to our growing list of technology metal inventories. Finally, we look
forward to the conclusion of the strategic process to expedite the lithium
development.
Anthony Viljoen
Chief Executive Officer
24 August 2023
CHIEF FINANCIAL OFFICER'S FINANCIAL REVIEW
The group managed to deliver on its key strategic milestones despite several
challenges in the macro- economic environment. Annual tin concentrate tonnage
increased by 23% to 960 (2022: 780 tonnes) but revenue decreased to £9.8m
(2022: £13.6m) mainly due to a 34% decline in the average tin price to US$25k
(2022: US$39k). Andrada exported 33 shipments (2022: 29 shipments) of tin
concentrate to the Company's offtake partner Thaisarco. The full impact on the
production profile and cash costs of the expansion project that was
successfully completed towards the end of the financial year, will reflect in
the upcoming financial year.
PROFIT AND LOSS STATEMENT OVERVIEW
Despite increased sales volumes, the significant decrease in the tin price
against inflationary cost increases further negatively impacted profitability,
resulting in a gross loss of £0.7m (2022: profit of £4.3m). The
administrative expenses increased to £7.5m (2022: £3.7m) mainly due to the
expanded operations and the higher headcount in line with the continued
implementation of the growth strategy. The multiple workstreams and special
skills necessary to achieve the potential lithium production necessitated the
increase in recruitment.
The Group's EBITDA was similarly impacted by the significantly lower tin
pricing, resulting in a loss of £5.9m (2022: £2.6m). The net finance costs
increased to £0.6m (2022: £0.3m), mainly due to the higher interest on
leases and bank debt. In addition, the Company was charged £0.2m (2022:
£0.05m) interest on the prepayments received from Thaisarco due to the higher
sales volume and long transit periods caused by shipping delays.
The Group net loss for the year was £8.1m (2022: loss £0.5m) resulting in
the basic loss per share of 0.60 pence (2022: loss 0.08 pence). The expansion
on the Uis Mine plant is expected to further reduce the cash costs as
demonstrated by the FY 2023 C1 costs that decreased to US$19 762 per tonne of
contained tin from US$21 839 in the comparative period due to the 70% increase
in production capacity. The all-in sustaining unit cost was 9% lower YoY at
US$24 939 (2022: US$27 515) due to the favourable economies of scale.
FINANCIAL POSITION STATEMENT OVERVIEW
Total assets increased by 28%, mainly due to additions on property, plant, and
equipment ("PPE"), as well as intangible assets. The value of PPE increased to
£27m (2022: £19m), mainly due to the equipment purchased and capitalised
costs for the Uis Phase 1a continuous improvement project.
During the year, £9.5m of costs related to the Uis Phase 1 Definitive
Feasibility Study and the related construction was transferred from mining
assets under construction to the mining assets, as per the requirements of
IFRS 6. Consequently, the capital expenditure increased from £6.0m to
£13.3m. Further details on the PPE and intangible assets can be read in the
Annual Financial Statements ("AFS") Notes 11 and 12. The inventory balance
increased to £2.7m (2022: £1.5m) due to the expanded capacity resulting in
higher volumes of tin concentrate, ROM stockpile and consumables. At year end,
157 tonnes (2022: 75 tonnes) of tin concentrate was on hand, valued at £1.4m
(2022: £0.9m).
Trade and other receivables were valued at £2.6m at year end (2022: £3.9m),
mainly due to the comparatively lower tin prices during the financial year.
Trade and other payables increased to £3.66m (2022: £2.97m) due to accruals
related to the expanded operations. All payables are paid within the agreed
credit terms with the average credit peri- od for trade purchases being 30
days.
Borrowings increased to £6.2m (2022: £5.1m) mainly due to the higher working
capital facility at £1.3m (£0.2m) and the introduction of a £0.5m vehicle
financing facility from Standard Bank Namibia. The value of equity increased
by £8.5m to approximately £36m due to the fundraising in September 2022 for
£11.1m and in October 2022 for £8.7m. Further- more, warrants valued at
£0.4m were exercised in January 2023. Consequently, the number of issued
shares increased from 1 121 841 684 to 1 537 863 344.
CASH FLOW STATEMENT OVERVIEW
Fundraising proceeds supported cashflows during the year as the Company
implemented its continuous improvement project at the Uis Mine plant. The
value accretion of these inflows is demonstrated by the improvement in
operational costs. Approximately £13m (2022: £6m) was utilised to purchase
assets required for the plant expansion. Borrowings mainly provided the
requisite cash inflows for working capital purposes. On 28 February 2023, the
Group cash balance amounted to £8.2m (2022: £7.4m).
FUNDING OVERVIEW
During the year, the Company secured a vehicle financing facility for the
value of £0.7m which had a balance of £0.5m at year end. The £4.5m term
loan facility at an interest rate of three-month JIBAR plus 4.5% had a balance
of £4.1m at year end. The loan including the accrued interest is being repaid
quarterly for five years from February 2022.
The VAT and working capital financing facilities do not have a fixed maturity
dates but are renewed annually, attracting an interest charge of the Namibian
prime rate minus 1%. At year end the effective rate on the term loan was 11.7%
and the rate on the VAT and working capital facilities was 10.75%. The vehicle
asset financing facility has a term of five years at an interest charge of the
Namibian prime rate minus 0.5%. Therefore, at year end the effective rate on
the vehicle financing was 11.25%. The Company received a covenant waiver for
the year under review without penalty and the next measurement date will be 28
February 2024.
POST-PERIOD FUNDING
CONVERTIBLE LOAN NOTES
In July 2023, Andrada raised £7.7m (c.US$10m) through the issue of 77
unsecured, convertible loan notes of £100 000 each to new and existing
investors. The proceeds are intended for commissioning the lithium pilot plant
and the tantalum circuit. In addition, the funds are for working capital
purposes as the Company implements the exploration programme and a lithium
feasibility study. These work- streams further consolidate Andrada's
competitive lithium advantage within the Erongo region of Namibia.
ORION GLOBAL RESOURCE FUND
On 14 August 2023, Andrada signed the conditional binding documentation for an
updated US$25m unsecured funding package with funds managed by Orion Resource
Partners ("Orion"). Orion agreed to an unsecured financing package at
marginally higher rates. The financing includes a royalty on the production of
contained tin, a convertible note, equity subscription and warrants. The
outstanding conditions to finalise the financing are the requisite shareholder
authorities at the upcoming Annual General Meeting, Andrada lender banks'
consent, the exchange control approval to remit funds into Namibia, and the
admission of subscription shares to trading on AIM.
DEVELOPMENT BANK OF NAMIBIA
At the writing of this review, the inter-creditor agreements between DBN and
Standard Bank have been concluded. The only outstanding condition to complete
and access the N$100m (c. US$5.8m) facility is the finalisation of the
security package. The terms are unchanged from those detailed in the Company's
announcement of 5 July 2022.
These are that the facility is for a 10-year term, for the first 12 months
after execution there will be no interest or capital repayment, and interest
accrues at Namibian prime lending rate (currently 11.5%) plus 2.5% per annum.
The facility is ringfenced for the continuous improvement programme of Uis
Mine.
CONCLUSION: GOING CONCERN
Management and the Board of Directors have considered cash flow forecasts and
have stress tested the potential impact of the decline in tin prices. There
are circumstances indicating that a material uncertainty exists which may cast
significant doubt on the Group's ability to continue as a going concern and
that the Group may therefore be unable to realise its assets or settle its
liabilities in the ordinary course of business. However, following their
review, the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational existence
for the going concern assessment period, and have therefore used the going
concern basis in preparing these consolidated financial statements.
HITEN OOKA
Chief Financial Officer
24 August 2023
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ANDRADA MINING
OPINION ON THE FINANCIAL STATEMENTS
In our opinion the financial statements:
• give a true and fair view of the state of the Group's affairs
as at 28 February 2023 and of its loss for the year then ended;
• have been properly prepared in accordance with UK adopted
international accounting standards; and
• have been prepared in accordance with the requirements of the
Companies (Guernsey) Law, 2008.
We have audited the financial statements of Andrada Mining Limited (the
"Parent Company") and its subsidiaries (the "Group") for the year ended 28
February 2023 which comprise the consolidated statement of comprehensive
income, the consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash flows and
notes to the financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the preparation of
the financial statements is applicable law and UK adopted international
accounting standards.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing
(UK) ISAs (UK) and applicable law. Our responsibilities under those standards
are further described in the Auditor's responsibilities for the audit of the
financial statements section of our report. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our
opinion.
INDEPENDENCE
We remain independent of the Group in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to Note 2 to the financial statements, which indicates that
the Group will need to raise additional funding from the Development Bank of
Namibia and other sources after the approval of the financial statements to
fund their working capital and capital projects. However, this additional
funding has not yet been completed. As stated in Note 2, these events or
conditions, indicate that a material uncertainty exists that may cast
significant doubt on the Group's ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Directors'
assessment of the Group's ability to continue to adopt the going concern basis
of accounting and our audit procedures in response to key audit matter
included the following:
• We discussed with Directors and the Audit Committee their
assessment of potential risks and uncertainties, forecast commodity prices,
production and the availability of financing that are relevant to the Group's
business model and operations. We formed our own assessment of risks and
uncertainties based on our understanding of the business and mining sector and
considered these in performing our own sensitivities.
• We reviewed the latest Board-approved cash flow forecasts for
the Group to September 2024. We challenged Directors' assumptions in respect
of level of production, forecast tin prices, operating costs and capital
expenditure. In doing so, we considered factors such as operational
performance, recent cost profile and market analyst commentary regarding
forecast commodity prices.
• We recalculated forecast covenant compliance calculations and
assessed the consistency of such calculations with the ratios stated in the
relevant lender agreements.
• We assessed the sensitivity analysis performed in respect of
key assumptions underpinning the forecasts and considered Directors'
conclusions as to whether such scenarios are reasonably possible based on our
knowledge of the business and operating environment.
• We discussed with management and the Board the Group's
strategy to access capital to fund its development plans and working capital
needs. We have verified the post year end funding received by the Group. We
considered the Director's judgement that they had reasonable expectation of
securing further necessary funding and the timing of such funding requirement.
There are term-sheets in place; however, currently there are no binding
agreements in respect of additional fund raising.
• We reviewed and considered the adequacy of the disclosure
within the financial statements relating to Directors' assessment of the going
concern basis of preparation with the requirements of the financial reporting
framework, our understanding of the business and the Directors' going concern
assessment.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
OVERVIEW
Coverage(1) 99% (2022: 99%) of Group revenue
90% (2022: 89%) of Group total assets
Key audit matters 2023 2022
Going concern Yes Yes
Potential Impairment of mining assets Yes Yes
Materiality Group financial statements as a whole
£470 000 (2022: £370 000) based on 1% of total assets (2022: 1% of total
assets)
(1) These are areas which have been subject to a full scope audit and
specified audit procedure performed by the group engagement team and the
component auditor teams.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
In approaching the Group audit we considered how the Group is organised and
managed. Andrada Mining Limited is a Company registered in Guernsey and listed
on AIM in the UK, the NSX in Namibia and has qualified to trade on the OTCQB
Venture Market in the US from 5 June 2023. The Group's principal operations
are located in Namibia and South Africa. Our Group audit scope focused on the
Group's producing and exploration assets to gain sufficient coverage over the
Group's total assets, total revenue and loss before tax while considering the
audit risks identified. As a result, we determined Parent Company and two
subsidiary entities, AfriTin Mining (Namibia) Pty Limited and Uis Tin Mining
Company Pty Limited which operate the Uis Mine to be significant components of
the Group and were subject to the full scope audits. The audits of each of the
significant components were principally performed in the United Kingdom,
Namibia, and South Africa. All the audits were conducted by either the group
audit team or BDO network member firms. The remaining components of the Group
were considered non-significant, and these components were principally subject
to analytical review procedures, together with specified audit procedures over
exploration and evaluation related assets. This work was conducted by BDO
network member firms.
OUR INVOLVEMENT WITH COMPONENT AUDITORS
For the work performed by component auditors, we determined the level of
involvement needed in order to be able to conclude whether sufficient
appropriate audit evidence has been obtained as a basis for our opinion on the
Group financial statements as a whole. Our involvement with component auditors
included the following:
• We held planning meetings with the component auditors and
local management.
• Detailed Group reporting instructions were sent to the
component auditors, which included significant areas to be covered by the
audits and set out the information to be reported to the Group audit team.
• The Group engagement partner visited Namibia, and during this
visit he had meetings with the component auditor and the management of the
audited entity, and visited the mine site.
• The Group audit team was actively involved in the direction of
the audits performed by the component auditor for Group reporting purposes,
along with the consideration of findings and determination of conclusions
drawn. We performed our own additional procedures in respect of certain of the
significant risk areas that represented key audit matters in addition to the
procedures performed by the component auditor.
• We received and reviewed Group reporting submissions and
performed a review of the component auditors' files. Our review was performed
remotely using our online audit software.
• We held clearance meetings remotely with the component
auditors and local management to discuss significant audit and accounting
issues and judgements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit, and directing the efforts of the engagement team.
In addition to the matter disclosed in the material uncertainty related to
going concern section of our report, we have determined the matter described
below to be the key audit matter to be communicated. These matters were
addressed in the context of our audit of the financial statements as a whole,
and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Key audit matter How the scope of our audit addressed the key audit matter
Potential impairment of mining assets We reviewed and challenged management's impairment indicator assessment and
testing performed on the underlying LoM valuation model for the Uis mining
assets which was carried out in accordance with relevant accounting standards.
Our audit procedures in this regard included:
See Note 2: Critical accounting estimates and judgements and Note 12:
Property, Plant and Equipment. • Reviewing the Competent Person's Report to support the mineral
reserve and performed an assessment of the independence and competence of
management's expert.
As disclosed in Note 2 Critical accounting estimates and judgements, • Critically reviewing LoM forecast by making enquiries of operational
management have reviewed the Uis Mine for indicators of impairment and have management, evaluating it against our understanding of the operations and
considered among other factors, the operations to date at Uis Mine including historic performance, and evaluating the consistency of available reserves
production from the lithium pilot plant, forecast commodity prices, production with the Competent Person's Report.
profile, inflation rate, post-tax real discount rate and market capitalisation
of the Group. The drilling and testing of lithium, decision on lithium • Obtaining management's LoM valuation model to confirm that
production and the initial steps that were taken prior 28 February 2023 and, sufficient headroom existed over the asset carrying value as part of our
the construction of pilot plant concluded in July 2023. Hence, production from assessment of potential impairment indicators.
lithium pilot plant is included in the impairment review of the mining asset.
• Checking the mathematical accuracy of management's LoM valuation
model.
As set out in Note 2, Management have identified the reduction in the tin • Challenging the significant inputs and assumptions used in the
price as an indicator of impairment. In undertaking the impairment review, management's LoM valuation model and whether these were indicative of
management have also reviewed the underlying Life of Mine ("LoM") valuation potential bias. This included comparing forecast commodity prices to a range
model for Uis. The LoM valuation model is on a fair value less cost to develop of third- party independent market outlook reports and historical actual data,
basis and includes assessments of different scenarios associated with capital comparing the forecast production to third party feasibility and resource
improvements and expansion opportunities. The impairment testing performed by studies. We compared forecasted costs against the expected production profiles
management did not result in an impairment. in the mine plans and recent historical performance.
• Recalculating the discount rate and utilising BDO valuation experts
to assist us in assessing management's discount rate by recalculating it in
The assessment of the recoverable value of the Uis mining assets requires reference to external data.
significant judgement and estimates to be made by management - in particular
regarding the inputs applied in the models including; future tin, tantalum and • We enquired management and reviewed the pre and post year end RNS
lithium prices, production and reserves, operating and development costs and announcements with respect to identification of lithium resources. This was
discount rates. The carrying value of the Uis mining assets is therefore further corroborated with the drilling cost for identification of lithium
considered a key audit matter given the level of judgement and estimation resources in the current year.
involved.
• We reviewed the post year end RNS announcements regarding completion
of construction and commissioning of the lithium bulk sampling plant and
tantalum circuit.
• 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:
Based on the procedures performed, we found that the key judgements and
estimates applied by management in their LoM valuation model to be within an
acceptable range and found their conclusion that there was no impairment as of
28 February 2023 to be reasonable.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit,
and in evaluating the effect of misstatements. We consider materiality to be
the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any
misstatements exceed materiality, we use a lower materiality level,
performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified
misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the
financial statements as a whole and performance materiality as follows:
Group financial statements
2023 2022
Materiality £470 000 £370 000
Basis for determining materiality 1% of total assets 1% of total assets
We consider total assets to be the most significant determinant of the Group's
financial performance used by members given the nature of Group.
The Group has invested significant sums on its production and non-production
mining assets and these are considered to be the key value driver for the
Group as its assets are an indicator of future value to shareholders.
Performance materiality £352 000 £278 000
Basis for determining performance materiality 75% of Materiality 75% of Materiality
Rationale for the percentage applied for 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 significant component of the Group based on a
percentage of between 21% and 66% (2022: 18% and 83%) of Group materiality
dependent on the size and our assessment of the risk of material misstatement
of that component. Significant component materiality ranged from £97 000 to
£310 000 (2022: £66 000 to £264 000). In the audit of each component, we
further applied performance materiality levels of 75% (2022: 75%) of the
component materiality to our testing to ensure that the risk of errors
exceeding component materiality was appropriately mitigated.
REPORTING THRESHOLD
We agreed with the Audit Committee that we would report to them all individual
audit differences in excess of £23 000 (2022: £18 500). We also agreed to
report differences be- low this threshold that, in our view, warranted
reporting on qualitative grounds.
OTHER INFORMATION
The Directors are responsible for the other information. The other information
comprises the information included in the annual report other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements, or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
OTHER COMPANIES (GUERNSEY) LAW, 2008 REPORTING
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
• proper accounting records have not been kept by the Parent
Company; or
• the financial statements are not in agreement with the
accounting records; or
• we have failed to obtain all the information and explanations
which, to the best of our knowledge and belief, are necessary for the purposes
of our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of Directors' responsibilities, the
Directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for
assessing the Group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the Directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
EXTENT TO WHICH THE AUDIT WAS CAPABLE OF DETECTING IRREGULARITIES, INCLUDING FRAUD
Irregularities, including fraud, are instances of non- compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
NON-COMPLIANCE WITH LAWS AND REGULATIONS
Based on:
• Our understanding of the Group and the industry in which it
operates;
• Discussion with management and those charged with governance;
and
• Obtaining and understanding of the Group's policies and
procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations directly relevant to
specific assertions in the financial statements are those related to reporting
framework (UK adopted international accounting standards, the Companies
(Guernsey) Law, 2008, AIM rules and the various Mining Regulations in
Namibia), and terms and conditions included in the Group's exploration and
evaluation licences and the mining licences.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with governance
for any instances of non-compliance with laws and regulations;
• Review of financial statement disclosures and agreeing to
supporting documentation;
• Holding discussions with the Directors and the Audit Committee
and made enquiries about whether they were aware of any known or suspected
instances of non-compliance with laws and regulations or fraud; and
• Gaining an understanding of the of the laws and regulations
relevant to the Group and the industry in which it operates, through
discussion with Directors and our knowledge of the industry.
FRAUD
We assessed the susceptibility of the financial statements to material
misstatement, including fraud. Our risk assessment procedures included:
• Enquiry with management and those charged with governance
regarding any known or suspected instances of fraud;
• Review of minutes of meeting of those charged with governance
for any known or suspected instances of fraud;
• Discussion among the engagement team as to how and where fraud
might occur in the financial statements; and
• Considering remuneration incentive schemes and performance
targets and the related financial statement areas impacted by these.
Based on our risk assessment, we considered the areas most susceptible to
fraud to be revenue recognition and management override of controls.
Our procedures in respect of the above included:
• Addressing the fraud risk in relation to revenue recognition
by testing one hundred percent of revenue transactions to supporting
documentation, including testing that revenue was recorded in the correct
period by testing revenue transactions in the period proceeding and preceding
year end;
• Addressing the risk of fraud through management override of
internal controls, by testing the appropriateness of journal entries made
throughout the year by applying specific criteria to select journals which may
be indicative of possible irregularities or fraud;
• Held a meeting with forensic specialists to understand
industry specific susceptible areas. Based on the input from forensic team, we
added two additional testing criteria for journal entries testing.
• Assessing the susceptibility of the Group's financial
statements to material misstatement, including how fraud might occur by making
enquiries of the Directors and the Audit Committee during the planning and
execution phases of our audit to understand where they considered there to be
susceptibility to fraud, considering the risk of management override of
controls and relevant controls established to address risks identified to
prevent or detect fraud.
• Agreeing the financial statement disclosures to underlying
supporting documentation;
• Made enquiries of Directors as to whether there was any
correspondence from regulators in so far as the correspondence related to the
financial statements;
• Assessing the judgements made in respect of going concern (see
section on Material uncertainty relating to going concern above) and Note 2 to
the financial statements; and
• Assessed whether the judgements made in accounting estimates
were indicative of a potential bias (refer to key audit matters above and Note
2 to the financial statements).
We also communicated relevant identified laws and regulations and potential
fraud risks to all engagement team members, including component engagement
teams who were all deemed to have appropriate competence and capabilities and
remained alert to any indications of fraud or non-compliance with laws and
regulations throughout the audit. For component engagement teams, we also
reviewed the result of their work performed in this regard.
Our audit procedures were designed to respond to risks of material
misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion.
There are inherent limitations in the audit procedures performed and the
further removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less likely we are
to become aware of it.
A further description of our responsibilities is available on the Financial
Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor's report.
The engagement partner on the audit resulting in this independent auditor's
opinion is Jack Draycott (Senior Statutory Auditor).
USE OF OUR REPORT
This report is made solely to the Company's members, as a body, in accordance
with Section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Parent Company's members those
matters we are required to state to them in an auditor's report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent
Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
BDO LLP Chartered Accountants
London, United Kingdom
24 August 2023
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28 February 2023
Year ended Year ended
28 February 2023 28 February 2022
Notes £ £
Revenue 4 9 827 474 13 615 045
Cost of Sales 5 (10 509 418) (9 302 518)
Gross (loss) / profit (681 944) 4 312 527
Administrative expenses 6 (7 451 352) (3 674 662)
Idle plant costs (258 177) -
Other income 52 196 61 753
Operating (loss) / profit (8 339 277) 699 618
Finance income 39 054 6 545
Finance cost 8 (669 824) (316 365)
(Loss) / profit before tax (8 970 047) 389 798
Deferred tax movement 9 866 203 (864 199)
Loss for the year (8 103 844) (474 401)
Other comprehensive (loss) / income
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of share-based payment reserve (441) 767
Exchange differences on translation of foreign operations (2 298 674) 526 779
Exchange differences on non-controlling interest 19 395 (6 700)
Total comprehensive (loss) / income for the year (10 383 564) 46 445
Loss for the year attributable to:
Owners of the parent (7 753 819) (815 645)
Non-controlling interests 23 (350 025) 341 244
(8 103 844) (474 401)
Total comprehensive (loss) / profit for the year attributable to:
Owners of the parent (10 052 933) (288 098)
Non-controlling interests (330 631) 334 543
(10 383 564) 46 445
Loss per ordinary share
Basic loss per share (in pence) 10 (0.60) (0.08)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 28 February 2023
28 February 2023 28 February 2022
Notes £ £
Assets
Non-current assets
Intangible assets 11 7 279 593 5 147 782
Property, plant and equipment 12 26 723 218 19 150 092
Total non-current assets 34 002 811 24 297 874
Current assets
Inventories 13 2 667 193 1 451 933
Trade and other receivables 14 2 592 770 3 953 382
Cash and cash equivalents 15 8 205 705 7 365 379
Total current assets 13 465 668 12 770 694
Total assets 47 468 479 37 068 568
Equity and liabilities
Equity
Share capital 20 56 883 908 38 655 078
Accumulated deficit (18 334 115) (10 739 321)
Warrant reserve 21 50 307 192 632
Share-based payment reserve 22 1 049 663 704 828
Foreign currency translation reserve (3 833 234) (1 534 560)
Equity attributable to the owners of the parent 35 816 529 27 278 657
Non-controlling interests 23 (147 430) 183 200
Total equity 35 669 099 27 461 857
Non-current liabilities
Environmental rehabilitation liability 18 965 578 295 151
Borrowings 16 3 287 121 4 095 405
Lease liability 19 707 355 167 216
Deferred tax liability 9 - 861 784
Total non-current liabilities 4 960 054 5 419 556
Current liabilities
Trade and other payables 17 3 655 126 2 969 833
Borrowings 16 2 915 917 1 024 736
Lease liability 19 268 283 192 586
Total current liabilities 6 839 326 4 187 155
Total equity and liabilities 47 468 479 37 068 568
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 28 February 2023
Share Convertible loan note reserve Accumulated Warrant Share-based payment reserve Foreign currency translation reserve Total Non-controlling interests Total
capital
deficit
reserve
equity
£ £ £ £ £ £ £ £ £
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 - - - - 767 526 779 527 546 (6 700) 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
Loss for the year - - (7 753 819) - - - (7 753 819) (350 025) (8 103 844)
Other comprehensive income / (loss) - - - - (441) (2 298 674) (2 299 115) 19 395 (2 279 720)
Transactions with owners:
Issue of shares 19 801 083 - - - - - 19 801 083 - 19 801 083
Share issue costs (1 962 253) - - - - - (1 962 253) - (1 962 253)
Share-based payments - - - - 345 276 - 345 276 - 345 276
Warrants exercised in the year 390 000 159 025 (159 025) - - 390 000 - 390 000
Warrants modified in the year - - - 16 700 - - 16 700 - 16 700
Total equity at 28 February 2023 56 883 908 - (18 334 115) 50 307 1 049 663 (3 833 234) 35 816 529 (147 430) 35 669 099
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 28 February 2023
Year ended Year ended
28 February 2023 28 February 2022
Notes £ £
Cash flows from operating activities
(Loss) / profit before taxation (8 970 047) 389 798
Adjustments for:
Fair value adjustment to customer contract 4 261 689 (137 019)
Depreciation of property, plant and equipment 12 2 377 349 1 861 023
Depreciation of intangible assets 11 10 290 28 198
Share-based payments 345 276 55 793
Equity-settled transactions 16 700 66 101
Finance income (39 054) (6 545)
Finance costs 8 669 824 316 365
Changes in working capital:
Decrease / (increase) in receivables 14 869 458 (2 866 192)
Increase in inventory 13 (1 471 706) (418 556)
Increase in payables 17 997 469 1 006 060
Net cash (used in) / generated from operating activities (4 932 752) 569 064
Cash flows from investing activities
Purchase of intangible assets (2 580 267) (1 442 774)
Purchase of property, plant and equipment (10 677 505) (4 543 884)
Net cash used in investing activities (13 257 772) (5 986 658)
Cash flows from financing activities
Finance income 39 054 6 545
Finance costs (499 621) (224 061)
Lease payments 19 (363 959) (213 661)
Net proceeds from issue of shares 20 18 228 830 12 548 248
Settlement of convertible loan notes - (1 769 945)
Proceeds from borrowings 16 1 729 454 5 024 727
Repayment of borrowings 16 (89 014) (3 907 086)
Net cash generated from financing activities 19 044 744 11 464 767
Net increase in cash and cash equivalents 854 220 6 047 173
Cash and cash equivalents at the beginning of the year 7 365 379 1 351 200
Foreign exchange differences (13 894) (32 994)
Cash and cash equivalents at the end of the year 15 8 205 705 7 365 379
The notes that follow in this report form part of these financial statements.
The financial statements were authorised and approved for issue by the Board
of Directors and authorised for issue on 24 August 2023.
MICHAEL RAWLINSON
Non-executive Director
24 August 2023
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 28 February 2023
1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES
Andrada Mining Limited ("Andrada") was incorporated and domiciled in Guernsey
on 1 September 2017, and admitted to the AIM market in London on 9 November
2017. The Company's registered office is PO Box 282, Oak House, Hirzel Street,
St Peter Port, Guernsey GY1 3RH, and it operates from Illovo Edge Office Park,
Ground Floor, Building 3, Corner Harries and Fricker Road, Illovo,
Johannesburg, 2116, South Africa.
These financial statements are for the year ended 28 February 2023 and the
comparative figures are for the year ended 28 February 2022.
As at 28 February 2023, the Andrada Group comprised:
Company Equity holding and voting rights Country of incorporation Nature of
activities
Andrada Mining Limited N/A Guernsey Ultimate holding Company
Greenhills Resources Limited(1) 100% Guernsey Holding Company
AfriTin Mining Pty Limited(1) 100% South Africa Group support services
Tantalum Investment Pty Limited(1) 100% Namibia Tin & Tantalum exploration
AfriTin Mining (Namibia) Pty Limited(2) 100% Namibia Tin, Tantalum & Lithium operations
Uis Tin Mining Company Pty Limited(3) 85% Namibia Tin, Tantalum & Lithium operations
Mokopane Tin Company Pty Limited(2) 100% South Africa Holding Company
Renetype Pty Limited(4) 74% South Africa Tin exploration
Jaxson 641 Pty Limited(4) 50% South Africa Tin exploration
Pamish Investments 71 Pty Limited(2) 100% South Africa Holding Company
Zaaiplaats Mining Pty Limited(5) 74% South Africa Property owning
Uis Tin Mining Rwanda Limited(2) 100% Rwanda Tin & Tantalum exploration
(1) Held directly by Andrada Mining Limited
(2) Held by Greenhills Resources Limited
(3) Held by AfriTin Mining (Namibia) Pty Limited
(4) Held by Mokopane Tin Company Pty Limited
(5) Held by Pamish Investments 71 Pty Limited
These financial statements are presented in Pound Sterling (£) 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, Andrada Mining Limited. The Group's key
subsidiaries, AfriTin Namibia and UTMC, use the Namibian Dollar (N$) as their
functional currency. The year end spot rate used to translate all Namibian
Dollar balances was £1 = N$22.22 and the average rate for the financial year
was £1 = N$20.22.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The consolidated financial statements have been prepared in accordance with UK
adopted international accounting standards. The consolidated financial
statements also comply with the AIM Rules for Companies, NSX Listing
Requirements and the Companies (Guernsey) Law, 2008 and show a true and fair
view.
The significant accounting policies applied in preparing these consolidated
financial statements are set out below. These policies have been consistently
applied throughout the period. The consolidated financial statements have been
prepared under the historical cost convention except as where stated.
GOING CONCERN
The Group closely monitors and manages its liquidity risk and day-to-day
working capital requirements. Cash forecasts are regularly produced,
considering the global logistical challenges around sales to ensure that there
is sufficient cash within the Group to meet its obligations. The Group runs
sensitivities for different scenarios, including but not limited to changes in
commodity prices and exchange rates. The Group also routinely monitors the
covenants associated with the borrowing facilities and proactively engages
with Standard Bank, the lender, where there is any risk. Although the bank
granted the Group a waiver on all covenants on the 28 February 2023
measurement date, based on the year-to-date production profile and latest
forecast, the Group will be able to meet its covenant obligations for the
testing period to February 2024. For the purpose of assessing going concern,
the directors have prepared forecasts to February 2025.
The main estimates considered as part of management's going concern assessment
are production profiles, tin, lithium and tantalum prices, exchange rates and
committed capital. The production profile is based on the Group's current
achieved production post the completion of the expansion project, as well as
the additional production on the successful completion of the continuous
improvement capital project, which will be started upon receipt of the funding
from the Development Bank of Namibia, this is conditional and not yet
completed. In addition, the Group successfully raised £7.7m through the issue
of 77 unsecured convertible loan notes of £100 000 each on 18 July 2023. This
further supports the liquidity requirements of the Group and its ability to
meet its obligations in the ordinary course of business until February 2025.
The Group also retains the ability to flex its ongoing exploration and
metallurgical capital expenditures in line with cash availability as well as
macro-economic circumstances.
Based on the forecasts, additional funding will be required within the next 12
months for the purpose of envisaged capital and exploration projects. As the
Group is also entering a new market with reference to lithium and tantalum
sales, which are close to near-term production, the cash flow forecast has
assumed the successful completion of the lithium pilot plant and the
tantalum circuit in order to deliver the business strategy. The need for
further funding would be required for additional exploration and capital
projects as well as studies related to the feasibility of the future growth
phases. The Group believes it has several options available to it, including
but not limited to, use of the overdraft facility, restructuring of the debt,
additional debt or equity, cost reduction strategies as well as potential
offtake arrangements. Management is already at an advanced stage of securing
bank funding mentioned above as well as other finance for the next 12 months.
On the 14th of August 2023, the Group has entered into a conditional binding
agreement to secure a blended funding package for the amount of US$25m from
Orion Resource Partners to further support the capital investment strategy of
the Group. Accordingly, the Directors continue to adopt the going concern
basis in preparing the consolidated financial information.
Notwithstanding the above, these circumstances indicate that a material
uncertainty exists that may cast significant doubt on the Group's ability to
continue as a going concern and, therefore, that the Group may be unable to
realise its assets or settle its liabilities in the ordinary course of
business. As a result of their review, and despite the aforementioned material
uncertainty, the Directors have confidence in the Group's forecasts and have a
reasonable expectation that the Group will continue in operational existence
for the going concern assessment period and have therefore used the going
concern basis in preparing these consolidated financial statements.
BASIS OF CONSOLIDATION
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
Inter-Company transactions, balances and unrealised gains/losses on
transactions between Group companies are eliminated. When necessary, amounts
reported by subsidiaries have been adjusted to conform with the Group's
accounting policies.
Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders that
present ownership interests entitling their holders to a proportionate share
of the net assets upon liquidation are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling interests is
the amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income
is attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the management
steering committee that makes strategic decisions.
The Group previously reported a Namibian and a South African operating
segment. In the 2021 financial year, the Group made the decision to impair the
full value of the South African mining licences as it chose to focus on
developing its Namibian assets and it did not intend to incur any further
expenditure on its South African licences. The Group now has a single
operating segment, consisting of the Namibian operations. During the financial
year, the Namibian operations earned £10 024 487 revenue from the sale of tin
concentrate to the Group's customer, Thailand Smelting and Refining Company
("Thaisarco"). The Namibian operating segment has a non-current asset balance
of £25 442 966 (consisting of property, plant and equipment of £21 824 522
and intangible assets of £3 618 444). The Group will continue to monitor
their operating segments and provide the necessary disclosure going forward.
FOREIGN CURRENCIES
Functional and presentational currency
The individual financial statements of each Group Company are prepared in the
currency of the primary economic environment in which that Company operates
(its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each Group Company are
expressed in Pound Sterling, which is the functional currency of the Group,
and the presentation currency for the consolidated financial statements.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation date where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
year end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement.
Group companies
The results and financial position of all the Group entities (none of which
has the currency of a hyper-inflationary economy) that have a financial
currency different from the presentation currency are translated into the
presentation currency as follows:
i) assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of that balance sheet;
ii) income and expenses for each income statement are translated at
average exchange rates, unless the average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of the
transactions; and
iii) all resulting exchange differences are recognised in other
comprehensive income.
REVENUE RECOGNITION
IFRS 15 "Revenue from Contracts with Customers" establishes a comprehensive
framework for determining whether, how much, and when revenue is recognised.
The core principle is that an entity recognises revenue to depict the transfer
of promised goods and services to the customer of an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods or services. The Group generates revenue from its primary activity, the
sale of tin concentrate, and it continued to generate immaterial revenue from
the sale of sand.
The Group produces and sells tin concentrate from its Uis Tin Mine in Namibia.
Once concentrate has been produced at the Uis plant, it is sampled, bagged,
and loaded into containers for transportation to the port in Walvis Bay for
shipment.
The Group currently has an offtake agreement with its customer, Thailand
Smelting and Refining Company ("Thaisarco"), which was signed on 1 August
2019. This contract was renewed on 1 December 2020 for a further three years.
As per the contract, Thaisarco pays the Group on the basis of actual tin
content in the concentrate per Thaisarco's analysis, at the London Metal
Exchange price less treatment charges, unit deductions and impurity charges.
The Group can elect for the sale of each shipment to occur under the following
terms:
Option 1: Standard provisional payment
Thaisarco shall pay 90% provisional payment on the basis of actual tin content
as per their own analysis. Payment is to be made within 10 working days after
the arrival of concentrate at Thaisarco's works. Title shall pass to Thaisarco
when the concentrate arrives at the Songkhla Port in Thailand.
Option 2: Provisional payment option against original bill of lading
Thaisarco shall pay 90% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original bill of lading. Title
shall pass to Thaisarco when UTMC receives the 90% provisional payment.
Option 3: Provisional payment option against warehouse holding certificate.
Thaisarco shall pay 70% provisional payment on the basis of provisional tin
content per UTMC's analysis. The provisional payment shall be done against
presentation of a provisional invoice and an original warehouse holding
certificate. Thaisarco shall pay an additional 20% provisional payment upon
presentation of the original bill of lading. Title shall pass to Thaisarco
when UTMC receives the 70% provisional payment.
During the financial year, the Group concluded sales under Option 3.
Revenue is recognised at a point in time when title and control of the goods
has transferred to the customer, which is when the concentrate arrives at
Songkhla Port in Thailand under Option 1 or when provisional payment is
received by UTMC under Option 2 and Option 3. There is limited judgement
needed to identify the point at which control passes: once physical delivery
of the products to the agreed location has occurred, the Group no longer has
physical possession of the products. At this point, the Group will have a
present right to payment and retains none of the significant risks and rewards
of the goods in question.
Pricing for the provisional payment is determined by the published tin price
on the date that title and control passes. Pricing for the final payment shall
be declared within 30 market days after arrival at Thaisarco's works. The
lower of the cash price and the three-month forward-looking price is used in
these calculations.
Revenue from the sale of sand is recognised at the point in time when control
of the goods has transferred to the customer, which is when the sand leaves
the Group's premises. At this point, the Group will have a present right to
payment and retains none of the significant risks and rewards of the goods in
question.
TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax charge is based on taxable profit for the period. The Group's
liability for current tax is calculated by using tax rates that have been
enacted or substantively enacted by the reporting date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit and is accounted for using the "balance sheet liability" method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
Deferred tax is calculated at the tax rates that are expected to apply to the
year when the asset is realised, or the liability is settled based upon rates
enacted and substantively enacted at the reporting date. Deferred tax is
charged or credited to profit or loss, except when it relates to items
credited or charged to other comprehensive income, in which case the deferred
tax is also dealt with in other comprehensive income.
INTANGIBLE EXPLORATION AND EVALUATION ASSETS
All costs associated with mineral exploration and evaluation are capitalised
as intangible exploration and evaluation assets and subsequently measured at
cost. These include the costs of: acquiring prospecting licences; mineral
production licences and annual licence fees; rights to explore; topographical,
geological, geochemical and geophysical studies; and exploratory drilling,
trenching, sampling and other activities to evaluate the technical feasibility
and commercial viability of extracting a mineral resource.
If an exploration project is successful, the related expenditures will be
transferred at cost to property, plant and equipment and depreciated over the
estimated life of the commercial ore reserves on a unit of production basis
(with this charge being taken through profit or loss). Where capitalised costs
relate to both development projects and exploration projects, the Group
reclassifies a portion of the costs which are considered attributable to
near-term production based on a percentage of the ore resource expected to be
mined in the relevant phase. Where a project does not lead to the discovery of
commercially viable quantities of mineral resources and is relinquished,
abandoned, or is considered to be of no further commercial value to the Group,
the related costs are recognised in the income statement.
The recoverability of deferred exploration costs is dependent upon the
discovery of economically viable ore reserves, the ability of the Group to
obtain necessary financing to complete the development of ore reserves and
future profitable production or proceeds from the extraction or disposal
thereof.
IMPAIRMENT OF EXPLORATION AND EVALUATION ASSETS
Intangible exploration and evaluation assets are reviewed regularly for
indicators of impairment following the guidance in IFRS 6 "Exploration for and
Evaluation of Mineral Resources" and tested for impairment where such
indicators exist.
In accordance with IFRS 6, the Group considers the following facts and
circumstances in their assessment of whether the Group's exploration assets
may be impaired:
· whether the period for which the Group has the right to explore in a
specific area has expired during the period or will expire in the near future,
and is not expected to be renewed; or
· whether substantive expenditure on further exploration for and
evaluation of mineral resources in a specific area is neither budgeted for nor
planned for; or
· whether exploration for and evaluation of mineral resources in a
specific area have not led to the discovery of commercially viable deposits
and the Group has decided to discontinue such activities in the specific area;
or
· whether sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying amount of
the exploration and evaluation assets is unlikely to be recovered in full from
successful development or by sale.
If any such facts or circumstances are noted, the Group, as a next step,
performs an impairment test in accordance with the provisions of IAS 36
"Impairment of Assets". In such circumstances, the aggregate carrying value of
the mining exploration and evaluation assets is compared to the expected
recoverable amount of the cash-generating unit. The recoverable amount is the
higher of value in use and the fair value less costs to sell.
SHARE CAPITAL AND RESERVES
i) Warrant reserve
The warrants issued by the Group are recorded at fair value on initial
recognition net of transaction costs. The fair value of warrants granted is
recognised as an expense or as share issue costs based on their nature, with a
corresponding increase in equity. The fair value of the warrants granted is
measured using the Black Scholes valuation model, taking into account the
terms and conditions under which the options were granted. The amount
recognised as an expense is adjusted to reflect the actual number of warrants
that vest.
ii) Share-based payment reserve
Where equity-settled share options are awarded to directors or employees, the
fair value of the options at the date of grant is charged to the statement of
comprehensive income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the statement of comprehensive
income over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the
statement of comprehensive income is charged with the fair value of goods and
services received.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment is stated at historical cost less accumulated
depreciation.
Depreciation is provided at rates calculated to write off the cost less the
estimated residual value of each asset over its expected useful economic life.
The applicable rates are:
· The mining assets are depreciated using the units of production
method from the point that commercial production was achieved. This reflects
the production activity in the period as a proportion of the total mining
reserve. Where the units of production method is used, the assets are
depreciated based on a rate determined by the tonnes of ore processed divided
by the estimate of the mineral reserve.
· Short-lived assets which are used in the mining and processing plant
are depreciated over a period of between one and ten years.
· Right-of-use assets are depreciated over the period of the lease
contract.
· Computer equipment is depreciated over three years.
· Furniture is depreciated over five years.
· Vehicles are depreciated over four years.
· Mobile equipment is depreciated over ten years.
· Buildings are depreciated over twenty years.
Land and mining assets under construction are not depreciated.
The estimated useful lives, residual values and depreciation methods are
reviewed at each year end and adjusted if necessary.
Gains or losses on disposal are included in profit or loss.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
MINING ASSET - STRIPPING
In open pit mining operations, it is necessary to incur costs to remove
overburden and other mine waste materials in order to access the ore body
("stripping costs"). During the development of a mine, stripping costs are
capitalised and included in the carrying amount of the related mining
property. During the production phase of a mine, stripping costs will be
recognised as an asset only if the following conditions are met:
· it is probable that the future economic benefit (improved access to
the ore body) associated with the stripping activity will flow to the entity;
· the entity can identify the component of the ore body (mining phases)
for which access has been improved; and
· the costs relating to the stripping activity associated with that
component can be measured reliably.
Stripping costs incurred and capitalised during the development and production
phase are depreciated using the unit-of-production method over the reserves
and, in some cases, a portion of resources of the area that directly benefit
from the specific stripping activity. Costs incurred for regular waste removal
that do not give rise to future economic benefits are considered as costs of
sales.
RIGHT-OF-USE ASSET
At inception of a contract, the Group assesses whether a contract is, or
contains, a lease. A contract is, or contains, a lease if the contract conveys
the right to control the use of an identified asset, for a period of time, in
exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group assesses whether:
· the contract involves the use of an identified asset. The asset may
be specified explicitly or implicitly and should be physically distinct or
represent substantially all of the capacity of a physically distinct asset. If
the supplier has a substantive substitution right, then the asset is not
identified;
· the Group has the right to obtain substantially all of the economic
benefits from use of the asset throughout the period of use; and
· the Group has the right to direct the use of the asset. The Group has
the right when it has the decision-making rights that are most relevant to
changing how and for what purposes the asset is used. In rare cases where the
decision about how and for what purposes the assets are used is predetermined,
the Group has the right to direct the use of the asset if either:
· - the Group has the right to operate the asset; or
· - the Group designed the asset in a way that predetermines how and
for what purposes it will be used.
At inception or on reassessment of a contract that contains a lease component,
the Group allocates the consideration in the contract to each lease component
on the basis of its relative stand-alone price.
The right-of-use asset is initially measured at the present value of the
remaining lease payments, discounted using the incremental borrowing rate. The
right-of-use asset is subsequently depreciated using the straight-line method
from the commencement date to the end of the lease term. In addition, the
right-of-use asset is annually assessed for impairment and will be adjusted
for certain re-measurements of the lease liability.
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
At each statement of financial position date, the Group reviews the carrying
amounts of its tangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss, if any. Where the asset does not generate
cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
Where there has been a change in economic conditions that indicate a possible
impairment in a cash-generating unit, the recoverability of the net book value
relating to that unit is assessed by comparison with the estimated discounted
future cash flows based on management's expectations of future commodity
prices and future costs.
The recoverable amount is determined on the fair value less cost to develop
basis. In assessing the recoverable amount, the expected future post-tax cash
flows from the asset are discounted to their present value using a post-tax
discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. The Life of Mine ("LoM") plan is
the approved management plan at the reporting date for ore extraction and its
associated capital expenditure. The capital expenditure included in the
impairment model does not include capital expenditure to enhance the asset
performance outside of the existing LoM plan. The ore tonnes included in the
LoM plan are those as per the Reserve Statement, which management considers
economically viable.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried
at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease to the extent that it reverses gains previously
recognised in other comprehensive income.
Where conditions giving rise to impairment subsequently reverse, the effect of
the impairment charge is also reversed as a credit to the income statement,
net of any depreciation that would have been charged since the impairment.
INVENTORIES
Inventory consists of tin concentrate on hand, the run of mine stockpile, and
consumable items.
The tin concentrate is carried at the lower of cost or net realisable value.
The cost of the concentrate includes direct materials, direct labour,
depreciation, and overhead costs relating to processing and engineering
activities. Net realisable value is the estimated selling price net of any
estimated selling costs in the ordinary course of business.
The run of mine stockpile is carried at the lower of cost or net realisable
value. The cost of the stockpile includes direct materials, direct labour,
depreciation, and overhead costs relating to mining activities. Net realisable
value is the estimated selling price net of necessary processing costs and any
estimated selling costs in the ordinary course of business.
Consumables are valued at the lower of cost (determined on the weighted
average basis) and net realisable value. Cost comprises all costs of purchase,
costs of conversion, and other costs incurred in bringing the inventories to
their present location and condition. Replacement cost is used as the best
available measure of net realisable value.
FINANCIAL INSTRUMENTS
Financial instruments are recognised in the Group's statement of financial
position when the Group becomes a party to the contractual provisions of the
instrument.
FINANCIAL ASSETS
The Group classifies its financial assets in the following measurement
categories:
· those to be measured subsequently at amortised cost and
· those to be measured subsequently at fair value through profit or
loss.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
Financial assets are classified as at amortised cost only if the asset is held
to collect the contractual cash flows and the contractual terms of the asset
give rise to cash flows that are solely payments of principal and interest. At
subsequent reporting dates, financial assets at amortised cost are measured at
amortised cost less any impairment losses.
For assets measured at fair value, gains and losses will be recorded in profit
or loss.
IMPAIRMENT OF FINANCIAL ASSETS
The Group assesses on a forward-looking basis the expected credit losses,
defined as the difference between the contractual cash flows and the cash
flows that are expected to be received, associated with its assets carried at
amortised cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk. For trade receivables only,
the simplified approach permitted by IFRS 9 "Financial Instruments" is
applied, which requires expected lifetime losses to be recognised from initial
recognition of the receivables. Losses are recognised in the income statement.
When a subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through the income statement.
To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due.
TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognised at the fair value of the
consideration receivable.
Trade and other receivables are subsequently measured at amortised cost less
impairment or at fair value through profit or loss.
Under its offtake arrangement, the Group receives a provisional payment upon
satisfaction of its performance obligations based on the tin price at that
date. This occurs prior to the final price determination and the Group then
subsequently receives the difference between the final price and quantity and
the provisional payment. As a result of the pricing structure, the instrument
is classified at fair value through profit or loss and changes in fair value
are recorded as revenue.
Trade and other receivables are classified as a current asset as these are
expected to be settled within a year.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash at hand and deposits on a term of not
greater than three months.
FINANCIAL LIABILITIES
Financial liabilities include trade and other payables, borrowings, and other
longer-term financing, classified into one of the following categories:
· Fair value through profit or loss: The liabilities are carried in the
statement of financial position at fair value with changes in fair value
recognised in the income statement. The Group currently has no financial
liabilities carried at fair value through profit or loss.
· Financial liabilities carried at amortised cost
TRADE AND OTHER PAYABLES
Trade and other payables are initially recognised at fair value and are
subsequently measured at amortised cost, calculated using the effective
interest rate method.
BORROWINGS
Interest-bearing debt is initially recorded at fair value less transaction
costs, and is subsequently measured at amortised cost, calculated using the
effective interest rate method.
Borrowing costs are expensed as incurred except where they relate to the
financing of construction or development of qualifying assets in which case
they are capitalised up to the date when the qualifying asset is ready for its
intended use.
DERECOGNITION
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised when:
· the rights to receive cash flows from the asset have expired; or
· the Group has transferred its right to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party, and either
- the Group has transferred substantially all the risks and rewards of the
asset, or
- the Group has neither transferred nor retained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
A financial liability (in whole or in part) is derecognised when the Group has
extinguished its contractual obligations, it expires, or it is cancelled.
Any gain or loss on derecognition is taken to the profit or loss.
REHABILITATION PROVISION
The net present value of estimated future rehabilitation costs is provided for
in the financial statements and capitalised within property, plant and
equipment on initial recognition. Rehabilitation will generally occur on or
after closure of a mine.
Initial recognition is at the time that the construction or disturbance
occurs, and thereafter as and when additional construction or disturbances
take place. The estimates are reviewed annually to take into account the
effects of inflation and changes in the estimated cost of the rehabilitation
works, and are discounted using rates that reflect the time value of money.
Annual increases in the provision due to the unwinding of the discount are
recognised in the statement of comprehensive income as a finance cost. The
present value of additional disturbances and changes in the estimate of the
rehabilitation liability are recorded to mining assets against an
increase/decrease in the rehabilitation provision.
The rehabilitation asset is amortised over the life of the mine once
commercial production commences. Rehabilitation projects undertaken, included
in the estimates, are charged to the provision as incurred. Environmental
liabilities, other than rehabilitation costs, which relate to liabilities
arising from specific events, are expensed when they are known, probable and
may be reasonably estimated.
LEASE LIABILITY
The lease liability is initially measured at the present value of the
remaining lease payments, discounted using the interest rate implicit in the
lease. The liability is subsequently measured at amortised cost using the
effective interest rate method. Lease payments are apportioned between the
finance charges and reduction of the lease liability using the incremental
borrowing rate to achieve a constant rate of interest on the remaining balance
of the liability.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Group's accounting policies, the Directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates. In particular, information about
significant areas of estimation uncertainty considered by management in
preparing the financial statements is provided below.
Estimates and judgements are continually evaluated. Revisions to accounting
estimates are recognised in the year in which the estimates are revised if the
revision affects only that year, or in the year of revision and in future
years if the revision affects both current and future years.
i) Going concern and liquidity
Significant estimates were required in forecasting cash flows used in the
assessment of going concern including tin and tantalum prices, the levels of
production, operating costs, and capital expenditure requirements. For further
details, refer to going concern considerations laid out earlier in Note 2.
ii) Decommissioning and rehabilitation obligations
Estimating the future costs of environmental and rehabilitation obligations is
complex and requires management to make estimates and judgements, as most of
the obligations will be fulfilled in the future and contracts and laws are
often not clear regarding what is required. The resulting provisions (see Note
18) are further influenced by changing technologies, and by political,
environmental, safety, business, and statutory considerations.
The Group's rehabilitation provision is based on the net present value of
management's best estimates of future rehabilitation costs. Judgement is
required in establishing the disturbance and associated rehabilitation costs
at period end, timing of costs, discount rates, and inflation. In forming
estimates of the cost of rehabilitation which are risk adjusted, the Group
assessed the Environmental Management Plan and reports provided by internal
and external experts. Actual costs incurred in future periods could differ
materially from the estimates, and changes to environmental laws and
regulations, life of mine estimates, inflation rates, and discount rates could
affect the carrying amount of the provision.
The carrying amount of the rehabilitation obligations for the Group at 28
February 2023 was £965 578 (2022: £295 151). In determining the amount
attributable to the rehabilitation liability, management used a risk-free
discount rate of 13% (2022: 10%), an inflation rate of 5.3% (2022: 5%) and an
estimated mining period of 13.4 years (2022: 17 years), being the Phase 1
expansion life of mine. The decrease in the mining period is as a result of
the increased mining volumes post the Phase 1 Expansion. A 1% increase or
decrease in the inflation rate used would result in an increase of £139 637
or a decrease of £123 812 difference in the liability respectively. A 2%
increase or decrease in the discount rate used would result in a decrease of
£175 466 or increase of £ 322 516 difference in the liability respectively.
iii) Impairment indicator assessment for exploration and evaluation assets
Determining whether an exploration and evaluation asset is impaired requires
an assessment of whether there are any indicators of impairment, including
specific impairment indicators prescribed in IFRS 6: Exploration for and
Evaluation of Mineral Resources. If there is any indication of potential
impairment, an impairment test is required based on value in use of the asset.
The valuation of intangible exploration assets is dependent upon the discovery
of economically recoverable deposits which, in turn, is dependent on future
tin prices, future capital expenditures, environmental and regulatory
restrictions, and the successful renewal of licences. The directors have
concluded that there are no indications of impairment in respect of the
carrying value of Namibian intangible assets at 28 February 2023 based on
planned future development of the Namibian projects, and current and forecast
tin prices. Exploration and evaluation assets are disclosed fully in Note
11.
iv) Impairment assessment for property, plant, and equipment
Management have reviewed the Uis Mine for indicators of impairment and have
considered, among other factors, the operations to date at the Uis Tin Mine
including production from the lithium pilot plant, forecast commodity prices,
production profile, inflation rate, post-tax real discount rate and market
capitalisation of the Group. The drilling and testing of lithium, decision on
lithium production, the initial steps taken prior 28 February 2023 and the
construction of pilot plant that was concluded in July 2023. Therefore,
production from the lithium pilot plant is included in the impairment review
of the mining asset. Management identified the reduction in the tin price as
an indicator of impairment. In undertaking the impairment review, management
have also reviewed the underlying LoM valuation model for Uis. The LoM
valuation model is on a fair value less cost to develop basis and includes
assessments of different scenarios associated with capital improvements and
expansion opportunities. The impairment testing performed by management did
not result in an impairment. The forecasts require estimates regarding
forecast tin, tantalum and lithium prices, ore resources, production,
operating and capital costs.
Under the base case forecast scenario, management used life of mine of 30
years a forecast tin price of US$26 000, tantalum price of US$150 000, lithium
price of US$2 960 for FY 2024, US$1 619 for FY 2025, US$1 429 for FY2026 and
US$1 051 from FY 2027 onwards, discount rate of 11.5% post-tax real rate and
inflation rate of 4.5%. The forecast indicates sufficient headroom as at 28
February 2023. Life of mine is assumed to be 30 years based on the measured
resources and based on assumption that the licences will be renewed.
One of the complex judgements in determining the recoverable amount of mining
assets is an estimation of the future tin price. The estimation of future tin
price is subject to uncertainty considering the market volatility. Management
has therefore compared the forecast tin price with the economic consensus
estimates and found that the forecast tin prices are within the range
suggested by economic consensus estimates. Furthermore, a sensitivity analysis
was performed by lowering the forecast tin prices by 5% which also indicated
sufficient headroom as at 28 February 2023.
As an additional test, management performed certain sensitivity calculations.
These included lowering plant recovery by 5% raising the discount rate by 2%
and and increasing operating costs by 5%. In each of these circumstances, the
forecast indicated sufficient headroom as at 28 February 2023.
v) Depreciation
Judgement is applied in making assumptions about the depreciation charge for
mining assets when using the unit-of-production method in estimating the ore
tonnes held in reserves. The relevant reserves are those included in the
current approved LoM plan which relates to the Phase 1 expansion.
Judgement is also applied when assessing the estimated useful life of
individual assets and residual values. The assumptions are reviewed at least
annually by management and the judgement is based on consideration of the LoM
plan, as well as the nature of the assets. The reserve assumptions included in
the LoM plan are evaluated by management.
vi) Capitalisation and depreciation of waste stripping
The Group has elected to capitalise the costs of waste stripping activities as
these are necessary to allow improved access to the ore and, therefore, will
result in future economic benefits.
The costs of drilling, blasting and load and haul of waste material is
capitalised until such time that the underlying ore is used in production.
These costs are then expensed on a proportional basis. The capitalised costs
are included in the mining asset in property, plant and equipment and are
expensed back into the statement of comprehensive income as depreciation.
Capitalisation of waste stripping requires the Group to make judgements and
estimates in determining the amounts to be capitalised. These judgements and
estimates include, amongst others, the expected life of mine stripping ratio
for each separate open pit, the determination of what defines separate pits,
and the expected volumes to be extracted from each component of a pit for
which the stripping asset is depreciated.
vii) Determination of ore reserves
The estimation of ore reserves primarily impacts the depreciation charge of
evaluated mining assets, which are depreciated based on the quantity of ore
reserves. Reserve volumes are also used in calculating whether an impairment
charge should be recorded where an impairment indicator exists.
The Group estimates its ore reserves and mineral resources based on
information, compiled by appropriately qualified persons, relating to
geological and technical data on the size, depth, shape, and grade of the ore
body and related to suitable production techniques and recovery rates. The
estimate of recoverable reserves is based on factors such as tin, lithium and
tantalum prices, future capital requirements and production costs, along with
geological assumptions and judgements made in estimating the size and grade of
the ore body.
There are numerous uncertainties inherent in estimating ore reserves and
mineral resources. Consequently, assumptions that are valid at the time of
estimation may change significantly if or when new information becomes
available.
viii) Valuation of inventories
Judgement is applied in making assumptions about the value of inventories and
inventory stockpiles, including tin prices, plant recoveries and processing
costs, to determine the extent to which the Group values inventory and
inventory stockpiles. The Group uses forecast tin prices to determine the net
realisable value of the ROM stockpile and the tin concentrate inventory on
hand at year end. Inventory stockpiles are measured using actual mining and
processing costs.
ix) Determining the lease term
In determining the lease term, management considers all facts and
circumstances that create an economic incentive to exercise, or not to
exercise, an extension option. Extension options are only included in the
lease term where the Group is reasonably certain that it will extend or will
not terminate the lease when the lease expires. For all leases, the most
relevant factors include:
· historical lease durations;
· costs incurred in replacing the leased asset;
· possible business disruption due to replacing the leased asset;
· likelihood of extension of the lease - if there are significant
penalties to terminate, then it's reasonably certain that the Group will
extend.
The lease term is reassessed on an ongoing basis, especially when the option
to extend becomes exercisable, or on occurrence of a significant event or a
significant change in circumstances which affects this assessment, and that is
within the control of the Group.
x) Determining the incremental borrowing rate to measure lease
liabilities
The interest rate implicit in leases is not available, therefore the Group
uses the relevant incremental borrowing rate (IBR) to measure its lease
liabilities. The IBR is estimated to be the interest rate that the Group would
pay to borrow:
· over a similar term;
· with similar security;
· the amount necessary to obtain an asset of a similar value to the
right of use asset; and
· in a similar economic environment.
The IBR, therefore, is considered to be the best estimate of the incremental
rate and requires management's judgement as there are no observable rates
available.
xi) Determining the fair value of trade receivables classified at fair
value through profit or loss.
The consideration receivable in respect of certain sales for which performance
obligations have been satisfied at year end and for which the Group has
received prepayment under the terms of the offtake agreement, remain subject
to pricing adjustments with reference to market prices at the date of
finalisation. Under the Group's accounting policies, the fair value of the
consideration is determined, and the remaining receivable is adjusted to
reflect fair value. Management estimated the forward price based on the LME
three month tin price that is expected when the open shipments will be
finalised. The forward prices used by management were US$23 866 and US$24 469
depending on the date the shipments were finalised.
As at 28 February 2023 the Group, using forward price of US$24 469 and US$23
866 based on when shipments will be finalised and recognised as a receivable
at fair value through profit or loss of £126 125 (2022: £812 594).
3. ADOPTION OF NEW AND REVISED STANDARDS
A number of new and amended standards and interpretations issued by IASB have
become effective for the first time for financial periods beginning on (or
after) 1 March 2022 and have been applied by the Group in these financial
statements. None of these new and amended standards and interpretations had a
significant effect on the Group because they are either not relevant to the
Group's activities or require accounting which is consistent with the Group's
current accounting policies.
ACCOUNTING STANDARDS AND INTERPRETATIONS NOT APPLIED
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods and which have not been adopted early.
4. REVENUE
Year ended Year ended
28 February 2023 28 February 2022
£ £
Revenue from the sale of tin 10 024 487 13 717 620
Revenue from the sale of sand 64 676 34 444
Total revenue from customers 10 089 163 13 752 064
Revenue - change in fair value of customer contract (261 689) (137 019)
Total revenue 9 827 474 13 615 045
The revenue from the sale of tin and sand is recognised at the point in time
at which control transfers. Other revenue relates to the change in the fair
value of amounts receivable under the offtake agreement between the date of
initial recognition and the period end resulting from forecast market prices
at the estimated final pricing date.
Refer to Note 2 for further details.
5. COST OF SALES
Year ended Year ended
28 February 2023 28 February 2022
£ £
Costs of production 9 334 142 8 057 083
Smelter charges 757 459 748 892
Logistics costs 106 626 126 086
Government royalties 311 191 370 457
10 509 418 9 302 518
6. ADMINISTRATIVE EXPENSES
The profit / (loss) for the year has been arrived at after charging /
(crediting):
Year ended Year ended
28 February 2023 28 February 2022
£ £
Staff costs 3 025 406 1 269 882
Depreciation of property, plant & equipment 366 190 221 948
Professional fees 1 201 984 621 379
Travelling expenses 350 884 96 956
Uis administration expenses 916 238 660 476
Auditor's remuneration 190 000 95 000
Foreign exchange (gains)/losses 696 621 (15 109)
IT costs 285 408 154 748
Other costs 418 621 569 383
7 451 352 3 674 663
Other costs are mainly comprised of corporate overheads necessary to run the
South African head office and the costs associated with being listed in
London.
7. STAFF COSTS
Year ended Year ended
28 February 2023 28 February 2022
£ £
Staff costs capitalised under property, plant, and equipment 1 044 009 607 622
Staff costs capitalised under intangible assets 413 939 171 793
Staff costs recognised as administrative expenses 2 680 130 1 182 228
Staff costs included in cost of sales 1 796 229 1 317 548
Share-based payment charge capitalised under property, plant and equipment - 18 892
Share-based payment charge capitalised under intangible assets - 6 076
Share-based payment charge recognised as administrative expenses 345 276 80 253
Share issue charge - 7 401
6 279 583 3 391 813
Key management personnel have been identified as the Board of Directors, Frans
van Daalen (Chief Strategy Officer of the Group) and Hiten Ooka (Chief
Financial Officer of the Group). Details of key management remuneration are
shown in Note 26.
The average number of staff during the period was 219 (2022: 165) with an
average total cost per employee for the year of £23 102 (2021: £20 510).
Emoluments of £305 270 including £90 081 of share options and shares to be
issued (2022: £183 712 including £13 258 of share options and shares to be
issued) were paid in respect of the highest-paid director during the year.
8. FINANCE COST
Year ended Year ended
28 February 2023 28 February 2022
£ £
Interest on lease liability 156 118 42 630
Interest on environmental rehabilitation liability 14 085 12 080
Bank interest 338 812 102 655
Interest on loan notes - 68 836
Amortisation of warrant charge - 37 594
Interest paid on prepayments from customer 160 809 52 570
669 824 316 365
9. TAXATION
The tax expense represents the sum of the tax currently payable and deferred
tax.
Year ended Year ended
28 February 2023 28 February 2022
Factors affecting tax for the year: £ £
The tax assessed for the year at the Guernsey corporation tax charge rate of
0%, as explained below:
(Loss) / profit before taxation (8 970 048) 389 798
(Loss) / profit before taxation multiplied by the Guernsey corporation tax - -
charge rate of 0%
Effects of:
Differences in tax rates (overseas jurisdictions) (1 791 238) (525 598)
Tax losses carried forward 1 791 238 525 598
Movement in deferred tax 866 203 (864 199)
Tax for the year 866 203 (864 199)
Accumulated losses in the subsidiary undertakings for which there is an
unrecognised deferred tax asset are £8 100 173 (2022: £4 290 665).
A deferred tax asset of £1 694 362 was not recognised in the Namibian
entities. Due to the sizeable assessed losses that have accumulated in these
entities, management has decided not to recognise the deferred tax asset in
the 2023 financial year as the timing of future taxable profits is not certain
at this stage.
10. LOSS PER SHARE FROM CONTINUING OPERATIONS
The calculation of a basic loss per share of 0.60 pence (February 2022: loss
per share of 0.08 pence), is calculated using the total loss for the period
attributable to the owners of the Company of £7 753 819 (February 2022: £815
645) and the weighted average number of shares in issue during the period of 1
291 331 804 (February 2022: 1 064 247 295).
Due to the loss for the period, the diluted loss per share is the same as the
basic loss per share. The number of potentially dilutive ordinary shares, in
respect of share options, warrants and shares to be issued as at 28 February
2023 is 77 636 918 (February 2022: 76 261 762). These potentially dilutive
ordinary shares may have a dilutive effect on future earnings per share.
11. INTANGIBLE ASSETS
Exploration and evaluation assets Computer Total
software
Cost £ £ £
As at 28 February 2021 5 124 686 115 775 5 240 461
Additions for the year - other expenditure 1 577 065 - 1 577 065
Transfer to mining asset (1 058 602) - (1 058 602)
Transfer to mining asset under construction (678 467) - (678 467)
Exchange differences 91 047 4 397 95 444
As at 28 February 2022 5 055 729 120 172 5 175 901
Additions for the year - other expenditure 2 580 267 - 2 580 267
Exchange differences (431 234) (7 858) (439 092)
As at 28 February 2023 7 204 762 112 314 7 317 076
Exploration and evaluation assets Computer Total
software
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
Charge for the period - 10 290 10 290
Exchange differences - (926) (926)
As at 28 February 2023 - 37 483 37 483
Exploration and evaluation assets Computer Total
software
Net Book Value £ £ £
As at 28 February 2023 7 204 762 74 831 7 279 593
As at 28 February 2022 5 055 729 92 053 5 147 782
As at 28 February 2021 5 124 686 115 775 5 240 461
The amounts for intangible exploration and evaluation assets represent costs
incurred on active exploration projects. Amounts capitalised are assessed for
impairment indicators under IFRS 6 at each year end as detailed in the Group's
accounting policy.
During the prior year, the Group transferred the costs incurred on the Phase 1
Stage II Definitive Feasibility Study (DFS) from exploration and evaluation
assets to mining asset under construction. It was determined that the project
had reached the stage of being commercially viable and technically feasible,
therefore, the transfer from intangible assets to property, plant and
equipment was deemed necessary. Demonstration of commercial viability and
technical feasibility coincided with a Board decision and approval to commence
development and construction of the project. Furthermore, the Group
transferred the purchase price of the Uis mining licence ML134. The pegmatites
covered by this mining licence are currently being mined at the Uis Mine. As
mining activities are actively taking place and revenue is being generated
from the ore that has been mined on this licence area, management concluded
that the value of this licence must be moved to property, plant, and
equipment, in the mining asset category during the prior year.
The directors have concluded that there are no indicators of impairment in
respect of the carrying value of the Namibian exploration and evaluation
assets at 28 February 2023 based on planned future development of the projects
and current and forecast tin, lithium and tantalum prices.
12. PROPERTY, PLANT AND EQUIPMENT
Cost Land Mining asset under construction Mining Mining asset - Stripping Decommissioning asset Right-of-use Computer Equipment Furniture Vehicles Mobile equipment Buildings Total
asset
Asset (crane)
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 - 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
Additions for the year - 7 264 184 984 390 1 531 721 750 363 1 121 536 112 496 99 371 294 699 303 356 284 733 12 746 849
Disposals for the year - - (309 259) - - (61 435) - - - - - (370 694)
Transfer between categories of assets - (9 532 184) 9 532 184 - - - - - - - - -
Foreign exchange differences (1 051) (74 979) (2 154 393) (251 622) (90 495) (156 934) (26 928) (24 209) (32 154) (42 317) (25 635) (2 880 714)
As at 28 February 2023 11 261 1 240 874 23 662 690 2 612 227 928 572 1 558 697 283 040 254 492 328 396 436 819 259 098 31 576 169
Accumulated Depreciation
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 (7) - 30 389
As at 28 February 2022 - - 1 859 775 488 004 9 435 332 624 117 605 65 091 54 878 3 224 - 2 930 636
Charge for the year - - 964 857 967 435 15 542 254 667 50 928 43 556 35 297 35 930 9 137 2 377 349
Foreign exchange differences - - (225 323) (128 759) (2 205) (62 451) (14 656) (9 447) (7 862) (3 511) (823) (455 037)
As at 28 February 2023 - - 2 599 309 1 326 680 22 772 524 840 153 877 99 200 82 313 35 643 8 314 4 852 948
Net Book Value
As at 28 February 2023 11 261 1 240 874 21 063 381 1 285 547 905 800 1 033 857 129 163 155 292 246 083 401 176 2 507 834 26 723 218
As at 28 February 2022 12 312 3 583 853 13 749 993 844 124 259 269 322 906 79 867 114 239 10 973 172 556 - 19 150 092
As at 28 February 2021 11 862 1 240 873 12 951 171 - 167 043 345 397 60 625 67 158 31 445 - - 13 634 701
In October 2020, the Group embarked on the Uis Phase 1 Stage II Definitive
Feasibility Study (DFS) with a view to expand the existing Phase 1 plant to
increase its nameplate production from 60 to 105 tonnes of tin concentrate per
month. All costs associated with carrying out the study were previously
capitalised as exploration and evaluation assets under IFRS 6. During the
prior financial year, management performed an assessment and transferred the
costs associated with the study from exploration and evaluation assets to
mining assets under construction. It was determined that the project had
reached the stage of being commercially viable and technically feasible,
therefore, the transfer was deemed necessary. The capitalised costs of the
study as well as the construction costs of the expansion were accumulated in
the mining asset under construction. The Uis Phase 1 Expansion was
commissioned in November 2022 and the total costs of the study and the
construction were transferred to the mining asset at this date.
Additions to the mining asset include capitalised costs and equipment
purchased as part of the Uis Phase 1 Continuous Improvement project.
Additions to the mining asset under construction include capitalised costs and
equipment purchased as part of the construction of the Bulk Sample Processing
Facility. This includes a Lithium pilot plant, a Tantalum pilot plant and an
ore sorting plant.
The Group has elected to capitalise the costs of waste stripping activities as
these are necessary to allow improved access to the ore and, therefore, will
result in future economic benefits. The costs of drilling, blasting and load
and haul of waste material is capitalised until such time that the underlying
ore is used in production.
Please refer to Note 19 for further information on the right-of-use asset.
The total depreciation charge for the current financial year was split between
administrative expenses and cost of sales. £336 190 (2022: £221 948) was
included in administrative expenses, while the balance of £2 071 856 (2022
£1 639 075) was included in cost of sales as it was a cost that was incurred
for mining and processing purposes.
13. INVENTORIES
Year ended Year ended
28 February 2023 28 February 2022
£ £
Tin concentrate on hand 1 364 286 909 180
Run-of-mine stockpile 589 725 155 389
Consumables 713 182 387 364
2 667 193 1 451 933
14. TRADE AND OTHER RECEIVABLES
Year ended Year ended
28 February 2023 28 February 2022
£ £
Trade receivables 27 678 96 173
Trade receivables at fair value through profit or loss 126 125 812 594
Other receivables 1 369 867 1 875 561
VAT receivables 1 069 100 1 169 054
2 592 770 3 953 382
The Directors consider that the carrying amount of trade and other receivables
approximates to their fair value due to their short-term nature. No allowance
for any expected credit losses against any of the trade receivables is
provided due to a history without default or non-payment from any of the
Group's customers.
Trade receivables at fair value through profit or loss relates to the change
in the fair value of trade receivables under the offtake agreement between the
date of initial recognition and the period end resulting from forecast market
prices at the estimated final pricing date.
Other receivables primarily consist of prepayments that the Group has made and
deposits that have been paid on items of equipment that are necessary for the
Phase 1 Stage II expansion.
The total trade and other receivables denominated in South African Rand amount
to £164 427 (2022: £61 316), denominated in Namibian Dollars amount to £2
221 827 (2022: £2 851 028) and denominated in US Dollars amount to £126 125
(2022: £812 594).
15. CASH AND CASH EQUIVALENTS
Year ended Year ended
28 February 2023 28 February 2022
£ £
Cash on hand and in bank 8 205 705 7 365 379
Cash and cash equivalents (which are presented as a single class of assets on
the face of the Statement of Financial Position) comprise cash at bank. The
Directors consider that the carrying amount of cash and cash equivalents
approximates their fair value. The total cash and cash equivalents denominated
in South African Rand amount to £110 625 (2022: £80 463), the total cash and
cash equivalents denominated in Namibian Dollars amount to £2 526 962 (2022:
£1 279 798) and the total cash and cash equivalents denominated in US Dollars
amount to £3 808 714 (2022: £3 450 626).
16. BORROWINGS
Year ended Year ended
28 February 2023 28 February 2022
£ £
Standard Bank term loan facility 4 083 503 4 523 414
Standard Bank VAT facility 336 357 367 739
Standard Bank working capital facility 1 298 805 228 988
Standard Bank vehicle asset financing facility 484 373 -
6 203 038 5 120 141
On 18 November 2021, a term loan facility of N$90 000 000 (c. £4 050 000), a
VAT facility of N$8 000 000 (c. £360 000) and a working capital facility of
N$35 000 000 (c. £1 575 000) was entered into between the Group's subsidiary,
Uis Tin Mining Company (Pty) Ltd and Standard Bank Namibia. During the current
year, a vehicle asset financing facility to the value of N$15 000 000 (c.
£675 000) was provided.
The maturity date of the term loan facility is November 2026 and the capital
balance of the loan together with accrued interest will be repaid in quarterly
instalments over the next five years. Interest is charged on the outstanding
capital balance of the loan at a rate of three month JIBAR plus a margin of
4.5%. The Company has offered security in the form of lien over all movable
assets, inter-Company guarantees over all book debts, cession of insurance
policies, the offtake agreement and all shareholder loans.
The Group is required to meet the following covenants as part of the term loan
facility agreement:
· EBITDA ÷ total interest must not be lower than 4.5 times
· Total debt ÷ EBITDA must not exceed 4 times in year 1, 3.5 times in
year 2 and 3 times thereafter
· Free cash flow before Debt Service Cover ÷ Principal and Interest
Senior Debt Service Payments must not be lower than 1.3 times
· Free cash flow before Debt Service Cover + Total Cash Collateral ÷
Principal and Interest Senior Debt Service Payments must not be lower than 2
times
The Group received a covenant waiver from Standard Bank for the year ended 28
February 2023. The next measurement date will be 28 February 2024.
The VAT facility is secured by assessed/audited VAT returns (refunds) which
have not been paid by Namibia Inland Revenue. Standard Bank Namibia provides a
facility amounting to the unpaid refunds. Any drawdowns against this facility
are repaid to the bank upon receipt of cash from Namibia Inland Revenue.
The VAT facility and the working capital facility have no fixed maturity date,
but are both renewed on an annual basis. Interest accrues on these facilities
at the Namibian prime rate less 1%.
Standard Bank Namibia have provided a N$5 956 100 (c. £268 000) guarantee
to the Namibia Power Corporation Pty Limited in relation to a deposit for the
supply of electrical power. As a result of the guarantee provided by Standar
Bank, no cash was paid over for the deposit.
The following is the split between the current and the non-current portion of
the liability:
Year ended Year ended
28 February 2023 28 February 2022
£ £
Non-current liability 3 287 121 4 095 405
Current liability 2 915 917 1 024 736
6 203 038 5 120 141
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN BORROWINGS
Balance as at 28 February 2021 3 869 489
Incoming cash flows
Proceeds from term loan 4 428 000
Proceeds from VAT facility 367 739
Proceeds from working capital facility 228 988
Outgoing cash flows
Repayment of loan note instrument and interest (2 196 836)
Repayment of working capital facility (1 607 592)
Interest paid on working capital facility (102 655)
Non-cash flows
Interest accrued on term loan (capitalised to mining asset under construction) 95 414
Amortisation of warrant charge 37 594
Balance as at 28 February 2022 5 120 141
Incoming cash flows
Proceeds from vehicle asset financing facility 532 296
Proceeds from working capital facility 1 197 158
Outgoing cash flows
Repayment of capital balance of term loan (89 014)
Interest paid on term loan (95 903)
Non-cash flows
Interest accrued on term loan (capitalised to mining asset) 125 832
Foreign exchange differences (587 472)
Balance as at 28 February 2023 6 203 038
17. TRADE AND OTHER PAYABLES
Year ended Year ended
28 February 2023 28 February 2022
£ £
Trade payables 1 624 816 2 293 471
Other payables 202 127 341 276
Accruals 1 828 183 335 086
3 655 126 2 969 833
Trade and other payables principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 30 days.
The Group has financial risk management policies in place to ensure that
payables are paid within the pre-arranged credit terms. No interest has been
charged by any suppliers as a result of late payment of invoices during the
year.
The Directors consider that the carrying amount of trade and other payables
approximates to their fair value.
The total trade and other payables denominated in South African Rand amount to
£1 147 054 (2022: £124 904) and £2 154 031 (2022: £2 692 924) is
denominated in Namibian Dollars.
18. ENVIRONMENTAL REHABILITATION LIABILITY
£
Balance as at 28 February 2021 180 917
Increase in provision 95 585
Interest expense 12 080
Foreign exchange differences 6 569
Balance as at 28 February 2022 295 151
Increase in provision 750 363
Interest expense 14 085
Foreign exchange differences (94 021)
Balance as at 28 February 2023 965 578
Provision for future environmental rehabilitation and decommissioning costs
are made on a progressive basis. Estimates are based on costs that are
regularly reviewed and adjusted appropriately for new circumstances. The
environmental rehabilitation liability is based on disturbances and the
required rehabilitation as at 28 February 2023.
The rehabilitation provision represents the present value of decommissioning
costs relating to the dismantling and sale of mechanical equipment and steel
structures related to the Phase 1 pilot plant, the demolishing of civil
platforms, and reshaping of earthworks. A provision for this requires
estimates and assumptions to be made around the relevant regulatory framework,
the magnitude of the possible disturbance, and the timing, extent and costs of
the required closure and rehabilitation activities. In calculating the
appropriate provision, cost estimates of the future potential cash outflows
based on current studies of the expected rehabilitation activities and timing
thereof are prepared. These forecasts are then discounted to their present
value using a risk-free rate specific to the liability. In determining the
amount attributable to the rehabilitation liability, management used a
discount rate of 13% (2022: 10%), an inflation rate of 5.3% (2022: 5%), and an
estimated mining period of 13.4 years (2022: 17 years). Actual rehabilitation
and decommissioning costs will ultimately depend upon future market prices for
the necessary rehabilitation works and timing of when the mine ceases
operation.
19. LEASE LIABILITY
The Group assessed all existing and new rental agreements and concluded that
the following rentals fall within the scope of IFRS 16: Leases and therefore a
lease liability has been raised:
Lease Option to Incremental
extend/terminate
borrowing rate
term
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 9.75%
years.
Residential housing 5 years The lease will continue automatically after the initial period for an 11.75%
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.
Vehicles 5 years The lessee will own the vehicles after the after the lease period of 5 years. 11.25%
Office Workshop Housing Mobile units Vehicles Total
Building
£ £ £ £ £ £
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
Additions 534 606 43 507 153 388 - 208 892 940 393
Disposals (22 035) - - - - (22 035)
Interest expense 55 378 15 612 62 198 1 906 21 024 156 118
Lease payments (159 096) (59 332) (51 685) (37 147) (56 699) (363 959)
Foreign exchange differences (51 391) (3 018) (24 004) (676) (15 593) (94 682)
Balance at 28 February 2023 528 283 32 341 248 225 9 165 157 624 975 638
The following is the split between the current and the non-current portion of
the liability:
Year ended Year ended
28 February 2023 28 February 2022
£ £
Non-current liability 707 355 167 215
Current liability 268 283 192 588
975 638 359 803
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN LEASES
Balance as at 28 February 2021 386 077
Outgoing cash flows
Lease payments (213 661)
Non-cash flows
Additions 129 982
Interest expense 42 630
Foreign exchange differences 14 775
Balance as at 28 February 2022 359 803
Outgoing cash flows
Lease payments (363 959)
Non-cash flows
Additions 940 393
Disposals (22 035)
Interest expense 156 118
Foreign exchange differences (94 682)
Balance as at 28 February 2023 975 638
20. SHARE CAPITAL
Number of ordinary shares of no-par value issued and fully paid Share Capital
£
Balance at 28 February 2021 874 690 012 25 608 001
Warrants exercised - 22 April 2021 1 686 666 63 150
Capital raise - 12 May 2021 216 666 667 13 000 000
Share issue costs - (823 447)
Convertible loan note settled - 25 May 2021 18 963 699 430 055
Shares issued to suppliers - 25 May 327 868 29 672
Shares issued to suppliers - 15 December 798 001 39 102
Exercising of employee share options - 14 January 2 185 087 72 059
Exercising of employee share options - 27 January 1 250 000 56 250
Exercising of employee share options - 22 February 5 273 684 180 236
Balance as at 28 February 2022 1 121 841 684 38 655 078
Capital raise - 16 September 2022 222 701 660 11 135 083
Capital raise - 10 October 2022 173 320 000 8 666 000
Share issue costs - (1 962 253)
Warrants exercised - 25 January 2023 20 000 000 390 000
Balance at 28 February 2023 1 537 863 344 56 883 908
Authorised: 1 616 508 573 ordinary shares of no par value Allotted, issued and
fully paid: 1 537 863 344 ordinary shares of no par value
On 16 September 2022, the Group completed an equity fundraising by way of a
placing and direct subscription of 222 701 660 ordinary shares of no par value
in the Group at a price of 5 pence per share. A further 173 320 000 660
ordinary shares of no par value in the Group at a price of 5 pence per share
were issued on 10 October 2022 as part of the same capital raise.
On 25 January 2023, warrant holders exercised 20 000 000 warrants at an
exercise price of 1.95.
21. WARRANTS
The warrants in issue during the year are as follows:
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
Granted during the year -
Expired during the year -
Exercised during the year (20 000 000)
Outstanding at 28 February 2023 2 613 334
Exercisable at 28 February 2023 2 613 334
On 22 January 2023, 2 613 334 warrants at an exercise price of 4.5 pence were
extended for an additional six months.
On 25 January 2023, notice was received from warrant holders to exercise 20
000 000 warrants at an exercise price of 1.95 pence. The charges previously
raised on these warrants was reversed, resulting in a movement in the warrant
reserve.
In the year ended 28 February 2023, there was a charge of £16 700 accounted
for due to the extension of the period of the warrants in issue (February
2022: nil).
Please refer to the statement of changes in equity for the reconciliation of
the warrant reserve.
22. SHARE-BASED PAYMENT RESERVE
DIRECTOR SHARE OPTIONS
The following director share options were granted during the year ended 28
February 2023:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Number granted 7 800 000 3 900 000 3 900 000
Vesting period 1 year 2 years 3 years
Contractual life 3 years 3 years 3 years
Estimated fair value per option (pence) 2.0830 2.8490 3.4090
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Share price at grant date (pence) 9.35 9.35 9.35
Exercise price (pence) 9.80 10.30 10.80
Expiry date 8 April 2025 8 April 2025 8 April 2025
Expected volatility 60% 60% 60%
Expected dividends Nil Nil Nil
Risk-free interest rate 1.24% 1.24% 1.24%
The director share options in issue during the year are as follows:
Outstanding at 28 February 2021 27 100 000
Exercisable at 28 February 2021 8 389 999
Granted during the year -
Forfeited during the year -
Exercised during the year (1 250 000)
Expired during the year -
Outstanding at 28 February 2022 25 850 000
Exercisable at 28 February 2022 23 850 000
Granted during the year 15 600 000
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 28 February 2023 41 450 000
Exercisable at 28 February 2023 23 850 000
The director share options outstanding at year end have an average exercise
price of £0.067 (2022: £0.045), with a weighted average remaining
contractual life of 1.29 years (2022: 1.79 years).
A director must remain as a director of the Group for the share options to
vest. In the event that a director ceases to be a director during the vesting
period, the Board reserves the right to determine whether the share options
will be terminated or not. There are no market-based vesting conditions on the
share options.
EMPLOYEE SHARE OPTIONS
The following employee share options were granted during the year ended 28
February 2023:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Number granted 2 400 000 1 200 000 1 200 000
Vesting period 1 year 2 years 3 years
Contractual life 3 years 3 years 3 years
Estimated fair value per option (pence) 2.0830 2.8490 3.4090
The estimated fair values were calculated by applying the Black Scholes
pricing model. The model inputs were:
Date of grant 8 April 2022 8 April 2022 8 April 2022
Share price at grant date (pence) 9.35 9.35 9.35
Exercise price (pence) 9.80 10.30 10.80
Expiry date 8 April 2025 8 April 2025 8 April 2025
Expected volatility 60% 60% 60%
Expected dividends Nil Nil Nil
Risk-free interest rate 1.24% 1.24% 1.24%
The employee share options in issue during the year are as follows:
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
Granted during the year 4 800 000
Forfeited during the year -
Exercised during the year -
Expired during the year -
Outstanding at 28 February 2023 32 171 229
Exercisable at 28 February 2023 27 371 229
The employee share options outstanding at the year end have an average
exercise price of £0.044 (2022: £0.034), with a weighted average remaining
contractual life of 1.13 years (2021: 1.96 years).
An employee must remain in employment with the Group for the share options to
vest. There are no market-based vesting conditions on the share options.
23. NON-CONTROLLING INTERESTS
Non-controlling interest that is material in the Group relates to the Small
Miners of Uis ("SMU") who own 15% of UTMC. SMU is a non-profit association
incorporated in Namibia. The entity was set up by the Ministry of Mines and
Energy to act on behalf of small-scale miners across Namibia.
Other includes the following minority interests which are not material:
· Cannosia Trading 62 CC which own 16% of Renetype
· African Women Enterprise Investments (Pty) Ltd which own 10% of
Renetype
· Lerama Resources (Pty) Ltd which own 50% of Jaxson
· Tamiforce (Pty) Ltd which own 26% of Zaaiplaats
No dividends have been paid to any of the minority interests listed above.
As at 28 February 2023 UTMC Other Total
Amount attributable to all shareholders:
Loss after tax (2 321 500) (6 147) (2 327 647)
Non-current assets 10 508 167 11 262 10 519 429
Current assets 5 116 388 - 5 116 388
Total assets 15 624 555 11 262 15 635 817
Non-current liabilities 7 956 192 - 7 956 192
Current liabilities 8 839 733 58 417 8 898 150
Total liabilities 16 795 925 58 417 16 854 342
Net assets / (liabilities) (1 171 370) (47 155) (1 218 525)
Amount attributable to non-controlling interest:
Profit / (loss) after tax (348 224) (1 801) (350 025)
Net assets / (liabilities) (173 406) (13 557) (186 963)
As at 28 February 2022 UTMC Other Total
Amount attributable to all shareholders:
Profit / (loss) after tax 2 281 762 (3 926) 2 277 836
Non-current assets 7 085 066 12 313 7 097 379
Current assets 8 862 468 - 8 862 468
Total assets 15 947 534 12 313 15 959 847
Non-current liabilities 12 843 653 44 967 12 888 620
Current liabilities 1 788 861 12 786 1 801 647
Total liabilities 14 632 514 57 753 14 690 267
Net assets / (liabilities) 1 315 020 (45 440) 1 269 580
Amount attributable to non-controlling interest:
Profit / (loss) after tax 342 264 (1 021) 341 243
Net assets / (liabilities) 196 230 (13 030) 183 200
24. FINANCIAL INSTRUMENTS
The Group is exposed to the risks that arise from its use of financial
instruments. This note describes the objectives, policies and processes of the
Group for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout
these financial statements.
CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be
able to continue as going concerns while maximising returns to shareholders.
In order to maintain or adjust the capital structure, the Group may issue new
shares or arrange debt financing.
The capital structure of the Group consists of cash and cash equivalents and
equity, comprising issued capital, borrowings and retained losses.
The Group is not subject to any externally imposed capital requirements.
SIGNIFICANT ACCOUNTING POLICIES
Details of the significant accounting policies and methods adopted including
the criteria for recognition, the basis of measurement, and the bases for
recognition of income and expenses for each class of financial asset,
financial liability, and equity instrument, are disclosed in Note 2.
PRINCIPAL FINANCIAL INSTRUMENTS
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
· Borrowings
· Lease liability
CATEGORIES OF FINANCIAL INSTRUMENTS
The Group holds the following financial assets:
Year ended Year ended
28 February 2023 28 February 2022
£ £
Measured at amortised cost:
Trade and other receivables 1 397 545 7 365 379
Cash and cash equivalents 8 205 705 7 365 379
Measured at fair value through profit or loss:
Trade and other receivables 126 125 812 594
Total financial assets 9 729 375 10 149 707
Under its customer sale arrangement, the Group receives a provisional payment
upon satisfaction of its performance obligations based on the spot price at
that date. This occurs prior to the final price determination, with the Group
then subsequently receiving or paying the difference between the final price
and quantity and the provisional payment. As a result of the pricing
structure, the instrument is classified at fair value through profit or loss
and measured at fair value with resulting changes in fair value recorded as
other revenue.
Trade receivables at fair value through profit or loss fail the criteria for
being measured at amortised cost owing to the variability resulting from final
pricing adjustments. Financial instruments measured at fair value are
presented by level within which the fair value measurement is categorised. The
levels of fair value measurement are determined as follows:
· Level 1: quoted prices (unadjusted) in active markets for identical
assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Group's contract receivable at 28 February 2023 is recorded at fair value
through profit or loss and fair valued based on the estimated forward prices
that will apply under the terms of the sales contracts on the product reaching
the port of destination. The trade receivables fair value reflects amounts
receivable from the customer adjusted for forward prices expected to be
realised.
The forward price is based on the expected LME three month tin price on the
date of finalisation. Given the short period to final pricing, the time value
of money is not considered to be significant.
Fair value of this trade receivable at fair value through profit or loss is
categorised at Level 1. During the year there were no transfers between levels
of fair value hierarchy.
The Group holds the following financial liabilities:
Year ended Year ended
28 February 2023 28 February 2022
£ £
Measured at amortised cost:
Trade and other payables 3 655 126 2 969 833
Borrowings 6 203 038 5 120 141
Lease liability 975 638 359 803
Total financial liabilities 10 833 802 8 449 777
Maturity analysis of the contractual undiscounted cash flows:
Up to Between 3 Between 1 Between 2 Total
3 months and 12 months and 2 years and 5 years
Trade and other payables 3 655 126 - - - 3 655 126
Borrowings 560 908 2 355 009 1 226 338 2 060 783 6 203 038
Lease Liability 75 616 192 668 205 633 501 721 975 638
4 291 650 2 547 677 1 431 971 2 562 504 10 833 802
GENERAL OBJECTIVES, POLICIES AND PROCESSES
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies. The Board receives reports through which
it reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below:
Credit risk
The Group's principal financial assets are bank balances and trade and other
receivables.
Credit risk arises principally from the Group's cash and trade and other
receivables balances. Credit risk is the risk that the counterparty fails to
repay its obligation to the Group in respect of amounts owed. The Group gives
careful consideration to which organisations it uses for its banking services
in order to minimise credit risk.
The concentration of the Group's credit risk is considered by counterparty,
geography and currency. The Group has split its cash reserves across multiple
banks in an effort to mitigate credit risk. The Pound Sterling and US Dollar
accounts are held with a bank in Mauritius which has a rating of Baa3
(Moody's), the Rand account is held with a bank in South Africa which has a
rating of Ba2 (Moody's) and the Namibian Dollar account is held with a bank in
Namibia with a rating of Ba2 (Moody's). The banks chosen remain stable and do
not present any further risks.
The concentration of credit risk was as follows:
Year ended Year ended
28 February 2023 28 February 2022
£ £
Currency
UK Pound Sterling 1 759 404 2 554 492
US Dollar 3 808 714 3 450 626
South African Rand 110 625 80 463
Namibian Dollars 2 526 962 1 279 798
8 205 705 7 365 379
Credit risk relating to trade and other receivables has also been considered.
Credit verification procedures are undertaken for all customers with whom we
trade on credit. This includes an assessment of the credit quality of the
customer, taking into account its financial position, past experience and
other factors. The trade account receivables comprise a limited customer base.
Ongoing credit evaluation of the financial position of customers is performed
and compliance with credit limits by customers is regularly monitored by
management. Please refer to Note 14 for the concentration of credit risk
relating to trade receivables.
At 28 February 2023, the Group held no collateral as security against any
financial asset. The carrying amount of financial assets recorded in the
financial statements, net of any allowances for losses, represents the Group's
maximum exposure to credit risk without taking account of the value of any
collateral obtained. The Group applies IFRS 9 to measure expected credit
losses for receivables and these are regularly monitored and assessed. No
expected credit losses have been recognised on financial assets during the
year. Management considers the above measures to be sufficient to control the
credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its financial obligations as they fall due. Ultimate responsibility for
liquidity risk management rests with the Board of Directors. The Board manages
liquidity risk by regularly reviewing the Group's gearing levels, cash flow
projections and associated headroom and ensuring that excess banking
facilities are available for future use.
The Group maintains good relationships with its banks and its cash
requirements are anticipated via the budgetary process. At 28 February 2023,
the Group had £8 205 705 (2021: £7 365 379) of cash reserves.
Market risk
The Group's activities expose it primarily to the financial risk of changes in
foreign currency exchange rates and interest rates.
Interest rate risk
The Group has interest bearing assets in the form of cash and cash
equivalents. The Group does not earn significant interest on cash balances.
The Group has interest bearing liabilities in the form of bank loans and
facilities. These liabilities are exposed to variable interest rates. The
following table details the Group's sensitivity to a 1% increase and a 1 %
decrease in the interest rate.
Value Cash flow impact of a 1% increase in interest rate Cash flow impact of a 1% decrease in interest rate
£ £ £
Borrowings 6 203 038 (62 030) 62 030
Foreign exchange risk
The Group has foreign currency denominated assets and liabilities, and is
therefore exposed to exchange rate fluctuations. The carrying amounts of the
Group's foreign currency denominated monetary assets and liabilities, all in
Pound Sterling, are shown below.
Year ended Year ended
28 February 2023 28 February 2022
£ £
Cash and cash equivalents 6 446 301 4 810 887
Trade and other receivables 1 443 280 2 555 885
Trade and other payables (3 301 085) (2 550 860)
Borrowings (6 203 038) (5 120 141)
(1 614 542) 304 229
The Group operates on an international basis; therefore, foreign exchange risk
exposures arise from transactions denominated in foreign currencies. The Group
is exposed to foreign currency risk on fluctuations related to financial
instruments that are denominated in UK Pound Sterling, US Dollars, South
African Rand and Namibian Dollars.
The Group does not enter into any derivative financial instruments to manage
its exposure to foreign currency risk. The following table details the Group's
sensitivity to a 10% increase and decrease in the Pound Sterling against the
Rand and the Namibian Dollar. 10% is the sensitivity rate used when reporting
foreign currency risk internally to key management personnel and represents
management's assessment of the reasonable possible change in foreign currency
rates. The sensitivity analysis includes only outstanding foreign currency
denominated monetary items and adjusts their translation at year end for a 10%
change in foreign currency rates.
Rand denominated monetary items Rand currency impact Rand currency impact
£ Strengthening Weakening
£ £
Assets 137 109 150 820 123 398
Liabilities (1 147 054) (1 261 760) (1 032 349)
(1 009 945) (1 110 940) (908 951)
Namibian Dollar denominated monetary items Namibian Dollar currency impact Namibian Dollar currency impact
£ Strengthening Weakening
£ £
Assets 3 943 758 4 338 133 3 549 382
Liabilities (8 357 069) (9 192 776) (7 521 362)
(4 413 311) (4 854 643) (3 971 980)
25. EVENTS AFTER BALANCE SHEET DATE
KEY MANAGEMENT CHANGE
Frans Van Daalen was appointed as Chief Strategy Officer to drive business
development strategy, with a focus on accelerating the lithium project. Chris
Smith was appointed as the Chief Operations Officer.
BOARD APPOINTMENTS
Hiten Ooka, the Chief Financial Officer, was appointed as an Executive
Director and Gida Nakazibwe Sekandi has been appointed as a Non-Executive
Director.
ISSUE OF SHARE OPTIONS
On 11 May 2023, the Group granted options over 41 217 116 ordinary shares to
certain Directors, senior managers, and employees of the Group, in line with
its LTIP. The options are exercisable at a price of 6p per ordinary share. For
the employees and senior managers, the options can be exercised at any time
from 1 May 2026, for a period of seven years and for the Directors, the
options can be exercised at any time from 1 May 2028, for a period of seven
years. In each case, the options will vest in three tranches and each tranche
can only be exercised if the 60-day Volume Weight Average Price of the Andrada
share price exceeds the target share price for that tranche. The target share
price for the three tranches are 7p, 8p and 9p respectively. The options
expire in 2033 and are conditional on the continued employment of the relevant
recipient as an employee of the Group at the time of exercise.
LISTING ON THE OTCQB MARKET
On 5 June 2023, the Group has qualified to trade on the OTCQB Market (an
American financial market) and trading in the Group's ordinary shares has
commence trading on this. The trading of the Group's ordinary shares on AIM, a
market of the London Stock Exchange, and on the Namibian Stock Exchange,
remain unaffected by this additional listing.
DEVELOPMENT BANK OF NAMIBIA FACILITY
On 2 June 2023, the Group executed the contractual documentation for the
N$100m (c. US$5.8m) senior secured debt facility with the Development Bank of
Namibia. The facility is for a 10-year term; for the first 12 months after
execution, no interest or capital repayments are required; and interest
accrues at Namibian prime lending rate (currently 11%) plus 2.5% per annum.
Completion of the Facility remains subject to a series of final conditions
including the execution of an inter-creditor agreement between the DBN and
Standard Bank and finalisation of the associated security package.
COMPLETION OF CONSTRUCTION OF PILOT PLANTS
On 18 July 2023, the Group completed the construction of both the lithium bulk
sampling plant and the tantalum production circuit. The Group has begun the
commissioning of these plants.
ISSUE OF CONVERTIBLE LOAN NOTES
On 21 July 2023, the Group raised £7.7m through the issue of 77 unsecured,
convertible loan notes of £100 000 each to new and existing investors. The
Group has also issued the holders of the loan notes two warrants for every £1
of loan note held. Each warrant enables the holder to subscribe for one
ordinary share in the Company.
ORION FACILITY
On 14 August 2023, Andrada signed binding documentation for an updated,
conditional US$25m financing package with Orion. The details of the Orion
financing are detailed below:
· US$2.5m (c. £2.0m) equity at 6.39p and, US$10m (c. £7.9m)
convertible loan note ("the Note") being for the general purposes of
accelerating Andrada's overall strategy of achieving commercial production of
its lithium, tin, and tantalum revenue streams.
· US$12.5m unsecured tin royalty for the sole purpose of increasing
Andrada's tin production as it ramps up its capital programmes over the next
two years.
· The Company will issue Orion with warrants equivalent to double the
GBP value of the US$10m Note based on the USD/GBP rate at market close on the
Orion Issuance Date. Each warrant will enable Orion to subscribe for one
ordinary share in Andrada.
· The financing is subject to the fulfilment of the following
outstanding conditions precedent:
o shareholder approval at the upcoming Annual General Meeting;
o the Company's lender banks' consent;
o exchange control approval to remit funds into Namibia; and
o Admission of the Subscription Shares (as defined below) to trading on AIM.
Funding expected to be completed around the end of September 2023.
26. RELATED-PARTY TRANSACTIONS
Balances and transactions between the Group and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.
The remuneration of the key management personnel of the Group, which includes
the Directors, as well as Frans van Daalen and Hiten Ooka, is set out below.
28 February 2023 Share Option Charge Shares to be Issued in Relation to Director Fees/Salary Director Fees/Salary (incl. bonus payment and accrual) Other Total
£ £ £ Fees £
£
Non-Executive Directors
Glen Parsons (Chairman) 36 032 - 55 000 - 91 032
Terence Goodlace 36 032 - 44 778 - 80 810
Laurence Robb 36 032 18 000 17 000 24 000 95 032
Michael Rawlinson 36 032 21 000 24 000 81 032
Executive Director
Anthony Viljoen (Chief Executive Officer) 90 081 - 360 780 - 450 861
Other key management personnel
Hiten Ooka (Chief Financial Officer - appointed June 2022) 72 065 - 198 042 - 270 107
Frans van Daalen (Chief Strategy Officer) 72 065 - 265 894 - 337 959
378 339 39 000 965 494 24 000 1 406 833
28 February 2022 Share Option Charge Shares to be Issued in Relation to Director Fees/Salary Director Fees/Salary (incl. bonus payment) 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 - 3 500 4 000 49 102 56 602
Executive Director
Anthony Viljoen (Chief Executive Officer) 13 258 - 170 454 - 183 712
Other key management personnel
Robert Sewell (previous Chief Financial Officer 8 838 - 110 326 - 119 164
Frans van Daalen (Chief Strategy Officer) 8 838 - 140 390 - 149 228
47 506 21 500 557 645 57 102 683 753
27. CAPITAL COMMITMENTS
Significant capital expenditure contracted for at the end of the reporting
period but not recognised as liabilities is as follows:
Year ended Year ended
28 February 2023 28 February 2022
£ £
Exploration and evaluation projects 1 246 195 1 021 297
Property, plant, and equipment 954 192 1 695 932
2 200 387 2 717 229
28. RESERVES WITHIN EQUITY
SHARE CAPITAL
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
CONVERTIBLE LOAN NOTE RESERVE
The convertible loan note reserve represents proceeds on issue of convertible
loan notes relating to equity component plus accrued interest on the
convertible loan notes. These notes were settled in full during the prior
financial year.
WARRANT RESERVE
The warrant reserve represents the cumulative charge to date in respect of
unexercised share warrants at the balance sheet date.
SHARE-BASED PAYMENT RESERVE
The share-based payment reserve represents the cumulative charge to date in
respect of unexercised share options at the balance sheet date as well as
fees/salaries owed to directors/employees to be settled through the issuing of
shares.
FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve comprises all foreign exchange
differences arising from the translation of entities with a functional
currency other than Pound Sterling.
RETAINED EARNINGS/ACCUMULATED DEFICIT
The retained earnings/accumulated deficit represents the cumulative profit and
loss net of distribution to owners.
__________________________________________________________________________________
About Andrada Mining Limited
Andrada Mining Limited has a vision to create a portfolio of globally
significant, conflict-free, production and exploration assets. The Company's
flagship asset is the Uis Mine in Namibia, formerly the world's largest
hard-rock open cast tin mine.
Andrada has three mining licences namely:
ML 134 on which Uis Mine is located.
ML133 (Lithium Ridge)
ML129 (Spodumene Hill)
The main minerals in these mining licences are tin, lithium and tantalum.
Additionally, the Company has an exploration licence EL5445 (Brandberg West)
on which the main minerals are tin, copper and tungsten. The Company has set a
mineral resource target of 200 Mt to be delineated within the next 5 years.
The substantial mineral resource potential allows the Company to consider
economies of scale.
Andrada is managed by a board of directors with extensive industry knowledge
and a management team with deep commercial and technical skills. Furthermore,
the Company is committed to the sustainable development of its operations and
the growth of its business. This is demonstrated by how the leadership team
places significant emphasis on creating value for the wider community,
investors, and other key stakeholders. Andrada has established an
environmental, social and governance system which has been implemented at all
levels of the Company and aligns with international standards.
www.andradamining.com (http://www.andradamining.com) or
connect@andradamining.com (mailto:connect@andradamining.com)
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. END FR SELSWLEDSEFARecent news on Andrada Mining
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