REG - Bens Creek Group PLC - Final Results
30/08/2022 07:16
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RNS Number : 4530X Bens Creek Group PLC 30 August 2022
Bens Creek Group plc
("Bens Creek" or "Company" or "Group")
Final results for the year ended 31 March 2022
Bens Creek Group plc (AIM: BEN), the owner of a metallurgical coal mine in
North America supplying the steel industry, is delighted to announce its
inaugural audited results for the year ended 31 March 2022.
Financial Highlights for the year to 31 March 2022
Ø Purchase gain on acquisition of Ben's Creek operating companies, $33.7m
Ø Profit before taxation, $25.3m
Ø Basic EPS 6.17 cents per share
Ø Net assets, $31.7m
Ø Property, plant and equipment, $29.8m, inclusive of plant valued at $24m
Ø Coal reserves, £25.0m
Ø Reclamation bonding asset, $1.6m
Ø Net cash, $5.6m
Ø Capitalised construction in progress (at cost) in use from April 2022,
$3.6m
Ø Revenue between January and March 2022, $5.4m
Ø Stock of raw and clean coal of 21.8k tons as at 31 March 2022, valued at
$1.5m
Ø Operating loss, $7.5m
Ø Adjusted EBITDA loss*, $3.4m
Ø Adjusted basic EPS* loss 1.24 cents per share
Ø IPO placing raised $9.6m in October 2021
Ø Convertible Loan Notes issued since IPO, $12m
*Adjusted EBITDA and EPS Adjusted EPS before, depreciation, share-based
payment expense, IPO and convertible loan note issuances and foreign exchange
movements and sale fund costs and non-recurring items.
Operational highlights
Ø Mining undertaken by contract mining arrangements
Ø Existing mining infrastructure remediated, including railway line, with
additional equipment purchased where necessary
Ø Total raw coal production of 64.8k tons of which 43.5k tons sold in the
three months to March 2022
Current trading outlook
Ø Production steadily increasing month on month. Between April and August
2022:
ü 184k raw tons of coal have been stockpiled
ü 66k clean tons (equivalent to 134k raw tons) sold via 6 trains
Ø Further 8 trains booked, two per month from September to December 2022,
equivalent to 179k raw tons
Ø Move from contractor model to equipment owner to "face-up" surface areas to
be highwall mined by our contractor, Mega Highwall Mining, to achieve cost
efficiencies
Ø Imminent receipt of new permit for a second highwall miner to be used
Ø Target production of 80k clean tons (160k raw tons) per month during the
last quarter of 2022
Extracted below is annual report and accounts of the Group. A copy of this
announcement can be accessed via our website; www.benscreek.com
(http://www.benscreek.com) . The full report and accounts are expected to
published and sent to shareholders in early September 2022 for which a further
announcement will be made at the time of publication.
Adam Wilson, Chief Executive Officer, commented:
"It gives me great pleasure to report our inaugural audited results for the
year ended 31 March 2022, as a public company. As a Group, we have achieved
considerable success within a short time frame; taking an idle mine,
developing it, achieving production and generating revenue, whilst also
providing employment and investment into the local community where our mine is
situated in West Virginia."
"Our development strategy is designed to put into place the core buildings
blocks of a fully producing met coal business which aids the de-carbonisation
of the planet as it moves towards providing infrastructure to use more
renewable energy. Without steel, this safeguarding of the environment cannot
be fulfilled in the medium to long term."
"Our rate of production continues to increase month on month following the
restart of an idle preparation and wash plant. We anticipate further increased
output as our rate of mining increases."
"We have only just started to take the initial steps to growing a met coal
Company, which we anticipate will provide our shareholders with a favourable
return on their investment from the IPO price of 10p per share."
"Our expansion plans have already secured two contiguous sites adjacent to the
Bens Creek operations, which has already enhanced our coal reserves, and is
expected in due course to be subjected to further testing and drilling to
quantify these into resources."
"I thank our shareholders who have joined our journey since our IPO and also
welcome new shareholders who have joined us since. We look forward to next
updating our shareholders at our AGM on Tuesday 27 September 2022 and as the
remainder of the year progresses."
"I take this opportunity to also thank MBU Capital Group Ltd ("MBU") for its
support and investment in developing the Group to launch an IPO in October
2021. This foundation has subsequently enabled the Group to operate
independently and allowed the Company to relocate its headquarters
independently from MBU. As a result, Raju Haldankar, decided, as announced on
12 July 2022, to step down as Chief Financial Officer of the Group and was
replaced by Murat Erden as Chief Financial Officer and Director of ESG
matters."
"Finally, I would also like to thank all members of staff, for their hard work
and dedication in ensuring that the very challenging milestones we had set
ourselves have been achieved in a very a short period of time."
"We look forward with confidence to an exciting and busy remainder of our
financial year to 31 March 2023."
For further information please contact:
+44 (0) 204 558 2300
Bens Creek Group plc
Adam Wilson, CEO
Raju Haldankar, Executive Director
Murat Erden, CFO
Allenby Capital Limited (Nominated Adviser and Joint Broker) +44 (0) 203 328 5656
Nick Athanas / Nick Naylor / George Payne (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
Optiva Securities Limited (Joint Broker) +44 (0) 203 137 1902
Christian Dennis / Mariela Jaho / Daniel Ingram
BENS CREEK GROUP PLC CHAIRMAN'S STATEMENT
I am delighted to present this first annual report and audited financial
statements of Bens Creek Group Plc (the "Group") following our Initial Public
Offering in October 2021. We are proud to have successfully built, thanks to
our outstanding management team and staff, a fully sustainable business in a
matter of months.
By way of background, we acquired two US companies, Ben's Creek Operations WV
LLC ("BC Operations") and Ben's Creek Land WV LLC ("BC Land") on 11 November,
2020 and received regulatory approval of the change of ownership on 29 April
2021. The property, which covers over 10,000 acres, had been controlled by
several different owners over its 100 year history, with the earliest
production at the site being recorded in 1914. In 2011, Investec, the previous
owner of the property, arranged a syndicate of investors to acquire the
operations. In 2014, however, following a sustained period of weakened
commodity prices, resulting in production ceasing, the business was placed on
a care and maintenance basis and remained in this state until late 2020.
I am thankful for the West Virginia Department of Environmental Protection
("WVDEP") granting the regulatory approval to acquire the mining permits and
for providing us with the opportunity to restart a dormant mine and provide
investment and employment to the local community. The transition, with the
assistance of the WVDEP, has been transparent and has aided the restart of
production within a short timeframe.
Today, the land and mining rights are controlled by Pocahontas Land
Corporation and Carbon Fuels Properties LLC. BC Land has lease agreements in
place with both these entities over the surface and mining assets. We are
grateful to these landowners in granting us the opportunity to reactivate
mining on these lands for our mutual benefit.
On 15 December 2021, we acquired the mining rights, via a lease, with M.G.C.
Inc., over a further 1,200 acres of an adjacent property, located in the
Stafford district in Mingo County, West Virginia. Furthermore, on 13 April
2022, we entered into a further lease agreement with Star Ridge Land LLC over
the mining rights of an additional 2,640 acres of adjacent property, also
located in Mingo County. Both lease arrangements are contiguous with the
primary Bens Creek property, which adds to our reserves and extends the life
of the mine.
Our product, metallurgical coal, of which we commenced delivery in January
2022 to our offtake partner Integrity Coal Sales Inc, is integral to modern
methods of steel production, which in turn will assist in the de-carbonisation
of the planet via the use of steel in renewables such as wind turbines, solar
panels, electric cars, etc. Steel is the world's most important engineering
and construction material. Metallurgical coal, sometimes referred to as met
coal or coking coal, is used, in some form, in all steel production with 70%
of steel requiring coal as a direct resource. The remaining 30%, is used in
electric arc furnace processes. Whilst this does not require direct use of
our product, it does, however, require the use of pig iron which needs
metallurgical coal in its production.
Essentially, a world without metallurgical coal mining would be a world
without steel production. I stress, however, that Bens Creek, in keeping with
its commitment to environmental protection, is not a producer of thermal coal.
Our financial performance is set out in the accompanying financial statements.
It is important to note, however, that the revenue numbers reported reflect
only a short period of production to the end of March 2022. Since then, we
have enhanced our production capability, not least by the introduction of a
second highwall miner via a contract mining agreement, which we anticipate
will be operational between September and October 2022.
We have additionally, purchased our own highwall miner which, once fully
remediated, will be available to quickly replace either of the other Highwall
miners, should they require repair, ensuring that we have only a minimal delay
in production. This addition to our equipment fleet may also be used in
conjunction with the existing highwall miners, enabling all three highwall
miners to be used simultaneously.
Post 31 March 2022, we have purchased a fleet of earth moving equipment to
supplement that used by an existing contractor.
We are proud to have an engaged a productive workforce committed to the
highest standards, supported by a highly skilled management team. I thank them
for their commitment to building a successful business.
We have, through our first financial period, tried to provide shareholders and
the market with information on a regular basis and will continue to do so.
Your board is committed to the provision of long-term sustainable returns to
shareholders. The board meets regularly, four times a year, with further ad
hoc meetings as required. The board challenges the executive team in the
development and implementation of their business plans and, where it can,
brings to bear the considerable experience of the non-executive directors. The
executive team consists of a group of mining executives who are highly
qualified and have many years of experience in the industry.
While we have recently seen some retraction in the underlying price of
metallurgical coal, demand continues to be strong for our product. We will be
pushing hard to move to full production by the end of 2022, and believe that,
now we have commenced deliveries of metallurgical coal, by train, our
anticipated delivery programme can be completed without interruption.
We are thankful for our shareholders who have shown their commitment and
support by providing the capital required for us to undertake our plan to
reinvigorate an idled mine, provide employment and investment, which restores
some financial stability to the region. We are confident that the year ahead
will be one that will see the fulfilment of our planned production programme,
thereby securing a profitable business for the future.
Robin Fryer
Non-Executive Director and Chairman
28 August 2022
BENS CREEK GROUP PLC CHIEF EXECUTIVE'S STATEMENT
To all our shareholders and stakeholders, including new members of this
investment community - I want to welcome you to this our first annual report
and audited financial statements of Bens Creek Group Plc since our listing on
AIM in October 2021.
Since we successfully completed our initial public offering ("IPO") on the
London Stock Exchange's AIM market in October 2021, I am pleased to report
that the Group has been able to fulfil its primary objective, which was to
turn a previously bankrupt, dormant mine and underperforming asset back into
production. This has been achieved within a very short time frame.
The net proceeds from our IPO, and subsequently further funding provided via
the issue of convertible loan notes, we have been able to remediate seven main
areas:
1. Implementing the necessary initial steps whilst preparing the idle
mine site;
2. Rebuild the infrastructure, such as haul roads - to get the mine
ready for future use;
3. Repair, rebuild and upgrade the wash and preparation plant;
4. Repair and rebuild the 5.2 kilometre railway line for the
transportation of our met coal product via the Norfolk Southern national
railway system;
5. Complete the advancement work, both physically at site and via the
regulators (WVDEP and MSHA) on the site, to prepare for the commencement of
Highwall Mining ("HWM");
6. Repair, rebuild and make safe the area and submit a mining plan for
the recommencement of underground mining; and
7. Purchase of a highwall miner.
I am delighted to report that, by the end of March 2022, a large part of this
work had already been completed while, post the year end, the balance of the
restoration activity has been completed. This was a considerable undertaking,
especially against external factors such as Covid-19, rising inflation and
logistical supply chain issues that all contributed to making the above
achievements more difficult.
Our ability to execute the above remedial measures was due to the excellent
management team that we were able to assemble in such a short period at Bens
Creek, both in the administrative office in Charleston and in the mine offices
at Glen Allum, West Virginia. As CEO, I want to personally thank all the
employees who, due to the relatively young age of our company, all of whom
have joined us recently and yet performed so diligently for the Group and its
shareholders.
Post year-end we have steadily increased production. We anticipate the monthly
run rate of production will be 40,000 US short tons per month as we approach
autumn 2022. This was our stated goal when we listed onto AIM back in October
2021. I am delighted to report that we aim to surpass this number on a monthly
basis after the deployment of a second Highwall Miner machine, which will be
in operational as soon as we receive our permit to mine in the area allocated
for its use. We are hopeful that this can be done well before the end of this
calendar year.
During the three months to 31 March 2022, we were able to ship some Run of
Mine coal (unwashed met coal) to generate some revenues, even though the
primary objective was to restore and renovate our infrastructure so that next
year's annual report will be one that demonstrates full production.
As a metallurgical coal mining company, we are always affected by the
underlying commodity price of met coal. Since the beginning of this year, we
have seen the price of High Vol B met coal increase to an all-time high of
$465 per metric ton achieved on the 17 March 2022 and then retrace some of
those gains to now stand at $284 per metric ton (at the time of writing this
report). This price reduction appears to be driven by the ban, from 10 August
2022, by the European Union, of all coal imports from Russia following their
invasion of Ukraine.
As a considerate mining company we take our Environmental, Social and
Governance ("ESG") responsibilities very seriously. Thankfully, in taking over
and restoring this particular mining area in West Virginia, we faced none of
the major legacy issues that other mining companies have had to deal with,
such as reclamation of areas previously mined and water and drainage
facilities. We also ensure our mining staff are provided with targeted task
training and training to standards expected by the US Department of Labour and
Mine Safety and Health Administration.
At Bens Creek we use the least evasive mining methods possible, highwall
mining versus strip mining. We actively reseed and reclaim areas previously
mined as soon as possible, so that the reclamation process is embedded within
our mining strategy.
This mining efficiency and our concern for the environment is combined with a
strong and effective safety strategy. I am delighted to report we have had no
accidents for the period reported on, or to the date of this report.
Personally, I want to thank everyone involved in the Bens Creek story: from
the employees providing their skills and labour to the contractors with their
professional experience. I wish to extend my thanks to our shareholders, a
family of investors that have backed our vision to bring this asset and
infrastructure back into production and create value for all concerned,
including ensuring a supply of well rewarded jobs that are highly appreciated
in this local area of West Virginia.
Adam Wilson
Chief Executive Officer
28 August 2022
STRATEGIC REPORT
The Directors present their Strategic Report on the Group for the year ended
31 March 2022.
Strategic approach
Bens Creek Group plc is a holding company that owns and operates the Ben's
Creek mining project in West Virginia, USA. The Group's key objective is to
deliver sustainable shareholder growth through the acquisition and development
of metallurgical coal assets, the underlying commodity of the Company. A key
component of the Company's success will be the metallurgical coal price.
The Group may seek to make further acquisitions of metallurgical coal mines in
North America.
Organisation overview
The Group's business is directed by the Board of Directors and is managed on a
day-to-day basis by the Chief Executive Officer. The Board monitors compliance
with objectives and policies of the Group through monthly performance
reporting, budget updates and periodic operational reviews.
The Board comprises of two Executive Directors and two Non-Executive
Directors.
The Corporate Head Office of the Group is located in London, and provides
corporate support services to the overseas operations in West Virginia, United
States of America ("USA").
Review of business
The strategic approach of the business pre and post IPO has been to undertake
the necessary remediation and infrastructure works required to a dormant mine
to enable it to become operational with the aim of commencing the production
of metallurgical coal or met coal. The investment made pre IPO enabled the
operational business to commence the remediation works required to the 5.2
kilometre railway facility, repairs to the preparation and wash plant and to
the underground mine site.
During the year under review and post 31 March 2022, the Group has completed
several milestones, which chronologically include:
Bens Creek Group Plc acquired on 22 September 2021, its wholly owned
subsidiary, Ben's Creek Carbon LLC based in West Virginia, USA along with its
operating subsidiaries, Ben's Creek Operations WV LLC and Ben's Creek Land WV
LLC.
The shares of the Company, via an IPO, were admitted to trading onto the
London Stock Exchange's AIM market on 19 October 2021, by the issue 70,000,000
shares at 10 pence per share, capitalising the Group at £35m. The IPO raised
$9m (£7m), before expenses, for the Group to undertake the necessary
infrastructure and redemption works as outlined above.
On 29 October 2021, the Company entered into an agreement with Integrity Coal
Sales Inc, New York ("Integrity"), our offtake partner, to supply it with a
minimum of 22,000 clean tons of metallurgical coal per month during the
calendar year 2022.
A contract mining agreement was entered into with Mega Highwall Mining on 29
October 2021 for the supply and operation of a highwall miner to extract,
using modern and environmentally friendly mining methods, met coal with a
capacity to mine up to 40,000 tons per month.
The Company commenced its initial production of mining raw (unwashed) met coal
on 1 December 2021.
On 15 December 2021, the Company raised $6m (£4.5m) from ACAM GP Limited, an
existing institutional shareholder, under a 2 year convertible loan note
facility with a conversion price of 28p per ordinary share. A further amount
of $6m (£4.5m) was raised from ACAM GP Limited on 18 February 2022 under a 2
year convertible loan note facility, with a conversion price of 40p per
ordinary share. Both of these convertible loan notes are unsecured.
Lease acquisition agreements were entered into on 16 December 2021 and 13
April 2022 for sites adjacent to the Group's site in West Virginia, giving it
rights to mine met coal reserves in situ. At the date of approval of this
strategic report, the Company had not commenced mining operations on these
sites.
The beginning of 2022, saw the Company generating revenue by the selling raw
met coal to its offtake partner, Integrity. Whilst our wash and preparation
plant were still undergoing repairs, Integrity had substantial demand for
either raw or clean met coal. This enabled us to supply our production of raw
High Vol B met coal from January to March 2022 by transporting our product to
Integrity's own wash and preparation plant.
During March 2022, the Group's own preparation and wash plant become fully
operational following the completion of remediation works and upgrades, which
initially commenced in January 2021. This has allowed the phased processing of
raw met coal into clean met coal ready for sale.
In April 2022, the Group's railway was approved for use by the inspectors of
the Norfolk Southern railway company. This enabled the Group to transport, via
rail, its stock of clean coal to Integrity for their onward transportation to
their designated loading port for onward sale.
Following the substantial investment in the current year under review and in
the current financial year (to 31 March 2023), during May 2022, the Group was
able to report on the commencement of underground mining operations to extract
High Vol A met coal. The Group was also able to report during June 2022, the
results of a reserve base evaluation undertaken by Marshall Miller &
Associates, Inc. which summarised the Group's coal properties in West
Virginia. This report stated the Group has 92.7 million tons of in-place dry
reserves, prior to any recovery of washed coal, and 33.6 million tons that are
recoverable reserves.
Outlook
The medium to long term demand for met coal would appear reasonable as
developed and developing countries embark on their plans for de-carbonisation
and infrastructure spending. Furthermore, defence spending in developed
countries is expected to increase following the armed conflict between Russia
and Ukraine.
The Group intends to maximise production using two highwall miners and
underground mining, which in aggregate is expected to produce up to 80,000
clean tons of met coal monthly. Whilst the Group has an offtake agreement for
a minimum of 22,000 clean tons per month, our offtake partner has indicated
they have further demand for our product, in excess of our contractual
commitments, to supply one of the largest steel producers in the world.
Metallurgical coal pricing
The Group is focused on producing met coal which span two quality grades,
commonly referred to as High Vol A and High Vol B. The High Vol A product is
extracted from the Group's underground property in West Virginia, whilst the
High Vol B is extracted via highwall mining. The selling prices of the Group's
met coal is correlated to the daily prices published by Standard & Poors
Global Platts Coal Trader. The prices quoted are typically for metric tons.
The weights used by the Group in its commercial arrangements are US short
tons, equivalent to 2,000 lbs per metric ton.
The pricing of met coal has since the beginning of 2021 increased
substantially, setting record all time highs in March 2022, the price having
increased from $120 to $465 per metric ton. At the time of issuing this
report, the price has softened to $284 per metric ton.
Financial review
Income Statement
The year under review has seen the Company transition from acquiring a dormant
mine and embarking on an extensive rehabilitation project to re-active
underground mining along with preparing the overall site for highwall mining
in addition to costs incurred in respect of the Company's IPO in October 2021.
The net profit generated by the Group for the year ended 31 March 2022, before
taxation was $25,285,795 with a profit (basic earnings per share) of 6.165
cents per ordinary share. The operating loss was $7,460,142.
The Company commenced the sale of High Vol B raw met coal on a monthly basis
between January and March 2022 to its offtake partner, Integrity. This
generated revenue of $5,411,816.
The direct costs incurred in connection with the sales made amounted to
$3,878,565. This generated a gross margin of 28%.
The operating loss of $7,460,142 has been driven by administrative costs of
$8,993,393, as set out in note 9 to the financial statements, which includes
the costs of $1,299,484 associated with the Group's IPO in October 2021,
brokerage related costs of $728,705 and share based payments of $2,095,151 in
relation to the Group granting share options to management and staff during
the year. Further details of granting of share options is set out in note 32
to the financial statements. Other costs incurred include depletion expenses
of $744,513, in connection with the amortisation of the stock of met coal
reserves sold to Integrity during the three months to 31 March 2022. Further
details of the value of the Company's met coal reserves is contained in note
16 of these financial statements.
The Bargain Purchase Gain of $33,688,689, has arisen from the acquisition by
BC Carbon of its subsidiaries BC Operations and BC Land on 29 April 2021, and
represents the assets acquired including plant and equipment along with the
met coal reserves less a deferred consideration payable to the seller, net of
any deferred tax liabilities. Further details of this transaction is set out
in note 29 to the financial statements.
Balance Sheet
The Group's investment in its mining activities amounts to $59,175,112 (2021:
$449,948), excluding the right of use of assets and deferred tax asset,
comprises of property, plant and equipment, coal rights to mine the known met
coal reserves along with the remediation works for the underground mining
operations and railway repairs and improvements recorded as construction in
progress.
The Group's property, plant and equipment includes capital expenditure during
the year of $7,166,523, which has continued
to the increase in the valuation of the plant, following the successful
completion of the remediation works during the year.
Accordingly, the value of the Group's plant has been independently assessed
with a carrying value of $24,000,000, details of
which are set out in note 15 of these financial statements.
Cash and cash equivalents were $5,555,296 held at the end of the year.
The Group's coal reserves are valued at $24,955,487, net of sales made during
the year.
During the period the Company issued 353,911,751 ordinary shares. This
included the issue at IPO of 70,000,000 ordinary
shares of at 10p per share along with a pre IPO issuance of 22,722,070
ordinary shares at 10p per ordinary share. Further
details of the shares issued during the period are set out in note 31 to the
financial statements.
During the year MBU Capital Group Limited ("MBU"), the Group's largest single
shareholder, provided two bridging loans, which in aggregate amounted to
$2,758,520 to allow the Group to continue the required remediation works
whilst the IPO process was being undertaken. This amount was repaid from the
proceeds of the IPO, shortly after the shares were admitted to trading onto
AIM. Without this funding, the project would have been considerably delayed,
and accordingly the Board expresses its sincere thanks to the management of
MBU in providing this funding.
The Group issued two convertible loan notes of $6,000,000 each, during the
year which raised $12,000,000 before expenses, which are repayable within 24
months from the date of issue. Further details of these issuances are
contained in note 24 of these financial statements.
During the year, following the completion of the remediation works on the
plant, which was revalued upwards by $5,411,476
to $24,000,200, as set out in note 15 to the financial statements.
As part of the Group's transition from a "start-up operation" to a fully
operational mining business, the Board is in the process of developing on
appropriate set of key performance indicators ("KPIs") against which to
benchmark how it performs against
operational, health and safety and ESG standards. The Board is fully committed
to ensuring the Group operates to the highest standards of sustainability and
responsibility whilst delivering shareholder value. The Board intends to
communicate its proposed KPIs once the transition has been fully completed.
However, in the meantime the Board is pleased to report the following KPIs for
the year to 31 March 2022:
KPI / Financial Information 2022
Cash and cash equivalents $5,555,296
Net assets $31,744,285
Clean tons produced 666
ROM tons produced 63,562
Health and Safety - number of reportable accidents (number) Nil
Environmental Incidents - breaches of environmental legislation (number) Nil
Cash has been used to fund the Group's operations and facilitate its
investment activities (refer to the Statements of Cash Flows).
The Board continues to monitor the activities and performance of the Group in
delivering its key milestones since IPO.
Principal risks and uncertainties
The management of the business and the execution of the Group's strategy are
subject to a number of risks.
Risks are formally reviewed by the Board, and appropriate processes are put in
place to monitor and mitigate them. If more than one event occurs, it is
possible that the overall effect of such events would compound the possible
adverse effects on the Group. The key business risks affecting the Group are
set out below:
Mining and processing risks
The Group's principal operation is the mining of met coal. Its operations are
subject to all of the hazards and risks normally encountered in mining and
processing coal. These include unusual and unexpected geological formations,
rock falls, flooding and other conditions involved in the extraction of
material, any of which could result in damage to the mine and infrastructure,
including, damage to life or property, environmental damage and possible legal
liability. Although adequate precautions to minimise risk are taken,
operations are subject to hazards, which may result in environmental pollution
and consequent liability which could have a material adverse impact on the
business, operations and financial performance of the Group.
As is common with all mining operations, there is uncertainty and therefore
risk associated with the Group's operating parameters and costs. These can
be difficult to predict particularly in a high inflationary environment and
are often affected by factors outside the Group's control.
The Group may be required to undertake clean-up programmes resulting from any
contamination from its operations or to participate in mine rehabilitation
programmes which may vary from project to project. The Group follows all
necessary laws and regulations and is not aware of any present material issues
in this regard.
Dependence on key personnel
The Group is dependent upon its executive management team and various
technical consultants. Whilst it has entered into contractual agreements with
the aim of securing the services of these personnel, the retention of their
services cannot be guaranteed. The development and success of the Group
depends on its ability to recruit and retain high quality and experienced
staff. The loss of the service of key personnel or the inability to attract
additional qualified personnel as the Group grows could have an adverse effect
on future business and financial conditions.
Uninsured risk
The Group, as a participant in mining and development programmes, may become
subject to liability for hazards that cannot be insured against or third party
claims that exceed the insurance cover. The Group may also be disrupted by a
variety of risks and hazards that are beyond control, including geological,
geotechnical and seismic factors, environmental hazards, industrial accidents,
occupational and health hazards and weather conditions or other acts of God.
Financial risks
The Group's operations expose it to a variety of financial risks that can
include market risk (including foreign currency, price and interest rate
risk), credit risk, and liquidity risk. The Group has a risk management
programme in place that seeks to limit the adverse effects on the financial
performance of the Group by monitoring levels of debt finance and the related
finance costs. The Group does not use derivative financial instruments to
manage interest rate costs and, as such, no hedge accounting is applied.
Further details on financial risks can be found in note 3 to the financial
statements.
Financial Instruments
The Group's financial instruments comprise of financial assets; trade and
other receivables and cash and cash equivalents, as set out in note 27 to the
financial statements. Financial liabilities comprise of short and long term
borrowings and trade and other payables also set out in note 27 to the
financial statements.
Reserve and resource estimates
The Group's reported reserves and resources are only estimates. No assurance
can be given that the estimated reserves and resources will be recovered or
that they will be recovered at the rates estimated. Reserve and resource
estimates are based on sampling and, consequently, are uncertain because the
samples may not be representative. Reserve and resource estimates may
require revision (either up or down) based on future actual production
experience.
The ability to extract coal reserves is dependent on obtaining the necessary
permits from the WVDEP.
Volatility of commodity prices
Historically, commodity prices have fluctuated and are affected by numerous
factors beyond the Group's control, including global demand and supply,
international economic trends, currency exchange fluctuations, expectations
for inflation, speculative activity, consumption patterns and global or
regional political events. The aggregate effect of these factors is
impossible to predict. Fluctuations in commodity prices, over the short term
to long term, may adversely impact the returns of the Group's investments.
A significant reduction in global demand for met coal, leading to a fall in
coal prices, could lead to a significant fall in the cash flow of the Group,
which may have a material adverse impact on the operating results and
financial condition of the Group.
COVID-19
The outbreak of the global COVID-19 virus has not in resulted in any material
business disruption of the Group's activities or stock market volatility.
Section 172(1) Statement - Promotion of the Company for the benefit of the
members as a whole
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
· Consider the impact of the Group's operations on the community
and the environment;
· Maintain a reputation for high standards of business conduct;
· Foster the Group's relationships with suppliers, customers and
others;
· Consider the interests of the Group's employees;
· Act fairly between the members of the Group; and
· Consider the likely consequences of any decision in the long
term.
The Group continues to progress the development of its existing project in
West Virginia, United States of America.
The application of the s172 requirements can largely be demonstrated by the
ongoing development of our business and developing Environmental Social and
Governance matters.
A number of the key decisions made during the year ended 31 March 2022 and
post this date included:
· The raising of unsecured financing via the issue of two
convertible loan notes to ACAM GP Limited, which allowed the Group to raise
$12m;
· Re-negotiating the convertible terms of the unsecured loan
provided by MBU. The revised terms, effective from April 2022, ensures that in
the event that MBU were to seek to exercise their conversion rights under the
loan facility, this would now be done at price of 60p per ordinary share
instead of 15p, as noted in the Group's admission document, in respect of any
amounts drawn down from April 2022 onwards;
· Development of an ESG strategy, elements of which have been
implemented including environmental and climate change aspects, such as the
planting of trees and grass seeding of areas that have been mined;
· Ensuring the Group's day to day operational aspects are
independent from its largest shareholder, which included the relocating to a
new office in April 2022;
· Implementing a staff share option plan to reward and retain key
members of both operational and administrative staff;
· Providing operational staff with a first class healthcare package
to ensure their mental and physical health is paramount to them and their
families, which in turn will aid the successful development of the business;
and
· As a start-up operation demonstrating to suppliers, particularly
in the state of West Virginia, that our DNA is to foster relationships,
goodwill and to provide investment and jobs to the community.
As a coal mining group with operations in the USA, the Board takes seriously
its ethical responsibilities to the communities and environment in which it
works. We abide by the local and relevant UK laws on anti-corruption and
bribery. Wherever possible, local communities are engaged in the geological
operations and support functions required for field operations, providing much
needed employment and wider economic benefits to the local communities. In
addition, we follow international best practise on environmental aspects of
our work. Our goal is to meet or exceed standards, in order to ensure we
maintain our social licence to operate from the communities with which we
interact. The interests of our employees are a primary consideration for the
Board. Personal development opportunities are supported and a health and
security support network is in place to assist with any issues that may arise
on field expeditions.
We would like to thank our family of Shareholders for their continued support
as we transition from a start-up operation into a fully fledged operating
business by providing a key ingredient to steel producers which will aid the
de-carbonisation of the planet.
The Group Strategic Report was approved by the Board on 28 August 2022.
On behalf of the Board
Adam Wilson
Chief Executive Office
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
For the year ended 31 March 2022
For the year ended 31 March 2022 For the year
ended 31 March 2021 Unaudited
Note $ $
Revenue 7 5,411,816 -
Cost of sales 8 (3,878,565) -
Gross Profit 1,533,251 -
Administrative expenses 9 (8,993,393) (1,404,680)
Operating Loss (7,460,142) (1,404,680)
Finance income 1,235 -
Finance costs 11 (997,449) (47,079)
Fair value gain on Convertible Loan Note embedded derivative 24 53,462 -
Bargain Purchase Gain 29 33,688,689 -
Profit/(loss) before taxation 25,285,795 (1,451,759)
Tax expense 12 (8,222,085) -
Profit/(loss) 17,063,710 (1,451,759)
Profit/(loss) attributable to:
Owners of the parent 17,063,710 (1,451,759)
17,063,710 (1,451,759)
All results arise from continuing operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2022
For the year ended 31 March 2022 For the year
ended 31 March 2021 Unaudited
Note $ $
Profit/(loss) for the year 17,063,710 (1,451,759)
Other comprehensive income:
Foreign exchange movement (1,249,783) -
Revaluation gain of Plant and equipment 5,411,476 -
Other comprehensive income before taxation 21,225,403 -
Taxation relating to other comprehensive income (1,488,156) -
Total comprehensive income 19,737,247 (1,451,759)
Basic earnings per share (cents) 14 6.165 -
Diluted earnings per share (cents) 14 5.922 -
CONSOLIDATED AND PARENT STATEMENT OF FINANCIAL POSITION
For the year ended 31 March 2022
Group Company
Note 31 March 2022 31 March 2021 Unaudited 31 March 2022
$ $ $
Non-current assets
Property, plant and equipment 15 28,948,808 119,403 539
Coal reserves and reclamation assets 16 24,955,487 - -
Other assets 16 1,628,605 135,163 -
Right of use assets 17 61,708 245,182 -
Construction in progress 15 3,642,212 - -
Investment in subsidiaries 35 - - 28,385,729
Deferred tax asset 13 576,151 - -
Trade and other receivables 18 - - 16,026,796
59,812,971 499,948 44,413,064
Current assets
Trade and other receivables 18 570,328 398,057 315,465
Cash and cash equivalents 19 5,555,296 - 2,971,515
Inventory 20 1,528,613 - -
7,654,237 398,057 3,286,980
Total assets 67,467,208 898,005 47,700,044
Current liabilities
Trade and other payables 21 3,451,346 411,348 291,263
Deferred consideration 22 816,000 - -
Borrowings 23 - 54,454 -
Lease liability 17 63,367 115,136 -
Provisions 25 350,000 - -
4,680,713 580,938 291,263
Non-current liabilities
Borrowings 23 3,280,827 1,646,749 -
Convertible loans notes 24 9,435,588 - 9,435,588
Provisions 25 2,841,888 - -
Deferred consideration 22 2,357,698 - -
Deferred tax liability 13 10,286,392 - -
Embedded derivative 24 2,839,817 - 2,839,817
Lease liability 17 - 122,077 -
31,042,210 1,768,826 12,275,405
Total liabilities 35,772,923 2,349,764 12,566,668
Net assets 31,744,285 (1,451,759) 35,133,376
Equity attributable to owners of the parent
Share capital 31 485,273 - 485,273
Share premium 31 38,712,008 - 38,712,008
Share based payments reserve 32 2,647,242 - 2,647,242
Translation reserve (1,249,783) - (1,270,738)
Revaluation reserve 3,923,320 - -
Merger reserve (6,750,420) - -
Retained losses (6,023,355) (1,451,759) (5,440,409)
Total equity 31,744,285 (1,451,759) 35,133,376
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 from presenting the Parent Company Income Statement and
Statement of Comprehensive Income. The loss for the Company for the period
ended 31 March 2022 was $5,440,409.
The Financial Statements were approved and authorised for issue by the Board
on 28 August 2022 and were signed on its behalf by:
Adam Wilson
Chief Executive Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2022
Group Unaudited
Note Share Share premium Share Based Payments Translation Reserve Revaluation Merger Reserve Retained losses Total
capital $ $ $ Reserve $ $ $
$ $
Balance as at 1 April 2020 - - - - - - - -
Loss for the year - - - - - - - (1,451,759) (1,451.759)
Total comprehensive income for the year - - - - - - (1,451,759) (1,451,759)
Total transactions with owners, recognised directly in equity - - - - - - (1,451,759) (1,451,759)
Balance as at 31 March 2021 - - - - - - (1,451,759) (1,451,759)
Audited
Group
Note Share Share premium Share Option Reserve Translation Reserve Revaluation Merger Reserve Retained losses Total
capital $ $ $ Reserve $ $ $
$ $
Balance as at 1 April 2021 - - - - - - (1,451,759) (1,451,759)
Profit for the year - - - - - - 17,063,710 17,063,710
Other comprehensive income - - - - - - - -
Gain on the revaluation of fixed assets - - - - 5,411,476 - - 5,411,476
Taxation on revaluation - - - - (1,488,156) - - (1,488,156)
Currency translation differences - - - (1,249,783) - - - (1,249,783)
Total comprehensive income for the year - - - (1,249,783) 3,923,320 - 17,063,710 19,737,247
Proceeds from issue of shares 31 152,390 12,578,569 - - - - - 12,730,959
Share based payments 32 - - 2,647,242 - - - - 2,647,242
Issue of ordinary shares relating to business combination 31 332,883 26,133,439 - - - (6,750,420) (21,635,306) (1,919,404)
Total transactions with owners, recognised directly in equity 485,273 38,712,008 2,647,242 - - (6,750,420) (21,635,306) 13,458,797
Balance as at 31 March 2022 485,273 38,712,008 2,647,242 (1,249,783) 3,923,320 (6,750,420) (6,023,355) 31,744,285
COMPANY STATEMENT OF CHANGES IN EQUITY
For the period ended 31 March 2022
Company
Note Share Share premium Share Option Reserve Translation Reserve Retained losses Total
capital $ $ $ $ $
$
Balance as at 11 August 2021 - - - - - -
Loss for the period - - - - (5,440,409) (5,440,409)
Currency translation differences - - - (1,270,738) - (1,270,738)
Total other comprehensive income (1,270,738) (5,440,409) (6,711,147)
Total comprehensive income for the period - - - (1,270,738) (5,440,409) (6,711,147)
Transactions with owners:
Proceeds from issue of shares 31 152,390 12,578,569 - - - 12,730,959
Share based payments 32 - - 2,647,242 - - 2,647,242
Issue of ordinary shares relating to business combination 31 332,883 26,133,439 - - (5,440,409) 21,025,913
Total transactions with owner, recognised directly in equity 485,273 2,647,242
38,712,008 - (5,440,409) 36,404,114
Balance as at 31 March 2022 485,273 38,712,008 2,647,242 (1,270,738) (5,440,409) 35,133,376
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 March 2022
Group Company
Year ended 31 March 2022 Year ended 31 March 2021 Unaudited Period ended 31 March 2022
Note $ $ $
Cash flows from operating activities
Profit/(loss) 25,285,795 (1,451,759) (5,440,409)
Adjustments for:
Depreciation and amortisation 154,008 49,713 27
Interest expense 997,449 47,057 355,780
Interest income (1,235) - (254,686)
Fair value gain on revaluation of embedded derivative (53,462) - (53,462)
Foreign exchange translation (1,629,735) 64,342 (588,596)
Share based payment charge 2,095,150 - 2,095,150
Depletion expense 744,513 - -
Bargain purchase gain (33,688,689) - -
Change in working capital
Increase in trade and other receivables (172,271) (398,057) (315,465)
Increase in trade and other payables 3,039,997 411,348 291,263
Increase in inventory 1,528,613 - -
Net cash flows (used in)/ generated from operating activities (1,699,687) (1,277,356) (3,910,399)
Investing activities
Purchase of property, plant and equipment (13,225,108) (121,225) (565)
Loans granted to subsidiary undertakings - - (15,296,261)
Acquisition of subsidiary (1,412,637) - -
Acquisition of reclamation assets (1,493,242) (135,363) -
Net cash used in investing activities (16,130,987) (256,588) (15,296,826)
Financing activities
Proceeds from borrowings 1,439,252 1,530,000 -
Repayment of borrowings (54,454) - -
Proceeds from issue of shares, net of issue costs 10,178,740 - 10,178,740
Proceeds from issuance of convertible loan notes 12,000,000 - 12,000,000
Repayment of lease liabilities (122,934) (50,536) -
Net cash generated from financing activities 23,440,604 1,479,464 22,178,740
Net increase/(decrease) in cash and cash equivalents 5,609,750 (54,454) 2,971,515
Cash and cash equivalents at beginning of year (54,454) - -
Cash and cash equivalents as at end of year 5,555,296 (54,454) 2,971,515
Major non-cash transactions:
Fair value uplift of plant and underground equipment was $5,411,476, and is
set out in note 15 to the financial statements.
Share based payments amounted to $2,095,150, and is set out in note 32 to the
financial statements.
Acquisition of subsidiary for shares of $25,400,390 and deferred consideration
of $2,985,339, and is set out in note 35 of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2022
1. General information
The principal activity of Bens Creek Group Plc (the Company) is that of a
holding company and through its subsidiaries, Ben's Creek Land WV LLC and
Ben's Creek Operations WV LLC (the Subsidiaries) (together the Group), the
Group's principal activity is the production and sale of high-quality
metallurgical coal products.
The Company was incorporated on 11 August 2021 in the United Kingdom. The
address of the Company's registered office is 53 Davies Street, London, United
Kingdom, W1K 5JH. The Company is listed on the AIM market of the London Stock
Exchange.
The Company acquired the Subsidiaries on 22 September 2021. Further details
are set out in note 29 of these financial statements.
The Group financial statements cover the period from 1 April 2021 to 31 March
2022.
2. Accounting policies
The principal accounting policies applied in the preparation of the Financial
Statements is set out below (Accounting Policies or Policies). These Policies
have been consistently applied to all the periods presented, unless otherwise
stated.
2.1. Basis of preparing the Financial Statements
The Group and Company Financial Statements has been prepared in accordance
with UK-adopted international accounting standards in accordance with the
requirements of the Companies Act 2006. The Group and Company Financial
Statements has also been prepared under the historical cost convention,
subsequent to any fair value adjustments required upon acquisition via a
business combination, with the exception of the preparation and wash plant
which is held under the revaluation model. Additionally, convertible loan
notes are held under the fair value through profit or loss "FVTPL" model. The
prior year financial statements were prepared as noted above.
The Group and Company Financial Statements are presented in United States
Dollars rounded to the nearest dollar, which is the Group's functional
currency.
The preparation of Group and Company Financial Statements requires the use of
certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group's Accounting Policies. The
areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the Financial Information are
disclosed in note 4 to these financial statements.
a) Changes in Accounting Policies
i) New and amended standards adopted by the Group
All new and amended standards should be adopted for the first time for the
financial period beginning 1 April 2021. The adoption of these standards has
not had a material impact on the Group and Company Financial Statements. The
new and amended standards are as follows:
· IFRS 9 - Financial instruments
· IFRS 15 - Revenue with contracts
· IFRS 16 - Leases
ii) New IFRS Standards and Interpretations not adopted
At the date on which the Group and Company Financial Statements was
authorised, there were no Standards, Interpretations and Amendments which had
been issued but were not effective for the period ended 31 March 2022 that are
expected to materially impact the Group and Company Financial Statements.
iii) New standards, amendments and interpretations in issue but not yet
effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet effective and have
not been early adopted are as follows:
Standard Impact on initial application Effective date
IFRS 3 Reference to Conceptual Framework 1 January 2022
IAS 37 Onerous contracts 1 January 2022
IAS 16 Proceeds before intended use 1 January 2022
Annual improvements 2018-2020 Cycle 1 January 2022
IFRS 17 Insurance contracts 1 January 2023
IAS 8 Accounting estimates 1 January 2023
IAS 1 Classification of Liabilities as Current or Non-Current. 1 January 2023
The Group is evaluating the impact of the new and amended standards above
which are not expected to have a material impact on the Group's results or
shareholders' funds.
b) Reporting under IFRS
Bens Creek Group Plc has adopted IFRS since incorporation, The Subsidiaries
were previously reported using US GAAP. The Group reports using IFRS standards
and in order to comply with the Group's reporting standards, the subsidiaries
will be reported in IFRS.
Upon the date of acquisition, the assets and liabilities of the subsidiaries
as shown under note 29 were consolidated into the Group. It has been deemed
that no transition adjustments to IFRS are required for the acquired entities
as the entities were acquired with nil assets and liabilities as per the terms
of the Membership Interest Purchase Agreement.
2.2. Basis of consolidation
The Group and Company Financial Statements consolidates the financial
information of the Company and the accounts of all of its subsidiary
undertakings for all periods presented.
Subsidiaries are 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.
The Group applies the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued
by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values
at the acquisition date.
Acquisition-related costs are expensed as incurred unless they result from the
issuance of shares, in which case they are offset against the premium on those
shares within equity.
Any contingent consideration to be transferred by the Group is recognised at
fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability is
recognised in accordance with IAS 39 either in profit or loss or as a change
to other comprehensive income. Contingent consideration that is classified as
equity is not re-measured, and its subsequent settlement is accounted for
within equity.
Investments in subsidiaries are accounted for at cost less impairment.
Where considered appropriate, adjustments are made to the financial
information of subsidiaries to bring the accounting policies used into line
with those used by other members of the Group. All intercompany transactions
and balances between Group enterprises are eliminated on consolidation.
2.3. Going concern
The Group and Company Financial Statements has been prepared on a going
concern basis.
The Group's and Company's business activities, together with the factors
likely to affect their future development, performance and position are set
out in the Strategic Report. The Directors' Report includes the Group's and
Company's objectives, policies and processes for managing their capital, their
financial risk management objectives and their exposure to credit risk and
liquidity risk.
Several events occurred post year-end which have given further reassurance
that the Group is a going concern. The most immediate of which was the
completion of the railway line in April 2022, which has allowed the
commencement of delivery of clean coal to the Group's offtake partner via its
rail facility. The commencement of underground mining occurred in May 2022,
which has resulted in an increase in production and quality of coal. The Group
announced on 18 August 2022, that it has raised $7,200,000 (£6,000,000) by
way of placing of 20,000,000 ordinary shares at 30p per share.
The price of metallurgical coal has fluctuated in the year and post year-end,
with a sharp fall in the price. However, management is confident even at the
current price ($284/ metric ton, High Vol B) that the Group will be able to
generate positive cash flows.
The Directors have reviewed the cashflow forecast and the future requirements
of the Group for the period to 31 December 2023. They have given consideration
to current and future offtake agreements, changes in the economic climate and
other contracts in place. The Group has in place an offtake agreement to sell
a minimum tonnage a month. The directors are of the opinion that the Group has
adequate resources to continue in operational existence 18 months from signing
of the audited annual report.
2.4. 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 Chief
Executive Officer.
2.5. Foreign currencies
a) Functional and presentation currency
Items included in the Financial Statements are measured using the currency of
the primary economic environment in which the entity operates (the functional
currency). Bens Creek Group Plc, the parent company, is based in the United
Kingdom and has a functional currency in GBP Sterling. The Financial
Statements are presented in US Dollars, rounded to the nearest dollar as this
is where the entity primarily operates.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions or
valuation where such items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the Statement of Profit and Loss. All
other foreign exchange gains and losses are presented in the Consolidated
Statement if Comprehensive Income.
Translation differences on non-monetary financial assets and liabilities such
as equities held at fair value through profit or loss are recognised in profit
or loss as part of the fair value gain or loss. Translation differences on
non-monetary financial assets measured at fair value, such as equities
classified as available for sale, are included in Consolidated Statement of
Profit and Loss.
c) Group companies
The results and financial position of all the Group entities (none of which
has the currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
· assets and liabilities for each period end date presented are
translated at the period-end closing rate;
· income and expenses for each Income Statement are translated at
average exchange rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the dates of the
transactions); and
· all resulting exchange differences are recognised in other
comprehensive income.
2.6. Property, plant and equipment
Vehicles, office equipment, plant, underground equipment and leasehold
improvements are stated at cost, plus any purchase price allocation uplift.
Plant upon acquisition has been accounted for under the fair value method of
accounting, less accumulated depreciation and any accumulated impairment
losses. Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. The carrying amount of the
replaced part is derecognised. All other repairs and maintenance are charged
to the Income Statement during the financial period in which they are
incurred.
Depreciation is provided to write off the cost less estimated residual value
of each asset over its expected useful economic life on a straight-line basis
at the following annual rates:
Office equipment 5 year straight-line
Plant and machinery 5 year straight-line
Vehicles 5 year straight-line
Plant 10 year straight-line
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its recoverable
amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposal are determined by comparing the proceeds with the
carrying amount and are recognised within 'Other net gains/(losses)' in the
Statement of Profit and Loss.
The preparation plant is recognised at fair value based on external and
internal valuations performed by Raw Resources LLC and management. Any
revaluation gains are recognised in other comprehensive income. Revaluation
losses are recognised with other comprehensive income, against any
pre-existing gains, with anything over and above pre-existing gains being
recognised as an expense in profit and loss.
2.7. Inventory
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the average costing method. Components of inventories consist
of coal, parts and supplies, net of allowance for obsolescence. Coal
inventories represent coal contained in stockpiles, coal that has been mined
and hauled to the wash plant for processing raw coal and coal that has been
processed (crushed, washed and sized) and stockpiled for shipment to
customers.
The cost of raw and prepared coal comprises extraction costs, direct labour,
other direct costs and related production overheads (based on normal operating
capacity). It excludes borrowing costs. Net realisable value is the estimated
selling price in the ordinary course of business, less applicable variable
selling expenses.
2.8. Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable, and represent amounts receivable for goods supplied, stated net of
discounts, returns and value added taxes. Under IFRS 15 there is a five-step
approach to revenue recognition which is adopted across all revenue streams.
The process is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue as and when the entity satisfies the performance
obligation.
The Group has one revenue stream being the sale of coal and other aggregate
bi-products produced by the Group. During the year under review, such revenue
was recognised at the point of contact at a pre-agreed fixed price on a per
tonnage basis. For deliveries made via truck the revenue is recognised once
the product leaves the Group's premises, which is the point at which the risk
and rewards are transferred to the customer. For sales made via railway it is
at the point at which the coal has arrived at the dock and is of satisfactory
quality.
2.9. Construction in Progress
Assets under construction are accounted for at cost, based on the value of
receipts and other direct costs incurred to 31 March 2022. They are not
depreciated until the period in which they are brought into use, where the
asset is transferred to the relevant category and depreciated the following
month.
As at 31 March 2022, construction in progress included the purchased Highwall
Miner and the railway line which has been subsequently completed. There were
no costs committed at the year end.
2.10. Coal rights and restoration assets
Coal land, mine development costs, which include directly attributable
construction overheads, land and coal rights are recorded at cost, plus any
purchase price allocation uplift if applicable upon acquisitions accounted for
under the acquisition method of accounting. Coal land and mine development are
depleted and amortised, respectively, using the units of production method,
based on estimated recoverable tonnage. The depletion of coal rights and
depreciation of restoration costs are expensed by reference to the estimated
amount of coal to be recovered over the expected life of the operation.
Future cost requirements for land reclamation are estimated where surface
operations have been conducted, based on the Group's interpretation of the
technical standards of regulations enacted by the U.S. Office of Surface
Mining, as well as West Virginia state regulations. These costs relate to
reclaiming the pit and support acreage at surface mines and sealing portals at
deep mines. Other costs include reclaiming refuse and slurry ponds as well as
related termination/exit costs.
The Group records asset retirement obligations that result from the
acquisition, construction or operation of long-lived assets at fair value when
the liability is incurred. Upon the initial recognition of a liability, that
cost is capitalised as part of the related long-lived asset and expensed over
the useful life of the asset. The asset retirement costs are recorded in Coal
Rights and Restoration Assets - see note 16 of these financial statements.
The Group expenses reclamation costs prior to the mine closure. The
establishment of the end of mine reclamation and closure liability is based
upon permit requirements and requires significant estimates and assumptions,
principally associated with regulatory requirements, costs and recoverable
coal lands. Annually, the end of mine reclamation and closure liability is
reviewed and necessary adjustments are made, including adjustments due to mine
plan and permit changes and revisions of cost and production levels to
optimize mining and reclamation efficiency. The amount of such adjustments is
reflected in the year end reclamation provision calculation - see note 25 of
these financial statements.
2.11. Financial assets
Classification
The Group's financial assets consist of loans and receivables. The
classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition.
(i) Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are
included in current assets, except for maturities greater than 12 months after
the balance sheet date. These are classified as non-current assets. The
Group's loans and receivables comprise trade and other receivables and cash
and cash equivalents at the year-end.
Recognition and Measurement
Regular purchases and sales of financial assets are recognised on the trade
date - the date on which the Group commits to purchasing or selling the
asset. Financial assets carried at fair value through profit or loss are
initially recognised at fair value, and transaction costs are expensed in the
Statement of Profit and Loss. Financial assets are derecognised when the
rights to receive cash flows from the assets have expired or have been
transferred, and the Group has transferred substantially all of the risks and
rewards of ownership.
Loans and receivables are subsequently carried at amortised cost using the
effective interest method.
Gains or losses arising from changes in the fair value of financial assets at
fair value through profit or loss are presented in the Statement of Profit and
Loss within "Other (Losses)/Gains" in the period in which they arise.
Impairment of Financial Assets
The Group assesses at the end of each reporting period whether there is
objective evidence that a financial asset, or a group of financial assets, is
impaired. A financial asset, or a group of financial assets, is impaired and
impairment losses are incurred, only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial
recognition of the assets (a "loss event"), and that loss event (or events)
has an impact on the estimated future cash flows of the financial asset, or
group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine that there is objective evidence
of an impairment loss include:
· significant financial difficulty of the issuer or obligor;
· a breach of contract, such as a default or delinquency in
interest or principal repayments;
· the Group, for economic or legal reasons relating to the
borrower's financial difficulty, granting to the borrower a concession that
the lender would not otherwise consider; and
· it becomes probable that the borrower will enter bankruptcy or
another financial reorganisation.
The Group first assesses whether objective evidence of impairment exists.
The amount of the loss is measured as the difference between the asset's
carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred), discounted at
the financial asset's original effective interest rate. The asset's carrying
amount is reduced and the loss is recognised in the Statement of Profit and
Loss.
If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the
impairment was recognised (such as an improvement in the debtor's credit
rating), the reversal of the previously recognised impairment loss is
recognised in the Statement of Profit and Loss.
The Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based
on the difference between the contractual cash flows due in accordance with
the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The
expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other
receivables due in less than 12 months, the Group applies the simplified
approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group
does not track changes in credit risk, but instead, recognises a loss
allowance based on the financial asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually occurs when
past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
Derecognition
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership of the asset to
another entity.
On derecognition of a financial asset measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss. This is
the same treatment for a financial asset measured at FVTPL.
2.12. Trade receivables
Trade receivables are amounts due from third parties in the ordinary course of
business. If collection is expected in one year or less, they are classified
as current assets. If not, they are presented as non-current assets. Trade
receivables are recognised initially at fair value, and subsequently measured
at amortised cost using the effective interest method, less provision for
impairment.
2.13. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and are subject to
an insignificant risk of changes in value.
2.14. Reserves
Equity comprises the following:
· "Share capital" represents the nominal value of the Ordinary
shares;
· "Share Premium" represents consideration less nominal value of
issued shares and costs directly attributable to the issue of new shares;
· "Other reserves" represents the merger reserve, translation
reserve, revaluation reserve and share based payments reserve where;
o "Merger reserve" represents the difference between the fair value of an
acquisition and the nominal value of the shares allotted in a share exchange;
o "Revaluation reserve" represents the change in valuation of assets
measured at fair value;
o "Translation reserve" (foreign currency) represents the translation
differences arising from translating the financial statement items from
functional currency to presentational currency; and
o "Share based payments reserve" represents share options awarded by the
Group;
· "Retained earnings" represents retained losses.
2.15. 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.
2.16. Share Based Payments
The Group operates a number of equity-settled, share-based schemes, under
which it receives services from employees or third party suppliers as
consideration for equity instruments (options and warrants) of the Group.
The Group may also issue warrants to share subscribers as part of a share
placing. The fair value of the equity-settled share based payments is
recognised as an expense in the income statement or charged to equity
depending on the nature of the service provided or instrument issued. The
total amount to be expensed or charged is determined by reference to the fair
value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability or sales growth targets, or
remaining an employee of the entity over a specified time period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
In the case of warrants the amount charged to the share premium account is
determined by reference to the fair value of the services received if
available. If the fair value of the services received is not determinable, the
warrants are valued by reference to the fair value of the warrants granted as
previously described.
Non-market vesting conditions are included in assumptions about the number of
options or warrants that are expected to vest. The total expense or charge
is recognised over the vesting period, which is the period over which all of
the specified vesting conditions are to be satisfied. At the end of each
reporting period, the entity revises its estimates of the number of options
that are expected to vest based on the non-market vesting conditions. It
recognises the impact of the revision to original estimates, if any, in the
income statement or equity as appropriate, with a corresponding adjustment to
a separate reserve in equity.
When the options are exercised, the Company issues new shares. The proceeds
received, net of any directly attributable transaction costs, are credited to
share capital (nominal value) and share premium.
2.17. Trade payables
Trade payables are obligations to pay for goods or services that have been
acquired in the ordinary course of business from suppliers. Accounts payable
are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value, and subsequently
measured at amortised cost using the effective interest method.
2.18. Provisions
The Group provides for the costs of restoring a site where a legal or
constructive obligation exists. The estimated future costs for known
restoration requirements are determined on a site-by-site basis and are
calculated based on the present value of estimated future costs. The Group
also provides minimum lease payments on land where they have leased and are
obligated per agreements The estimated cost of these leases over the shorter
of the life of the mine or the lease terms is calculated at present value.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period,
taking into account the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimated to settle the
present obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is material). The increase
in provisions due to the passage of time is included in the Consolidated
Statement of Profit or Loss and Comprehensive Income. Any increase in
provision due to reclamation obligations is capitalised as part of the mine
asset and subsequently depreciated. This is through depletion or impairment if
the provision is larger than the carrying value of the mine.
2.19. Convertible Loan Notes
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual agreement.
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Group are recognised as the proceeds are received, net of direct
issue costs.
Where warrants are granted in conjunction with other equity instruments, which
themselves meet the definition of equity, they are recorded at their fair
value, which is measured using an appropriate valuation model. Warrants which
do no meet the definition of equity are classified as derivative financial
instruments.
The component parts of compound instruments, such as Convertible Loan Notes,
issued by the Group are classified separately as financial liabilities and
equity in accordance with the substance of the contractual arrangement.
If the conversion feature of a Convertible Loan Notes issued does not meet the
definition of an equity instrument, that portion is classified as an embedded
derivative and measured accordingly. The debt component of the instrument is
determined by deducting the fair value of the conversion option at inception
from the fair value of consideration received for the instrument as a whole.
The debt component amount is recorded as a financial liability on an amortised
cost basis using the effective interest rate method until extinguished upon
conversion or at the instrument's maturity date.
Where debt instruments issued by the Group are repurchased for cancellation,
the financial liability is derecognised at the point at which the cash
consideration is settled. Upon derecognition, the difference between the
liability's carrying amount that has been cancelled and the consideration paid
is recognised as a gain in the Statement of Profit and Loss, net of any direct
transaction costs.
In December 2021 and February 2022 the Group raised $6m and $6m respectively
from the placement of two Convertible Loan Notes. They were both issued at par
and carry a coupon of 15% and 12% payable quarterly in arrears. The
Convertible Loan Notes are convertible into fully paid Ordinary Shares with
the initial conversion prices set at £0.28 and £0.40 per ordinary share. The
number of Ordinary shares at the year end that could be issued if all the
Convertible Loan Notes were converted is 27,175,221 (assuming that the
exchange rate at the year-end is $1.31/£1). Unless previously converted,
redeemed or purchased and cancelled, the Convertible Loan Notes will be
redeemed at par on 13 December 2023 and 16 February 2024 respectively.
The conversion feature of the Convertible Loan Notes is classified as an
embedded derivative as the number of shares issued to settle the liability is
not fixed due to the variable nature of the US$ and £ exchange rate.
Therefore, the Convertible Loan Note does not meet the 'fixed for fixed'
criteria outlined in IAS 32 for recognition as an equity instrument. It has
therefore been measured at fair value through profit and loss. The amount
recognised at inception in respect of the host debt contract was determined by
deducting the fair value of the conversion option at inception (the embedded
derivative) from the fair value of the consideration received for the
Convertible Loan Notes. The debt component is then recognised at amortised
cost, using the effective interest method, until extinguished upon conversion
or maturity. The effective interest rate applicable to the debt component is
15% and 12% respectively.
Embedded derivatives
Derivatives embedded in financial instruments or other host contracts that are
not financial assets are treated as separate derivatives when their risks and
characteristics are not closely related to those of the host contracts and the
host contracts are not measured at FVTPL. Derivatives embedded in financial
instruments or other host contracts that are financial assets are not
separated; instead, the entire contract is accounted for either at amortised
cost of fair value as appropriate.
An embedded derivative is presented as non-current if the remaining maturity
of the compound instrument to which the embedded derivative relates is more
than 12 months and is not expected to be realised or settled within 12 months.
The table below analyses the derivatives, by valuation method. The different
levels are defined as follows:
Level 1 Level 2 Level 3 Total
Financials instruments by valuation method $ $ $ $
Fair value at 31 March 2021 - - - -
Additions - 9,106,722 2,893,278 12,000,000
Interest 401,128 - 401,128
Foreign exchange gains - (72,262) - (72,262)
Revaluation - - (53,461) (53,461)
Fair value at 31 March 2022 - 9,435,588 2,839,817 12,275,405
The embedded derivative component of the Convertible Loan Note is categorised
within Level 3 of the fair value hierarchy, as the derivatives themselves are
not traded on an active market and their fair values are determined using a
valuation technique that uses one key input that is not based on observable
market data, being share price volatility.
Borrowing costs
Borrowing costs directly relating to the construction or production of a
qualifying capital project under construction are capitalised and added to the
project cost during construction until such time as the assets are
substantially ready for their intended use, i.e. when they are capable of
commercial production. The amount of borrowing costs eligible to be
capitalized is reduced by an amount equivalent to any interest income received
on temporary reinvestment of those borrowings.
Borrowings
Interest-bearing loans are recognised initially at fair value less
attributable transaction costs. All borrowings are subsequently stated at
amortised cost with the difference between initial net proceeds and redemption
value recognised in the Statement of Profit or Loss over the period to
redemption on an effective interest basis.
Debt component $ Derivative component $ Total $
As at 1 April 2021 - - -
Gross proceeds from issue of convertible loan notes 9,106,722 2,893,278 12,000,000
Transaction costs paid - - -
Net proceeds from convertible loan notes 9,106,722 2,893,278 12,000,000
Cash interest paid - - -
Foreign exchange gains (72,262) - (72,262)
Fair value gains - (53,461) (53,461)
Interest charged 401,128 - 401,128
As at 31 March 2022 9,435,588 2,839,817 12,275,405
2.20. Taxation
Tax is recognised in the Statement of Profit or Loss, except to the extent
that it relates to items recognised in other comprehensive income or directly
in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
No current tax is yet payable in view of the losses to date.
Deferred tax is recognised for using the liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the consolidated financial statements and the
corresponding tax bases used in the computation of taxable profit. However,
deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill; deferred tax is not accounted for if it arises from
initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss.
In principle, deferred tax liabilities are recognised for all
taxable temporary differences and deferred tax assets (including
those arising from investments in subsidiaries), are recognised
to the extent that it is probable that taxable profits
will be available against which deductible temporary differences can be
utilised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries only to the extent that it is
probable the temporary difference will reverse in the future and there is
sufficient taxable profit available against which the temporary difference can
be used.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in except where the Group is able to control the
reversal of the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred tax assets and liabilities relate to income taxes levied
by the same taxation authority on either the same taxable entity or different
taxable entities where there is an intention to settle the balances on a net
basis.
Deferred tax is calculated at the tax rates (and laws) that have been enacted
or substantively enacted by the statement of financial position date and are
expected to apply to the period when the deferred tax asset is realised or
the deferred tax liability is settled.
Deferred tax assets and liabilities are not discounted.
2.21. Leases and right of use assets
The Group leases certain property, plant and equipment. Leases of plant and
equipment where the Group has substantially all the risks and rewards of
ownership are classified as finance leases under IFRS 16. Finance leases are
capitalised on the lease's commencement at the lower of the fair value of the
leased assets and the present value of the minimum lease payments. Other
leases are either small in value or cover a period of less than 12 months.
The lease liability is initially measured at the present value of the lease
payments that are not paid. Lease payments generally include fixed payments
less any lease incentives receivable. The lease liability is discounted using
the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral assumptions,
and the economic environment in which the lease is denominated. The lease
liability is subsequently measured at amortised cost using the effective
interest method. The lease liability is remeasured when the expected lease
payments change as a result of new assessments of contractual options and
residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at
the commencement date of the lease less any incentives received from the
lessor. Added to the right-of-use asset are initial direct costs, payments
made before the commencement date, and estimated restoration costs. The
right-of-use asset is subsequently depreciated on a straight-line basis from
the commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term. The right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
Each lease payment is allocated between the liability and finance charges. The
corresponding rental obligations, net of finance charges, are included in
lease liabilities, split between current and non-current depending on when the
liabilities are due. The interest element of the finance cost is charged to
the Statement of Profit and Loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. Assets obtained under finance leases are depreciated over
their useful lives. The lease liabilities are shown in note 17 to these
financial statements.
2.22. Earnings per share
The calculation of the total basic earnings per share is based on the loss
attributable to equity holders of the parent company and on the weighted
average number of ordinary shares in issue during the year.
In accordance with IAS 33, basic and diluted earnings per share are identical
for the Group as the effect of the exercise of share options would be to
decrease the earnings per share.
2.23. Deferred consideration
The Deferred Consideration is comprised of re-imbursement of reclamation bonds
and of ongoing royalty payments over the life of the mines. It is recognised
at the present value over the life of the mine and split between current and
non-current liabilities.
3. Financial risk management
3.1. Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk,
credit risk and liquidity risk. The Group's overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
Risk management is carried out by the management team under policies approved
by the Board of Directors.
a) Market Risk
The Group is exposed to market risk, primarily relating to interest rate,
foreign exchange and commodity prices. The Group has not sensitised the
figures for fluctuations in interest rates, foreign exchange or commodity
prices as the Directors are of the opinion that these fluctuations are
immaterial and would not have a significant impact on the Financial Statements
at the present time. The Directors will continue to assess the effect of
movements in market risks on the Group's financial operations and initiate
suitable risk management measures where necessary.
b) Credit Risk
Credit risk arises from cash and cash equivalents as well as exposure to
customers including outstanding receivables. To manage this risk, the Group
periodically assesses the financial reliability of customers and
counterparties. The Group regularly reviews ageing of receivables to ensure
there is no risk of default.
No credit limits were exceeded during the year, and management does not expect
any losses from non-performance by these counterparties.
c) Liquidity Risk
The Group's continued future operations depend on the ability to raise
sufficient working capital through the issue of equity share capital or debt.
The Directors are reasonably confident that adequate funding will be
forthcoming with which to finance operations. Controls over expenditure are
carefully managed.
3.2. Capital risk management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, in order to enable the Group to
continue its activities, and to maintain an optimal capital structure to
reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the
issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity of the Company. The Group
monitors its level of cash resources available against future planned
operational activities and the Company may issue new shares in order to raise
further funds from time to time.
The gearing ratio at 31 March 2022 is as follows:
31 March 2022
$
Total borrowings (Notes 23 & 24) 15,556,232
Less: Cash and cash equivalents (Note 19) (5,555,296)
Net debt 10,000,936
Total equity 31,744,285
Gearing ratio 32%
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels are defined as follows:
· quoted prices (unadjusted) in active markets for identical assets
or liabilities (Level 1);
· inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2);
· inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level 3)
Level 1 Level 2 Level 3 Total
Financials instruments by valuation method $ $ $ $
Fair value at 1 April 2021 - - - -
Additions - - 24,000,000 24,000,000
Fair value at 31 March 2022 - - 24,000,000 24,000,000
Included in Level 3 is the Plant measured at fair value (see note 15).
4. Critical accounting estimates
The preparation of the Financial Statements in conformity with IFRSs requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the Financial Statements and the reported amount of expenses
during the year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Significant items subject to such estimates and assumptions include, but are
not limited to:
a) Valuation of provision for reclamation costs (see note 25)
The Group's provision for reclamation costs has a carrying value at 31 March
2022 of $1,949,888 relates to the Group's reclamation obligations. The
provision for reclamation costs is calculated by discounting the future cash
outflows in respect of reclamation work based on the estimated future cost
provided by independent experts (Heritage Technical Associates, Inc). The
reclamation costs are expected to be incurred from 2028 to 2033 (at the end of
the mine life per the mine plan). The cash outflows have been discounted at
12.69% and an inflation rate of 2% has been used. The discounted provision for
reclamation costs is broadly equivalent to the reclamation bond assessments
made by the WVDEP. The restoration provision is a commitment to restore the
site to a safe and secure environment. The provisions are reviewed annually.
b) Fair value of the acquisition of Ben's Creek Operations LLC (See
note 29)
The initial fair value of the plant acquired was $12,450,000 and is based on
independent expert valuations of the preparation plant and associated
facilities (Raw Resources Group) and equipment (New Age Mining LLC). Raw
Resources Group valued the preparation plant and associated facilities at
$16,000,000. In the valuation report they noted that;
1. the plant was in very good condition,
2. the plant had a remaining life of at least 15 to 20 years and is of
efficient process design,
3. the preparation plant had a current value from $12,000,000,
4. the existing material handling system and loadout was valued at
$4,000,000, if operable,
5. replacement cost for a similar 500-tph processing plant with
floatation would cost around $25,000,000 and basic material handling with a
raw coal feed system and a batch-weigh loadout system would add another
$9.000,000 of cost.
The valuation letter does not allocate value between the various assets that
make up the plant and associated facilities and was prepared on the assumption
that the assets are in working order. Included within the value is the
preparation plant, unit train loadout, coal refuse belt systems and electronic
distribution system. The Company had assumed a lower and conservative
valuation of $10,000,000. Management have used the Raw Resources LLC valuation
letter and Marshall Miller & Associates Competent Person Report together
to confirm the reasonableness of the $10,000,000 valuation. Management have
also completed a present value calculation assuming a range of margins
achieved from washing coal in the preparation plant, which gave a range of
indicative fair values for the plant from $8,900,000 (assuming a $5 margin per
tonne) to $14,700,000 (assuming a $30 margin per tonne). Under this approach,
valuing the plant and associated facilities as a whole rather than by
component parts, the plant was carried at fair value through the Statement of
Profit and Loss in the financial statements. Component parts purchased for the
plant going forward will be expensed rather than capitalised.
New Age Mining LLC valued the equipment at $2,450,000. The equipment is
comprised of five continuous miners ($1,225,000), eleven shuttle cars
($880,000), five roof bolters ($295,000) and two scoops ($50,000). New Age
Mining LLC assessed the state of equipment by physical condition as follows -
good ($1,945,000), good/fair ($125,000), fair ($350,000) and fair/poor
($30,000). Komatsu Limited, an independent manufacturer of such equipment,
quoted a total cost of circa $22,000,000 if the equipment was bought new.
The fair value of the coal rights was evaluated by Marshall Miller &
Associates in their Competent Person Report produced at the IPO. The valuation
is based on identified coal reserves of 2.34 million marketable tons (within
the Pond Creek and Lower Alma underground mines) at a sale price of $115 per
ton less the capital expenditure and all operating expenditure required to
extract, process, maintain and reclaim the mines plant and equipment and sell
the coal, over the life the mines. Corporate income tax at a rate of 27.5%
(Federal tax of 21% and State tax of 6.5%) was applied to the pre-tax profits.
The operating costs include all royalties payable and all applicable coal
production and sales taxes. The net cash flows were discounted at 12.69%
(which represents Marshall Miller & Associates estimate of the constant US
dollar, risk adjusted weighted average cost of capital for likely market
participants if the subject resources were offered for sale). The net present
value of the discounted cash flows, over the life of the mines, at a discount
rate of 12.69% was calculated to be $25,700,000.
c) Subsequent re-measurement of fair value of the plant (See note
15)
At the year-end a second valuation of the plant was undertaken. The fair value
of the plant was determined at be $24,000,000, is based on an independent
expert valuation of the preparation plant and associated facilities. Raw
Resources Group valued the preparation plant and associated facilities at
$24,000,000. In the valuation report they noted that;
1. the plant is in very good condition;
2. the plant has a remaining life of at least 15 to 20 years and is of
efficient process design;
3. the preparation plant has a current value from $20,000,000; and
4. the existing material handling system and loadout is valued at
$4,000,000, if operable.
The Group had spent $7.2m on the remediation costs of the plant. As the
valuation at the year-end was $24m, there is a clear uplift. The increase in
demand and subsequent price of metallurgical coal has led to the increase in
valuation. Additionally, inflation has resulted in the increase of parts and
labour.
d) Deferred Consideration (See note 22)
The Deferred Consideration of $4,485,428, payable to Ben's Creek Holding LLC,
is comprised of re-imbursement of reclamation bonds of $1,412,637 and ongoing
royalty payments of $3,072,791 over the life of the mine. In May 2021,
$130,000 was paid to Ben's Creek Holding LLC (the seller) in respect of the
re-imbursement of reclamation bonds with the outstanding balance having been
paid from the listing proceeds. The ongoing royalties payable, has been
accepted at a rate of $2 per tonne of coal mined and sold, over the life of
the mines discounted at 12.69% in calculating the deferred consideration. The
life of the mines is projected to be from October 2021 until May 2028.
The Group completed the re-imbursement of the reclamation bonds earlier than
planned and on 23 July 2021, it paid $1,258,520 to the seller in full and
final settlement. MBU Capital Group Limited provided a bridging loan of
GBP 918,164 ($1,258,520) to the Group to fund the re-imbursement. The bridging
loan accrued interest at 1% per month. This bridging loan was paid from the
proceeds following the Group's IPO.
e) Share based payments (See note 32)
The Group has made awards of options and warrants over its unissued share
capital to certain Directors and employees as part of their remuneration
package. The valuation of these options and warrants involves making a number
of critical estimates relating to price volatility, future dividend yields,
expected life of the options and forfeiture rates. These assumptions have been
described in more detail in note 32 to these financial statements.
f) Embedded derivative (See note 24)
Valuation of the embedded derivative within the Convertible Loan Notes
requires a number of estimates, the most significant of which is the estimated
equivalent bond yield applied to the debt component. The fair value
calculations and related sensitivities for the embedded derivative are
disclosed in note 24 to these financial statements.
In December 2021 and February 2022, the Group raised $6m and $6m respectively
from the placement of two Convertible Loan Notes. They were both issued at par
and carry a coupon of 15% and 12% payable quarterly in arrears. The
Convertible Loan Notes are convertible into fully paid Ordinary Shares with
the initial conversion prices set at £0.28 and £0.40. The number of Ordinary
shares at the year-end that could be issued if all the Convertible Loan Notes
were converted is 27,175,221 (assuming that the exchange rate at the year-end
is $1.31/£1). Unless previously converted, redeemed, or purchased and
cancelled, the Convertible Loan Notes will be redeemed at par on 13 December
2023 and 16 February 2024 respectively.
g) Impairment of Investment in subsidiary (See note 35)
The Company's investment in its subsidiary has a carrying value at 31 March
2022 of $28,385,729.
Management tests annually whether the investment in subsidiary has future
economic value in accordance with the accounting policies. The investment is
subject to an annual impairment review by management. This calculates the net
present value of future cash flows of the subsidiary's operations over the
life of the mine. The review takes into consideration changing coal prices,
anticipated resources, sales volumes and cost of production. The estimated
future cash flows are discounted (12.69%) to their present value at the
Company's cost of capital in order to determine the recoverable amount of the
mine.
h) Royalty provision (See note 25)
The Group has a provision in place at a value of $1,242,000 in relation to
minimum royalty payments. This is based on minimum lease payments for leases
with mining rights. The present value of the minimum lease payments has been
calculated based on the life of the mine or if shorter, the lease term. The
provision will be discounted over this period at 12.69%.
i) Recoverability of Intragroup loans (See note 23)
The Group currently has an intra group loan between Bens Creek Group Plc and
Ben's Creek Carbon WV LLC. The terms of the loan are over 5 years, with a
total facility of $20,000,000. Interest is accrued monthly at 6% which is
considered a market rate. As the interest rate is deemed market value the loan
has not been discounted over the term.
5. Dividends
No dividend has been declared or paid by the Company during the period ended
31 March 2022.
6. Segment information
Management has determined the operating segments based on reports reviewed by
the Board of Directors that are used to make strategic decisions. During the
year the Group had interests in two geographical segments, the United Kingdom
and the United States of America ("USA"). Activities in the UK are mainly
administrative in nature whilst the activities in the USA relate to coal
production and sale of coal. The reportable operating segments derive their
revenue from the sale of prepared coal to industrial and retail customers. All
of the revenue and costs of Ben's Creek Carbon are US based, whereas all the
costs of Ben's Creek Group Plc are from the UK.
USA UK Total
2021 $ $ $
Administrative expense (1,451,759) - (1,451,759)
Operating loss (1,451,759) - (1,451,759)
Additions to plant and equipment 121,225 - 121,225
Reportable segment assets 898,005 - 898,005
Reportable segment liabilities 2,349,764 - 2,349,764
USA UK Total
2022 $ $ $
Revenue 5,411,816 - 5,411,816
Cost of sales (3,878,565) - (3,878,565)
Administrative expense (3,600,617) (5,392,776) (8,993,393)
Operating loss (2,067,366) (5,392,776) (7,460,142)
Additions to plant and equipment 12,325,171 565 12,325,736
Reportable segment assets 64,179,689 3,287,519 67,467,208
Reportable segment liabilities 23,156,255 12,566,668 35,772,923
7. Revenue
31 March 2022 31 March 2021 Unaudited
$ $
Coal Sales 5,411,816 -
5,411,816 -
Revenue was noted above were derived from one external customer. This revenue
was all generated in the USA.
8. Cost of sales
31 March 2022 31 March 2021 Unaudited
$ $
Production costs 3,051,937 -
Royalty expense (See note 4) 826,628 -
3,878,565 -
9. Administrative expenses
31 March 2022 31 March 2021 Unaudited
$ $
Expenses by nature:
Operational and remediation costs - 696,694
Staff costs 1,928,301 214,726
Legal, professional and brokerage 1,267,578 248,991
Travel and subsistence 139,920 70,206
Depreciation 154,008 49,717
Coal Depletion 744,513 -
Insurance 564,551 -
IPO related costs 1,299,484 -
Audit fees 152,456 -
Sale of scrap (133,982) -
Share based payment charge 2,095,151 -
Foreign exchange costs (125,505) -
Other administrative costs 906,918 124,346
Total administrative expenses 8,993,393 1,404,680
During the year the Group obtained the following services from the Company's
auditors and its subsidiaries:
31 March 2022 31 March 2021 Unaudited
$ $
Fees payable to the Group's auditor and its associates for the audit of the 152,456
Company and Consolidated Financial Statements
-
Fees payable to the Company's auditor for other services:
- Reporting accountant services 104,494 -
- Interim financial statements review 3,000
259,950 -
10. Employee benefits expense
31 March 2022 31 March 2021 Unaudited 31 March 2022 Company
Staff costs $ $ $
Salaries and wages 1,139,642 195,591 139,934
Bonuses 624,079 - 624,079
Social security contributions and similar taxes 89,449 17,661 13,568
Other benefits 75,131 1,474 -
1,928,301 214,726 777,581
Average number of employees by function 31 March 2022 Numbers 31 March 2021 Numbers Unaudited 31 March 2022 Company Numbers
Operations 10 - -
Administration 2 - -
Directors - - 4
12 - 4
Details of the directors' emoluments are set out in note 30 to these financial
statements.
11. Finance costs
31 March 2022 31 March 2021 Unaudited
$ $
Interest expense 682,130 -
Unwinding of discount of reclamation liability 315,319
Total finance costs 997,449 -
12. Taxation
31 March 2022 31 March 2021 Unaudited
Tax recognised in profit or loss $ $
Current tax - -
Deferred tax (note 13) 8,222,085 -
Total tax charge in the Statement of Profit and Loss 8,222,085 -
The tax on the Group's profit/(loss) before taxation differs from the
theoretical amount that would arise using the weighted average tax rate
applicable to the profits/(losses) of the consolidated entities as follows:
31 March 2022 31 March 2021 Unaudited
$ $
Profit/(loss) on ordinary activities before tax 25,285,795 (1,451,759)
Tax on profit on ordinary activities at combined CT rate of 29.3% (2021: 7,408,738 (275,834)
27.5%)
Effects of:
Disallowed Expenditure 767,687 275,834
Parent company tax losses not recognised 726,846 -
Brought forward deferred tax asset on US losses not previously recognised (143,017) -
Other timing differences (538,169) -
Tax charge 8,222,085 -
The overseas tax rate used is a combination of 21% US federal tax rate and
6.5% West Virginia state tax rate, to give an applicable rate of 27.5%. The
rate used for the UK tax is 19%, which with the overseas tax rate gives a
blended rate of 29.3%.
The Group has UK tax losses of approximately $2,480,704 available to carry
forward against future taxable profits. A deferred tax asset has been
recognised in respect of overseas losses which are likely to be offset against
future profits arising from the Group's overseas entities. No deferred tax
asset has been recognised in respect of UK tax losses which are unlikely to be
offset against future expected profits.
13. Deferred tax
Group
Deferred tax liability Deferred tax asset
$ $
As at 1 April 2021 - -
Gain on bargain purchase 8,798,236 -
Uplift on fair value of plant 1,488,156 -
Deferred tax asset on future profit - 576,151
Total deferred tax 10,286,392 576,151
Current - -
Non-current 10,286,392 576,151
A deferred tax liability of $8,798,236 arose as part of the acquisition of
Ben's Creek Operations LLC and Ben's Creek Land LLC. Additionally, a deferred
tax liability of $1,488,151 was recognised on the increase in fair value of
the plant in relation to Other Comprehensive Income. The total deferred tax
liability amounted to $10,286,392. The charge in the profit and loss of
$8,222,085 consists of the liability from the acquisition of $8,798,236 less a
deferred tax asset of $576,151 recognised on the basis of future profits.
14. Earnings per share
The calculation of the total basic earnings per share of 6.165 cents is based
on the profit attributable to equity holders of the Company of $17,063,710 and
on the weighted average number of ordinary shares of 276,774,515 in issue
during the period. Diluted earnings per share are 5.922 cents based on a
weighted average of 288,162,165 shares. There are no prior year shares due to
the Company being incorporated in the year. Due to the uncertainty of the
Convertible Loan Notes being converted, they have not been included in the
weight average number of shares for the diluted earnings per share.
Details of share options that could potentially dilute earnings per share in
future periods are set out in note 32 to these financial statements.
15. Property, Plant and Equipment
Group
Vehicles Office equipment Plant Underground equipment Leasehold Improvements Construction in progress Total
$ $ $ $ $ $ $
Cost or valuation
As at 1 April 2020 - - - - - - -
Acquired during year 9,800 - - 121,225
111,425 - -
As at 31 March 2021 9,800 111,425 - - - - 121,225
As at 1 April 2021 - - - - - - -
Acquired from business combination - - - - 13,692,000
- 13,692,000
Additions during the year 114,597 420,396 - - 13,405,108
544,379 12,325,736
Transfers - - 18,588,524 3,787,000 -
- (22,375,524)
Gain on revaluation - - 5,411,476 - 5,411,476
- -
As at 31 March 2022 124,397 531,821 24,000,000 3,787,000 32,629,809
544,379 3,642,212
Depreciation
As at 1 April 2020 - - - - - - -
Depreciation during the year (653) (1,169) - - (1,822)
- -
As at 31 March 2021 (653) (1,169) - - - - (1,822)
As at 1 April 2021 - - - - - - -
Depreciation during the year (4,367) (14,454) - - (36,967)
(18,146) -
As at 31 March 2022 (5,020) (15,623) - - (38,789)
(18,146) -
Net book value as at 31 March 2021 9,147 110,256 - - - - 119,403
Net book value as at 31 March 2022 119,377 516,198 24,000,000 3,787,000 32,591,020
526,233 3,642,212
The items acquired through acquisition are detailed in note 29 to these
financial statements. An independent valuation of the Group's plant was
performed by valuers to determine the fair value as at 31 March 2022 (and
acquisition). The asset was reviewed and assessed as to the replacement for
the asset would be. The revaluation surplus, net of deferred income taxes, was
credited to other comprehensive income and is shown in the 'revaluation
reserve'. The plant and underground machinery are not depreciated in the year
due to completion of the remediation work until post year end and therefore
the assets are to be depreciated in the next financial year.
If the plant was to be recognised on the historical cost basis, they would be
measured at cost (being the fair value upon acquisition) less accumulated
depreciation ($18,588,524). As there is no depreciation the year, the value
would be the cost.
Included in the value of the plant additions, is the value of the minimum
lease payments on the lease of land from various lessees. The following leases
require a minimum payment: Pocahontas, based on the life of the mine to May
2028; MGC based on the lease term to end of 2025 and Carbon Fuels, based on
the life of the mine to May 2028. In aggregate this amounted to $1,242,000.
Other contractual payments due to the lessees are obligations based on the
sales of coal which have not been provided for as they cannot be reliably
estimated. A further $180k is included due to an increase in the reclamation
bond which is part of the mine asset. Additionally, $7.2m relates to costs
incurred in remediating the plant.
As at the year end construction in progress was made up of the following,
Highwall Miner ($2,726,574), railroad ($773,757) and other projects
($141,881). Post year-end the railway became fully operational. Work is still
being undertaken on the purchased Highwall miner to ensure it is fully
operational. There were no committed costs at 31 March 2022.
Company
Office equipment Total
$ $
Cost or valuation
As at 1 April 2021 - -
Acquired during period 565 565
As at 31 March 2022 565 565
Depreciation
As at 1 April 2021 - -
Depreciation charge during the period (26) (26)
As at 31 March 2022 (26) (26)
Net book value 539 539
As at 31 March 2022 539 539
16. Coal reserves and reclamation assets
Group Coal Reserves
$
Cost or valuation
As at April 2020 -
As at 31 March 2021 -
As at 1 April 2021 -
Fair value uplift at acquisition 25,700,000
Additions during the year -
As at 31 March 2022 25,700,000
Depletion
As at April 2020 -
As at 31 March 2021 -
As at 1 April 2021 (744,513)
As at 31 March 2022 (744,513)
Net book value
As at 1 April 2021 -
As at 31 March 2022 24,955,487
The coal reserves acquired through acquisition are detailed in note 29 to
these financial statements. The reclamation assets relate to bonds paid to and
held by the West Virginia Department of Environmental Protection as part of
the Groups reclamation commitments. Movement in the year relates to the
depletion of coal reserves from coal mined during the year.
The reclamation bond is based on a number of mining permits which is held with
the West Virginia Department of Environmental Protection and is interest
bearing.
The group has provided certificates of deposit as collateral to secure mine
reclamation obligations as required by the West Virginia Department of
Environmental Protection. The certificates are not released until the
underlying reclamation obligations have been completed by the group to the
satisfaction of the WDEP.
Group Company
31 March 2022 31 March 2021 Unaudited 31 March 2022 31 March 2021 Unaudited
$ $ $ $
Certificates of deposit 1,628,605 135,363 - -
17. Leases
The following lease liabilities arose in respect of the recognition of right
of use assets with a net book value of $63,366. The Group holds two leases
that it accounts for under IFRS 16.
Office Housing Vehicle Total
$ $ $ $
Balance as 1 April 2020 -
Acquired right of use assets 115,402 96,168 71,053 283,073
Principal reduction (25,000) (20,833) (4,703) (50,536)
Interest 1,671 1,392 1,614 4,677
Balance as 31 March 2021 92,073 76,727 67,964 237,214
Balance at 1 April 2021 92,073 76,727 67,964 237,214
Disposal right of use assets - - (59,804) (59,804)
Principal reduction (60,000) (50,000) (12,934) (122,934)
Interest 2,490 2,077 4,324 8,891
Balance at 31 March 2022 34,563 28,804 - 63,367
Less: Current portion (34,563) (28,803) - (63,367)
Non-current portion - - - -
All lease payments will occur in the next 12 months and are therefore
classified as current. The cash flows of the leases are as follows:
31 March 2022 31 March 2021 Unaudited
$ $
Interest charge 801 5,605
Principal reduction 64,167 66,277
Depreciation 44,077 47,891
The right of use assets are as follows:
Office lease Apartment lease Vehicle lease Total
$ $ $ $
Balance at 1 April 2020 - - - -
Additions 115,402 96,168 81,503 293,073
Depreciation (24,042) (20,035) (3,814) (47,891)
Balance at 31 March 2021 91,360 76,133 77,689 245,182
Balance at 1 April 2021 91,360 76,133 77,689 245,182
Disposal - - (68,156) (68,156)
Additions - - - -
Depreciation (57,701) (48,084) (9,533) (115,318)
Balance at 31 March 2022 33,659 28,049 - 61,708
18. Trade and other receivables
Group Company
31 March 2022 31 March 2021 Unaudited 31 March 2022
Current $ $ $
Prepayments 298,096
263,057 146,517
Other Receivables 272,232 135,000 168,948
570,328 398,057 315,465
Group Company
31 March 2022 31 March 2021 Unaudited 31 March 2022
Non-current $ $ $
Amount due from Ben's Creek Carbon LLC -
- 16,026,796
- - 16,026,796
Amount due from Ben's Creek Carbon LLC is funding provided by the parent
company to Bens Creek Carbon LLC for working capital and other projects.
Interest is accruing at 6% per annum and the loan is repayable immediately
following the first business day of the fifth anniversary of Admission, or a
later day as the parties may agree.
19. Cash and cash equivalents
Group Company
31 March 2022 31 March 2021 Unaudited 31 March 2022 31 March 2021 Unaudited
$ $ $ $
Cash at bank and on hand 5,555,296 - 2,971,515 -
5,555,296 - 2,971,515 -
The carrying amounts of the Group's cash and cash equivalents are denominated
in USD.
20. Inventory
Group
As at 31 March 2022 As at 31 March 2021 Unaudited
$ $
Coal inventory 1,528,613 -
The cost of inventories recognised as an expense and included in 'cost of
sales' amounted to $3,051,937 and is stated at the lower of cost and net
realisable value.
21. Trade and other payables
Group Company
31 March 2022 31 March 2021 Unaudited 31 March 2022
Current $ $ $
Trade payables 2,367,290
411,348 91,111
Other payables 30,150 - -
Payroll liabilities 27,971 - 24,123
Accruals 1,025,935 - 176,029
3,451,346 411,348 291,263
22. Deferred consideration
31 March 2022 Group 31 March 2021 Group Unaudited
$ $
Current liabilities
Deferred consideration 816,000 -
816,000 -
Non-current liabilities
Deferred consideration 2,357,698 -
2,357,698 -
The deferred consideration relates to the purchase consideration for the
acquisition of Ben's Creek Operations LLC and Ben's Creek Land LLC. For
further information, see notes 4 and 29 of these financial statements.
23. Borrowings
MBU Capital Group
$
Non-current liabilities
As at 1 April 2020 -
Drawdowns 1,604,367
Interest charge 42,401
Payments -
As at 31 March 2021 1,646,768
As at 1 April 2021 1,646,768
Drawdowns 1,439,252
Interest charge 194,807
Payments -
As at 31 March 2022 3,280,827
The Loan provided by MBU Capital Group Limited is a convertible facility up to
£10,000,000 (GBP) draw down. The loan commenced on 1 November 2020 and is
repayable in full by 30(th) June 2023 or such earlier date as may be agreed
between lender and borrower. The interest rate is 7% per annum, accruing
monthly. MBU Capital Group Limited is a shareholder of the Group and therefore
is considered a related party as disclosed in note 34 of these financial
statements.
31 March 2022 31 March 2021 Unaudited
$ $
Current liabilities
Bank overdraft - 54,454
- 54,454
24. Convertible Loan Notes
Debt component $ Derivative component $
Total $
As at 1 April 2021 - - -
Gross proceeds from issue of convertible loan notes 9,106,722 2,893,278 12,000,000
Transaction costs paid - - -
Net proceeds from convertible loan notes 9,106,722 2,893,278 12,000,000
Cash interest paid - - -
Foreign exchange losses (72,262) - (72,262)
Fair value gains - (53,461) (53,461)
Interest charged 401,128 - 401,128
As at 31 March 2022 9,435,588 2,839,817 12,275,405
The fair value of the embedded derivative was determined using the Black
Scholes valuation model. The parameters used are detailed below:
2021 Loan 2022 Loan
Granted on: 14 Dec 2021 17 Feb 2022
Life (years) 24 months 24 months
Exercise price (cents per share) 33 pence 44 pence
Risk free rate 1.25% 1.25%
Expected volatility 25.2% 25.2%
Fair value per share £0.0750 £0.0858
In December 2021 and February 2022, the Group raised $6m and $6m from the
placement of two Convertible Loan Notes. They were both issued at par and
carry a coupon of 15% and 12% respectively payable quarterly in arrears. The
Convertible Loan Notes are convertible into fully paid Ordinary Shares with
the initial conversion prices set at £0.28 and £0.40. The number of Ordinary
shares at the year-end that could be issued if all the Convertible Loan Notes
were converted is 27,175,221 (assuming that the exchange rate at the year-end
is $1.31/£1). Unless previously converted, redeemed, or purchased and
cancelled, the Convertible Loan Notes will be redeemed at par on 13 December
2023 and 16 February 2024 respectively. Volatility is calculated by reviewing
historic share price movements of comparable companies to the Group being
newly listed, as well as historic foreign exchange volatility between USD and
GBP (5%). The derivative is to be revalued at the year-end based on the
year-end foreign exchange rate.
25. Provisions
Reclamation provision Minimum lease payments
Total
$ $ $
As at 1 April 2021 - - -
Additions 1,635,569 1,242,000 2,877,569
Unwinding of discount 314,319 - 314,319
As at 31 March 2022 1,949,888 1,242,000 3,191,888
Current provisions - (350,000) (350,000)
Non-current provisions 1,949,888 892,000 2,841,888
The Group's provision for reclamation costs has a carrying value at 31 March
2022 of $1,949,888 and relates to the Group's reclamation obligations. The
provision for reclamation costs is calculated by discounting the expected
future cash outflows in respect of reclamation work based on the estimated
future cost provided by independent experts (Heritage Technical Associates,
Inc), being $4,454,777. The reclamation costs are expected to be incurred from
2028 to 2033 (at the end of the mine life per the mine plan - being 7 years).
The cash outflows have been discounted at 12.69%. The discounted provision for
reclamation costs is broadly equivalent to the reclamation bond assessments
made by the WVDEP. The reclamation provision is a commitment to restore the
site to a safe and secure environment. The provisions are reviewed annually.
The Group's provision for minimum lease payments amount to $1,242,000 relate
to leases held with Pocahontas, MGC and Carbon Fuels. In the agreements with
each respectively there is a minimum monthly payment which has been calculated
based on the life of the mine or if shorter the lease agreement. The lease
payments have been discounted to present value and will be reviewed annually.
The royalty agreements contain further clauses in which further royalties are
payable when mining on the land. However, as there is no accurate method to
estimate the level of production, no provision has been included.
26. Reconciliation of debt
As at 1 April 2020 Cash transactions Non-cash transactions As at 31 March 2021
2021 $ $ $ $
Borrowings (note 23) - 1,658,821 42,382 1,701,203
Convertible loan notes (note 24) - - - -
Lease liability (note 17) - (50,536) 287,750 237,214
As at 1 April 2021 Cash transactions Non-cash transactions As at 31 March 2022
2022 $ $ $ $
Borrowings (note 23) 1,701,203 1,384,798 194,826 3,280,827
Convertible loan notes (note 24) - 12,000,000 275,405 12,275,405
Lease liability (note 17) 237,214 (122,934) (50,913) 63,367
27. Financial instruments by category
Consolidated 31 March 2022
At amortised cost FVTPL Total
Financial Assets $ $ $
Trade and other receivables (excluding prepayments) 272,231 - 272,231
Cash and cash equivalents 5,555,296 - 5,555,296
5,827,527 - 5,827,527
At amortised cost FVTPL Total
Financial Liabilities $ $ $
Borrowings 12,716,415 2,839,817 15,556,232
Trade and other payables 2,425,411 - 2,425,411
Lease liability 63,367 - 63,367
15,205,193 2,839,817 18,045,010
Consolidated 31 March 2021 Unaudited
Loans & receivables FVTPL Total
Financial Assets $ $ $
Trade and other receivables (excluding prepayments) 135,000 - 135,000
Cash and cash equivalents - - -
135,000 135,000
At amortised cost FVTPL Total
Financial Liabilities $ $ $
Borrowings 1,701,203 - 1,701,203
Trade and other payables 411,348 - 526,464
Lease liability 237,214 - 237,214
2,349,765 - 2,349,765
The periods where the financial liabilities are payable are as follows:
31 March 2022
Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years
$ $ $ $
Borrowings - 15,556,232 - -
Trade and other payables 2,425,411 - - -
Leases 63,367 - - -
2,488,778 15,556,232 - -
31 March 2021 Unaudited
Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years
$ $ $ $
Borrowings 54,454 1,646,749 - -
Trade and other payables 411,348 - - -
Leases 115,136 122,077 - -
580,938 1,768,826 - -
Company 31 March 2022
Loans & receivables FVTPL Total
Financial Assets $ $ $
Trade and other receivables (excluding prepayments) 16,195,744 - 16,195,744
Cash and cash equivalents 2,971,515 - 2,971,515
19,167,259 - 19,167,259
At amortised cost FVTPL Total
Financial Liabilities $ $ $
Borrowings 9,435,588 2,839,817 12,275,405
Trade and other payables 115,234 - 115,234
9,550,822 2,893,817 12,390,639
The periods where the financial liabilities are payable are as follows:
31 March 2022
Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years
$ $ $ $
Borrowings - 12,275,405 - -
Trade and other payables 115,234 - - -
115,234 12,275,405 - -
28. Fair Value of Financial Assets and Liabilities Measured at Amortised
Costs
Financial assets and liabilities comprise the following:
· Trade and other receivables;
· Cash and cash equivalents; and
· Trade and other payables.
The fair values of these items equate to their carrying values as at the
reporting date.
29. Business combinations
On 22 September 2021, the Company acquired 100% of the membership interests in
Ben's Creek Carbon LLC, Delaware United States of America, which is registered
and incorporated in Delaware, United States of America and operates from its
office in West Virginia, United States of America.
The following table summarises the consideration paid for Ben's Creek Carbon
LLC and the values of the net assets assumed at the acquisition date.
Acquisition accounting has been completed using merger accounting, as the
transaction was between entities under common control, and is not within the
scope of IFRS 3 - Business Combinations:
2022
$
Recognised amounts of assets and liabilities acquired
Total assets 41,085,879
Total liabilities (19,450,569)
Total identifiable net assets 21,635,310
Purchase consideration (28,385,730)
Merger reserve from acquisition of subsidiary (6,750,420)
The identifiable net assets of Ben's Creek LLC have been consolidated into the
results of the Company as at 31 March 2022, and reflect the assets acquired by
Ben's Creek Carbon LLC on 22 September 2021.
Acquisition of Ben's Creek Operations WV LLC and Ben's Creek Land WV LLC
On 29 April 2021, Ben's Creek Carbon LLC, acquired 100% interest in Ben's
Creek Operations WV LLC and Ben's Creek Land WV LLC. Both of these entities
are registered and incorporated in Delaware, United States of America are
based and operate in West Virginia, United States of America.
The following table summarises the consideration payable of $4,485,428 for
Ben's Creek Operations WV LLC and Ben's Creek Land WV LLC and the values of
the assets and equity assumed at the acquisition date:
2022
$
Recognised amounts of assets and liabilities acquired
Property and plant 10,000,000
Equipment 2,450,000
Coal reserves 25,700,000
Total identifiable net assets 38,150,000
Purchase consideration payable (4,485,428)
Interest saving on early repayment of reclamation bonds 24,117
Gain on bargain purchase price 33,688,689
On acquisition the fair value of the plant of $10,000,000 and equipment of
$2,450,000 is based on independent expert valuations of the preparation plant
and associated facilities (Raw Resources Group) and equipment (New Age Mining
LLC). Raw Resources Group valued the preparation plant and associated
facilities at $16,000,000. The Company assumed a lower and more conservative
valuation of $10,000,000. New Age Mining LLC valued the equipment at
$2,450,000.
The fair value of the coal rights was evaluated by Marshall Miller &
Associates in their Competent Person Report. The valuation is based on proven
and probable recoverable coal reserves of 2.34 million tons (within the Pond
Creek and Lower Alma underground mines) at a sale price of $115 per ton less
the capital expenditure and all operating expenditure required to extract,
process, maintain and reclaim the mines plant and equipment and sell the coal,
over the life the mines. Corporate income tax at a rate of 27.5% (Federal tax
of 21% and State tax of 6.5%) was applied to the pre-tax profits. The
operating costs include all royalties payable and all applicable coal
production and sales taxes. The net cash flows were discounted at 12.69%
(which represents Marshall Miller & Associates estimate of the constant US
dollar, risk adjusted weighted average cost of capital for likely market
participants if the subject resources were offered for sale). The net present
value of the discounted cash flows, over the life of the mines, at a discount
rate of 12.69%, was calculated to be $25,700,000.
The deferred purchase consideration of $4,485,428, payable to The former
owner, is comprised of re-imbursement of reclamation bonds ($1,412,637), which
has been reduced by $24,117, following the early repayment and transfer to the
Group of the reclamation bonds, and royalty payments (being $3,072,791) over
the life of the mines. In May 2021, $130,000 was paid to Ben's Creek Holding
LLC in respect of the re-imbursement of reclamation bonds with the outstanding
amount payable by 31 October 2021 which nevertheless was settled early on 23
July 2021. The balance outstanding accrued interest at 7.5% per annum. Accrued
interest has been included in calculating the deferred consideration, which
was paid on 23 July 2021. The royalties payable, at a rate of $2 per tonne of
coal mined and sold, over the life of the mines were discounted at 12.69% in
calculating the deferred consideration. The life of the mine is projected to
be from October 2021 until May 2028. The production tonnage assumptions on
which the royalties were calculated are as follows;
Year To Tonnage
April 22 169,500
April 23 408,000
April 24 408,000
April 25 418,667
April 26 434,667
April 27 311,833
April 28 176,667
April 29 8,666
Total 2,336,000
Note 22 of these financial statements out the deferred consideration payable
at 31 March 2022, following the early repayment to the former owner of the
reclamation bonds.
30. Directors' emoluments
Year ended 31 March 2022
Short-term benefits salary Short-term Bonuses Share based payments Total Share options
Notice period months $ $ $ No.
$
Executive Directors
Adam Wilson 6 259,489 459,848 925,322 1,644,659 10,500,000
Raju Haldankar 6 43,759 98,539 - 142,298 -
Non-executive Directors
Robin Fryer - 21,428 26,277 - 47,705 -
David Harris - 16,151 19,708 - 35,859 -
Mohammed Iqbal - - - - -
340,827 604,372 925,322 1,870,521 10,500,000
Mohammed Iqbal resigned on 30 September 2021.
On 19 October 2021, Adam Wilson was granted 10,500,000 share options in the
Company at an exercise price of 5p per ordinary share. The vesting conditions
of the grant were related to performance criteria as set out in the Group's
admission document. The performance criteria was such that three targets of
3,500,000 share options would vest on conditions that the ordinary share price
of the Group's shares would increase by 100%, 200% and 300% of the admission
price of the Group following its IPO on 19 October 2021. These conditions were
met during the period from 19 October 2021 to 31 March 2022.
Short term benefits paid to Adam Wilson include a discretionary bonus of
$459,848 (£350,000) in connection with his employment contract with Bens
Creek Operations WV LLC. Short term benefits paid to Raju Haldankar includes a
discretionary bonus of $98,539 (£75,000). The discretionary bonuses paid to
both Adam Wilson and Raju Haldankar were in recognition of their efforts in
managing the affairs of the Group's subsidiaries including the rapid
development of the business to achieve a fundamental milestone, the
commencement of mining operations in December 2021.
31. Share capital and share premium
Shares issued Ordinary shares Share premium Total
$ $ $
Incorporation 1 - - -
Issue of shares - 11 August 2021 999 1 - 1
Issue of shares - 10 September 2021 49,999,000 68,543 - 68,543
Issue of shares - 22 September 2021 192,827,930 264,340 26,133,439 26,397,779
Issue of shares - 30 September 2021 14,450,000 19,809 - 19,809
Issue of shares - 19 October 2021 22,722,070 31,149 3,083,726 3,114,875
Issue of shares - 19 October 2021 70,000,000 95,960 9,500,051 9,596,011
Issue of shares - 27 November 2021 200,000 274 32,284 32,558
Issue of shares - 3 December 2021 1,500,000 2,056 203,573 205,629
Issue of shares - 14 December 2021 370,880 508 50,334 50,842
Issue of shares - 20 January 2022 900,000 1,234 122,144 123,378
Issue of shares - 14 February 2022 85,435 117 11,595 11,712
Issue of shares - 25 February 2022 600,000 823 81,429 82,252
Issue of shares - 25 March 2022 85,435 117 11,595 11,712
Issue of shares - 25 March 2022 250,000 342 33,928 34,270
Share issuance costs - - (552,090) (552,090)
353,991,750 485,273 38,712,008 39,197,281
On 11 August 2021, the Group issued 1,000 new ordinary shares in the capital
of the Company at a price of 0.1 pence per share raising £1.
On 10 September 2021, the Group issued 49,999,000 new ordinary shares in the
capital of the Company at a price of 0.1 pence per share raising £49,999
($68,543).
On 22 September 2021, the Group entered into a purchase agreement to acquire
the membership interests of BC Carbon for a consideration of $26,433,984
(£19,282,793). The consideration was satisfied by the issue of 192,827,930
ordinary in the Group. Details of the share for share exchange are noted
below:
MBU Capital Group 159,227,930
Adam Wilson 28,000,000
Larkin Hoskins 5,600,000
192,827,930
On 30 September 2021, the Group issued 14,450,000 new ordinary shares in the
capital of the Company at a price of 0.1 pence per share raising $19,809
(£14,450).
On 19 October 2021 the Group issued 22,722,070 new ordinary shares in the
capital of the Company at a price of 10p per share to a number of convertible
loan note investors of MBU in settlement of funding provided to the
Subsidiaries, raising $3,114,875 (£2,272,207).
On 19 October 2021 the Group issued 70,000,000 new ordinary shares in the
capital of the Company were issued at a price of 10p per share pursuant to its
initial public offering on 13 October 2021, with trading in the shares having
commenced on 19 October 2021, raising $9,596,011 (£7,000,000)
On 27 November 2021, the Group issued 200,000 new ordinary shares in the
capital of the Company at a price of 11.875p per share under a contractual
agreement for services.
On 3 December 2021, warrants were exercised for 1,500,000 new ordinary shares
in the capital of the company at a price of 10p per share, with the proceeds
of issue amounting to $205,629 (£150,000).
On 14 December 2021, warrants were exercised for 370,880 new ordinary shares
in the capital of the company were issued on 14 December 2021, at a price of
10p per share, with the proceeds of issue amounting to $50,842 (£37,088).
On 20 January 2022, warrants were exercised for 900,000 new ordinary shares in
the capital of the Company at a price of 10p per share, with proceeds of the
issue amounting to $123,378 (£90,000).
On 14 February 2022, warrants were exercised for 85,435 new ordinary shares in
the capital of the Company at a price of 10p per share, with the proceeds of
issue amounting to $11,712 (£8,543)
On 25 February 2022, warrants were exercised for 600,000 new ordinary shares
in the capital of the Company at a price of 10p per share, with the proceeds
of issue amounting to $82,252 (£60,000).
On 25 March 2022, warrants were exercised for 85,435 new ordinary shares in
the capital of the Company at a price of 10p per share, with the proceeds of
issue amounting to $11,712 (£8,543).
On 25 March 2022, warrants were exercised for 250,000 new ordinary shares in
the capital of the Company at a price of 10p per share, with the proceeds of
issue amounting to $34,272 (£25,000).
32. Share based payments reserve
Share options and warrants
Share options and warrants outstanding at the end of the year have the
following expiry dates and exercise prices:
Share options
Grant Date Expiry Date Exercise price in £ per share 31 March 2022
19 October 2021 18 October 2031 0.05 10,500,000
19 October 2021 18 October 2031 0.05 3,500,000
04 January 2022 04 January 2032 0.05 1,750,000
16 February 2022 15 February 2032 0.05 450,000
09 March 2022 08 March 2032 0.05 100,000
16,300,000
Warrants
Grant Date Expiry Date Exercise price in £ per share 31 March 2022
19 October 2021 18 October 2024 0.10 40,000
19 October 2021 18 October 2024 0.10 118,250
30 November 2021 29 November 2024 0.10 500,000
14 January 2022 13 December 2024 0.28 971,000
17 February 2022 16 February 2025 0.40 661,764
2,291,014
Total 18,591,014
The Company and Group have no legal or constructive obligation to settle or
repurchase the options or warrants in cash.
The fair value of the share options and warrants was determined using the
Black Scholes valuation model. The parameters used are detailed below using
the weighted
average:
2022 Options 2022 Warrants
Granted: 2022 2022
Life (years) 10 years 3 years
Exercise price (pence per share) 5 pence 26 pence
Risk free rate 1.25% 1.25%
Expected volatility 23.6% 23.6%
Fair value per share £0.0979 £0.18344
Volatility is calculated looking back at the historic exchange rate movement.
A reconciliation of share options and warrants granted and lapsed during the
period ended 31 March 2022 are
shown below:
Number
Outstanding as at 1 April 2021 -
Granted 22,382,764
Exercised (3,791,750)
Outstanding as at 31 March 2022 18,591,014
Exercisable at 31 March 2022 18,591,014
The total fair value of the options and warrants granted in the current year
resulted in a charge of $2,095,151 to the Consolidated Statement of
Comprehensive Income. The total charge to share premium at 31 March 2022 was
$552,091 due to the broker warrants which had not been exercised at the year
end.
33. Capital commitments
On 13 April 2022, the Group entered into a lease arrangement with Star Ridge
Land LLC over the mining rights for 2,640 acres contiguous to the Group's
property Mingo County, West Virginia. This agreement commits the Group to pay
an annual royalty of $120,000 per annuum from October 2024, which is
recoupable from any sales made from the coal assets of the property.
The group has provided certificates of deposit as collateral to secure mine
reclamation obligations as required by the West Virginia Department of
Environmental Protection. The certificates are not released until the
underlying reclamation obligations have been completed by the group to the
satisfaction of the WDEP (see note 16 for more details).
34. Related party transactions
MBU, at 31 March 2022, owned 59.25% of the voting issued share capital of the
Company.
The Group is party to the following arrangements with MBU:
MBU loan facility
MBU, which was a member of Ben's Creek Carbon LLC until 22 September 2021, has
a GBP £10,000,000 draw down facility with the Group. This facility commenced
on 1 November 2020 and is repayable in full by 30 June 2023 or such earlier
date as may be agreed between lender and borrower. The facility also allows
MBU to convert any funding provided, along with accrued interest, into
ordinary shares of the Group at a premium of 50% of the IPO price of 10p per
share. Accordingly, the conversion price is 15p per share. The interest
applicable on this facility is 7% per annum, which accrues monthly. As at 31
March 2022, $3,043,619 was drawn down by Ben's Creek Carbon LLC from the loan
facility. During the period $237,208 was charged as interest on the loan. This
is included in note 10 above and remains outstanding at 31 March 2022.
On 7 April 2022, the Group renegotiated and agreed with MBU, the balance of
the unused facility, if drawn down by the Group, can be converted at a price
of 60p per ordinary share, if MBU exercises its option to convert into shares
of the Group rather than seeking repayment of it loan and accrued interest.
MBU first bridging facility
On 23 July 2021, MBU provided a short-term bridging loan of $1,258,520 to
enable the Subsidiaries to pay the purchase consideration in respect of the
reclamation bonds. This facility, along with the outstanding interest of
$28,488, was repaid in full on 20 October 2021 from the net proceeds of the
Company's initial public offering on 19 October 2021.
MBU second bridging facility
On 27 August 2021, MBU provided a second short-term bridging loan of
$1,000,000 to enable the Subsidiaries to fund ongoing remediation works for
the plant, repairs to the rail facility and to provide working capital. This
facility, along with the outstanding interest of $11,279, was repaid in full
on 20 October 2021 from the net proceeds of the Company's initial public
offering on 19 October 2021.
MBU share Issuance to connected parties
On 30 September 2021, the Company issued 14,450,000 shares to employees and
connected persons of MBU who subscribed for these shares at par value. The
aggregate consideration payable for these was £14,450, which was paid during
the year.
MBU Services Agreement Licence
On 19 October 2021, the Group entered into a Services Agreement and Licence
for the supply of support services, covering information technology, human
resources, legal and compliance and the use of a logo. The monthly cost of
these services to the Group amounted to £10,833 per month. Accordingly, the
aggregate amount charged during the year to 31 March 2022 by MBU was £60,804,
of which £20,464 remained outstanding at 31 March 2022 and is included within
trade and other payables.
Ben's Creek Carbon LLC
During the year the Group provided funding of $15,777,986 to its Subsidiary;
Ben's Creek Carbon LLC, along with accrued interest of $248,810. The interest
rate applicable on the loan is an annual rate of 6%.
Executive Directors
The Board of Directors includes two Executive Directors; Adam Wilson (CEO) and
Raju Haldankar (CFO during the year), who are regarded as related parties by
virtue of their employment with MBU GBR Limited, a 100% subsidiary of MBU.
Adam Wilson was until 5 May 2022, an employee of MBU GBR Limited, On 06 May
2022, he commenced employment with Hamra Limited, a 75% owned subsidiary of
MBU.
Raju Haldankar was an employee of MBU GBR Limited during the year.
Directors' emoluments is disclosed in note 30 to these financial statements.
35. Investment in Subsidiary
Company
31 March 2022
$
Shares in Group
At beginning of period -
Consideration 25,400,390
Deferred consideration for subsidiaries 2,985,339
At end of period 28,385,729
Investments in Group undertakings are stated at cost, which is the fair value
of the consideration paid, less any impairment provision. Investments are
eliminated upon consolidation.
Name of subsidiary Country of incorporation and place of business Proportion of ordinary shares held by parent (%) Nature of business
Ben's Creek Carbon LLC United States 100% Direct Mining
Ben's Creek WV Operations LLC United States 100% Indirect Mining
Ben's Creek Land WV LLC United States 100% Indirect Lease rights
The registered address of all three subsidiary companies is 109 Capitol St,
Charleston, WV, 25301. The subsidiaries are exempt from individual audits.
36. Ultimate Controlling Party
As at 31 March 2022, MBU Capital Group Limited is the ultimate controlling
party as a result of owning 59.25% of the Group.
37. Events After Reporting Date
On the 13 April 2022, the Group entered into a further lease arrangement with
Star Ridge Land LLC over the mining rights of an additional 2,640 acres of
adjacent property, also located in Mingo County. The acquisition is contiguous
with the first Bens Creek property, which adds to our reserves and extends the
life of the mine.
Additionally, the Group agreed revised terms on an unsecured loan facility
provided by MBU. The revised terms, effective from April 2022, ensures that in
the event that MBU were to seek to exercise their conversion rights under the
loan facility, this would now be done at price of 60p per ordinary share
instead of 15p, as noted in the Group's admission document, in respect of any
drawdowns from April 2022. The Group exercised its right to draw down from the
MBU loan facility in April 2022, drawing down $6,500,000 (£5,000,000).
Other material events after the reporting period included, in chronological
order:
· Completion of the remediation of the Group railway facility,
which was formally approved for use by Norfolk Southern during April 2022;
· The commencement of underground mining during May 2022;
· The commencement of delivery of the Group's stock of clean met
coal via its railway facility to the Group's offtake partner Integrity;
· The grant of 2,000,000 share options to Raju Haldankar, the
Group's outgoing CFO, who retains an executive role with the Board;
· Post year-end 408,250 warrants were exercised by various brokers.
· The purchase of a fleet of earth moving equipment at a cost of
$5,405,000 to supplement the machinery operated by a contractor; and
· The placing of 20,000,000 ordinary shares of the Group at a price
of 30p per ordinary share. The aggregate gross proceeds of this issue was
$7,200,000 (£6,000,000).
· Draw down of $6,138,000 for an equipment financing facility to
aid the purchase of further earth moving equipment as the Group moves from a
contractor model to an equipment owner.
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