REG - Bens Creek Group PLC - Half-year Report
20/12/2022 07:00
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RNS Number : 2373K Bens Creek Group PLC 20 December 2022
20 December 2022
Bens Creek Group Plc
("Bens Creek" or the "Group")
Unaudited interim results for the period from 1 April 2022 to 30 September
2022
Bens Creek Group plc (AIM:BEN), the owner of a metallurgical coal mine in
North America supplying the steel industry, is pleased to announce its interim
results for the period from 1 April 2022 to 30 September 2022.
Interim Results Highlights
· The Group produced 99,928 tons of clean metallurgical coal in the
period.
· The Group recorded sales of $17.4 million for the period against
a volatile met-coal price.
· The Group witnessed its first positive gross profit before
depreciation, depletion and share option payments of $942k.
· The Group delivered 8 trains during the period of which 6 were in
August and September.
· First sales delivered by train in June 2022.
· Cash on the balance sheet as at 30th September 2022 was $7.4
million.
· 19,230 clean tons of coal were held in inventory.
· Non-recurring remediation and associated start-up costs incurred
during the period.
· The Group incurred $6 million of non-cash items including
depreciation, depletion and share option charge.
Adam Wilson, CEO of Bens Creek, said, 'The first half of our fiscal year has
seen us further advance the transition from a moribund business on care and
maintenance into a flourishing full production model. We have completed the
upgrade of our licence, although it took us a little longer than originally
anticipated. We have successfully moved our first high wall miner (HWM) into
the newly permitted area and commenced production on a recently introduced two
shift system. Initial results from what is a wider seam have been encouraging
and we anticipate that coal recovery ratios will continue to be higher than we
had achieved under our earlier licence. We expect to have the second HWM in
place in the first month of the new year and should be able to have it fully
operational shortly after. We will introduce a two-shift system on this HWM as
well which, along with our current programme, will bring us closer to our
planned for levels of production. We also expect that as production levels
rise that we will see economies of scale per clean ton start to take effect
which should assist us in our drive for profitability. The change from
contracted out earth moving to utilising our own fleet will allow us greater
control over the operations and we expect that it will also result in some
financial efficiencies, primarily as we will no longer have to make profit
share payments. I would like to thank all our staff for their unstinting
commitment. We are looking forward to the balance of the year with confidence
and remain focussed upon providing shareholder returns in the form of
dividends as soon as we are able to do so.'
Chairman's review of period
I am pleased to present the interim report for the group for the six months
ended 30th September 2022.
Much was achieved during the period to position the Group to become a
significant producer of metallurgical coal in 2023 and beyond. We successfully
completed the remediation of the railway line for the transportation of the
Group's metallurgical coal product and, at the beginning of June, delivered
the first train carrying our High Vol B product to our customer and offtake
partner Integrity Coal Sales, Inc. One highwall miner operated throughout the
period. Limited underground mining to supplement production from the
highwall miner commenced on 27th June 2022.
In the period under review, the Company made further improvements to the wash
plant by increasing its capacity. We produced 99,928 tons of clean
metallurgical coal and shipped 86,717 clean tons on 8 trains in the period.
With the price volatility of our product that we are currently experiencing,
we elected to fix prices on eight of the twelve trains that have been
confirmed through to December 2022. I am pleased to report that there were
no lost time accidents during the period.
In July we experienced a severe disruption as a result of unprecedented
flooding in the area of our operations leading to a state of emergency being
declared. Despite the extremely challenging conditions, our staff worked
tirelessly to repair the damage and we were up and running again in a short
period of time. The board's thanks go out to our staff for their sterling
efforts during this difficult time.
On 18th August 2022, the Company announced that it had raised £6 million in
placing and subscription at 30p, supported by both MBU Capital, our largest
shareholder, and Bluestar Global Capital as well as other investors. We have
utilised these funds to purchase our own fleet with a market value of about
$15 million, which was delivered to the site in November 2022, allowing us to
terminate the services of our contractor. The contractor had a four-production
shift limit, which has now been eliminated.
We were able to expand the territory available to us for mining by some 2,640
contiguous acres when we entered into a sublease agreement in April with Star
Ridge Land LLC, an affiliate of our offtake partner Integrity Coal Sales Inc.
We also successfully negotiated the purchase of the land upon which our
railway runs from MBU Land, a company controlled by MBU Capital. The Chief
Executive Officer, Adam Wilson, and his entire team are to be congratulated on
all these achievements.
To create further separation from MBU Capital, we terminated our
administrative and licence agreements with them in May 2022 and moved to a new
office in London. In July we appointed Murat Erden as our non-Board Chief
Financial Officer. Raju Haldankar stood down as Chief Financial Officer at the
same time, and from the board at the annual general meeting on 27th September
2022. The assistance of MBU Capital Group has been of immense value to us and
we are delighted that they continue to offer us their unequivocal support. We
would like to thank Mr Haldankar for his unwavering commitment during his
tenure, which included the successful raising of the capital to acquire and
rehabilitate a dormant mine and the listing of the company's shares on AIM in
October 2021.
The interim financial statements which follow reflect the group's gradual
transition from a start-up situation to becoming, in due course, a fully
operational metallurgical coal producer. The group generated $17.4 million in
revenue during the period, of which the majority was generated in the second
three months. This resulted in an operating cash flow shortfall of $6.4
million. Factoring in non-cash charges totalling $6.0m for the depletion of
coal reserves, depreciation of fixed assets, and share-based payments, the
group reported a loss of $10.9 million for the period. The Group's cash
position at 30 September 2022 amounted to $7.4 million with an inventory of
19,230 clean tons of coal.
As previously announced, Bens Creek currently has two loan notes in place,
that were entered into in December 2021 and February 2022 respectively with
two-year maturity dates. There is an early redemption right on the loan note
instruments that entitles the lender to 50% of their loans and accrued
interest after 12 months. The lender has confirmed they will not be exercising
this right on the December 2021 loan notes, such that the December 2021 loan
note will be repayable, if not converted, in December 2023. Further details
are provided in note 18 to the interim financial statements.
Responsibility Statement
We confirm that to the best of our knowledge:
· the interim financial statements have been prepared in accordance
with AIM Rules;
· give a true and fair view of the assets, liabilities, financial
position and loss of the Group; and
· the Interim report includes a fair review of important events
that have occurred during the financial period and their impact on the set of
interim financial statements; and a description of the principal risks and
uncertainties for the remaining six months of the year.
The interim report was approved by the Board of Directors and the above
responsibility statement was signed on its behalf by:
Robin Fryer
Non-Executive Chairman
19 December 2022
For further information please contact:
Bens Creek Group plc +44 (0) 204 558 2300
Adam Wilson, CEO
Murat Erden, CFO
Allenby Capital Limited (Nominated Adviser and Joint Broker) +44 (0) 203 328 5656
Nick Athanas / Nick Naylor / George Payne (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
WH Ireland Limited (Joint Broker) +44 (0) 207 220 1666
Harry Ansell / Katy Mitchell
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 APRIL TO 30 SEPTEMBER 2022
6 months ended 30 September 2022 6 months ended 30 September 2021
Note US$ US$
Unaudited Unaudited
Revenue 17,421,696 -
Cost of goods sold (12,210,281)
Other cost of sales 4 (4,269,624) -
Gross profit before depletion & depreciation 941,791 .-
Depletion & depreciation (3,818,103)
Administrative expenses 5 (4,835,347) (605,737)
Share option charge 15 (2,139,225)
Operating (loss) income (9,850,884) (605,737)
Finance income 18,584 72
Finance costs (1,478,544) -
Fair value gain on Convertible Loan Note embedded derivative (423,911) -
Profit/(loss) before taxation (11,734,755) (605,665)
Tax expense 844,564 -
Profit/(loss) for the period (10,890,191) (605,665)
Other comprehensive income
Foreign exchange movement 938,778 74,115
Total comprehensive (loss) income for the period (9,951,413) (531,550)
Total comprehensive (loss) income for the period attributable to equity (9,951,413) (531,550)
holders
Earnings (loss) per share from continuing operations attributable to the
equity owners of the parent
Basic earnings (loss) per share (US cents per share) 6 (3.468) (0.235)
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Note 30 September 2022 31 March 2022
Unaudited Audited Restated
$
$
Non-current assets
Property, plant and equipment 7 34,611,587 28,948,808
Coal reserves and reclamation assets 8 23,994,572 24,955,487
Other assets 8 2,568,883 1,628,605
Right of use assets 8,813 61,708
Construction in progress 7 3,323,325 3,642,212
Deferred tax asset 1,420,715 576,151
65,927,895 59,812,971
Current assets
Trade and other receivables 9 1,056,848 570,328
Cash and cash equivalents 7,350,685 5,555,296
Inventory 2,765,041 1,528,613
11,172,574 7,654,237
Total assets 77,100,469 67,467,208
Current liabilities
Trade and other payables 10 3,813,798 3,451,346
Deferred consideration 11 816,000 816,000
Borrowings 12 7,730,846 -
Lease liability 9,138 63,367
Convertible loan notes 13 7,547,938 6,397,769
Embedded derivative 13 2,415,906 2,839,817
Provisions 14 440,000 350,000
22,773,627 13,918,299
Non-current liabilities
Borrowings 12 3,434,968 3,280,827
Convertible loan notes 13 3,037,819 3,037,819
Provisions 14 4,148,071 2,841,888
Deferred consideration 11 2,140,947 2,357,698
Deferred tax liability 10,286,392 10,286,392
23,048,197 21,804,624
Total liabilities 45,821,823 35,772,923
Net assets 31,278,646 31,744,285
Equity attributable to owners of the parent
Share capital 509,166 485,273
Share premium 45,777,353 38,712,008
Share based payments reserve 5,043,778 2,647,242
Translation reserve (311,005) (1,249,783)
Revaluation reserve 3,923,320 3,923,320
Merger reserve (6,750,420) (6,750,420)
Retained losses (16,913,546) (6,023,355)
Total equity 31,278,646 31,744,285
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
AS AT 30 SEPTEMBER 2021
Unaudited
Group
Note Share Share premium Share Option Reserve Translation Reserve Revaluation Merger Reserve Retained losses Total
capital $ $ $ Reserve $ $ $
$ $
Balance as at 1 April 2021 - - - - - - - -
Profit for the year - - - - - - (605,665) (605,665)
Other comprehensive income - - - - - - - -
Currency translation differences - - - 74,115 - - - 74,115
Total comprehensive income for the year - - - 74,115 - - (605,665) (531,550)
Proceeds from issue of shares 346,860 25,736,900 - - - - - 26,083,760
Issue of ordinary shares relating to business combination - - - - - (4,428,967) - (4,428,967)
Total transactions with owners, recognised directly in equity 346,860 25,736,900 - - - (4,428,967) (605,665) 21,123,242
Balance as at 30 September 2021 (Unaudited) 346,860 25,736,900 - - - (4,428,967) (605,665) 21,123,242
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
AS AT 30 SEPTEMBER 2022
Unaudited
Group
Note Share Share premium Share Option Reserve Translation Reserve Revaluation Merger Reserve Retained losses Total
capital $ $ $ Reserve $ $ $
$ $
Balance as at 1 April 2022 (Audited) 485,273 38,712,008 2,647,242 (1,249,783) 3,923,320 (6,750,420) (6,023,355) (31,744,285)
Profit for the year - - - - - - (10,890,191) (10,890,191)
Other comprehensive income - - - - - - - -
Currency translation differences - - - 938,778 - - - 938,778
Total comprehensive income for the year - - - 938,778 - - (10,890,191) (9,951,413)
Proceeds from issue of shares 23,893 7,065,345 - - - - - 7,089,238
Share option charge - - 2,396,536 - - - - 2,396,536
Total transactions with owners, recognised directly in equity 23,893 7,065,345 2,396,536 - - - (10,890,191) (1,404,417)
Balance as at 30 September 2022 (Unaudited) 509,166 45,777,353 5,043,778 (311,005) 3,923,320 (6,750,420) (16,913,546) 31,278,646
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 SEPTEMBER 2022
6 months ended 30 September 2022 6 months ended 30 September 2021
US$ US$
Cash flows from operating activities
Loss before taxation (10,890,191) (605,665)
Adjustments for:
Depreciation and amortisation 1,702,188 3,067
Depletion expense 2,115,915 -
Interest expense 1,478,544 (64,852)
Interest income (18,584) -
Share based payment charge 2,139,225 -
Fair value gain on revaluation of embedded derivative 423,911 -
Foreign exchange translation (1,993,005) 74,115
Change in working capital
(Increase) in inventory (1,236,428) -
(Increase) in trade and other receivables (486,520) (9,470)
Increase in trade and other payables 362,452 557,972
Net cash used in operations (6,402,493) (44,833)
Cash flows from Investing activities
Purchase of property, plant and equipment (7,524,532) -
Net cash used in investing activities (7,524,532) -
Cash flows from financing activities
Proceeds from borrowings 12,408,050 -
Repayment of borrowings (3,720,645) -
Proceeds from issue of shares, net of issue costs 7,089,238 19,481
Repayment of lease liabilities (54,229) (1,748)
Net cash generated from financing activities 15,722,414 17,733
Net (decrease)/increase in cash and cash equivalents 1,795,389 (27,101)
Cash and cash equivalents at the beginning of the year 5,555,296 113,813
Cash and cash equivalents at end of period 7,350,685 86,712
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. General Information
The Company was incorporated on 11 August 2021 in England and Wales with
company number 13559916 and is domiciled in the United Kingdom with its
registered office being 53 Davies St, London, W1K 5JH, United Kingdom. The
ordinary shares of Bens Creek Group Plc were admitted to trading on AIM on 19
October 2021.
Bens Creek Group Plc is a holding company which, through its subsidiaries,
Ben's Creek Carbon LLC, Ben's Creek Operations WV LLC and Ben's Creek Land WV
LLC (the "Subsidiaries") (together "the Group"), is a producer of high-quality
metallurgical coal in the United States of America.
The Subsidiaries own and operate a metallurgical coal mine located on over
10,000 acres on the southern part of the state of West Virginia and the
eastern edge of Kentucky, in the central Appalachian Basin of the eastern
United States of America (the "Mine"). The Mine's operations are located
primarily in Mingo County, West Virginia. The Mine includes a wash plant and
rail loading facility located on the freehold land.
2. Basis of Preparation
These unaudited consolidated interim financial statements of Bens Creek Group
Plc have been prepared in accordance with the AIM Rules. The comparative
Balance Sheet figures for the year ended 31 March 2022 were derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. Those accounts received an unqualified audit report which did not
contain statements under section 498(2) or (3) of the Companies Act 2006.
The interim financial information set out does not constitute statutory
accounts within the meaning of the Companies Act 2006. It has been prepared on
a going concern basis in accordance with the recognition and measurement
criteria of IFRS. The functional currency of the Group is US Dollars.
The acquisition by the Company of its Subsidiaries has been reflected in the
consolidated financial results of the Group using merger accounting. This
method for accounting for business combinations has been made by virtue of
both the Company and the Subsidiaries being under common control prior to and
post the acquisition. Business combinations under common control are outside
the scope of IFRS 3. However, IAS 8 allows the use of judgement when
developing an accounting policy.
In the prior year, there was a reclassification in the disclosure of the
Convertible Loan Notes. This reclassification was in relation to the
disclosure of current and non-current liabilities and did not affect the net
assets of the Group or its loss for the period. For further information on
this please refer to note 18.
Going concern
The Group and Company Financial Statements have 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 Chairman's review.
The Group announced on 18 August 2022, that it has raised $7,089,238
(£6,000,000) by way of placing 20,000,000 ordinary shares at 30p per share.
In October 2022 the Group began mining in the new permit area which has
resulted in increased production for the first High Wall Miner, now on a
double shift since the first week of November 2022. With the expected
introduction of the second High Wall Miner in early 2023, management is
confident the Group can produce sufficient coal to meet its cashflow
requirements.
The price of metallurgical coal has seen material fluctuations in price during
2022. However, management is confident even at the current price as of
14(th) December 2022 ($258/ metric ton, High Vol B) the Group
will be able to generate positive cash flows.
The Directors have reviewed the cash flow 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.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
The key risks that could affect the Company's medium-term performance and the
factors that mitigate those risks have not substantially changed from those
set out in the Company's 2022 Annual Report and Financial Statements, a copy
of which is available on the Company's website: www.benscreek.com. The key
financial risks are liquidity risk, credit risk, interest rate risk and fair
value estimation.
Critical accounting estimates
The preparation of condensed interim financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the end of the reporting period. Significant items subject
to such estimates are set out in Note 2 of the Company's 2022 Annual Report
and Financial Statements. The nature and amounts of such estimates have not
changed significantly during the interim period.
3. Accounting Policies
Information on the accounting policies applied can be found in the Group's
latest annual audited financial statements. The Group and Company Financial
Statements have 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 the profit or loss "FVTPL" model.
Basis of consolidation
The Group's results consolidate the financial information of the Company and
its Subsidiaries for the 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.
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.
New and amended standards adopted by the Group
There have been no new or amended standards adopted by the Group for the first
time during the interim period.
4. Other cost of sales
30 September 2022 Unaudited 30 September 2021 Unaudited
$ $
Coal severance tax 721,894
Royalty expense 1,126,136 -
Freight and other selling costs 2,421,594
4,269,624 -
5. Administrative Expenses
30 September 2022 Unaudited 30 September 2021 Unaudited
$ $
Salaries 1,931,857 -
Legal, professional and brokerage 489,933 -
Travel and subsistence 182,857 -
Insurance 662,896 -
IPO related costs - 483,750
Audit fees 129,233 -
Foreign exchange costs (186,099) -
Other administrative costs 1,624,670 121,987
Total administrative expenses 4,835,347 605,737
6. Earnings (loss) per share
The calculation of the total basic loss per share of 3.468 cents is based on
the loss attributable to equity holders of the Company of $10,890,191 and on
the weighted average number of ordinary shares of 314,050,215 in issue during
the period. The diluted loss per share is 3.468 cents based on a weighted
average of 314,050,215 shares.
7. Property, Plant and Equipment
Group
Vehicles Office equipment Plant Underground equipment Leasehold Improvements Construction in progress Total
Equipment
$ $ $ $ $ $ $ $
Cost or valuation
As at 1 April 2022 124,397 28,235 503,021 24,000,000 3,787,000 3,642,212 32,629,243
544,379
Acquired during year 688,000 22,073 5,578,775 - 344,365 - 7,524,532
891,319
Disposal - - (160,000) - - - (318,887) (478,887)
As at 30 September 2022 812,397 50,308 5,921,796 24,000,000 4,131,365 3,323,325 39,674,889
1,435,698
Depreciation
As at 1 April 2022 (5,020) (15,623) - - (38,789)
(18,146) -
Depreciation during the year (20,256) (4,303) (132,579) (1,200,000) (246,046) (99,004) - (1,702,188)
As at 30 September 2022 (25,276) (19,926) (132,579) (1,200,000) (246,046) (117,150) - (1,740,977)
Net book value as at 30 September 2022 787,121 30,382 5,789,217 22,800,000 3,885,319 37,934,912
1,318,548 3,323,325
Net book value as at 1 April 2022 119,377 22,039 494,593 24,000,000 3,787,000 3,642,212 32,591,454
526,233
8. Coal reserves and reclamation assets
Group Coal Reserves
$
Cost or valuation
As at 1 April 2022 25,700,000
As at 30 September 2022 25,700,000
Fair value uplift at acquisition -
Additions during the year 1,155,000
As at 30 September 2022 26,855,000
Depletion
As at 1 April 2022 (744,513)
In the year (2,115,915)
As at 30 September 2022 (2,860,428)
Net book value
As at 1 April 2022 24,955,487
As at 30 September 2022 23,994,572
Other assets
Reclamation bond
30 September 2022 Unaudited 31 March 2022 Audited
$ $
Certificates of deposit 2,568,882 1,628,605
Additional deposits relate to the new permit, which was approved in September,
totalling $915,000. Additionally, the new lease with Star Ridge included a
minimum lease payment which has been capitalised over the life of the mine
($240,000).
9. Trade and other receivables
30 September 2022 Unaudited 31 March 2022 Audited
Current $ $
Trade receivables 716,415 -
Prepayments 161,502 298,096
Other receivables 178,931 272,232
1,056,848 570,328
10. Trade and other payables
30 September 2022 Unaudited 31 March 2022 Audited
Current $ $
Trade payables 1,545,057 2,367,290
Other payables 838,680 30,150
Payroll liabilities 170,969 27,971
Accruals 1,259,092 1,025,935
3,813,798 3,451,346
11. Deferred consideration
30 September 2022 Unaudited 31 March 2022 Audited
$ $
Current liabilities
Deferred consideration 816,000 816,000
816,000 816,000
Non-current liabilities
Deferred consideration 2,140,947 2,357,698
2,140,947 2,357,698
12. Borrowings
$ $ $
MBU Facility Other loans Total
As at 1 April 2022 3,280,897 - 3,280,897
Drawdowns 6,272,050 6,136,000 12,408,050
Interest charge 205,446 81,813 287,259
Payments (3,506,580) (214,065) (3,720,645)
FX translation (1,089,746) - (1,089,746)
As at 30 September 2022 5,162,066 6,003,748 11,165,814
Current Liability 5,162,066 2,568,780 7,730,846
Non-current liability - 3,434,968 3,434,968
During the period the Group drew down on two new facilities, the first from
McGinty Road Partners LP, who provided a facility of $6,136,000 at an interest
rate of 15%. This was to provide funding for the new fleet of equipment.
Additionally, the Group received funds from MBU Capital Group from the
£10,000,000 facility which was available. Interest accrued at 7%, and during
the period the Group repaid $3,506,580 of the loan to MBU Group Limited.
Further details on the MBU loan facility are set out in note 16 of the interim
results.
13. Convertible Loan Notes
Debt component $ Derivative component $
Total $
As at 1 April 2022 9,435,588 2,839,817 12,275,405
Foreign exchange losses 202,439 (423,911) (221,472)
Interest charged 947,730 - 947,730
As at 30 September 2022 10,585,757 2,415,906 13,001,663
Current 7,547,938 2,415,906 9,963,844
Non-Current 3,037,819 - 3,037,819
Further details of the convertible loan note are set out in Note 24 of the
Company's 2022 Annual Report and Financial Statements. The nature and amounts
of such estimates have not changed significantly during the interim period.
However, the classification of the convertible notes is the subject of a prior
year restatement between current and non-current classifications. Please see
note 18 for more details.
14. Provisions
Reclamation provision Minimum lease payments
Total
$ $ $
As at 1 April 2022 1,949,888 1,242,000 3,191,888
Additions 915,000 240,000 1,55,000
Unwinding of discount 241,183 - 241,183
As at 30 September 2022 3,106,071 1,482,000 4,588,071
Current provisions - 440,000 440,000
Non-current provisions 3,106,071 1,042,000 4,148,071
In April 2022, the Group entered into another lease arrangement with Star
Ridge Land LLC. Although the Group is not currently mining this land, there is
a minimum royalty due for the life of the lease. Further details on the
minimum lease payments are set out in note 25 of the Company's 2022 Annual
Report and Financial Statements.
15. Share options
During the period 2,300,000 share options were granted to Directors and
employees. Raju Haldankar (former CFO) was granted 2,000,000 share options and
other employees were granted 300,000 shares. The options are valued at the
date of the grant using the Black Scholes Model, totalling a charge of
$2,139,225.
16. Related party transactions
MBU Capital Group Limited ("MBU"), on 30 September 2022, owned 57.67% of the
voting issued share capital of the Company.
The Group is a 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 £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 an 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.
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 the loan and accrued interest.
During the period the Group drew down a further £5,000,000 of the facility to
fund working capital requirements. Subsequently, £3,000,000 of this facility
was repaid to MBU. The total balance outstanding on 30 September 2022 was
$5,162,066, of which $442,725 was related to interest accrued. In October
2022, the Group repaid a further £500,000 to MBU against the facility.
MBU share Issuance to connected parties
On 17 August 2022, the Group undertook a placing of £6,000,000. MBU and
Mohammed Iqbal the controlling party of MBU, subscribed for a total of
£1,500,000 at a price of 30p per share.
Executive directors
The Board of Directors includes two Executive Directors; Adam Wilson (CEO) and
Raju Haldankar (resigned from the board in September 2022), who are regarded
as related parties by virtue of their current or prior employment with Bens
Creek and MBU GBR Limited, a 100% subsidiary of MBU.
Adam Wilson was until 5 May 2022, an employee of MBU GBR Limited, on 6 May
2022, he commenced employment with Hamra Limited, a 100% owned subsidiary of
MBU.
Raju Haldankar was an employee of MBU GBR Limited during the year. Raju was
granted 2,000,000 shares options in Bens Creek via the employee share option
scheme during the period.
17. Events after the Balance Sheet Date
The Group announced that Robin Fryer, Non-Executive Chairman of the Company
and a PDMR, on 6 October 2022, acquired 150,000 share options from a US
Employee at a price of 18.5p per share option. Furthermore, in the event that
Robin Fryer exercises the share options he will be required to pay the Company
5p per share option exercised, which in aggregate equates to 23.5p per share.
Furthermore, a non-PDMR employee of the Company, on 6 October 2022, purchased
50,000 share options from the US Employee at a price of 18.5 pence per option
and has simultaneously exercised 50,000 options at a price of 5p per share,
which in aggregate equates to 23.5p per share.
At the same time, the US Employee has exercised an additional 740,000 share
options over the Ordinary Shares in the Company at a price of 5p per Ordinary
Share.
The Group engaged with Marsh USA Inc. to issue Surety Bonds which are placed
with Applied Surety Underwriters with cash collateral deposited at Morgan
Stanley USA. The Group will use surety bonds to provide financial assurance
for certain transactions and business activities. The West Virginia Department
of Environmental Protection (WVDEP), federal and state laws allow us to submit
surety bonds to secure payment of certain long-term obligations including mine
closure or reclamation costs and other miscellaneous obligations. The amount
of security required to be obtained can change as a result of new federal or
state laws, as well as changes to the factors used to calculate the bonding
amounts.
18. Prior year adjustment
The Group has restated the year-ended 31 March 2022 balance sheet in relation
to the Convertible Loan Notes. This is a reclassification restatement and has
no effect on the net assets of the Group as of 31 March 2022.
The two Convertible Loan Notes entered into in December 2021 and February 2022
have a two-year Final Maturity Date. Both Notes also have an early redemption
clause on the first anniversary of the date of the Notes, to the extent if
demanded by the Noteholders by 20 Business Days' notice in writing to the
Group prior to the first anniversary of the Notes. This early redemption
clause entitles the Noteholders to demand fifty per cent of the Notes together
with the accrued and unpaid interest. To the extent that the Noteholders have
not made such demand, all outstanding Notes are due on the Final Maturity
Dates, i.e. December 2023 and February 2024.
Accordingly, the Group has reclassified fifty per cent of the Notes together
with the accrued and unpaid interest of the Notes to current liabilities as of
31 March 2022.
Additionally, the embedded derivative element of the Convertible Loan Notes
was also reclassified from non-current to current liabilities. The Noteholder
has the right to exercise conversion of the Loans with 5 working days prior
notice, and therefore are deemed current.
As at the date of signing this Interim Report, the Noteholders have not
exercised early redemption of the December 2021 Note. Hence the Final Maturity
of the December 2021 Convertible Loan Note is confirmed as December 2023.
31 March 2022 31 March 2022
$ restated
$
Current liabilities
Trade and other payables 3,451,346 3,451,346
Deferred consideration 816,000 816,000
Borrowings - -
Lease liability 63,367 63,367
Convertible loan notes - 6,397,769
Embedded derivative - 2,839,817
Provisions 350,000 350,000
4,680,713 13,918,299
Non-current liabilities
Borrowings 3,280,827 3,280,827
Convertible loan notes 9,435,588 3,037,819
Provisions 2,841,888 2,841,888
Deferred consideration 2,357,698 2,357,698
Deferred tax liability 10,286,392 10,286,392
Embedded derivative 2,839,817 -
Current liabilities 31,042,210 21,804,624
Total liabilities 35,772,923 35,772,923
19. Approval of interim financial statements
The interim financial statements were approved by the Board of Directors on 19
December 2022.
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