REG - Bens Creek Group PLC - Half-year Report
28/12/2023 07:00
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RNS Number : 9830X Bens Creek Group PLC 28 December 2023
28 December 2023
Bens Creek Group Plc
("Bens Creek" or the "Group")
Unaudited interim results for the six month period from 1 April 2023 to 30
September 2023
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 six month period.
Interim results highlights
· The Group produced 204,998 (six months to 30 September 2022:
99,928) tons of clean metallurgical coal during the period, a 105% increase.
· The Group delivered 18 (2022: 8) trains during the period, a 125%
increase, all of which were sold via Integrity Coal Inc sales and included
amongst them was an order that was shipped to Arcelor Mittal, one of the
largest steel producers in the world.
· 42,728 (six months to 30 September 2022: 19,230) clean tons of
coal were held in inventory at 30 September 2023, a 122% increase.
· From September 2023 both highwall miners were fully activated and
operational.
· EBITDA loss of $6.5m for the period (six months to 30 September
2022: loss $6.4m).
Post period highlights
· On 30 November 2023, Bens Creek announced that its subsidiary
company, BC Operations, had executed its first agreement with Avani for the
delivery of 3-unit trains comprising a total of 33,000 short tons of coal with
delivery of coal anticipated to be made no later than end of January 2024.
Adam Wilson, CEO of Bens Creek, said,
"We have now successfully completed the transition of the business and are
moving towards full production. During the period we have unfortunately
suffered from weakness in pricing putting our cash flow under pressure. We
were delighted to enjoy the support of both Avani and JCAM (ACAM) who assisted
us by providing debt facilities during difficult months and Integrity with
whom we have continued our strong relationship. A few of our competitors did
not have the same level of support, issuing WARN notices ahead of making
substantial redundancies. We are pleased that we were able to avoid taking any
such action.
"Sales for the period were ahead of last year, reflecting our improved
productivity. However inflationary pressures on costs and a deteriorating
price led to an increase in losses when compared to the same period last year.
Our average sales price in the period being only $118/ton against $166/ton for
the comparable period in 2022, a difference of $50/ton which, if we had
achieved it in the period upon which we are reporting, would have been
expected to result in a small profit for the half.
"This period saw a 125% increase in trains despatched, however there is a
reliance on Norfolk Southern ("NS") to provide trains in a timely manner,
which is completely out of our control.
"The early part of the 2(nd) half of our financial year has seen a significant
rise in the High Vol B met coal prices, from a low of $191/ton to a current
price of $250/ton. This will bring our sales prices to levels seen in the
comparable period in 2022. This has resulted in an improved order book and it
has allowed us to commit to sales through to the end of the third quarter
which, if trains booked run to schedule, could see the Group produce its first
monthly profit. We are also delighted to announce that a number of those
confirmed trains have been negotiated with Avani to be shipped to India. This
will help the Company enter the Indian market, which is a key target for the
future.
"We have repeatedly highlighted the correlation between the index price of the
coal and its inter relationship with the share price and the net sales price
achieved.
"The graph below shows clearly how intertwined the components are and clearly
evidences that both profitability and capital value lies in the hands of the
commodity market. With a predominantly fixed overhead any index price movement
results in an upward or downward swing of both. We have of course been very
aware of this and have concentrated, among other things, on reducing the fixed
cost per ton produced.
"Overall, the outlook has improved for us, and we look forward with growing
confidence to the coming months. With both Avani and Integrity in place, the
Company will continue to establish its branded coal in markets worldwide. As
ever I thank all of our staff for their continued commitment and support to
the business and we are hopeful that we will be able soon to deliver positive
returns to our shareholders."
Note: First train delivery of coal was in June 2022
Chairman's review of period
I am pleased to present the half-year chairman's review for the period ended
30 September 2023 and to share with you the progress the Company has
experienced during the first half of this fiscal year and the challenges it
faces.
Operational highlights:
· Safety First: Our commitment to safety remains unwavering. I am
pleased to report that our accident experience continues to be excellent, with
no reported accidents in the period. This is thanks to our dedication to
safety protocols and training. The well-being of our employees always remains
our top priority.
· Production: We continued on our journey from rehabilitating a
dormant coal operation to gradually moving into full production. In the six
months to September 2022, we produced 99,928 tons of clean metallurgical coal,
in the following six months 172,390 tons and in this period 204,998 tons. Once
the operation reaches full production it is expected that the mine will be
able to produce in excess of 300,000 tons in a six month period.
Environmental Stewardship:
We continue to make progress in minimising our environmental footprint.
Investments in cleaner technologies and sustainable mining practices have
positioned us as a responsible player in the industry. One of our highwall
miners is now using line power in place of a mobile generator. The Company is
always looking for opportunities for improvement and we remain focussed on
further changes that will contribute positively to environmental preservation.
Financial Performance:
· Revenue: Despite the challenging market conditions in the period
to which the CEO has referred, we are pleased to report a revenue increase of
35% compared to the first half of the previous financial year. This growth is
attributable to the increased production referred to above.
· Profitability: The loss for the period is a result of the
challenging price environment during much of the period. As noted above,
production in the period was no more than two-thirds of what we expect once
the optimal level of production is reached. Achieving this will have a
significant positive impact on the company's profit margins, especially if
recent price levels for our product are maintained.
Community Engagement:
We continue to foster positive relationships with the communities in which we
operate. Our commitment to social responsibility includes community
development programs, job creation, and efforts to support the well-being of
local residents.
Conclusion:
Our commitment to safety, financial discipline, and responsible environmental
practices are cornerstones for the company to be successful. I want to express
my gratitude to our dedicated employees and contractors, supportive
shareholders, and loyal stakeholders who have contributed to our achievements
during this half-year period.
On behalf of the board of directors and the entire management team, I thank
you for your trust in Bens Creek Group and look forward to a prosperous
future.
Robin Fryer
Chairman
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
Chairman
27 December 2023
For further information please contact:
Bens Creek Group plc +44 (0) 204 558 2300
Adam Wilson, CEO
Allenby Capital Limited (Nominated Adviser and Joint Broker) +44 (0) 203 328 5656
Nick Athanas / Nick Naylor / George Payne (Corporate Finance)
Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)
WH Ireland Limited (Joint Broker) +44 (0) 207 220 1666
Harry Ansell / Katy Mitchell
6 months ended 30 September 2023 6 months ended 30 September 2022 Year ended 31 March 2023
Note US$ US$ US$
Unaudited Unaudited Audited
Revenue 23,527,605 17,421,696 42,208,848
Cost of goods sold 4 (22,384,672) (12,210,281) (31,036,252)
Cost of sales 4 (2,992,728) (4,269,624) (9,390,6350)
Gross (loss) / profit before depletion & depreciation (1,851,795) 941,791 1,781,961
Depletion & depreciation 4 (4,792,788) (3,818,103) (5,326,847)
Administrative expenses 5 (4,614,723) (4,835,347) (9,945,404)
Change in estimates for provisions - - (575,580)
Share option charge 15 (16,731) (2,139,225) (2,397,585)
Operating (loss) / income (11,276,037) (9,850,884) (21,323,294)
Finance income 26,698 18,584 42,960
Finance costs (2,409,025) (1,478,544) (3,435,252)
Fair value gain on Convertible Loan Note embedded derivative - (423,911) -
Profit/(loss) before taxation (13,658,364) (11,734,755) (24,715,586)
Tax expense 550,226 844,564 548,835
Profit/(loss) for the period (13,108,138) (10,890,191) (24,166,751)
Other comprehensive income
Foreign exchange movement 353,271 938,778 705,713
Total comprehensive (loss) income for the period (12,754,867) (9,951,413) (23,461,038)
Total comprehensive (loss) income for the period attributable to equity (12,754,867) (9,951,413) (23,461,038)
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 (3.532) (3.468) (6.563)
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD FROM 1 APRIL TO 30 SEPTEMBER 2023
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
Note 30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited Audited
$
$ $
Non-current assets
Property, plant and equipment 7 44,294,635 34,611,587 43,579,689
Coal reserves and reclamation assets 8 23,409,252 23,994,572 24,514,572
Other assets 8 - 2,568,883 -
Right of use assets 120,331 8,813 175,868
Construction in progress 7 1,726,307 3,323,325 550,644
Restricted investments through OCI 1,094,061 - 695,120
Deferred tax asset 576,151 1,420,715 576,151
71,220,737 65,927,895 70,092,044
Current assets
Inventory 4,378,029 2,765,041 5,150,750
Trade and other receivables 9 1,854,611 1,056,848 1,530,513
Property, plant and equipment held for sale - 7,350,685 2,898,145
Cash and cash equivalents 1,183,719 2,765,041 471,651
7,416,359 11,172,574 10,051,059
Total assets 78,637,096 77,100,469 80,143,103
Current liabilities
Trade and other payables 10 8,821,645 3,060,434 6,894,131
Unearned revenue 4,520,052 753,364 2,783,969
Deferred consideration 11 1,254,206 816,000 1,254,206
Borrowings 12 3,462,778 7,730,846 3,462,778
Lease liability 55,875 9,138 110,706
Convertible loan notes 13 - 7,547,938 11,619,734
Embedded derivative 13 - 2,415,906 1,503,775
Provisions 14 510,000 440,000 510,000
18,624,556 22,773,627 28,139,299
Non-current liabilities
Borrowings 12 21,332,516 3,434,968 7,105,751
Convertible loan notes 13 7,133,844 3,037,819 -
Provisions 14 5,789,875 4,148,071 5,567,987
Deferred consideration 11 6,132,270 2,140,947 6,525,967
Deferred tax liability 9,187,331 10,286,392 9,737,557
Lease liability 66,534 - 66,534
Embedded derivative 13 159,446 - -
49,801,816 23,048,197 29,003,796
Total liabilities 68,426,372 45,821,823 57,143,930
Net assets 10,210,724 31,278,646 23,000,008
Equity attributable to owners of the parent
Share capital 539,260 509,166 538,221
Share premium 51,040,045 45,777,353 50,989,150
Share based payments reserve 4,947,561 5,043,778 5,033,913
Translation reserve (190,798) (311,005) (544,070)
Revaluation reserve 3,923,320 3,923,320 3,923,320
Merger reserve (6,750,420) (6,750,420) (6,750,420)
Retained losses (43,298,244) (16,913,546) (30,190,106)
Total equity 10,210,724 31,278,646 23,000,008
Group
Note Share Share premium Share Option Reserve Translation Reserve Revaluation Merger Reserve Retained losses Total
capital $ $ $ Reserve $ $ $
$ $
Balance as at 1 April 2022 485,273 38,712,008 2,647,242 (1,249,783) 3,923,320 (6,750,420) (6,023,355) 31,744,285
Loss for the year - - - - - - (24,166,751) (24,166,751)
Other comprehensive income
Currency translation differences - - - 705,713 - - - 705,713
Total comprehensive income for the year - - - 705,713 - - (24,166,751) (23,461,038)
Proceeds from issue of shares net of issue costs 52,948 12,277,142 - - - - - 12,330,090
Share based payments - - 2,386,671 - - - - 2,386,671
Total transactions with owners, recognised directly in equity 52,948 12,277,142 2,386,671 - - - - 14,716,761
Balance as at 31 March 2023 (Audited) 538,221 50,989,150 5,033,913 (544,070) 3,923,320 (6,750,420) (30,190,106) 23,000,008
Group
Note Share Share premium Share Option Reserve Translation Reserve Revaluation Merger Reserve Retained losses Total
capital $ $ $ Reserve $ $ $
$ $
Balance as at 1 April 2023 538,221 50,989,150 5,033,913 (544,070) 3,923,320 (6,750,420) (30,190,106) 23,000,008
Loss for the year - - - - - - (13,108,138) (13,108,138)
Other comprehensive income
Currency translation differences - - - 353,272 - - - 353,272
Total comprehensive income for the year - - - 353,272 - - (13,108,138) (12,754,866)
Proceeds from issue of shares net of issue costs 1,039 50,895 - - - - - 51,934
Share based payments - - (86,352) - - - - (86,352)
Total transactions with owners, recognised directly in equity 1,039 50,895 (86,352) - - - - (34,418)
Balance as at 30 September 2023 (Unaudited) 539,260 51,040,045 4,947,561 (190,798) 3,923,320 (6,750,420) (43,298,244) 10,210,724
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
AS AT 30 SEPTEMBER 2023
6 months ended 30 September 2023 Unaudited 6 months ended 30 September 2022 Unaudited Year ended 31 March 2023 Audited
US$ US$ US$
Cash flows from operating activities
Loss before taxation (13,658,364) (10,890,191) (24,715,586)
Adjustments for:
Depreciation and amortisation 3,687,457 1,702,188 4,886,904
Depletion expense 1,105,320 2,115,915 440,915
Interest expense 1,993,830 1,478,544 3,435,252
Interest income - (18,584) (42,960)
Share based payment charge 16,731 2,139,225 2,397,585
Fair value gain on revaluation of embedded derivative - 423,911 (168,691)
Foreign exchange translation 353,302 (1,993,005) 568,329
Change in revaluation of deferred consideration - - 4,859,839
Change in estimates - - 575,580
Change in working capital
Decrease in inventory 772,721 (1,236,428) (960,185)
(Increase) in trade and other receivables (324,098) (486,520) 6,226,754
Increase in trade and other payables 3,663,597 362,452 (3,622,137)
Net cash used in operations (2,389,504) (6,402,493) (6,118,401)
Cash flows from Investing activities
Purchase of property, plant and equipment (5,594,779) (7,524,532) (17,024,823)
Disposal of property, plant and equipment 2,970,395 - (172,149)
Investment in deposit account (398,941) - (695,120)
Net cash used in investing activities (3,023,325) (7,524,532) (17,892,092)
Cash flows from financing activities
Proceeds from borrowings 10,240,861 12,408,050 18,419,042
Repayment of borrowings (3,616,287) (3,720,645) (8,054,780)
Payment of deferred consideration (393,697) - -
Proceeds from issue of shares, net of issue costs (51,149) 7,089,238 7,049,481
Repayment of lease liabilities (54,831) (54,229) (115,500)
Net cash generated from financing activities 6,124,897 15,722,414 18,926,848
Net (decrease)/increase in cash and cash equivalents 712,068 1,795,389 (5,083,645)
Cash and cash equivalents at the beginning of the year 471,651 5,555,296 5,555,296
Cash and cash equivalents at end of period 1,183,719 7,350,685 471,651
BENS CREEK GROUP PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
AS AT 30 SEPTEMBER 2023
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 15 Stratton St, London, W1J 8LQ, 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 2023 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.
Going concern
The Directors have reviewed the cashflow forecast and the future requirements
of the Group for the period to 31 December 2024. They have considered current
and future offtake agreements, changes in the economic climate and other
contracts, such as vendors in place.
Key assumptions in the cashflow were production rates, recovery rates and
pricing. The forecast also assumes Norfolk Southern will provide reliable
train service to ship coal produced. The Directors and executive team
discussed these assumptions in detail in reviewing the cashflow forecasts are
accurate. Assumptions are discussed in further detail below.
The Group is confident that it will be able to achieve its targeted increased
production rates using two High Wall Miners on double shifts. Although there
is a risk of not being able to achieve this due to repairs, maintenance and
anomalies, the Group considers the risk of downtime is minimal. One of the
biggest contributors to downtime was the risk of generators breaking down. The
Group in September 2023 installed Line Power to one of the High Wall Miners,
which will now result in far less downtime due to having two generators and
Line Power to ensure both High Wall Miners are running. Looking forward a
second Line Power will be installed to ensure both High Wall Miners are
running at maximum efficiency.
There are an estimated 92m tons of reserve in situ, which was confirmed by
Marshall Miller, an independent expert in the field. This indicates that there
is significant coal both underground and overground in which the Group can
explore and mine in the future. This gives management confidence that there
are enough reserves to continue mining beyond 10 years.
The price of metallurgical coal has fluctuated in the year and post year-end,
with a sharp fall in the price to a low of $191/ metric ton, High Vol B.
However, management is confident even at the current price ($250/ metric ton,
High Vol B) that the Group will be able to generate positive cash flows in the
future.
The Directors also recognise the importance of the reliability of Norfolk
Southern ("NS") who provide the transport service to the port.
The Group undertook a cost-cutting exercise amid the fall in coal prices.
Contractor costs have decreased significantly, as underground mining has been
cut from $45/ton to $35/ton. In addition to the reduction in costs the
recoverability of underground mining has significantly improved since August
2023. It was achieving lows of 32% to currently around 45%, which
significantly improves the profitability.
High wall mining costs have been cut from $28/ton to $25/ton with a view to
achieving further decreases at full production. These and other costs that
have been reduced have significantly helped the cash flow during the low of
the coal prices.
Several events occurred during the period which have given further reassurance
that the Group is a going concern. The most immediate of which was the
issuance of two loan notes to provide extra funding for both working capital
and repayment of outstanding convertible loan notes. At 30 June 2023 the
convertible loan note issued in February 2022 was due for repayment (following
amendment of repayment date). To ensure the Group was able to meet this
repayment, some of the funds were used to repay this loan.
The Directors are also confident that the Group is able to raise funds
elsewhere if required. This can be done through several methods including
raising finance against property, plant and equipment currently on the balance
sheet, re-negotiating with contractors and suppliers for lower rates or an
equity raise with shareholder approval.
The Directors are of the opinion that the Group has adequate resources to
continue in operational existence for twelve months from signing of the
Interim financial statements, while recognising there is a material
uncertainty. Accordingly the Interim financial statements have been prepared
on a going concern basis.
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. Cost of sales
30 September 2023 30 September 2022 31 March 2023
Unaudited Unaudited
Audited
$ $ $
Production costs 22,384,672 12,210,281 31,036,252
Transportation costs 184,120 2,421,594 3,145,205
Coal & sale taxes 1,323,962 721,894 2,335,728
Royalty expense 1,486,656 1,126,136 3,909,702
Depreciation 3,631,920 1,649,299 4,770,614
ROU depreciation 55,537 52,889 115,318
Coal Depletion 1,105,321 2,115,915 440,915
30,172,188 20,298,008 45,753,734
5. Administrative Expenses
30 September 2023 Unaudited 30 September 2022 Unaudited 31 March 2023
Audited
$ $ $
Operational and remediation costs 1,094,406 1,794,153
Salaries 1,815,782 1,931,857 3,651,828
Legal, professional and brokerage 510,020 619,166 1,118,565
Travel and subsistence 179,160 182,857 353,958
Insurance 1,245,944 662,896 2,318,757
IPO and AIM related costs - - 66,824
Sale of scrap - (133,982)
Gain on disposal (754,980) - -
Foreign exchange costs 98,756 (186,099) (125,505)
Other administrative costs 425,635 1,624,670 906,918
Total administrative expenses 4,614,723 4,835,347 9,945,404
6. Earnings (loss) per share
The calculation of the total basic loss per share of 3.532 cents is based on
the loss attributable to equity holders of the Company of $13,108,138 and on
the weighted average number of ordinary shares of 368,214,862 in issue during
the period.
7. Property, Plant and Equipment
Group
Vehicles Plant Underground equipment Leasehold Improvements Construction in progress Total
Equipment
$ $ $ $ $ $ $
Cost or valuation
As at 1 April 2023 131,897 25,949,883 4,674,829 2,085,699 550,644 48,936,370 131,897
Acquired during year 449,323
- 3,901,170 68,623 - 1,175,662 5,594,779
Disposal - (85,000) - - (85,000)
- -
As at 30 September 2023 131,897 19,359,588 26,399,206 4,743,451 2,085,699 1,726,307 54,446,149
Depreciation
As at 1 April 2023 (30,649) (1,432,242) (2,400,000) (682,426) (260,720) - (4,806,037)
Depreciation during the year (13,190) (1,711,684) (1,326,720) (436,756) (143,570) (3,631,920)
Disposals - 12,750 - - - - 12,750
As at 30 September 2023 (43,839) (3,131,176) (3,726,720) (1,119,182) (404,290) - (8,424,861)
Net book value as at 30 September 2023 88,058 16,228,412 22,672,486 3,624,270 1,681,410 1,726,307 46,020,942
Net book value as at 1 April 2023 101,248 14,111,176 23,549,883 3,992,403 1,824,979 550,644 44,130,333
8. Coal reserves and reclamation assets
Group Coal Reserves
$
Cost or valuation
As at 1 April 2023 25,700,000
As at 30 September 2023 25,700,000
Fair value uplift at acquisition -
Additions during the year -
As at 30 September 2023 25,700,000
Depletion
As at 1 April 2023 (1,185,428)
In the year (1,105,321)
As at 30 September 2023 (2,290,749)
Net book value
As at 1 April 2023 24,514,572
As at 30 September 2023 23,409,252
Other assets
Reclamation bond
30 September 2022 Unaudited 30 September 2022 Unaudited 31 March 2023 Audited
$ $ $
Certificates of deposit - 2,568,882 -
Movement in the year relates to the depletion of coal reserves from coal mined
underground 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 were released during the year
through a Surety. This enabled the Company to realise the cash element of the
Deposits.
9. Trade and other receivables
30 September 2023 Unaudited 30 September 2022 Unaudited 31 March 2023 Audited
Current $ $ $
Trade receivables - 716,415 475,000
Prepayments 171,017 161,502 352,103
Other receivables 1,683,594 178,931 703,410
1,854,611 1,056,848 1,530,513
10. Trade and other payables
30 September 2023 Unaudited 30 September 2022 Unaudited 31 March 2023 Audited
Current $ $ $
Trade payables 4,270,556 1,545,057 1,442,491
Tax liabilities 209,158 - 447,507
Other payables 2,333,338 85,316 3,140,056
Payroll liabilities 462,054 170,969 402,725
Accruals 1,546,539 1,259,092 1,461,352
8,821,645 3,060,434 6,894,131
11. Deferred consideration
30 September 2023 Unaudited 30 September 2022 Unaudited 31 March 2023 Audited
$ $ $
Current liabilities
Deferred consideration 1,254,206 816,000 1,254,206
1,254,206 816,000 1,254,206
Non-current liabilities
Deferred consideration 6,132,270 2,140,947 6,525,967
6,132,270 2,140,947 6,525,967
12. Borrowings
30 September 2023 Unaudited 30 September 2022 Unaudited 31 March 2023 Audited
$ $ $
Current liabilities
Equipment financing 3,462,778 2,568,780 3,462,778
Other loans - 5,162,066 -
3,462,778 7,730,846 3,462,778
Non-current liabilities
Equipment financing 7,871,442 3,434,968 7,105,751
Other loans 13,461,074 - -
21,332,516 3,434,968 7,105,751
30 September 2023
$
Equipment financing
As at 1 April 2023 10,568,529
Drawdowns 3,666,691
Interest 715,258
Repayments (3,616,258)
As at 30 September 2023 11,334,220
Current 3,462,778
Non-current 7,871,442
30 September 2023
$
Other loans
As at 1 April 2023 -
Drawdowns 13,000,000
Interest 499,999
Repayments (137,404)
As at 30 September 2023 13,461,074
Current -
Non-current 13,461,074
On 23 June 2023 Bens Creek Operations entered into an unsecured loan note
agreement with Avani Resources Pte Ltd (the Company's largest shareholder) for
a total subscription of $6,500,000 in Loan Notes. The Loan Notes have a term
of 18 months and interest will roll up and be repaid as a bullet on the
second anniversary of the Loan Note.
Bens Creek Operations will repay to the Lender $2 per tonne of clean coal sold
within 7 business days of production. The principal outstanding under the Loan
Notes, less coal payments or other prepayments, will be repayable on the
repayment date.
Simple interest shall be added to the principal amount of the outstanding
Notes on each relevant repayment date. The interest shall be calculated at a
rate of 15.1% per annum from and including the date of issue of each Note up
to and including the date of the redemption or repurchase of the relevant
Notes. The interest shall be payable in the same manner as in the case of the
original principal amount of the Note and shall otherwise be treated as
principal of the Note for all purposes.
In the event Bens Creek Operations redeems or fully repays any Note prior to
the repayment date it shall, together with the payment of the principal amount
outstanding, pay for the account of the Avani a prepayment calculated at a
rate of 15% per annum from and including the date of issue of each Note up to
and including the date of the redemption or repurchase of the relevant Notes.
On 7 July 2023 Bens Creek entered into a second unsecured loan note agreement
with the Avani Resources Pte Ltd for a total subscription of $6.5 million of
Loan Notes. The Loan Notes have a term of 18 months and interest will roll up
and be repaid as a bullet at the maturity of the Loan Note. The terms of the
loan note are the same as the note issued on 23 June 2023.
Proceeds from the second Loan Note issuance with Avani were used to repay one
of the Convertible Loan Notes held by ACAM LP which was due for repayment by
the end of summer 2023. Total repayment amounted to $5.7m.
On 7 July 2023 Bens Creek also issued c.$7.57 million of unsecured loan notes
to ACAM LP (the "2023 ACAM Loan Notes").
The 2023 ACAM Loan Notes have been issued to ACAM in replacement for the now
cancelled $6m of convertible loan notes issued to ACAM on 14 December 2021,
full details of which were included in the Company's announcement of 15
December 2021. The CLNs were due for repayment on 31 December 2023.
Following negotiations with ACAM it has been agreed that they would cancel the
CLNs and accept the 2023 ACAM Loan Notes by way of replacement. The 2023 ACAM
Loan Notes have a term of 18 months. The 2023 ACAM Loan Notes are not
convertible into new ordinary shares in the Company.
The terms of the 2023 ACAM Loan Notes are the same as the loan notes issued to
Avani Resources Pte Ltd.
The Company has also issued ACAM with a total of 21,082,257 warrants to
subscribe for new ordinary shares in Bens Creek exercisable at 28 pence per
ordinary share. The warrants have a life of five years from the date of issue
and can be exercised at any time by ACAM during the period ending 10 July
2028.
13. Convertible Loan Notes
Debt component $ Derivative component $
Total $
As at 1 April 2023 11,619,734 1,503,775 13,123,509
Repayments (5,765,692) - (5,765,692)
Modification 1,344,329 (1,344,329) -
Foreign exchange losses (64,527) - (64,527)
Fair value gains - - -
Interest charged - - -
As at 30 September 2023 7,133,844 159,446 7,293,290
During the period, the Group repaid one of the Convertible Loan Notes in full.
In doing so the Group undertook a number of new Loan Notes which were
non-convertible, detailed in note 12. Additionally, the second Convertible
Loan Note was cancelled, and a new Loan Note for the same balance was issued
for equal value. Attached to this were 21,082,257 warrants exercisable at 28p.
The warrants are deemed a derivative, as there is no additional investment
required, the value of the warrants will vary based on the issuer's share
price and the warrants will be settled in the future. Black Scholes was used
to value the derivative.
14. Provisions
Reclamation provision Minimum lease payments
Total
$ $ $
As at 1 April 2023 4,147,212 1,930,775 3,191,888
Additions - - -
Unwinding of discount 221,888 - 241,183
As at 30 September 2023 4,369,100 1,930,775 6,299,875
Current provisions - 510,000 510,000
Non-current provisions 4,369,100 1,420,775 5,789,875
The Group's provision for reclamation costs has a carrying value at 30
September 2023: $4,369,100 (31 March 2023 of $4,147,212) 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 $7,816,773. The
reclamation costs are expected to be incurred in 10 years (at the end of the
mine life per the management's mine plan). The cash outflows have been
discounted at 15% and inflation assumed to be 8.6%. 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 $1,930,775 relate
to leases held with Pocahontas, MGC, Carbon Fuels and Star Ridge. 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.
15. Share options
During the period 1,075,000 share options were granted to employees. The
options are valued at the date of the grant using the Monte Carlo Model,
totalling a charge of $16,498.
16. Related party transactions
Avani Resources Pte Ltd, who are the major shareholder by owning 29.9% of the
total shareholding entered into two Loan Notes during the period. Total
subscription amounted to $13,000,000 in Loan Notes. The Loan Notes have a term
of 18 months and interest will roll up and be repaid as a bullet at the end of
the term of the Loan Note.
Bens Creek Operations will repay to the Lender $2 per tonne of clean coal sold
within 7 business days of production. The principal outstanding under the Loan
Notes, less coal payments or other prepayments, will be repayable on the
repayment date.
Simple interest shall be added to the principal amount of the outstanding
Notes on each relevant repayment date. The interest shall be calculated at a
rate of 15.1% per annum from and including the date of issue of each Note up
to and including the date of the redemption or repurchase of the relevant
Notes.
In the event Bens Creek Operations redeems or fully repays any Note prior to
the repayment date it shall, together with the payment of the principal amount
outstanding, pay for the account of the Avani a prepayment calculated at a
rate of 15% per annum from and including the date of issue of each Note up to
and including the date of the redemption or repurchase of the relevant Notes.
17. Events after the Balance Sheet Date
On 30 November 2023, Bens Creek announced that Bens Creek Operations WV LLC
("BC Operations"), a wholly owned operating subsidiary of the Company executed
an agreement with Avani Resources Pte Ltd ("Avani"), the Company's largest
shareholder, for the delivery of 3-unit trains comprising a total of 33,000
short tons of Bens Creek High Vol B Metallurgical coal. The delivery of the
coal is expected to be made, subject to train delays, no later than the end of
January 2024. This sale is in addition to existing and ongoing business. The
coal was purchased by Avani at a price which is in line with market rates at
the time for the sale and purchase of High Vol B coal. The quality of the coal
will be in keeping with standard production from the Bens Creek mine. This
coal sale follows on from Avani entering into a non-exclusive sales and
marketing agreement, details of which were announced by Bens Creek on 26 July
2023.
18. Approval of interim financial statements
The interim financial statements were approved by the Board of Directors on 27
December 2023.
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