REG - Beowulf Mining PLC - Financial Results for the year ended 31 Dec 2023
20/05/2024 07:00
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RNS Number : 9951O Beowulf Mining PLC 20 May 2024
20 May 2024
Beowulf Mining plc
("Beowulf" or the "Company")
Audited Financial Results for the year ended 31 December 2023
Beowulf (AIM: BEM; Spotlight: BEO), the mineral exploration and development
company, announces its audited financial results for the year ended 31
December 2023 (the "Period").
The Annual Report and Accounts will be tabled to shareholders at the Annual
General Meeting ("AGM") of the Company, the details of which will be announced
in a separate news release.
The 2023 Annual Report and the Notice of AGM and Form of Proxy will shortly be
posted to those shareholders who have requested a copy and will be available
on the Company's website today (https://beowulfmining.com/
(https://beowulfmining.com/) ).
Enquiries:
Beowulf Mining plc
Ed Bowie, Chief Executive Officer
ed.bowie@beowulfmining.com
SP Angel
(Nominated Adviser & Joint Broker)
Ewan Leggat / Stuart Gledhill / Adam Cowl Tel: +44 (0) 20
3470 0470
Alternative Resource Capital
(Joint Broker)
Alex
Wood
Tel: +44 (0) 20 7186 9004
BlytheRay
Tim Blythe / Megan Ray
Tel:
+44 (0) 20 7138 3204
Cautionary Statement
Statements and assumptions made in this document with respect to the Company's
current plans, estimates, strategies and beliefs, and other statements that
are not historical facts, are forward-looking statements about the future
performance of Beowulf. Forward-looking statements include, but are not
limited to, those using words such as "may", "might", "seeks", "expects",
"anticipates", "estimates", "believes", "projects", "plans", strategy",
"forecast" and similar expressions. These statements reflect management's
expectations and assumptions in light of currently available information. They
are subject to a number of risks and uncertainties, including, but not limited
to , (i) changes in the economic, regulatory and political environments in the
countries where Beowulf operates; (ii) changes relating to the geological
information available in respect of the various projects undertaken; (iii)
Beowulf's continued ability to secure enough financing to carry on its
operations as a going concern; (iv) the success of its potential joint
ventures and alliances, if any; (v) metal prices, particularly as regards iron
ore. In the light of the many risks and uncertainties surrounding any mineral
project at an early stage of its development, the actual results could differ
materially from those presented and forecast in this document. Beowulf assumes
no unconditional obligation to immediately update any such statements and/or
forecast.
CHAIRMAN'S STATEMENT
Dear Shareholders
I am pleased to introduce the Annual Report for 2023, the first full year of
my tenure as Chairman of Beowulf.
The year has been a transformational one for the Company, and not without its
challenges. In particular, we have seen a number of management changes,
however, I am confident that we are now in a stronger position than we were at
the beginning of 2023, and I remain excited about the future prospects for the
Company.
After nine years as Chief Executive Officer of Beowulf, Kurt Budge announced
on 3 May 2023 that he was stepping down from the Company. Kurt played a
pivotal role in the Company's development, in particular achieving the
successful delivery of the Exploitation Concession for Kallak North. Following
this we were fortunate to attract Ed Bowie to join Beowulf, taking over as CEO
on 7 August 2023. Ed has extensive technical, corporate and financial
experience and his involvement and new perspectives brought an immediate
positive impact to the Company's portfolio of assets.
We further strengthened the Board with the appointment of Mikael Schauman as
Non-Executive Director, on 10 July 2023. Mikael has over 40 years of
experience in base metals with senior management roles with major mining
companies including as Senior Vice President Commercial of Lundin Mining
Corporation. Mikael's insights and experience are proving invaluable to the
Company.
The Kallak project is now on a much firmer footing. We have initiated a
properly scoped PFS and put together an industry leading group of consultants
to manage the range of technical and environmental disciplines. The
environmental studies are continuing in preparation for the EIA and future
application for the environmental permit. Additionally, we have attracted an
excellent Project Director, Dmytro Siergieiev, to take over the leadership of
the project and Jokkmokk Iron following the resignation of Ulla Sandborgh as
the subsidiary's CEO.
In Finland, under the leadership of Rasmus Blomqvist, we delivered an
excellent PFS on the Coating plant but, in the fast-moving market and against
the backdrop of export controls introduced by China, have modified our plans
and initiated the PFS on the full anode material plant. Test-work and the EIA
studies are ongoing and remain on track for completion in 2024.
Vardar has continued to develop and refine exploration targets in Kosovo,
although we significantly reduced the expenditure from previous years,
focusing on low-cost mapping, sampling and drone-magnetics to better refine
targets prior to drilling. Further, following the end of 2023, we reached an
agreement to consolidate 100 per cent through in an all-share transaction.
This not only gives Beowulf full control of Vardar, but also tidies up the
subsidiary holdings and provides greater optionality to drive the business
forward.
Beowulf remains deeply committed to developing sustainable operations that
benefit our local communities. We strive to engage with our stakeholders and
have made significant efforts to improve our transparency, accountability, and
accessibility. In Jokkmokk we have opened an office in the town centre, where
Ed and I have made numerous trips and had regular meetings with local
politicians and business leaders. The appointment of Dmytro, who will be
spending significant time in Jokkmokk, further reinforces our determination to
become a trusted partner.
In March 2023, we completed a rights issue of Swedish Depository Receipts and
PrimaryBid retail offer and placing to certain UK investors. The total gross
amount raised was £6.4 million (SEK 80.8 million). The net funds raised after
repayment of the loan (£2.04 million) and transaction costs (£0.64 million)
were £3.72 million.
On 3 April 2024 we announced the completion of the capital raise with a total
of £4.3 million (SEK 56.3 million) gross raised to fund the development of
the Company's assets through their next key valuation milestones. We have a
clear strategy for each asset and have built a team capable of delivering.
I would like to thank our shareholders and stakeholders for their continuing
support.
J Röstin
Non-Executive Chairman
CONSOLIDATED INCOME STATEMENT
2023 2022
Note £ £
Continuing operations
Administrative expenses (2,501,263) (1,806,582)
Impairment of exploration assets 8 (350,158) (36,988)
Operating loss (2,851,421) (1,843,570)
Gain on disposal of investment - 21,951
Finance costs 3 (197,724) (304,806)
Finance income 3 7,923 176
Grant income 6 96,750 84,797
Recovery of impairment on listed investment 6,563 -
Loss before tax (2,937,909) (2,041,452)
Tax expense 5 - -
Loss for the year (2,937,909) (2,041,452)
Loss attributable to:
Owners of the parent (2,863,959) (1,948,459)
Non-controlling interests 15 (73,950) (92,993)
(2,937,909) (2,041,452)
Loss per share attributable to the ordinary equity holder of the parent:
Basic and diluted (pence) 7 (0.26) (0.23)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2023 2022
Note £ £
Loss for the year (2,937,909) (2,041,452)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange losses arising on translation of foreign operations (196,950) (32,945)
(196,950) (32,945)
Total comprehensive loss (3,134,859) (2,074,397)
Total comprehensive loss attributable to:
Owners of the parent (3,032,416) (2,020,889)
Non-controlling interests 15 (102,443) (53,508)
(3,134,859) (2,074,397)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Company Number 02330496 Note 2023 2022
£ £
ASSETS
NON-CURRENT ASSETS
Intangible assets 8 14,873,326 13,002,465
Property, plant and equipment 9 87,755 129,715
Investments 10 6,563 -
Loans and other financial assets 11 5,209 5,181
Right-of-use asset 12 63,158 19,279
15,036,011 13,156,640
CURRENT ASSETS
Trade and other receivables 13 152,004 220,427
Cash and cash equivalents 14 905,555 1,776,556
1,057,559 1,996,983
TOTAL ASSETS 16,093,570 15,153,623
EQUITY
SHAREHOLDERS' EQUITY
Share capital 16 11,571,875 8,317,106
Share premium 18 27,141,444 24,689,311
Capital contribution reserve 18 46,451 46,451
Share based payment reserve 18 903,766 516,098
Merger reserve 18 137,700 137,700
Translation reserve 18 (1,457,872) (1,289,415)
Accumulated losses 18 (23,235,514) (20,323,414)
15,107,850 12,093,837
Non-controlling interests 15 514,430 568,732
TOTAL EQUITY 15,622,280 12,662,569
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 19 433,662 625,730
Lease liability 20 22,575 10,840
Borrowings 21 - 1,845,947
456,237 2,482,517
NON-CURRENT LIABILITIES
Lease liability 20 15,053 8,537
15,053 8,537
TOTAL LIABILITIES 471,290 2,491,054
TOTAL EQUITY AND LIABILITIES 16,093,570 15,153,623
The financial statements were approved and authorised for issue by the Board
of Directors on 17 May 2024 and were signed on its behalf by:
Mr Ed Bowie - Director
COMPANY STATEMENT OF FINANCIAL POSITION
Company Number 02330496 Note 2023 2022
£ £
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 9 964 834
Investments 10 3,967,878 3,645,181
Loans and other financial assets 11 12,839,865 11,084,289
16,808,707 14,730,304
CURRENT ASSETS
Trade and other receivables 13 49,155 53,284
Cash and cash equivalents 14 794,909 1,667,840
844,064 1,721,124
TOTAL ASSETS 17,652,771 16,451,428
EQUITY
SHAREHOLDERS' EQUITY
Share capital 16 11,571,875 8,317,106
Share premium 18 27,141,444 24,689,311
Capital contribution reserve 18 46,451 46,451
Share based payment reserve 18 903,766 516,098
Merger reserve 18 137,700 137,700
Accumulated losses 18 (22,276,683) (19,317,455)
TOTAL EQUITY 17,524,553 14,389,211
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 19 128,218 216,270
Borrowings 21 - 1,845,947
TOTAL LIABILITIES 128,218 2,062,217
TOTAL EQUITY AND LIABILITIES 17,652,771 16,451,428
As permitted by Section 408 of the Companies Act 2006, the income statement of
the parent Company is not presented as part of these financial statements. The
parent Company's loss for the financial year was £2,959,228 (2022: loss of
£1,372,662).
These financial statements were approved and authorised for issue by the Board
of Directors on 17 May 2024 and were signed on its behalf by:
Mr Ed Bowie - Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Note Share capital Share premium Merger reserve Capital contribution reserve Share based payment reserve Translation reserve Accumulated Totals Non - controlling interests Total
£ £ £ £ £ £ losses £ £ equity
£ £
At 1 January 2022 8,317,106 24,689,311 137,700 46,451 668,482 (1,216,985) (18,470,675) 14,171,390 325,039 14,496,429
Loss for the year - - - - - - (1,948,459) (1,948,459) (92,993) (2,041,452)
Foreign exchange translation - - - - - (72,430) - (72,430) 39,485 (32,945)
Total comprehensive income - - - - - (72,430) (1,948,459) (2,020,889) (53,508) (2,074,397)
Transactions with owners
Equity-settled share-based payment transactions 17 - - - - 240,537 - - 240,537 - 240,537
Step up interest in subsidiary 10 - - - - - - (297,201) (297,201) 297,201 -
Transfer of reserve on option exercised - - - - (392,921) - 392,921 - - -
At 31 December 2022 8,317,106 24,689,311 137,700 46,451 516,098 (1,289,415) (20,323,414) 12,093,837 568,732 12,662,569
Loss for the year - - - - - - (2,863,959) (2,863,959) (73,950) (2,937,909)
Foreign exchange translation - - - - - (168,457) - (168,457) (28,493) (196,950)
Total comprehensive income - - - - - (168,457) (2,863,959) (3,032,416) (102,443) (3,134,859)
Transactions with owners
Issue of share capital 3,254,769 3,654,829 - - - - - 6,909,598 - 6,909,598
Cost of issue - (1,202,696) - - - - - (1,202,696) - (1,202,696)
Equity-settled share-based payment transactions 17 - - - - 387,668 - - 387,668 - 387,668
Step up interest in subsidiary 10 - - - - - - (48,141) (48,141) 48,141 -
At 31 December 2023 11,571,875 27,141,444 137,700 46,451 903,766 (1,457,872) (23,235,514) 15,107,850 514,430 15,622,280
COMPANY STATEMENT OF CHANGES IN EQUITY
Share capital Share premium Merger reserve Capital contribution reserve Share based payment reserve Accumulated losses Total
£ £ £ £ £ £ equity
Note £
At 1 January 2022 8,317,106 24,689,311 137,700 46,451 668,482 (18,337,714) 15,521,336
Loss for the year - - - - - (1,372,662) (1,372,662)
Total comprehensive income - - - - - (1,372,662) (1,372,662)
Transactions with owners
Equity-settled share-based payment transactions 17 - - - - 240,537 - 240,537
Transfer of reserve on option lapsed - - - - (392,921) 392,921 -
At 31 December 2022 8,317,106 24,689,311 137,700 46,451 516,098 (19,317,455) 14,389,211
Loss for the year - - - - - (2,959,228) (2,959,228)
Total comprehensive income - - - - - (2,959,228) (2,959,228)
Transactions with owners
Issue of share capital 3,254,769 3,654,829 - - - - 6,909,598
Cost of issue - (1,202,696) (1,202,696)
Equity-settled share-based payment transactions 17 - - - - 387,668 - 387,668
At 31 December 2023 11,571,875 27,141,444 137,700 46,451 903,766 (22,276,683) 17,524,553
CONSOLIDATED STATEMENT OF CASH FLOWS
2023 2022
Note £ £
Cash flows from operating activities
Loss before income tax (2,937,909) (2,041,452)
Depreciation of property, plant and equipment 4 43,276 45,133
Equity-settled share-based transactions 387,668 240,537
Impairment of exploration costs 4 350,158 36,988
Loss on disposal of property, plant and equipment 9 643 -
Gain on disposal of right of use assets (58) -
Finance income 3 (7,923) (176)
Finance cost 3 197,724 304,806
Grant income 6 (96,750) (84,797)
Gain on sale of investment - (21,951)
Amortisation of right-of-use assets 12 29,478 6,384
Unrealised foreign exchange losses 86,637 55,337
Recovery of impairment on listed investment (6,563) -
(1,953,619) (1,459,191)
Decrease/(increase) in trade and other receivables 61,395 (36,535)
Decrease in trade and other payables (277,400) (43,827)
Net cash used in operating activities (2,169,624) (1,539,553)
Cash flows from investing activities
Purchase of intangible assets 8 (2,308,473) (1,536,674)
Purchase of property, plant and equipment 9 (7,052) (34,397)
Payments for improvements of right of use assets (33,121) -
Disposal of investments 4 - 21,951
Grant receipt 6 96,750 84,797
Grant repaid - (39,849)
Interest received 3 7,923 176
Net cash used in investing activities (2,243,973) (1,503,996)
Cash flows from financing activities
Proceeds from issue of shares 4,373,056 -
Payment of share issue costs 16 (704,587) -
Lease principal 20 (21,228) (6,347)
Lease interest paid 20 (2,420) (264)
Proceeds from borrowings, net of issue costs 21 - 1,554,381
Interest paid - (10)
Net cash from financing activities 3,644,821 1,547,760
Decrease in cash and cash equivalents (768,776) (1,495,789)
Cash and cash equivalents at beginning of year 1,776,556 3,336,134
Effect of foreign exchange rate changes (102,225) (63,789)
Cash and cash equivalents at end of year 905,555 1,776,556
COMPANY STATEMENT OF CASH FLOWS
2023 2022
Note £ £
Cash flows from operating activities
Loss before income tax (2,959,228) (1,372,662)
Expected credit losses 11 1,001,537 5,336
Equity-settled share-based transactions 321,534 173,344
Depreciation of property, plant and equipment 233 278
Loss on disposal of property, plant and equipment 643 -
Finance income 3 (7,655) (170)
Finance cost 195,304 304,529
Gain on disposal of investment - (21,951)
Unrealised foreign exchange losses 86,637 55,337
Recovery of impairment on listed investment (6,563) -
(1,367,558) (855,959)
Decrease/(increase) in trade and other receivables 4,129 (12,099)
(Decrease)/increase in trade and other payables (88,052) 101,779
Net cash used in operating activities (1,451,481) (766,279)
Cash flows from investing activities
Loans to subsidiaries 11 (2,757,113) (909,975)
Interest received 3 7,655 170
Financing of subsidiary 10 (250,000) (1,200,000)
Grant repaid 20 - (39,849)
Purchase of property, plant and equipment (1,006) -
Disposal of investments 4 - 21,951
Net cash used in investing activities (3,000,464) (2,127,703)
Cash flows from financing activities
Proceeds from issue of shares 4,373,056 -
Payment of share issue costs 16 (704,587) -
Proceeds from borrowings 21 - 1,554,381
Net cash from financing activities 3,668,469 1,554,381
Decrease in cash and cash equivalents (783,476) (1,339,601)
Cash and cash equivalents at beginning of year 1,667,840 3,075,741
Effect of foreign exchange rate changes (89,455) (68,300)
Cash and cash equivalents at end of year 794,909 1,667,840
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Material accounting policy information
Nature of operations
Beowulf Mining plc (the "Company") is domiciled in England. The Company's
registered office is 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT.
These consolidated financial statements comprise the Company and its
subsidiaries (collectively the "Group" and individually "Group companies").
The Group is engaged in the acquisition, exploration and evaluation of natural
resources assets and has not yet generated revenues.
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below:
Going concern
As at 31 December 2023, the Group had a cash balance of £0.91 million (2022:
£1.78 million) and the Company had a cash balance of £0.79 million (2022:
1.67 million).
As disclosed in Note 28, on 16 February 2024, in conjunction with the
Company's right issue, the Company entered into a short-term bridging loan of
SEK 10 million (approx. £724k) with the underwriters of the rights issue to
ensure that the Company has sufficient financial resources to continue
advancing its projects ahead of the right issue being finalised. The bridging
loan accrues interest of 1.5% per 30-day period and is repayable on 31 May
2024. The bridging loan was repaid early in April 2024 using part of the
proceeds from the capital raise on the right issue, noted below.
On 3 April 2024 the Company announced the completion of the capital raise with
a total of £4.3 million (SEK 56.3 million) gross raised to fund the
development of the Company's assets through their next key valuation
milestones. The net funds raised after the loan repayment and share issue
transaction costs are £3.0 million (see note 28).
Therefore, at the date of this report, based on management prepared cashflow
forecasts, the Directors are confident that the Group and Company has raised
sufficient capital to fund the Group's key projects and investments for the
period to June 2025 but note that further funds will be required within a few
months post this date to allow the Group and Company to realise its assets and
discharge its liabilities in the normal course of business. There are
currently no agreements in place and there is no certainty that the funds will
be raised within the appropriate timeframe. These conditions indicate the
existence of a material uncertainty which may cast significant doubt over the
Group's and the Company's ability to continue as going concerns and therefore,
the Group and the Parent Company may be unable to realise their assets and
discharge their liabilities in the normal course of business. The Directors
will continue to explore funding opportunities at both asset and corporate
levels. The Directors have a reasonable expectation that funding will be
forthcoming based on their past experience and therefore believe that the
going concern basis of preparation is deemed appropriate and as such the
financial statements have been prepared on a going concern basis. The
financial statements do not include any adjustments that would result if the
Group and the Company were unable to continue as going concerns.
Basis of preparation
The consolidated and individual Company financial statements have been
prepared in accordance with UK adopted international accounting standards. The
policies have been consistently applied to both the parent Company and Group.
The financial statements are presented in GB Pounds Sterling. They are
prepared on the historical cost basis or the fair value basis where the fair
valuing of relevant assets and liabilities has been applied.
Merger relief under s612 of the Companies Act 2006 removes the requirement to
credit the share premium account and where the conditions are met, the relief
must be applied. However, it allows the investment to be accounted for at the
nominal value of the shares issued or the fair value of the consideration.
Where the investment is to be recorded at fair value, then the credit will be
to the merger relief reserve.
The conditions to qualify for merger relief are:
· the consideration for shares in another company includes issued
shares;
· on completion of the transaction, the company issuing the shares
will have secured at least a 90% equity holding in the other company.
Merger relief was required to be applied in acquisition of Grafintec, in which
the Company obtained 100% of the share capital of Grafintec for shares issued
by the Company. Further details of this acquisition are outlined in note 10.
New standards, amendments and interpretations
Standards and interpretations adopted during the year
Information on new standards, amendments and interpretations that are relevant
to the Group and Company annual report and accounts is provided below:
· IFRS 17 Insurance Contracts
· Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - amendments to IAS 12
· Disclosure of Accounting Policies - amendments to IAS 1 and IFRS
Practice Statement 2
· Definition of Accounting Estimates - amendments to IAS 8
The Group did not have to change its accounting policies or make retrospective
adjustments as a result of adopting these new standards and amendments and
they did not have a material impact.
Standards, amendments and interpretations that are not yet effective
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January
2024:
· Amendments to IAS 1 Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current
· IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)
· IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants)
Significant accounting judgements, estimates and assumptions
Beowulf Mining Plc is currently assessing the impact of these new accounting
standards and amendments.
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the amounts reported for
income and expenses during the year and the amounts reported for assets and
liabilities at the balance sheet date. However, the nature of estimation means
that the actual outcomes could differ from those estimates. The estimates and
underlying assumptions are reviewed on an on-going basis. Revisions to
accounting estimates are recognised in the period in which the revision is
made.
Control of Vardar Group
Judgement is exercised in assessing the control of the Vardar Group and, in
respect of the Parent Company, the recoverability of the loans made to
subsidiary undertakings.
The Company is assessed to have control by virtue of its shareholding in
Vardar Minerals Limited, which was 61.1% at 31 December 2023 (2022: 59.5%).
Exploration costs capitalisation
The Group has to apply judgement in determining whether exploration and
evaluation expenditure should be capitalised within intangible assets as
exploration costs or expensed. The Group has a policy of capitalising all
costs which relate directly to exploration costs (as set out above).
Management apply judgement in determining if Directors' remuneration costs are
directly attributable to a specific exploration area (project) and should be
capitalised or expensed as incurred. The total value of exploration costs
capitalised as at each of the reporting dates is set out in Note 8.
Exploration assets
The Pitkäjärvi licence was renewed in 2021 and expires on 26 April 2024, a
further extension was applied for on 15 March 2024 and remains subject to
approval.
The licences for Mitrovica and Viti expired on 27 January 2024. New licence
applications were submitted, and confirmation of receipt was provided on 22
February 2024, which remain subject to approval. With the licence applications
formally lodged with ICMM, no other party may apply for licences over the same
area.
Management considers that in each case licence conditions have been met and
are confident applications or renewals will be accepted by receiving
authorities.
The Board has considered the impairment indicators as outlined in the Group's
accounting policies and having done so is of the opinion that no impairment
provisions are required for Group's main assets, Kallak, Aitolampi, Mitrovica
and Viti.
The licence for Åtvidaberg is not expected to be renewed when it expires in
2024 and therefore has been fully impaired in the year (see note 8).
Sources of estimation and uncertainty
Valuation of share-based payments
Accounting for some equity-settled share-based payment awards required the use
of valuation models to estimate the future share price performance of the
Company. These models require the Directors to make assumptions regarding the
share price volatility, risk free rate and expected life of awards in order to
determine the fair values of the awards at grant date (see note 17).
Expected credit losses
The Company, in applying the ECL model under IFRS 9, must make assumptions
when implementing the forward-looking ECL model. This model is required to be
used to assess the intercompany loans receivable from subsidiaries for
impairment.
Estimations were made regarding the credit risk of the counterparty and the
underlying probability of default in each of the credit loss scenarios. The
scenarios identified by management included Production, Divestment, Fire-sale
and Failure. These scenarios considered technical data, necessary licences to
be awarded, the Company's ability to raise finance, and ability to sell the
project. A reasonable change in the probability weightings of both the
downside scenarios of failure and fire-sale of 3% would result in further
impairment of £789,297 (2022: £626,927).
Basis of consolidation
(i) Subsidiaries and acquisitions
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (and its subsidiaries) made
up to 31 December each year. Control is recognised where an investor is
exposed, or has rights, to variable returns from its investment with the
investee, and has the ability to affect these returns through its power over
the investee.
The results of subsidiaries acquired or disposed of during the year are
included in the statement of comprehensive income from the effective date of
acquisition, or up to the effective date of disposal, as appropriate.
Non-controlling interests in subsidiaries are presented separately from the
equity attributable to equity owners of the parent Company. When changes in
ownership in a subsidiary do not result in a loss of control, the
non-controlling shareholders' interests are initially measured at the
non-controlling interests' proportionate share of the subsidiaries net assets.
Subsequent to this, the carrying amount of non-controlling interests is the
amount of those interests at initial recognition plus the non-controlling
interests' share of subsequent changes in equity. Total comprehensive income
is attributed to non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
(ii) Transactions eliminated on consolidation
Intra-Group balances and any unrealised gains and losses or income and
expenses arising from intra-Group transactions are eliminated in preparing the
consolidated financial statements.
Intangible assets - deferred exploration costs
All costs incurred prior to the application for the legal right to undertake
exploration and evaluation activities on a project are expensed as incurred.
Each asset is evaluated annually at 31 December, to determine whether there
are any indications that impairment exists.
Exploration and evaluation costs arising following the application for the
legal right, are capitalised on a project-by-project basis, pending
determination of the technical feasibility and commercial viability of the
project. Costs incurred include appropriate employee costs and costs
pertaining to technical and administrative overheads.
Exploration and evaluation activities include:
• researching and analysing historical exploration data;
• gathering exploration data through topographical,
geochemical and geophysical studies;
• exploratory drilling, trenching and sampling;
• determining and examining the volume and grade of the
resource;
• surveying transportation and infrastructure
requirements; and
• conducting market and finance studies.
Administration costs that are not directly attributable to a specific
exploration area are expensed as incurred.
Exploration costs are carried at historical cost less any impairment losses
recognised. When a project is deemed to no longer have commercially viable
prospects to the Group, exploration costs in respect of that project are
deemed to be impaired and written off to the statement of comprehensive
income. Once the decision for investment is taken, the assets will be assessed
for impairment and to the extent that these are not impaired, will be
classified as development assets. At the point that production commences these
assets will be depreciated.
Intangible assets - capitalised development costs
Development costs that are directly attributable to the GAMP project are
recognised as intangible assets where the following criteria are met:
· it is technically feasible to complete the intangible asset so
that it will be available for use;
· management intends to complete the intangible asset and use or
sell it;
· there is an ability to use or sell the intangible asset;
· it can be demonstrated how the intangible asset will generate
probable future economic benefits;
· adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset are available, and;
· the expenditure attributable to the intangible asset during its
development can be reliably measured.
Directly attributable costs that are capitalised as part of intangible assets
include employee costs and an appropriate portion of relevant overheads.
Capitalised development costs are recorded as intangible assets and amortised
from the point at which the asset is ready for use.
Impairment
Whenever events or changes in circumstance indicate that the carrying amount
of an asset may not be recoverable an asset is reviewed for impairment. An
asset's carrying value is written down to its estimated recoverable amount
(being the higher of the fair value less costs to sell and value in use) if
that is less than the asset's carrying amount.
Impairment reviews for exploration costs are carried out on a project by
project basis, with each project representing a potential single cash
generating unit. An impairment review is undertaken when indicators of
impairment arise such as:
(i) unexpected geological occurrences that render the resource
uneconomic;
(ii) title to the asset is compromised;
(iii) variations in mineral prices that render the project
uneconomic;
(iv) substantive expenditure on further exploration and
evaluation of mineral resources is neither budgeted nor planned; and
(v) the period for which the Group has the right to explore has
expired and is not expected to be renewed.
Property, plant and equipment
Items of property, plant and equipment are stated at historical cost less
accumulated depreciation.
Depreciation is provided at the following annual rates in order to write off
each asset over its estimated useful life.
Office equipment - 25 per cent on reducing balance
Computer equipment - 25 per cent on reducing balance
Motor vehicles - 20 per cent on reducing balance
Machinery and - 20 to 25 per cent on reducing balance
equipment
The assets' residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.
Leased assets
When entering into a contract the Group assesses whether or not a lease
exists. A lease exists if a contract conveys a right to control the use of an
identified asset under a period of time in exchange for consideration. Leases
of low value items and short-term leases (leases of less than 12 months at the
commencement date) are charged to the profit or loss on a straight-line basis
over the lease term in administrative expenses.
The Group recognises right-of-use assets at cost and lease liabilities at the
lease commencement date based on the present value of future lease payments.
The right-of-use assets are amortised on a straight-line basis over the length
of the lease term. The lease liabilities are recognised at amortised cost
using the effective interest rate method. Discount rates used reflect the
incremental borrowing rate specific to the lease.
Investments in subsidiaries
Investments in subsidiary undertakings are stated at cost less provision for
any impairment in value.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
banks, and other short term highly liquid investments with original maturities
of three months or less.
Financial assets
The Group classifies its financial assets at amortised cost and at fair value
through profit or loss. Management determines the classification of its
financial assets at initial recognition.
Amortised cost
The Group's financial assets held at amortised cost comprise trade and other
receivables, cash and cash equivalents and loans and other financial assets in
the consolidated statement of financial position.
These assets are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. They arise principally
through financial assets where the objective is to hold their assets in order
to collect contractual cash flows and the contractual cash flows are solely
payments of the principal and interest. They are initially recognised at fair
value plus transaction costs that are directly attributable to their
acquisition or issue and are subsequently carried at amortised cost using the
effective interest rate method, less provision for impairment.
Impairment provisions for trade receivables are recognised based on the
simplified approach within IFRS 9 using the lifetime ECLs. During this process
the probability of the non-payment of the trade receivables is assessed. This
probability is then multiplied by the amount of the expected loss arising from
default to determine the lifetime ECL for the trade receivables. For trade
receivables, which are reported net; such provisions are recorded in a
separate provision account with the loss being recognised within
administrative expenses in the consolidated statement of comprehensive income.
On confirmation that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated provision.
Expected credit loss provisions for other receivables are recognised based on
a forward-looking expected credit loss model. The methodology used to
determine the amount of the provision is based on whether there has been a
significant increase in credit risk since initial recognition of the financial
asset. For those where the credit risk has not increased significantly since
initial recognition of the financial asset, twelve month expected credit
losses along with gross interest income are recognised. For those for which
credit risk has increased significantly, lifetime expected credit losses along
with the gross interest income are recognised. For those that are determined
to be credit impaired, lifetime expected credit losses along with interest
income on a net basis are recognised.
Fair value through profit or loss
The Group's financial assets held at fair value through profit or loss
comprise equity investments held. These are carried in the statement of
financial position at fair value (refer to fair value hierarchy below).
Subsequent to initial recognition, changes in fair value are recognised in the
statement of comprehensive income.
Financial liabilities
The Group's financial liabilities include trade and other payables and
borrowings. All financial liabilities are recognised initially at fair value,
net of transaction costs incurred, and are subsequently stated at amortised
cost, using the effective interest method.
Borrowings include convertible debt with settlement terms that fail the fixed
for fixed criterion and are treated as containing an embedded derivative
liability, where this is recognised the loan value is allocated between the
derivative value and the loan residual which is carried at amortised cost.
Borrowings are derecognised when the obligation is extinguished.
Unless otherwise indicated, the carrying values of the Group's financial
liabilities measured at amortised cost represents a reasonable approximation
of their fair values.
Share capital
Financial instruments issued by the Group are classified as equity only to the
extent that they do not meet the definition of a financial liability or
financial asset.
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs. Where equity instruments are issued as
part of an acquisition they are recorded at their fair value on the date of
acquisition.
The Group's ordinary shares are classified as equity instruments.
Taxation
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid (or recovered) using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised, using the liability method, in respect of
temporary differences between the carrying amount of the Group's assets and
liabilities and their tax base.
Deferred tax assets and deferred tax liabilities are offset, if a legally
enforceable right exists to set off current tax assets against current tax
liabilities and the deferred taxes relate to the same taxable entity and the
same taxation authority. Any remaining deferred tax asset is recognised only
when, on the basis of all available evidence, it can be regarded as probable
that there will be suitable taxable profits, within the same jurisdiction, in
the foreseeable future against which the deductible temporary difference can
be utilised.
Deferred tax is determined using tax rates that are expected to apply in the
periods in which the asset is realised or liability settled, based on tax
rates and laws that have been enacted or substantively enacted by the balance
sheet date.
Current and deferred tax is recognised in the profit or loss, except when the
tax relates to items charged or credited directly in equity, in which case the
tax is also recognised directly in equity.
Foreign currencies
The individual financial statements of each Group entity are presented in the
currency of the primary economic environment in which the entity operates (its
functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each entity are expressed in
GB Pounds Sterling which is the presentation currency for the Group and
Company financial statements. The functional currency of the Company is the
GB Pounds Sterling.
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity's functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at the balance
sheet date.
Exchange differences arising on the settlement of monetary items and on the
retranslation of monetary items are included in the statement of comprehensive
income for the period.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are expressed in GB Pounds
Sterling using exchange rates prevailing at the balance sheet date. Income and
expense items are translated at the average exchange rates for the period.
Exchange differences arising, if any, are classified as other comprehensive
income and are transferred to the Group's translation reserve.
Foreign currency movements arising from the Group's net investment, which
comprises equity and long-term debt, in subsidiary companies whose functional
currency is not the GB Pounds Sterling are recognised in the translation
reserve, included within equity until such time as the relevant subsidiary
company is sold, whereupon the net cumulative foreign exchange difference
relating to the disposal is transferred to profit and loss.
Share-based payment transactions
Where equity settled share options are awarded to employees, the fair value of
the options at the date of grant is charged to the income statement over the
vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each balance
sheet date so that, ultimately, the cumulative amount recognised over the
vesting period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of all options
granted. As long as all other vesting conditions are satisfied, a charge is
made irrespective of whether market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market vesting
condition.
Where terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and
after the modification, is also charged to the income statement over the
remaining vesting period.
Where equity instruments are granted to persons other than employees, the
income statement or share premium account, if appropriate, are charged with
the fair value of goods and services received.
Government grants
Government grants received on capital expenditure are generally deducted in
arriving at the carrying amount of the asset purchased. Grants for revenue
expenditure are recorded gross in the Group income statement.
2. Employees and directors
Group Company
2023 2022 2023 2022
£ £ £ £
Wages and salaries 1,156,604 794,969 637,755 308,543
Social security costs 182,611 138,192 56,454 45,632
Other benefits 20,832 10,691 15,401 6,554
1,360,047 943,852 709,610 360,729
Directors' remuneration is as follows:
2023 2022
£ £
Directors' emoluments, including salary and fees 443,157 315,097
Payments for loss of office 210,000 -
Shared-based payments 321,534 173,345
974,691 488,442
Further details pertaining to Directors' remuneration can be found in the
Directors' remuneration report on page 33.
The remuneration of the highest paid Director who served during the year was
Kurt Budge which consisted of base salary of £210,000 (2022: £210,000).
The average monthly number of employees and Directors during the year was as
follows:
Group Company
2023 2022 2023 2022
Number Number Number Number
Directors 3 3 3 3
Employees 12 10 - -
3. Finance income and costs
Group Company
2023 2022 2023 2022
£ £ £ £
Finance income:
Deposit account interest 7,923 176 7,655 170
7,923 176 7,655 170
Finance costs:
Interest on lease liabilities 2,420 267 - -
Interest on loans and borrowings 195,304 304,529 195,304 304,529
Other interest paid - 10 - -
197,724 304,806 195,304 304,529
4. Loss before tax and auditor's remuneration
a. The loss before tax is stated after charging:
2023 2022
£ £
Depreciation of property, plant and equipment (note 9) 43,276 45,133
Amortisation of right-of-use asset (note 12) 29,478 6,353
Share-based payment expense 387,668 240,537
Foreign exchange differences 58,035 68,302
Loss on disposal of property, plant and equipment (note 9) 643 -
Gain on disposal of right of use assets (note 12) (58) -
Gain on disposal of investment(1) - 21,951
Recovery of impairment on listed investments(2) 6,653 -
Impairment of exploration costs (note 8) 350,158 36,988
(1)Gain on disposal of investment relates to shares held in Sunvest
Corporation Limited, which were previously impaired in full.
(2)Recovery of impairment on listed investments related to shares held in
Marula Mining Plc, which were previously impaired in full.
b. Auditor's remuneration
2023 2022
£ £
Fees payable to the Group's auditor for the audit of the consolidated 103,290 57,005
financial statements
Fees payable to the Group auditor for other services:
- audit of subsidiaries pursuant to legislation - 6,000
- review of quarterly financial statements 3,240 3,208
- tax compliance services - 11,826
106,530 78,039
5. Income tax
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year
ended 31 December 2023 or for the year ended 31 December 2022.
Factors affecting the tax expense
The tax assessed for the year is lower than the standard rate of corporation
tax in the UK. The difference is explained below:
2023 2022
£ £
Loss on ordinary activities before income tax (2,937,909) (2,041,452)
Tax thereon at a UK corporation tax rate of 23.5% (2022: 19%) (690,409) (387,876)
Effects of:
Non-deductible expenditure 75,615 32,936
Tax losses not recognised 390,715 241,390
Losses of overseas subsidiaries to be carried forward 224,079 113,550
- -
The main rate of UK corporation tax for the year ended 31 December 2023 and up
to 1 April 2023 was 19 per cent. From 1 April 2023, the main rate of UK
corporation tax increased to 25 per cent, resulting in an effective tax rate
of 23.5% for the year ended 31 December 2023. The Group has estimated UK
losses of £16,656,271 (2022: £14,993,653) and foreign losses of £5,780,656
(2022: £4,659,376) available to carry forward against future trading profits.
The value of unrecognised deferred tax assets in respect of the UK losses
amounts to £4,164,068 (2022: £3,748,413) and foreign losses of £1,041,936
(2022: £804,730). The Directors believe that due to the uncertainty over when
the tax losses will be utilised it is appropriate not to recognise a deferred
tax asset at this time.
6. Grant income
2023 2022
£ £
Business Finland 96,750 84,797
96,750 84,797
Grafintec is participating in project titled "BATCircle - the development of a
Finland-based Circular Ecosystem of Battery Metals". BATCircle is part of
the European Union ("EU") Strategic Energy Technology Programme. The project
is being administered by Business Finland and a 50 per cent contribution to a
budget of €791,000 (approximately £700,000) for Phase 2 and €224,900
(approximately £200,000) Phase 1. The funds will be used for graphite
purification and spheroidization test work, and the further assessment of
Grafintec's graphite for battery applications. The funding is released by the
administrator as incurred with Phase 1 running from 1 January 2019 to 31
January 2020 and Phase 2 running from 1 January 2021 to 31 December 2023. In
the year to 31 December 2023, £96,750 has been recognised as grant income
(2022: £84,797).
7. Basic and diluted loss per share
The calculation of basic and diluted loss per share at 31 December 2023 was
based on the loss attributable to ordinary shareholders of £2,863,959 (2022:
£1,948,459) and a weighted average number of Ordinary Shares outstanding
during the year ended 31 December 2023 of 1,084,958,359 (2022: 831,710,636)
calculated as follows:
2023 2022
£ £
Loss attributable to ordinary shareholders (2,863,959) (1,948,459)
Weighted average number of ordinary shares
2023 2022
Number Number
Number of shares in issue at the beginning of the year 831,710,636 831,710,636
Effect of shares issued during year 253,247,723 -
Weighted average number of ordinary shares in issue for the year 1,084,958,359 831,710,636
The diluted earnings per share is identical to the basic loss per share as the
exercise of warrants and options would be anti-dilutive.
Following the year end, the Company issued 52,326,758 new Ordinary shares as
consideration for the consolidation of ownership of Vardar Minerals Limited.
The calculation of loss per share has not been adjusted as the issue of shares
does not affect the amount of capital used to produce profit or loss for the
year.
8. Intangible assets - Group
Exploration costs Other intangible assets Total
£ £ £
COST
At 1 January 2022 11,235,656 - 11,235,656
Additions for the year - cash 1,536,674 - 1,536,674
Additions for the year - non-cash 314,272 - 314,272
Foreign exchange movements (47,149) - (47,149)
Impairment (36,988) - (36,988)
At 31 December 2022 13,002,465 - 13,002,465
At 1 January 2023 13,002,465 - 13,002,465
Additions for the year - cash 2,232,694 75,779 2,308,473
Additions for the year - non-cash 98,208 - 98,208
Foreign exchange movements (185,376) (286) (185,662)
Impairment (350,158) - (350,158)
At 31 December 2023 14,797,833 75,493 14,873,326
NET BOOK VALUE
At 31 December 2023 14,797,833 75,493 14,873,326
At 31 December 2022 13,002,465 - 13,002,465
The net book value of exploration costs is comprised of expenditure on the
following projects:
2023 2022
£ £
Kallak 9,481,130 7,666,563
Åtvidaberg - 358,694
Ågåsjiegge - 7,718
Pitkäjärvi 1,667,854 1,641,836
Karhunmaki 55,935 56,089
Rääpysjärvi 174,060 148,430
Mitrovica 2,527,239 2,430,150
Viti 680,331 687,065
Emas 41,693 1,663
Luopioinen 4,812 4,257
Shala 164,779 -
14,797,833 13,002,465
Total Group exploration costs of £14,797,833 are currently carried at cost in
the financial statements. The Group will need to raise funds and/or bring in
joint venture partners to further advance exploration and development work. An
amount of £183,034 was recorded against the projects for services provided by
the Directors during the year (2022: £262,684).
In Sweden, on 24 January 2023, the Company announced the positive economic
results of the Kallak North Scoping Study. Management have considered that
there is no current risk associated with Kallak and thus have not impaired the
project.
In Finland, the development of downstream capabilities is a key part of
Grafintec's strategy. During the year, the Company announced the results of a
PFS, envisaging importing Spherical Purified Graphite ("SPG") and producing an
initial 20,000 tonne per annum of Coated Spherical Graphite ("CSPG"), for sale
to anode manufacturers. The economics of the study were extremely positive
with an after-tax NPV8 of US$242 million, an Internal Rate of Return of 39 per
cent, and a Payback Period of 2.4 years.
To support a sustainable graphite anode value chain in Finland, Grafintec is
focused on expanding its resource footprint and increasing its raw materials'
inventory, primary and recycled, feeding downstream processing, leveraging
renewable power, targeting net zero CO2 emissions across the supply chain.
The Company's most advanced natural flake graphite project, Aitolampi, has an
Indicated and Inferred Mineral Resource of 26.7 Mt at 4.8 per cent TGC for
1,275,000 tonnes of contained graphite. In addition to Aitolampi, the Company
has other graphite exploration prospects, including Rääpysjärvi for which
positive exploration results were announced during the prior year.
In Kosovo, Vardar has three exploration licence areas, Mitrovica, Viti and
Shala. Significant progress continues to be made in Kosovo. The Company has
also made further investments to fund drilling and taking the Company's
ownership of Vardar to approximately 61.1 per cent.
The focus of activity in 2023 was on low-cost exploration including mapping,
sampling and drone magnetic surveys to identify and refine exploration
targets.
In the year, an impairment provision of £350,158 was recognised for project
costs capitalised for projects at Ågåsjiegge and Åtvidaberg (2022: £36,988
in project Merivaara) on the basis that licence at Ågåsjiegge was
relinquished early and the licence at Åtvidaberg will not be renewed. In
respect of the other licence areas, no impairment indicators have been
identified. The impairment is charged as an expense and included within the
consolidated income statement.
Other intangible assets capitalised are development costs incurred following
the feasibility of GAMP project. This development has attained a stage that it
satisfies the requirements of IAS 38 to be recognised as intangible asset in
that it has the potential to completed and used, provide future economic
benefits, its costs can be measured reliably and there is the intention and
ability to complete. The development costs will be held at cost less
impairment until the completion of the GAMP project at which stage they will
be transferred to the value of the Plant.
9. Property, plant and equipment
Group
Office equipment Motor vehicles Machinery & equipment Computer equipment Total
£ £ £ £ £
Cost
At 1 January 2022 2,975 146,545 98,830 1,499 249,849
Additions - 2,730 31,667 - 34,397
Foreign exchange movements (21) (579) 3,349 - 2,749
At 31 December 2022 2,954 148,696 133,846 1,499 286,995
Depreciation
At 1 January 2022 1,787 65,811 48,436 387 116,421
Charge for year 1,006 19,796 24,053 278 45,133
Foreign exchange movements 36 (6,018) 1,708 - (4,274)
At 31 December 2022 2,829 79,589 74,197 665 157,280
Group
Office equipment Motor vehicles Machinery & equipment Computer equipment Total
£ £ £ £ £
Cost
At 1 January 2023 2,953 148,696 133,846 1,499 286,994
Additions - - 6,046 1,006 7,052
Disposals - - - (1,499) (1,499)
Reclassification 1,806 (7,330) 5,524 - -
Foreign exchange movements (126) (6,151) (5,255) - (11,532)
At 31 December 2023 4,633 135,215 140,161 1,006 281,015
Depreciation
At 1 January 2023 2,829 79,589 74,197 665 157,280
Charge for year 741 19,416 22,886 233 43,276
Disposals - - - (856) (856)
Foreign exchange movements (102) (3,586) (2,752) - (6,440)
At 31 December 2023 3,468 95,419 94,331 42 193,260
Net book value
At 31 December 2023 1,165 39,796 45,830 964 87,755
At 31 December 2022 125 69,107 59,649 834 129,715
9. Property, plant and equipment (continued)
Company
Computer equipment Total
£ £
Cost
At 1 January 2022 1,499 1,499
At 31 December 2022 1,499 1,499
Depreciation
At 1 January 2022 387 387
Charge for year 278 278
At 31 December 2022 665 665
Company
Computer equipment Total
£ £
Cost
At 1 January 2023 1,499 1,499
Additions 1,006 1,006
Disposals (1,499) (1,499)
At 31 December 2023 1,006 1,006
Depreciation
At 1 January 2023 665 665
Charge for year 233 233
Disposals (856) (856)
At 31 December 2023 42 42
Net book value
At 31 December 2023 964 964
At 31 December 2022 834 834
10. Investments
Group and Company Company
listed Shares in
investments subsidiaries
£ £
Cost
At 1 January 2022 - 2,377,988
Acquisitions - 1,267,193
At 31 December 2022 - 3,645,181
At 1 January 2023 - 3,645,181
Acquisitions - 322,697
Recovery of impairment 6,563 -
At 31 December 2023 6,563 3,967,878
Listed investments
The listed investment includes equity investment in Marula Mining Plc which is
recognised at fair value.
Shares in subsidiaries
Further investments in the share capital of subsidiaries of Vardar constitute
additions during the year of £250,000 (2022: £1,200,000) to increase the
Company's shareholding in Vardar from 59.5% to 61.1%. The share capital of
Vardar was reclassified to share capital of subsidiaries following control
being obtained on 1 April 2019. The basis for control was assessed on the on
the Group's ability to exercise power over Vardar through combination of the
increased investment in Vardar and the appointment of the CEO as Investor
Director, which conveyed substantive rights to direct the actions of Vardar
that would ultimately affect the returns of the investee.
The additional investment during the year includes a share-based payment
expense of £66,134 in relation to share options granted to employees of the
Company's subsidiaries Grafintec and JIMAB.
Included within the brought forward investment is 100 per cent of the share
capital of Grafintec, that was acquired during the year ended 31 December 2016
and holds a portfolio of four early-stage graphite exploration projects. At
the time of acquisition, Beowulf paid for 100 per cent of the share capital of
Grafintec by issuing 2.55 million ordinary shares in the Company, with two
further tranches of 2.1 million ordinary shares to be issued on achievement of
certain performance milestones.
The first tranche of 2.1 million ordinary shares was issued on the anniversary
of 24 months from the date of the acquisition, in accordance and Mr Blomqvist
having worked for the Company as a full-time employee during that period. The
second tranche of shares will be issued on completion of a bankable
feasibility study on one of the graphite projects in the portfolio.
The total number of ordinary shares that may be issued, if all performance
milestones are achieved, is 6.75 million ordinary shares. Beowulf will issue
up to a further 2.1 million additional consideration shares in the form of a
share-based payment transaction to the former owner, Rasmus Blomqvist. The
share-based payments fall within the scope of IFRS 2 and are fair valued at
the grant date based on the estimated number of shares that will vest. The
fair value has been prepared using a Black-Scholes pricing model including a
share price of 6.4 pence, option life of two years, volatility of 49.79 per
cent and a risk-free rate of 0.698 per cent.
There was nil consideration recognised in the financial statements for the
year ended 31 December 2023, (2022: £Nil). No further share-based payment
expense for the consideration shares was capitalised to intangibles in the
year ended 31 December 2023 (2022: £Nil).
The remaining investment in subsidiaries includes the share capital of the
Company's directly owned subsidiaries, listed below.
Step up interest in Vardar Minerals
The investment in Vardar gives the Company exposure to a portfolio of
exploration licences situated in the European Tertiary calc-alkaline Tethys
Arc most notable for its lead-zinc-silver mining districts, as well as recent
porphyry related copper and gold discoveries. On 12 March 2023, a further
investment of £250,000 was made to increase the Company's shareholding in
Vardar from 59.5% to 61.1%.
Further investment in Vardar was recognised as an increase to accumulated
losses of £48,141 (2022: £297,201).
The Group consists of the following subsidiary undertakings:
2023 2022
Name Incorporated Activity % holding % holding
Grafintec Oy Finland Mineral exploration 100% 100%
Jokkmokk Iron Mines AB Sweden Mineral exploration 100% 100%
Beowulf Mining Sweden AB Sweden Mineral exploration 100% 100%
Wayland Copper Limited UK Holding company 65.25% 65.25%
Wayland Sweden AB Sweden Mineral exploration ((1)(2))65.25% ((1)(2))65.25%
Vardar Minerals Ltd UK Mineral exploration 61.1% 59.5%
UAV Geophysics (UK) Ltd UK Dormant ((1)(2)) 61.1% ((1)(2))59.5%
Vardar Geoscience BVI Ltd British Virgin Islands Holding company ((1)(2)) 61.1% ((1)(2))59.5%
Vardar Geoscience Kosovo L.L.C Kosovo Mineral exploration ((1)(2)) 61.1% ((1)(2))59.5%
Vardar Exploration Kosovo L.L.C Kosovo Mineral exploration ((1)(2)) 61.1% ((1)(2))59.5%
(1) Indirectly held
(2) Effective interest
The registered offices of the subsidiary undertakings as are follows:
( )
Name Registered office
Grafintec Oy Plåtslagarevägen 35 A 1, 20320 Turku, Finland
Jokkmokk Iron Mines AB Storgatan 36, 921 31, Lycksele, Sweden
Beowulf Mining Sweden AB Storgatan 36, 921 31, Lycksele, Sweden
Wayland Copper Limited 201 Temple Chambers, 3-7 Temple Avenue, London
Wayland Sweden AB Storgatan 36, 921 31, Lycksele, Sweden
Vardar Minerals Limited 35-39 Maddox Street, London, England
UAV Geophysics (UK) Ltd Stapeley House, London Road, Nantwich, United Kingdom
Vardar Geoscience BVI Ltd Trident Chambers, P.O. Box 146, Wickhams Cay 1 Road Town, British Virgin
Islands
Vardar Geoscience Kosovo L.L.C Rifat Berisha 23/10, Pristina, Republic of Kosovo
Vardar Exploration Kosovo L.L.C Rifat Berisha 23/10, Pristina, Republic of Kosovo
Details on the non-controlling interest in subsidiaries is given in note 15.
11. Loans and other financial assets
Group
Financial fixed
assets
£
At 1 January 2022 5,247
Foreign exchange movements (66)
At 31 December 2022 5,181
At 1 January 2023 5,181
Foreign exchange movements 28
At 31 December 2023 5,209
Company
Loans to group undertakings Financial assets Total
£ £ £
At 1 January 2022 10,176,866 2,784 10,179,650
Advances made in the year 909,975 - 909,975
ECLs in year (5,336) - (5,336)
At 31 December 2022 11,081,505 2,784 11,084,289
At 1 January 2023 11,081,505 2,784 11,084,289
Advances made in the year 2,757,113 - 2,757,113
ECLs in year (1,001,537) - (1,001,537)
At 31 December 2023 12,837,081 2,784 12,839,865
Reconciliation of provisions against receivables arising from lifetime ECLs
31 December Current year movement 31 December 2023
2022
£ £ £
ECLs 2,106,249 1,001,537 3,107,786
Total provision arising from ECLs 2,106,249 1,001,537 3,107,786
The Directors have also assessed the cash flow scenarios of the above
considerations. Estimations were made regarding the credit risk of the
counterparty and the underlying probability of default in each of the credit
loss scenarios. The scenarios identified by management included Production,
Divestment, Fire-sale and Failure. These scenarios considered technical data,
necessary licences to be awarded, the Company's ability to raise finance, and
ability to sell the project. The expected credit loss is calculated based on
the Fire-Sale and Failure outcomes, being the outcomes with an expected value
of less than the carrying value of loans. The expected credit loss increased
due to the impairment of Ågåsjiegge and Åtvidaberg in the year and a
reassessment of expected recoverability of the loans to the subsidiaries. A
reasonable change in the probability weightings of 3% to failure and fire-sale
would result in further impairment of £789,297 (2022: £626,927)
Further details of the transactions in the year are shown within related
parties disclosure note 25.
12. Right of use assets
Group Buildings Buildings
2023 2022
£ £
Cost
At 1 January 29,774 11,100
Additions 77,924 17,506
Disposals (11,493) -
Foreign exchange movements (2,305) 1,169
At 31 December 93,900 29,775
Amortisation
At 1 January 10,496 3,701
Charge 29,478 6,353
Disposals (9,577) -
Foreign exchange movements 345 442
At 31 December 30,742 10,496
Net book value
At 31 December 63,158 19,279
13. Trade and other receivables
Group Company
2023 2022 2023 2022
£ £ £ £
Other receivables 88,180 78,148 - -
VAT 51,315 121,284 37,515 32,289
Prepayments and accrued income 12,509 20,995 11,640 20,995
152,004 220,427 49,155 53,284
Included in other receivables is a deposit of £17,724 held by Finnish
regulatory authorities (2022: £17,724).
14. Cash and cash equivalents
Group Company
2023 2022 2023 2022
£ £ £ £
Bank accounts 905,555 1,776,556 794,909 1,667,840
905,555 1,776,556 794,909 1,667,840
15. Non-controlling interests
The Group has material non-controlling interests arising from its subsidiaries
Wayland Copper Limited and Vardar Minerals Limited. These non-controlling
interests can be summarised as follows;
2023 2022
£ £
Balance at 1 January 568,732 325,039
Total comprehensive loss allocated to NCI (102,443) (53,508)
Effect of step acquisitions 48,141 297,201
Total 514,430 568,732
2023 2022
£ £
Wayland Copper Limited (164,573) (163,666)
Vardar Minerals Limited 679,003 732,398
Total 514,430 568,732
Wayland Copper Limited is a 65.25% per cent owned subsidiary of the Company
that has material non-controlling interests ("NCI").
Summarised financial information reflecting 100 per cent of the Wayland's
relevant figures is set out below:
2023 2022
£ £
Administrative expenses (2,315) (2,931)
Loss after tax (2,315) (2,931)
Loss allocated to NCI (805) (1,019)
Other comprehensive loss allocated to NCI (102) (155)
Total comprehensive loss allocated to NCI (907) (1,174)
Current assets 12,973 15,298
Current liabilities (486,563) (486,280)
Net liabilities (473,590) (470,982)
Net cash outflow - (725)
Non-controlling interest (164,573) (163,666)
Vardar Minerals Limited, a 61.1% per cent owned subsidiary of the Company that
has material non-controlling interests ("NCI").
Summarised financial information reflecting 100 per cent of the Vardar
Minerals relevant figures is set out below:
2023 2022
£ £
Administrative expenses (112,400) (199,197)
Loss after tax (112,400) (199,197)
Loss allocated to NCI (73,145) (91,974)
Other comprehensive income allocated to NCI (28,391) 39,640
Total comprehensive loss allocated to NCI (101,536) (52,334)
Current assets 20,195 109,099
Non-current assets 2,388,133 2,186,253
Current liabilities (142,686) (214,294)
Net assets 2,265,642 2,081,058
Net cash (outflow)/inflow (51,783) 34,043
Non-controlling interest 679,003 732,398
16. Share capital
Share capital Share premium Total
Number £ £ £
At 1 January 2023 831,710,636 8,317,106 24,689,311 33,006,417
Issue of new shares 325,476,827 3,254,769 2,452,133(1) 5,706,902
At 31 December 2023 1,157,187,463 11,571,875 27,141,444 38,713,319
Share capital Share premium Total
Number £ £ £
At 1 January 2022 831,710,636 8,317, 106 24,689,311 33,006,417
At 31 December 2022 831,710,636 8,317, 106 24,689,311 33,006,417
( )
All issues are for cash unless otherwise stated.
( )
(1)Includes issue costs of £1,202,696 of which £704,587 was paid in cash and
£498,109 in ordinary shares of the company.
The par value of all Ordinary Shares in issue is £0.01.
The Company has removed the limit on the number of shares that it is
authorised to issue in accordance with the Companies Act 2006.
There were 325,476,827 shares issued in 2023. There were no shares issued in
2022.
17. Share-based payments
During the year ended 31 December 2023, 12,250,000 options were granted (2022:
23,250,000). The options outstanding as at 31 December 2023 have an exercise
price in the range of 1.00 pence to 7.35 pence (2022: 1.00 pence to 7.35
pence) and a weighted average remaining contractual life of 5 years, 294 days
(2022: 7 years, 98 days).
The share-based payments expense for the options for the year ended 31
December 2023 was £387,668 (2022: £240,537).
The fair value of share options granted and outstanding were measured using
the Black-Scholes model, with the following inputs:
2023 2022 2022 2019
Fair value at grant date 0.52p 3.59p 3.59p 1.15p
Share price 1.68p 4.00p 4.00p 5.65p
Exercise price 2.06p 1.00p 1.00p 7.35p
Expected volatility 55.2% 100.0% 100.0% 51.89%
Expected option life 2.5 years 6 years 6 years 2 years
Contractual option life 5 years 10 years 10 years 10 years
Risk free interest rate 4.800% 4.520% 4.520% 0.718%
The options issued will be settled in the equity of the Company when exercised
and have a vesting period of one year from date of grant.
Reconciliation of options in issue Number Weighted average exercise price(£'s) Number Weighted average exercise price(£'s)
2023 2023 2022 2022
Outstanding at 1 January 32,500,000 0.055 13,750,000 0.089
Granted during the year 12,250,000 0.021 23,250,000 0.048
Lapsed during the year - - (4,500,000) 0.120
Outstanding at 31 December 44,750,000 0.046 32,500,000 0.055
Exercisable at 31 December 37,250,000 0.042 11,750,000 0.060
No warrants were granted during the year (2022: Nil).
18. Reserves
The following is a description of each of the reserve accounts that comprise
equity shareholders' funds:
Share capital The share capital comprises the issued ordinary shares of the Company at par.
Share premium The share premium comprises the excess value recognised from the issue of
ordinary shares above par value.
Capital contribution reserve The capital contribution reserve represents historic non-cash contributions to
the Company from equity holders.
Share-based payment reserve Cumulative fair value of options charged to the consolidated income statement
net of transfers to the profit or loss reserve on exercised and
cancelled/lapsed options.
Translation reserve Cumulative gains and losses on translating the net assets of overseas
operations to the presentation currency.
Merger reserve The balance on the merger reserve represents the fair value of the
consideration given in excess of the nominal value of the ordinary shares
issued in an acquisition made by the issue of shares where the transaction
qualifies for merger relief under the Companies Act 2006.
Accumulated losses Accumulated losses comprise the Group's cumulative accounting profits and
losses since inception.
19. Trade and other payables
Group Company
2023 2022 2023 2022
£ £ £ £
Current:
Trade payables 307,909 448,045 43,511 148,567
Social security and other taxes 14,631 34,493 13,224 22,771
Other payables 29,900 24,834 851 2,142
Accruals 81,222 118,358 70,632 42,790
433,662 625,730 128,218 216,270
20. Lease liability
Nature of leasing activities
Vardar Geoscience leases buildings located in Str. Highway Prishtina Mitrovice
Village Shupkove No.2, Kosovo.
Jokkmokk Mining leases office premises located in 962 31 Jokkmokk, Sweden.
2023 2022
No. No.
Number of active leases 2 1
Lease liability at year end
Group 2023 2022
£ £
Current
Lease liability 22,575 10,840
Non-current
Lease liability 15,053 8,537
Total lease liability 37,628 19,377
Analysis of lease liability
Group Buildings
£
At 1 January 2022 7,491
Additions 17,506
Interest expense 264
Lease payments (6,611)
Foreign exchange movements 727
At 31 December 2022 19,377
Additions 43,126
Interest expense 2,420
Lease payments (23,648)
Lease disposals (1,974)
Foreign exchange movements (1,673)
At 31 December 2023 37,628
Analysis of gross value of lease liabilities
Maturity of the lease liabilities is analysed as follows:
2023
£
Within 1 year 22,575
Later than 1 year and less than 5 years 15,053
After 5 years -
At 31 December 2023 37,628
The total cash outflow for leases in 2023 was £25,637 (2022: £6,611).
21. Borrowings
Group Company
2023 2022 2023 2022
£ £ £ £
Opening balance 1,845,947 - 1,845,947 -
Funds advanced, net of commission and transaction costs - 1,554,381 - 1,554,381
Finance costs 195,304 304,529 195,304 304,529
Effect of FX (2,818) (12,963) (2,818) (12,963)
Funds repaid (2,038,433) - (2,038,433) -
- 1,845,947 - 1,845,947
On 3 July 2022, the Company secured a bridging loan from Nordic investors of
SEK 22 million, gross of commission and transaction costs (approximately:
£1.76 million). The loan had a fixed interest rate of 1.5 percent per stated
30-day period during the duration. Accrued interest was compounding. The
loan had a commitment fee of 5 per cent and a maturity date of 28 February
2023.
The loan and accrued interest were repayable at any time prior to the maturity
date. If the loan and accrued interest was not repaid by maturity date, at the
latest, the creditors had the right to offset a minimum of SEK 1 million at a
time of the loan and accrued interest into SDRs at a price per SDR calculated
with a 15 per cent discount on the volume weighted average price of the SDR
during the preceding 5 trading days to the conversion decision.
The loan was accounted for using an amortised cost using an effective rate of
interest. The conversion feature contained within the loan is considered an
embedded derivative and was not assessed to be significant given the available
inputs.
During the year, it became apparent that due to the timing of the receipt of
the funds from the rights issue the Company would not be in a position to pay
back the bridging loan facility at its maturity. The outcome of this is that
the holder of the loan enforced the penalty interest for entering another
30-day period, which was circa 1 million SEK. The loan principal and interest
totalling £2.04m was repaid via a deduction to the gross proceeds from the
Rights Issue.
22. Changes in liabilities from financing activities
Group Leases Borrowings Total
£ £ £
Opening balance 1 January 2023 19,377 1,845,947 1,865,324
Cash movements
Lease payments (23,648) - (23,648)
Total (4,271) 1,845,947 1,841,676
Non-cash movements
Lease additions 43,126 - 43,126
Lease disposals (1,974) - (1,974)
Finance cost 2,420 195,304 197,724
Funds repaid - (2,038,433) (2,038,433)
Effect of FX (1,673) (2,818) (4,491)
Closing balance 31 December 2023 37,628 - 37,628
Leases Borrowings Total
Group
£ £ £
Opening balance 1 January 2022 7,491 - 7,491
Cash movements
Borrowings advances - 1,554,381 1,554,381
Lease payments (6,611) - (6,611)
Total 880 1,554,381 1,555,261
Non-cash movements
Lease additions 17,506 - 17,506
Finance cost 264 304,529 304,793
Effect of FX 727 (12,963) (12,236)
Closing balance 31 December 2022 19,377 1,845,947 1,865,324
Company Borrowings Total
£ £
Opening balance 1 January 2023 1,845,947 1,845,947
Non-cash movements
Funds repaid (2,038,433) (2,038,433)
Finance cost 195,304 195,304
Effect of FX (2,818) (2,818)
Closing balance 31 December 2023 - -
Company Borrowings Total
£ £
Opening balance 1 January 2022 - -
Cash movements
Borrowings advances 1,554,381 1,554,381
Total 1,554,381 1,554,381
Non-cash movements
Finance cost 304,529 304,529
Effect of FX (12,963) (12,963)
Closing balance 31 December 2022 1,845,947 1,845,947
23. Financial instruments
The Group and Company's financial instruments comprise cash and cash
equivalents, loans and other financial assets, trade and other receivables,
trade and other payables, borrowings and lease liabilities that arise directly
from its operations.
The Group and Company hold the following financial instruments:
Group
At 31 December 2023 Held at amortised cost Fair value through profit and loss Total
£ £ £
Financial assets
Cash and cash equivalents 905,555 - 905,555
Trade and other receivables 90,965 - 90,965
Other financial assets 5,209 6,563 11,772
1,001,729 6,563 1,008,292
Financial liabilities
Trade and other payables 420,808 - 420,808
Lease liability 37,628 - 37,628
458,436 - 458,436
Company
At 31 December 2023 Held at amortised cost Fair value through profit and loss Total
£ £ £
Financial assets
Cash and cash equivalents 794,909 - 794,909
Loans to group undertakings 12,837,080 - 12,837,080
Other financial assets 2,784 6,563 9,347
13,634,773 6,563 13,641,336
Financial liabilities
Trade and other payables 116,743 - 116,743
At 31 December 2023 116,743 - 116,743
Group Company
At 31 December 2022 Held at amortised cost Total Held at amortised cost Total
£ £ £ £
Financial assets
Cash and cash equivalents 1,776,556 1,776,556 1,667,840 1,667,840
Trade and other receivables 78,148 78,148 - -
Loans to group undertakings - - 11,081,505 11,081,505
Other financial assets 5,181 5,181 2,784 2,784
1,859,885 1,859,885 12,752,129 12,752,129
Financial liabilities
Trade and other payables 591,237 591,237 195,328 195,328
Borrowings 1,845,947 1,845,947 1,845,947 1,845,947
Lease liability 19,377 19,377 - -
2,456,561 2,456,561 2,041,275 2,041,275
The carrying values of the Group's financial liabilities measured at amortised
cost represents a reasonable approximation of their fair values.
The main purpose of these financial instruments is to finance the Group's and
Company's operations. The Board regularly reviews and agrees policies for
managing the level of risk arising from the Group's financial instruments as
summarised below.
a) Market risk
Market risk is the risk that changes in market prices, such as commodity
prices, foreign exchange rates, interest rates and equity prices will affect
the Group's and Company's income or the value of its holdings in financial
instruments.
i) Foreign exchange risk
The Group operates internationally and is exposed to currency risk arising on
cash and cash equivalents, receivables and payables denominated in a currency
other than the respective functional currencies of the Group entities, which
are primarily Swedish Krona, Euro and Sterling. The Group manages foreign
currency risk by paying for foreign denominated invoices in the currency in
which they are denominated. The Group's and Company's net exposure to foreign
currency risk at the reporting date is as follows:
Group Company
2023 2022 2023 2022
£ £ £ £
Net foreign currency financial
assets:
Swedish Krona 427,207 1,560,383 484,839 1,655,334
Euro (25,804) (32,396) (2,960) (2,906)
Total net exposure 401,403 1,527,987 481,879 1,652,428
Sensitivity analysis
A 10 per cent strengthening of sterling against the Group's primary currencies
at 31 December 2023 would have decreased equity and profit or loss by the
amounts shown below:
Group
Profit or loss Equity
2023 2022 2023 2022
£ £ £ £
Swedish Krona (42,721) (156,038) (42,721) (156,038)
Euro 2,580 3,240 2,580 3,240
Total (40,141) (152,798) (40,141) (152,798)
Company
Profit or loss Equity
2023 2022 2023 2022
£ £ £ £
Swedish Krona (48,484) (165,533) (48,484) (165,533)
Euro 296 291 296 291
Total (48,188) (165,242) (48,188) (165,242)
A 10 per cent weakening of sterling against the Group's primary currencies at
31 December 2023 would have an equal but opposite effect on the amounts
shown above.
ii) Interest rate risk
The Group's and Company's policy is to retain its surplus funds on the most
advantageous term of deposit available up to a 12-month maximum duration.
Given that the Directors do not consider that interest income is significant
in respect of the Group's and Company's operations no sensitivity analysis has
been provided in respect of any potential fluctuations in interest rates.
Interest rate risk is the risk that the value of a financial instrument or
cash flows associated with the instrument will fluctuate due to changes in
market interest rates. Interest rate risk arises from interest bearing
financial assets and liabilities that the Group uses. The Group's
interest-bearing financial liability in the year is the bridging loan finance
entered into in the prior year and repaid in the current year; this was at a
fixed rate of interest. The interest-bearing financial liability in the prior
year was the bridging loan finance, which was at a fixed rate of interest.
b) Credit risk
The Group's principal financial assets are the cash and cash equivalents and
loans and receivables, as recognised in the statement of financial position,
and which represent the Group's maximum exposure to credit risk in relation to
financial assets. The Group and Company policy for managing its exposure to
credit risk with cash and cash equivalents is to only deposit surplus cash
with financial institutions that hold a Standard & Poor's, BBB- rating as
a minimum.
The Company has made unsecured interest-free loans to its subsidiaries.
Although they are repayable on demand, they are unlikely to be repaid until
the projects are successful and the subsidiaries start to generate revenues.
An assessment of the expected credit loss arising on intercompany loans is
detailed in note 11.
The amounts used by the subsidiaries are as follows:
2023 2022
£ £
Jokkmokk Iron Mines AB 10,105,806 8,407,039
Beowulf Mining Sweden AB - 368,306
Grafintec Oy 2,656,618 2,304,786
Total 12,762,424 11,080,131
Reconciliation of provisions against receivables arising from lifetime ECLs
1 January 2023 Movement in the year 31 December 2023
£ £ £
ECLs 2,106,249 1,001,537 3,107,786
Total provision arising from ECLs 2,106,249 1,001,537 3,107,786
1 January 2022 Movement in the year 31 December 2022
£ £ £
ECLs 2,100,913 5,336 2,106,249
Total provision arising from ECLs 2,100,913 5,336 2,106,249
The Directors have also assessed the cash flow scenarios of the above
considerations. Estimations were made regarding the credit risk of the
counterparty and the underlying probability of default in each of the credit
loss scenarios. The scenarios identified by management included Fire-sale and
Failure. These scenarios considered technical data, necessary licences to be
awarded, the Company's ability to raise finance, and ability to sell the
project. A reasonable change in the probability weightings of 3% would result
in further impairment of £789,297 (2022: £626,927).
i) Commodity price risk
The principal activity of the Group is the exploration for iron ore in Sweden,
graphite in Finland and other prospective minerals in Kosovo, and the
principal market risk facing the Group is an adverse movement in the price of
such commodities/industrial minerals. Any long-term adverse movement in market
prices would affect the commercial viability of the Group's various projects.
The Board looks to mitigate this risk through the diversification of different
prospective minerals.
c) Liquidity risk
To date the Group and Company have relied on shareholder funding and loan
funding to finance operations. As the Group and Company have finite cash
resources and no material income, the liquidity risk is significant and is
managed by controls over expenditure and cash resources. The Group and Company
have minimal exposure to liquidity risk as trade and other payables all have a
maturity of less than one year, the only exception being the lease liability
per note 21. The rationale for the preparation of the accounts on a going
concern basis is detailed in the Report of the Directors.
The undiscounted contractual maturities of the Group's financial liabilities
are set out below:
31 December 2023 Less than 3 months Between 3 and 12 months Between 1 and 2 years
£ £ £
Trade and other payables 433,662 - -
Borrowings - - -
Lease liabilities 6,282 17,940 15,597
439,944 17,940 15,597
31 December 2022 Less than 3 months Between 3 and 12 months Between 1 and 2 years
£ £ £
Trade and other payables 625,730 - -
Borrowings 1,845,947 - -
Lease liabilities 3,912 7,685 8,773
2,475,589 7,685 8,773
d) Capital management
The Groups capital structure consists of issued capital and reserves,
accumulated losses and non-controlling interest.
The Board's policy is to preserve a strong capital base in order to maintain
investor, creditor and market confidence and to safeguard the future
development of the business, whilst balancing these objectives with the
efficient use of capital. The Group and Company's net debt ratio for the year
ended 31 December 2023 was below what the Board would consider to be
sustainable, furthermore, this ratio should be considered an outlier as it
arose due to the timing of the fundraising completed. This is further
discussed in Note 21.
The Group does not have any externally imposed capital requirements.
Group
Net working capital 2023 2022
£ £
Cash and cash equivalents 905,555 1,776,556
Trade and other payables (433,662) (625,730)
Lease liabilities (37,628) -
Borrowings - (1,845,947)
Net cash/(debt) 434,265 (695,121)
Total equity 15,622,280 12,662,569
Net cash/(debt) to equity ratio 2.78% (5.49%)
Company
Net working capital 2023 2022
£ £
Cash and cash equivalents 794,909 1,667,840
Trade and other payables (128,218) (216,270)
Borrowings - (1,845,947)
Net cash/(debt) 666,691 (394,377)
Total equity 17,524,553 14,389,211
Net cash/(debt) to equity ratio 3.80% (2.74%)
24. Segment reporting
The Group has only one primary business activity being the exploration for,
and the development of iron ore, graphite and other mineral deposits. The
Group also reports by geographical reportable segment in the countries in
which it operates. The Group(')s exploration and development activities are
focused on three countries, Sweden, Finland and Kosovo, with support provided
from the UK headquarters. In presenting information on the basis of
geographical reportable segments, the loss for the year, key statement of
financial position data, property, plant and equipment additions and deferred
exploration additions is based on the geographical location of the assets. The
Group has adopted IFRS 8 'Operating Segments'. IFRS 8 requires operating
segments to be identified on the basis of internal reports that are regularly
reviewed by the chief operating decision maker to allocate resources and
assets.
2023 Sweden Finland Kosovo UK Total
£ £ £ £ £
Intangible assets 9,481,130 1,944,354 3,372,349 - 14,797,833
Other non-current assets 57,747 - 93,721 11,217 162,685
Current assets 72,699 132,412 6,218 846,230 1,057,559
Liabilities (159,504) (39,950) (114,247) (157,589) (471,290)
Finance income (268) - - (7,655) (7,923)
Finance costs 1,686 - 734 195,304 197,724
Grant income - (96,750) - - (96,750)
Gain on disposal of investment - - - (6,563) (6,563)
Intangible asset additions 1,898,312 208,876 299,493 - 2,406,681
Impairment 350,158 - - - 350,158
Expenses(1) 549,084 404,362 85,707 2,009,992 3,049,145
Loss for the year 548,816 307,612 85,707 1,995,774 2,937,909
Total comprehensive loss 660,187 345,386 133,511 1,995,775 3,134,859
2022 Sweden Finland Kosovo UK Total
£ £ £ £ £
Intangible assets 8,032,977 1,852,274 3,117,214 - 13,002,465
Other non-current assets 2,674 - 146,752 4,749 154,175
Current assets 83,341 88,542 72,381 1,752,719 1,996,983
Liabilities (178,095) (29,339) (166,475) (2,117,145) (2,491,054)
Finance income (6) - - (170) (176)
Finance costs 10 - 267 304,529 304,806
Grant income - (84,797) - - (84,797)
Gain on disposal of investment - - - (21,951) (21,951)
Intangible asset additions 684,396 175,269 991,281 - 1,850,946
Impairment - 36,988 - - 36,988
160,268 379,748 157,829 1,450,531 2,148,376
Loss for the year 160,262 294,951 157,829 1,428,410 2,041,452
Total comprehensive loss 386,566 196,831 62,591 1,428,409 2,074,397
(1)Expenses include administrative expenses, impairment and finance costs.
25. Related party disclosures
Transactions with subsidiaries
During the year, cash advances of £2,153,998 (2022: £524,614) were made to
Jokkmokk Iron Mines AB and net settled costs of £33,643 with the Company
(2022: net settled costs £194,754). The advances are held on an interest free
inter-group loan which has no terms for repayment. At the year end the
inter-Group loan amounted to £12,179,315 (2022: £9,991,673).
Beowulf Mining Sweden AB received cash advances of £31,879 (2022: £7,320)
and expenses paid on behalf of £22,318 (2022: net settled costs of £118).
The advances are held on an interest free inter-Group loan which has no terms
for repayment. At the year end the inter-Group loan amounted to £790,632
(2022: £781,071).
Grafintec Oy received cash advances of £430,213 (2022: £180,287) and net
settled costs of £30,918 (2022: net settled costs of £1,507) with the
Company. The advances are held on an interest free inter-Group loan which has
no terms for repayment. At the year end the inter-Group loan amounted to
£3,202,436 (2022: £2,741,305).
Vardar received cash advances of £68,572 (2022: £nil) and net settled costs
of £1,374 (2022: net settled costs of £nil) with the Company. The advances
are held on an interest free inter-Group loan which has no terms for
repayment. At the year end the inter-Group loan amounted to £100,155 (2022:
£nil).
In accordance with its service agreement, Grafintec charges Beowulf Mining plc
for time incurred by its staff on exploration projects held by other entities
in the Group. In turn Beowulf Mining plc recharges the other entities
involved.
In addition, Beowulf Mining plc charges entities in the Group for time and
expenses spent by Directors on providing services. An arm's length margin has
been included at entity level, but this is subsequently eliminated on
consolidation.
The Company has made unsecured interest-free loans to its subsidiaries.
Although they are repayable on demand, they are unlikely to be repaid until
the projects becomes successful and the subsidiaries start to generate
revenues. An assessment of the expected credit loss arising on intercompany
loans is detailed in note 11.
Transactions with other related parties
Key management personnel include all Directors and those who have authority
and responsibility for planning, directing and controlling the activities of
the entity, the aggregate compensation paid to key management personnel of the
Company is set below.
2023 2022
£ £
Short-term employee benefits (including employers' national insurance 847,791 711,962
contributions)
Loss of office 210,000 -
Post-retirement benefits 67,288 44,764
Share-based payments 321,534 173,345
Insurance 526 887
1,447,139 930,958
Loss of office comprises a settlement amount in relation to Kurt Budge's
resignation, which was agreed on 21 July 2023. It represents the remainder of
the notice period due to Mr Budge as he was continued to be paid until the
date the agreement was reached.
26. Capital commitments
As an exploration and development company, the Company has a portfolio of
exploration projects held through subsidiary companies relevant to the local
operations of the business. All of the Company's business interests carry
financial commitments to remain in good standing which are funded directly by
the Company.
All the subsidiary companies require timely submission of regulatory filings,
financial accounts and tax submissions. All exploration projects are held
under exploration licences and permits, against which during the year renewals
are expected to be processed with associated renewal fees attaching.
27. Contingent liabilities
At 31 December 2023, the Company has a possible obligation to pay up to two
years annual salary (£420,000) to Ed Bowie in the event of a change in
control.
28. Events after the reporting date
On 16 February 2024, the Company announced its intention to conduct a
preferential rights issue of SDRs in Sweden and a UK retail offer of ordinary
shares and partially secured capital raise up to approximately SEK 100 million
(approximately £7.5million). The rights issue is underwritten to maximum
value of SEK 50 million, subject to customary adjustments.
On 16 February 2024, in conjunction with the rights issue, the Company has
entered into a short-term loan agreement with the Underwriters to provide SEK
10 million to ensure the Company has sufficient financial resources to
continue advancing its projects over the coming weeks. The loan carries an
interest charge of 1.5 per cent per month and has a commitment fee of 5 per
cent. If the loan and accrued interest is not repaid by maturity date, at the
latest, the creditors have the right to offset a minimum of SEK 1 million at a
time of the loan and accrued interest into SDRs at a price per SDR calculated
with a 15 per cent discount on the volume weighted average price of the SDR
during the preceding 5 trading days to the conversion decision. In case of
default, the loan will accrue additional default interest of 2.5 per cent per
month.
On 3 April 2024 the Company announced the completion of the capital raise with
a total of £4.3 million (SEK 56.3 million) gross raised to fund the
development of the Company's assets through their next key valuation
milestones. The net funds raised after the loan repayment and share issue
transaction costs are £3.0 million.
On 9 April 2024, the Company announced the completion of consolidation of 100
per cent ownership of Vardar Minerals Ltd from the currently held 61.1 per
cent interest through the issue of 52,326,761 Ordinary share in the Company.
The new shares are subject to a 12-month lock-in agreement from the 8 April
2024 and will be issued at the same time as shares issued in connection with
the proposed capital raise.
On 14 May 2024 there were 1,574,658,777 Swedish Depository Receipts
representing 81.07% per cent of the issued share capital of the Company. The
remaining issued share capital of the Company is held in the UK.
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