REG - Blencowe Resources - Annual Financial Report
31/01/2024 07:00
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RNS Number : 4206B Blencowe Resources PLC 31 January 2024
Blencowe Resources Plc
("Blencowe" or the "Company")
Annual Results for the year ended 30 September 2023
And Notice of Annual General Meeting
Blencowe Resources Plc, the natural resources company focused on the
development of the Orom-Cross Graphite Project in Uganda, is pleased to
announce its audited financial results for the year ended 30 September 2023
(the "Annual Report") and it's notice of Annual General Meeting ("Notice of
AGM").
The Annual Report which includes an unqualified audit report and audited
Financial Statement for the year ended 30 September 2023 & The Notice of
AGM and the associated Form of Proxy will be made available on the Company's
website at www.blencoweresourcesplc.com (http://www.blencoweresourcesplc.com)
. Hard copies will be posted to the Company's shareholders.
For further information, please contact:
Blencowe Resources www.blencoweresourcesplc.com (http://www.blencoweresourcesplc.com)
Sam Quinn Tel: +44 (0) 1624 681 250
info@blencoweresourcesplc.com
Investor Enquiries Tel: +44 (0) 7891 677 441
Sasha Sethi sasha@flowcomms.com (mailto:sasha@flowcomms.com)
Tavira Financial Limited Tel: +44 (0)20 7100 5100
Jonathan Evans jonathan.evans@tavirasecurities.com
(mailto:jonathan.evans@tavirasecurities.com)
First Equity Limited Tel: +44 (0)203 192 1733
Jason Robertson jasonrobertson@firstequitylimited.com
(mailto:jasonrobertson@firstequitylimited.com)
Chief Executive Officer's Statement for the period ended 30 September 2023
Shareholders and Stakeholders,
It gives me great pleasure to reflect on another year of progress within
Blencowe and our continued efforts to unlock the value sitting in our
Orom-Cross graphite project in Uganda. This project remains one of the
largest, highest quality graphite projects in the world and in a market which
is forecast to demand exponential tonnage of graphite ahead, in particular to
deliver the huge number of batteries to power electric vehicles and store
renewable energy, we are operating in very exciting times.
Our main focus of energy and efforts this past year have been in commencing
the Definitive Feasibility Study (DFS) which is the last major study required
prior to investment decision, and one that requires a lot more work and cost
than the previous Scoping or Pre-Feasibility Studies. The DFS started in the
early calendar year and was expected to take 12 months, but longer than
anticipated time taken to secure necessary funding has meant the DFS will only
be completed by end of 2024. The DFS requires four major thrusts; firstly,
mining and infrastructure development at site; secondly revised environmental
impact studies to extend the previous EIS that was done in conjunction with
our mining license award in 2019; thirdly bulk sample testing in China to
ultimately secure offtake contracts; and fourthly, providing a full project
funding solution, for the DFS costs themselves but thereafter to implement the
strategy and build the mine.
As the DFS has progressed a fifth element has now been added, which is
downstream processing of graphite from a concentrate to a purified product.
This is being considered as a means to significantly enhance the overall value
of the project.
I am pleased to report that all DFS work to date has yielded positive results,
with no exceptions. Earlier in the calendar year we mined 100 tonnes of
material from Orom-Cross and shipped this to China where it underwent
commercial scale testing to show that we can process and deliver the same high
quality end concentrate from a much larger quantity than we had previously
proven we could deliver from lab-scale testing. This pilot testing in China
has been very successful and by showcasing our product over there we have also
opened many doors for future relationships; in simple terms our product is
well received there which is good as China accounts for the vast majority of
the graphite market today. We are using very experienced partners to build
these relationships in China, experts who have taken other graphite companies
through this same qualification process, so we are confident we will end up
with a good end result from this in 2024. In order to seek tier one
partnerships for offtake we are now embarking on a further 600 tonne bulk
sample to go through the same pilot testing procedure over the next six months
and if successful this will hopefully complete our pre-qualification process
and allow us to move to negotiate initial offtake agreements which are vital
to the DFS.
Work continues in Uganda on all facets of infrastructure and environment, and
we are building a strong team there to take ownership of in-country
requirements. Government of Uganda support remains firm as does local
community support.
The process to find a tier one strategic funding partner has taken us longer
than anticipated but has ultimately borne exceptional results, as the Company
was able to sign a Technical Assistance Grant with the US International
Development Funding Corporation (DFC) in September 2023 for a US$5 million
grant to Blencowe for DFS costs, as well as DFC mandated as lead partner to
help provide a full project funding solution ahead. Having the US Government
as our strategic partner has obvious benefits and we are very proud to be the
first and only graphite company that DFC have partnered with to date in this
regard. Whilst this took time to lock down this grant it was absolutely
worth the wait and Blencowe now has a strong funding partner ahead which is
the envy of many of our peers in the graphite market.
The shift in focus to consider further downstream processing is gathering
momentum, and this could have a colossal impact on the value that Orom-Cross
brings to Blencowe. Whilst mining and processing graphite to a 96%
concentrate was proven to be a profitable venture in the PFS we have come to
realise that further processing of that concentrate to a 99.95% purified
product can yield considerably higher margins and Blencowe is now considering
all options how it can get involved in this downstream market. There is
substantial IP (intellectual property) involved which is held by existing
processing companies so any such a move would involve partnering with one or
more of these processing experts, but work is underway to consider several
alternatives.
Further work has been completed using international technical experts to
ascertain the quality of Orom-Cross graphite as it upgrades from 96%
concentrate to a purified 99.95% end product, and I am pleased to say the
results have been outstanding, with Orom-Cross having passed with flying
colours. At the end of the day each graphite project is unique, with
inherent chemical characteristicst hat are different to each project, and
which largely define the quality of the end product and therefore price and
demand for these end products. As we continue to test Orom-Cross through to
99.95% purified product we continue to learn of its exceptional chemical
properties and these characteristics will ultimately be the advantage that
helps shape key relationships, offtake partners and contracts.
I would like to reach out to all the consultants, partners, and other
relationships we have built to thank all of them for their efforts, including
our internal management team. We are in very exciting times as the green
energy revolution gathers pace and the graphite market is evolving fast due to
a variety of factors, including geopolitics. Each and every one of these
partnerships is critical to our success ahead and we value their expertise and
support.
I would also like to thank our shareholders and the wider market for your
support, and in particular our major shareholders who have stuck by us through
what have been challenging market conditions. We offer the ability to be
part of something unique as we develop this exceptional project, and we hope
that we can continue to justify your faith and your investment.
Mike Ralston
Chief Executive officer
The Directors present the Strategic Report for the year ended 30 September
2023.
Results
The results are set out in the Consolidated Statements of Comprehensive Income
on page 29. The total comprehensive loss attributable to the equity holders of
the Group for the period was £1,366,685 (2022: £1,089,679).
The Group paid no distribution or dividends during the period.
Business model, review of the business and future developments
The Group' principal activity is the exploration of Orom-Cross Graphite
Project in Northern Uganda, which it owns through its 100% subsidiary
Consolidated African Resources Limited 'CARU'.
The Group's aim is to create value for shareholders through the discovery and
development of economic mineral deposits. The Group's strategy is to
continue to progress the development of its existing project in Uganda and to
evaluate its existing and new mineral resource opportunities.
The Group's business is directed by the Board and is managed on a day-to-day
basis by the Executive Chairman, Cameron Pearce. The Board monitors
compliance with objectives and policies of the Group through performance
reporting, budget updates and periodic operational reviews.
Key performance indicators (KPIs)
Financial KPIs
Results for the year
With no income in the year the Group continues to monitor the loss before tax
to ensure the continued viability of the Group and ability to continue to
develop the Orom-Cross Graphite Project. The Group has made a loss before tax
of £1,397,967 for the year ended 30 September 2023 (2022: loss before tax of
£1,085,474).
Exploration expenditure - funding and development costs
At this stage in the Group's development, the Group is focusing on financing
and continued development of the Orom-Cross Graphite Project. Therefore, the
funding and development costs of Orom-Cross Graphite project have been chosen
as Key Performance Indicators.
The Group incurred £1,190,977 (2022: £1,423,236) of capitalised exploration
costs. These exploration costs are in line with the Board expectations.
In 2023 the Group raised funds of £1,313,820 net of issue costs (2022:
£2,628,748) from the equity markets. Please see note 20 for further details
of the funds raised after the year end.
At 30 September 2023 the Group had a cash balance of £129,853 (2022:
£346,994).
Employees
There were two employees during the year apart from the directors, the Chief
Executive Officer ("CEO") and the Chief Operating Officer ("COO"), who are the
key management personnel. All current members of the Board and the key
management personnel are males. For more information about the Group's key
management personnel see note 7.
Social, Community and Human Rights Issues
The Orom-Cross Graphite Project is still at an early stage of project
development and further consideration will need to be given to social,
community and human rights issues affecting the Project. Currently a key
consideration is that under Ugandan law the Company is required to
rehabilitate the area affected by the mining activities. Accordingly, there
will be a potential cost associated with undertaking this obligation. At this
time, although the Group continues to explore and test the minerals, the land
has not been affected and therefore the Group has not accounted for any costs
associated with the rehabilitation of the area.
On 10 September 2022 CARU signed a revised agreement with the local communal
land association of Locomo village for the land surface rights and has agreed
to help provide local education and sensitization of the local communities in
Akurumo parish on the opportunities and advantages of mining graphite. CARU
will give employment priorities to the local capable members of Akurumo
parish.
Since the acquisition of CARU the Group has donated to local causes, such as a
scholarship programme and to fight against COVID-19. The Group will continue
to donate to the local communities around the region of Uganda in which the
Project Licences are located.
Principal risks and uncertainties and risk management
The Group operates in an uncertain environment and is subject to a number of
risk factors. The Directors have carried out a robust assessment on the
principal risks facing the Group, including those that threaten its business
model, future performance, solvency or liquidity.
The Group continues to monitor the principal risks and uncertainties with the
help of specialists to ensure that any emerging risk are identified, managed
and mitigated. There has been no significant impact to the Group from the
Russia-Ukraine conflict and the Israel-Palestine conflict.
Geological risks
On 19 July 2022, the Group completed the pre- feasibility study for the
Orom-Cross graphite project and a net present value (post tax) assessment of
$482million has been estimated from the project. The pre-feasibility study
indicates a robust, long-term, and profitable mining operation at Orom-Cross.
The Pre-feasibility study was managed by leading graphite technical experts
Battery Limits Pty Limited (Australia), who have delivered several other
graphite project feasibility study in the past. The estimated production per
annum will be 36,000tpa as 96-97% end products and increasing this to
147,000tpa in stages. It is estimated that 50% of the product is +100 to +50
mesh fractions. The pre-feasibility study estimated a US$1,307/t weighted
average selling price for a basket of end products and US$499/t operating
costs, underlining one of the lowest cost graphite projects worldwide. On 26
September 2022 the Group announced that it had commenced the definitive
feasibility study with completion date 2H-2023.
On 6 December 2022, the Group completed the metallurgical test work on
substantially up-scaled quantities of Orom-Cross composite mix. The additional
metallurgical test work on Orom-Cross graphite continues to deliver a
high-quality grade graphite concentrate. The program was designed to deliver
the following objectives:
1. Confirm a 95-97% total graphite content, pure concentrate with low
impurities.
2. Confirm 90% recovery is achievable for this concentrate.
3. Confirm the liberation process to maintain a high percentage of
Jumbo/XL/Large flakes within concentrate.
4. Confirm process flow diagram for plant design as part of the Definitive
Feasibility Study.
5. Deliver bulk concentrate samples to allow Blencowe to initiate
discussions with potential off-take partners.
On 11 January 2023 the Ugandan Government approved a landmark one-off permit
for Blencowe to export bulk sample graphite from Orom-Cross for key
Metallurgical final testing. 100 tonnes of bulk samples were mined, and fast
track delivered to China by air freight for initial off -site testing with a
Chinese experienced graphite processing specialist Jilin Huiyang New Material
Technology Company Limited. Blencowe also send an additional 5kg of
concentrate to Chicago-based graphite specialist AET Co, which is a recognized
industry expert in SPG (spheronised purified graphite) and expandability
testing.
On 23 January 2023, the group appointed a leading firm from Perth, CPC
Engineering to lead, develop and sign off the Definitive Feasibility study.
The Group uses advisors with specialist knowledge in mining and related
environmental management for reducing the impacts of environmental risk.
Government regulation and political risk
The Group's operating activities are subject to laws and regulations governing
expropriation of property, health and worker safety, employment standards,
waste disposal, protection of the environment, mine development, land and
water use, prospecting, mineral production, exports, taxes, labour standards,
occupational health standards, toxic wastes, the protection of endangered and
protected species and other matters. While the Group believes that it is in
substantial compliance with all material current laws and regulations
affecting its activities, future changes in applicable laws, regulations,
agreements or changes in their enforcement or regulatory interpretation could
result in changes in legal requirements or in the terms of existing permits
and agreements applicable to the Group or its properties, which could have a
material adverse impact on the Group's current operations or planned
exploration and development projects. Where required, obtaining necessary
permits and licences can be a complex, time consuming process and the Group
cannot assure whether any necessary permits will be obtainable on acceptable
terms, in a timely manner or at all. The costs and delays associated with
obtaining necessary permits and complying with these permits and applicable
laws and regulations could stop or materially delay or restrict the Group from
proceeding with any future exploration or development of its properties. Any
failure to comply with applicable laws and regulations or permits, even if
inadvertent, could result in interruption or closure of exploration,
development or mining operations or material fines, penalties or other
liabilities.
The Orom-Cross Graphite Project is located in Uganda. The Group's activities
may be affected in varying degrees by political stability and governmental
regulations. Any changes in regulations or shifts in political attitudes in
the country or any other countries in which the Group may operate are beyond
the control of the Group and may adversely affect its operations. To mitigate
this risk, the Board continues to review any changes on the government
regulations and the political stability in Uganda.
Pricing risk
The development and success of any project of the Group will be primarily
dependent on the future prices of graphite. The graphite prices are subject to
significant fluctuation and are affected by a number of factors which are
beyond the control of the Group. Such factors include, but are not limited to
exchange rates, fluctuations in the value of the United States dollar and
foreign currencies, global and regional supply and demand, and political and
economic conditions. The price of graphite and other commodities have
fluctuated widely in recent years, and future price declines could cause any
future development of and commercial production from the Group's property to
be impracticable. Although the Group expects to have sufficient working
capital for the Working Capital Period, depending on the price of graphite,
projected cash flow from planned mining operations may not be sufficient for
future operations and the Group could be forced to discontinue any further
development and may lose its interest in, or may be forced to sell, some or
all of its properties. Future production from the Orom-Cross Graphite Project
is dependent on the production of graphite that is adequate to make the
project economically viable. The Board regularly monitors the prices of
graphite and is prepared to raise further capital if it is required.
Commodity and currency risk
As the Groups' potential earnings will be largely derived from the sale of
graphite, the Group's future revenues and cash flows will be impacted by
changes in the prices and available market of this commodity. Any substantial
decline in the price of graphite or in transport or distribution costs may
have a material adverse effect on the Group.
Commodity prices fluctuate and are affected by numerous factors beyond the
control of the Group. These factors include current and expected future supply
and demand, forward selling by producers, production cost levels in major
mineral producing centers as well as macroeconomic conditions such as
inflation and interest rates.
Furthermore, the international prices of most commodities are denominated in
United States dollars while the Group cost base will be in Pounds Sterling and
Ugandan Shilling. Consequently, changes in the Pound Sterling and Ugandan
Shilling exchange rates will impact on the earnings of the Group. The exchange
rates are affected by numerous factors beyond the control of the Group,
including international markets, interest rates, inflation and the general
economic outlook. The Directors are confident that they have put in place a
strong management team capable of dealing with the above issues as they arise.
Financing
On 27 April 2023 the Group announced that it had found a strategic funding
partner for the Orom-Cross Graphite project, and this was completed on 22
September 2023. The Development Finance Corporation (DFC) engaged to fund 50%
of Project Definitive Feasibility Study costs by way of a technical assistance
grant. US International Development Finance Corporation is America's leading
development finance institution that partners with the private sector to
provide finance solutions for project development in markets deemed
critical. As of 10 October 2023, the Group received $1 million of the $5
million technical grant funding from the Development Finance Corporation. The
Group is likely to remain cash flow negative for some time and, although the
Directors have confidence in the future revenue earning potential of the Group
from its interests in the Orom-Cross Graphite Project, there can be no
certainty that the Group will achieve or sustain profitability or positive
cash flow from its operating activities. With regards to future capital
expenditure on the Orom-Cross Graphite Project, the Company will need to raise
additional capital during the next 12 months in order to fully fund completion
of the Definitive Feasibility Study.
The Group has been approached by potential strategic partners who may
eventually provide an offtake, funding or development scenario for the
Orom-Cross graphite project. If this is not successful, the Board may consider
stopping the project until further cash can be generated.
Future mineral prices, revenues, taxes, capital expenditures and operating
expenses and geological success will all be factors which will have an impact
on the amount of additional capital required. Additionally, if the Group
acquires further exploration assets or is granted additional permits and/or
exploration licences, this may increase its financial commitments in respect
of the Group's exploration activities.
In common with many exploration entities, the Group will need to raise further
funds in order to progress the Group from pre-construction phase of its
business and eventually into production of revenues.
Environmental and safety
The Orom-Cross Graphite Project is still at an early stage of project
development and further consideration will need to be given to environmental
and social issues affecting the Orom-Cross Graphite Project. Environmental and
safety legislation (e.g. in relation to reclamation, disposal of waste
products, protection of wildlife and otherwise relating to environmental
protection) may change in a manner that may require stricter or additional
standards than those now in effect, a heightened degree of responsibility for
companies and their directors and employees and more stringent enforcement of
existing laws and regulations. There may also be unforeseen environmental
liabilities resulting from both future and historic exploration or mining
activities, which may be costly to remedy. Risks may include on-site sources
of environmental contamination such as oil and fuel from the mining equipment
and rehabilitation of the site upon expiry of the Project Licences. Under
Ugandan law the Company is required to rehabilitate the area affected by the
mining activities, accordingly there will be a potential cost associated with
undertaking this obligation. It is currently unknown what this could be but
the funding of this could have a material impact on the Group's financial
position in the future.
If the Group is unable to fully remedy an environmental problem, it may be
required to stop or suspend operations or enter into interim compliance
measures pending completion of the required remedy. The potential exposure may
be significant and could have a material adverse effect on the Group.
The Group has not purchased insurance for environmental risks (including
potential liability for pollution or other hazards as a result of the disposal
of waste products occurring from exploration and production) as it is not
generally available at a price which the Group regards as reasonable.
Environmental management systems are in place to mitigate environmental hazard
risks. The Group uses advisors with specialist knowledge in mining and related
environmental management for reducing the impacts of environmental risk.
Task Force on Climate -related Financial Disclosures (TCFD)
The Task Force on Climate-related Financial Disclosures was convened by the
Financial Stability Board to produce a common global framework for companies
to report on how climate change will affect their business.
To help investors and wider stakeholders understand how companies are managing
climate related financial risks, the TCFD recommends that companies make
disclosures across four key areas, often referred to as the four pillars.
The directors support the initiatives of the TCFD, and has prepared
disclosures to a level of detail that the directors consider to be consistent
with the TCFD recommended disclosures, and as appropriate to the current
position of the Group as an exploration entity.
The directors consider that several of the specific disclosures sought under
TCFD recommendations will be less meaningful to users at the current stage of
the Company's Orom-Cross Project and will have greater relevance at the
conclusion of the DFS (due to be completed by the end of 2024) and following
the commissioning of the Orom-Cross Project.
1. Governance
The Company view climate related risks and opportunities as growing in
importance. The Board is ultimately responsible for the oversight and
compliance with local environmental laws at its exploration location in
Uganda, together with assessment of the impact of climate change on risk to
the organisation.
In advance of commissioning the project operations, the Group will establish a
Sustainability Committee, comprising the Chairman, the Chief Executive Officer
and a non-executive director, that will guide and support the Group's
environmental approach and plans with respect to climate-related matters. The
Committee will also consider and set appropriate Group policies that will
govern how management assess and manage the risks and opportunities following
commissioning.
Management of the group, who are involved with the ongoing DFS are responsible
for assessing and managing climate -related risks and opportunities through
the current study and will input to plans and assessments related to the ESIA
(environmental and social impact assessment) and ESG (environmental, social
and governance) components of the study.
2. Strategy
The Group's project at Orom-Cross is currently in the stage of completing its
Definitive Feasibility Study, the outcome of which in 2024 will include more
detail and assessment to define the Group's strategic approach to
climate-related matters.
The current global movement towards clean energy and storage solutions, in
which graphite forms an integral part, together with technological advances in
the use of graphite are an exciting opportunity for the Group to be a
significant part of sustainable energy solutions.
3. Risk management
Identification and assessment of climate related risks and opportunities in
relation to the Group's activities is performed by management on an ad-hoc
basis. Management have not assessed there to be any significant
climate-related risks that impact on the current exploration activity in
Uganda.
The Group is currently completing the DFS, which will include ESIA and ESG
assessments that will assist management to detail the climate related risks
and opportunities relating to development of the project. Identification and
mitigation of these risks will be addressed by the planned Sustainability
Committee described in the Governance section of this statement.
At this time the Group operates no corporate offices either for the management
team, or in Uganda, and has no operational graphite production activity. As
such management have assessed that no significant greenhouse gas (GHG)
emissions are currently produced.
As the project progresses through the DFS, the risk management framework is
somewhat fluid and will be analysed, adapted and expanded as the various study
components of the DFS develop. The Group is identifying and developing a
'leave no trace' solution to development wherever possible including utilising
renewable energy supply and electrification options for operations. These
actions will be included in the output of the DFS.
The Group currently employs the foundations of ISO Risk Management standards
31000, and will develop this by engaging in the certification process for this
standard. Climate risks will be identified in detail in the ESIA and ESG
assessments that form part of the DFS.
Management have not identified any climate-related scenarios that are expected
to impact the resilience of the current exploration works performed by the
Group. Assessment of different climate scenarios will be included in the works
performed for the DFS.
4. Metrics and targets
The Company will define the metrics and performance targets to assess the
climate-related risks and opportunities in line with its strategy and risk
management processes once the Orom-Cross operation has been commissioned.
Initially some of these will be outlined as part of the ESIA and ESG
assessments currently being undertaken for the project DFS.
As the current exploration operations of the Group have a minimal physical
presence, Greenhouse Gas emissions are not currently recorded. However as part
of the ESIA and ESG study works, the Group is developing the systems and
reporting standards to track these in preparation for development of the
project.
Taxation
Following an inspection by the Ugandan Revenue Authority (URA) of the tax
affairs of Consolidated African Resources Uganda ("CARU") covering the period
between January 2014 and December 2022, the Group has incurred a capital gains
tax charge of £392,425 as set out in Note 8 to the Financial Statements. This
charge related to the acquisition by the Company of CARU in 2019. The amount
was chargeable to the former owners, however this was not settled by them and
under Ugandan legislation the liability is reclaimable from the acquirer if it
cannot be obtained from the seller. Following advice from in-country tax
advisors the Company is currently in discussions with the Ugandan Revenue
Authority (URA) regarding options available to the Company to either pursue
the seller for the tax liability or to seek a reduction or payment plan for
the liability.
Section 172 Statement
The Board believes they have acted in a way most likely to promote the success
of the Group for the benefit of its members as a whole, as required by section
172.
The requirements of section 172 are or the Board to:
· consider the likely consequences of any decision in the long
term,
· act fairly between the members of the Group,
· maintain a reputation for high standards of business conduct,
· consider the interest of the Group's employees,
· foster the Group's relationship with suppliers, customers and
others, and
· consider the impact of the Group's operations on the community and
the environment.
The Group operates a mineral exploration business, which is inherently
speculative in nature and, without regular income, is dependent upon
fund-raising for its continued operation. The pre-revenue nature of the
business is important to the understanding of the Group by its members,
employees and suppliers, and the Directors are as transparent about the cash
position and funding requirements as is allowed under LSE regulations.
The principal decisions taken by the Board during the year relate to the
ongoing research and development of the Orom-Cross Graphite Project, which
since its acquisition in 2020 is still at an early stage of project
development. The Board has looked to build upon the information available and
the exploration activities carried out by the Subsidiary prior to its
acquisition. Through work such as Metallurgical testwork and preliminary
economic assessment the board continues to gather information on the long-term
viability of the project and the impact on the local community and the
environment. The Board have outlined a work program for the future strategy of
the Project. In order to carry out its strategy, the company has entered into
a number of contracts with providers who are best placed to undertake the
necessary research and review.
The Board is ultimately responsible for the direction, management, performance
and long-term sustainable success of the Group. It sets the Group's strategy
and objective considering the interest of all its stakeholders. A good
understanding of the Company's stakeholders enables the Board to factor the
potential impact of strategic decisions on each stakeholder group into a
boardroom discussion. By considering the Company's purpose, vision and values
together with its strategic priorities the Board aims to make sure that its
decisions are fair. The Board has always taken decisions for the long term and
consistently aims to uphold the highest standards of business conduct. Board
resolutions are always determined with reference to the interests of the
Company's employees, its business relationships with suppliers and customers.
Wherever possible, local communities are engaged in the geological operations
and support functions required for field operations providing much needed
employment and wider economic benefits to the local communities. In addition,
the Group contributes annually towards a scholarship programme for the local
community in Uganda. The Board takes seriously its ethical responsibilities to
the communities and environment in which it works. We abide by the local and
relevant UK laws on anti-corruption and bribery.
The Group follows international best practice on environmental aspects of our
work.
Cameron Pearce
Director
30 January 2024
The Directors submit their report with the audited Financial Statements for
the year ended 30 September 2023.
General information
Blencowe Resources Plc ("the Company"), was incorporated as a private Limited
Company under the laws of England and Wales with registered number 10966847 on
18 September 2017. On 13 July 2018, the Company was re-registered as a
public company under the Companies Act 2006.
Blencowe's primary focus is on exploration of the Orom-Cross Graphite Project
located in Northern Uganda.
Results for the year and distributions
The Group results are set out in the Consolidated Statements of Comprehensive
Income. The total consolidated comprehensive loss attributable to the equity
holders of the Group for the financial year was £1,366,685 (2022:
£1,089,679). The Group received no income, and the full amount of the loss
is due to expenses incurred in capital raising (to the extent not deducted
from share premium), and general corporate overheads.
The Group paid no distribution or dividends during the financial year (2022:
£Nil).
Subsidiary change of name
On 7 March 2023 Blencowe Resources Uganda Limited a 100% owned subsidiary of
Blencowe Resources Plc changed its name to Consolidated African Resources
Limited.
The Board of Directors
The Directors who held office during the financial year and to the reporting
date, together with details of their interest in the shares of the Company at
the reporting date were:
Number of Ordinary Shares Percentage of Ordinary Shares
Sam Quinn 4,916,667 2.35%
Cameron Pearce 7,516,667 3.59%
Alexander Passmore 1,550,000 0.74%
The Board comprises of one Executive Director and two Non-Executive Directors
as detailed below:
Cameron Pearce - Executive Chairman
Cameron Pearce was a founder of the Company and has extensive professional
experience in both the Australian and United Kingdom finance industries. In
recent times he has provided corporate, strategic, financial and advisory
assistance to private and public companies in both Australia and the United
Kingdom. Mr Pearce is a member of the Australian Institute of Chartered
Accountants and has been in commerce over twenty years holding senior
financial and management positions in both publicly listed and private
enterprises in Australia, Europe, Asia, Africa and Central America. Mr. Pearce
has considerable corporate and international expertise and over the past
decade has focussed on mining and exploration activities.
Sam Quinn - Non Executive
Director
Sam Quinn is a corporate lawyer with over a decade's worth of experience in
the natural resources sector, in both legal counsel and executive management
positions. Mr Quinn was formerly the Director of Corporate Finance and Legal
Counsel for the Dragon Group, a London-based natural resources venture capital
firm and is currently a partner of Silvertree Partners, a natural resource
focussed back office outsourcing business. Mr Quinn has in addition held
several management roles for listed and unlisted natural companies and has
gained significant experience in the administration, operation, financing and
promotion of natural resource companies. Prior to working in the natural
resources sector, Mr Quinn worked as a corporate lawyer for Jackson McDonald
Barristers & Solicitors in Perth, Western Australia and for Nabarro LLP in
London.
Alex Passmore - Non Executive Director
Alex Passmore is an experienced corporate executive with strong financial and
technical background. Mr Passmore managed the arrangement of debt for many
well-known resources companies and has a wealth of experience in project
evaluation. He also managed the WA natural resources business of CBA which
comprised a substantial portfolio of loan, hedge, trade finance and working
capital products to ASX-listed and multi-national resource companies. Prior to
this, Mr Passmore held senior roles at Patersons Securities and was director
of corporate finance and head of research. Mr Passmore holds a BSc (Hons) in
Geology from the University of Western Australia and a graduate diploma of
Applied Finance and Investments from the Institute of Securities Australia.
Directors' indemnities
To the extent permitted by law and the Articles, the Company has made
qualifying third-party indemnity provisions for the benefit of its directors
during the year, which remain in force at the date of this report.
Policy for new appointments
Without prejudice to the power of the Company to appoint any person to be a
Director pursuant to the Articles the Board shall have power at any time to
appoint any person who is willing to act as a Director, either to fill a
vacancy or as an addition to the existing Board, but the total number of
Directors (other than alternate directors) must not be less than two and must
not be more than 15 in accordance with the Articles. Any Director so appointed
shall hold office only until the annual general meeting of the Company next
following such appointment and shall then be eligible for re-election but
shall not be taken into account in determining the number of Directors who are
to retire by rotation at that meeting. If not re-appointed at such annual
general meeting, he shall vacate office at the conclusion thereof.
Rules for amendments of articles
Directors cannot alter the Company's Articles unless a special resolution is
approved by the shareholders. A special resolution requires at least 75% of a
company's members to vote in favour for it to pass.
Substantial shareholders
The share capital of Blencowe consist of only one class: ordinary shares.
Therefore, all of the Company's shares rank pare passu and no preferential
rights apply. No single person directly or indirectly, individually or
collectively, exercises control over the Company. The Directors are aware of
the following persons, who had an interest in 3% or more of the issued
ordinary share capital of the Company as at 30 September 2023:
% of issued share capital of the Company
Shareholder
Pershing Nominees Limited 23.91%
Hargreaves Lansdown (Nominees) Limited 16.46%
Interactive investors services Nominees Limited 9.57%
Lawshare Nominees Limited 6.08%
Vidacos Nominees Limited 5.11%
James Brearley Crest Nominees Limited 4.02%
HSDL Nominees Limited 3.40%
The Directors are not aware of any changes in interests between 30 September
2023 and the date of approval of the financial statements.
Financial risk management
The Group's principal financial instruments comprise cash balances, accounts
payable and other receivables arising in the normal course of its operations.
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. In order to maintain or
adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares, or
sell assets to reduce debt.
The Group's activities expose it to a variety of financial risks: market risk,
credit risk, liquidity risk and cash flow interest rate risk. See note 18.2
for more information on the financial risk management objectives and policies.
Greenhouse Gas (GHG) Emissions
The energy consumption has not been disclosed as the Group's consumption is
below 40,000 kWh.
Responsibility statement
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the
financial statements in accordance with UK adopted international accounting
standards. Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs and profit or loss of the Company and Group for that
period.
In preparing these Financial Statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether UK adopted international accounting standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
· prepare the financial statements on a going concern basis, unless it
is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Group to enable
them to ensure that the financial statements comply with the requirements of
the Companies Act 2006. They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for preparing the Annual Report in accordance
with applicable law and regulations. The Directors consider the Annual Report
and the financial statements, taken as a whole, provide the information
necessary to assess the Group's position, performance, business model and
strategy and are fair, balanced and understandable.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
· the financial statements have been prepared in accordance with UK
adopted international accounting standards and give a true and fair view of
the assets, liabilities, financial position and profit or loss of the Group;
and
· the management report includes a fair review of the development and
performance of the business and the financial position of the Group, together
with a description of the principal risks and uncertainties that they face.
Embed effective risk management, considering both opportunities and threats,
throughout the organisation
The Directors are responsible for maintaining the Group's systems of controls
and risk management in order to safeguard its assets.
Risk is monitored and assessed by the Board who meet regularly and are
responsible for ensuring that the financial performance of the Group is
properly monitored and reported. This process includes reviews of annual and
interim accounts, results announcements, internal control systems, procedures
and accounting policies.
Subsequent events
Please see note 20 for details of the Group's subsequent events.
Directors' confirmation
So far as the directors are aware, there is no relevant audit information of
which the Group's auditors are unaware, and they have taken all steps that
they ought to have taken as directors in order to make themselves aware of any
relevant audit information and to establish that the Group's auditors are
aware of that information.
Auditors
The auditors, Crowe U.K LLP, have expressed their willingness to continue in
office and a resolution to reappoint them will be proposed at the Annual
General Meeting.
By Order of the Board
Cameron Pearce
Director
30 January 2024
Corporate Governance
The Group recognises the importance of, and is committed to, high standards of
Corporate Governance. Whilst the Group is not formally required to comply
with the UK Corporate Governance Code 2018, the Group will try to observe,
where practical, the requirements of the UK Corporate Governance Code 2018, as
published by The Financial Reporting Council.
The Company intends to voluntarily observe the requirements of the UK
Corporate Governance Code 2018, save as set out below. As at the date of the
financial statements the Directors consider the Group to be in compliance with
the UK Corporate Governance Code 2018 with the exception of the following:
· The Company does not comply with the requirements of the UK
Corporate Governance Code in relation to the requirement to have a senior
independent director and the Audit Committee does not have three independent
non-executive directors. The Nomination & Remuneration Committees also do
not include independent directors.
· Due to the current size of the company, and the early stages of
the Project's life cycle, the Company has not developed a formal diversity
policy, and investment in and rewarding of the workforce. Furthermore, there
have been no board evaluations conducted within the year.
· All directors are not subject to annual re-election. Instead at
least one third of the current directors are put forward for re-election at
each annual general meeting, in accordance with the Company's Articles of
Association.
· Remuneration for the non-executive directors includes share
options. The awards are made in accordance with the Company's remuneration
policy.
· The Board does not consider there to be a need for a formal
succession plan at this stage, but this will be monitored as the size and
complexity of the Company's activities develop.
As at the date of the financial statements, the Board has a share dealing code
that complies with the requirements of the Market Abuse Regulations. All
persons discharging management responsibilities (comprising only the Directors
at the date of this Document) shall comply with the share dealing code from
the date of Admission.
Set below are Blencowe Resources Plc's corporate governance practices for the
year ended 30 September 2023.
Leadership
The Company is headed by an effective Board which is collectively responsible
of the long term success of the Company.
The role of the Board - The Board sets the Company's strategy, ensuring that
the necessary resources are in place to achieve the agreed strategic
priorities, and reviews management and financial performance. It is
accountable to shareholders for the creation and delivery of strong,
sustainable financial performance and long-term shareholder value. To achieve
this, the Board directs and monitors the Company's affairs within a framework
of controls which enable risks for the future success of the business to be
assessed and managed effectively. The Board also has responsibility for
setting the Company's core values and standards of business conduct and for
ensuring that these, together with the Company's obligations to its
stakeholders, are widely understood throughout the Company. The Board has a
formal schedule of matters reserved which is provided later in this report.
The Company aims to generate and preserve value over the long-term primarily
through the development of its principal asset, the Orom-Cross Graphite
project in the Republic of Uganda. The Company has previously completed a
preliminary feasibility study on the project and is now in the process of
completing a definitive feasibility study which will provide a risked and
independent project valuation to international standards. The DFS process is
rigorous and will result in an examination of all aspects of the project
including economic viability, principal risks as well as engineering and
geological matters.
Board Meetings - The core activities of the Board are carried out in scheduled
meetings of the Board. These meetings are timed to link to key events in the
Company's corporate calendar and regular reviews of the business are
conducted. Additional meetings and conference calls are arranged to consider
matters which require decisions outside the scheduled meetings. During the
year, the Board met on 10 occasions. Any concerns identified that cannot be
resolved in these meetings will be documented in written form to the Chairman
and recorded in the formal minutes of the Company. In addition to the
Leadership (continued)
Board meetings linked to corporate transactions, the directors consider on an
ad hoc, non-formal basis their effectiveness and relevance, and that of
management.
Outside the scheduled meetings of the Board, the Directors maintain frequent
contact with each other to discuss any issues of concern they may have
relating to the Company or their areas of responsibility, and to keep them
fully briefed on the Company's operations.
Matters reserved specifically for Board - The Board has a formal schedule of
matters reserved that can only be decided by the Board. The key matters
reserved are the consideration and approval of:
· the Group's overall strategy;
· financial statements and dividend policy;
· management structure including succession planning, appointments
and remuneration;
· material acquisitions and disposal, material contracts, major
capital expenditure projects and budgets;
· capital structure, debt and equity financing and other matters;
· risk management and internal controls;
· the Group's corporate governance and compliance arrangements; and
· corporate policies
Summary of the Board's work in the financial year - During the year, the Board
considered all relevant matters within its remit, but focused in particular on
exploration and development of the Orom-Cross Graphite Project.
Attendance at meetings:
Member Meeting attended
Cameron Pearce Executive Chairman 9
Sam Quinn Non-Executive Director 10
Alexander Passmore Non-Executive Director 10
The Board is pleased with the level of attendance and participation of
Directors at Board and committee meetings.
The Chairman, Cameron Pearce, sets the Board Agenda and ensures adequate time
for discussion.
Non-executive Directors - The non-executive Directors bring a broad range of
business and commercial experience to the Company and have a particular
responsibility to challenge independently and constructively the performance
of the Executive management (where appointed) and to monitor the performance
of the management team in the delivery of the agreed objectives and targets.
Non-executive Directors - Are initially appointed for a term of three years,
which may, subject to satisfactory performance and re-election by
shareholders, be extended by mutual agreement.
Other governance matters - All of the Directors are aware that independent
professional advice is available to each Director in order to properly
discharge their duties as a Director. In addition, each Director and Board
committee has access to the advice of the Company Secretary.
The Company Secretary - The Company Secretary is FIM Secretaries Limited which
is retained on a consultancy basis. FIM Secretaries Limited is available to
Directors and advises the Board on UK compliance matters.
Effectiveness
For the period under review the Board comprised of an Executive Chairman and
two non-executive Directors.
The Directors are of the view that the Board and its committees consist of
Directors with an appropriate balance of skills, experience, independence and
diverse backgrounds to enable them to discharge their duties and
responsibilities effectively.
The Board believes it has the correct balance of skills, reflecting a broad
range of commercial and professional skills across geographies and relevant
industries that is necessary to ensure the Company is equipped to deliver its
investment objective. Additionally, each Director has experience in public
markets.
The Directors and their roles and key personnel are displayed on the Company's
website: Management & Directors - Blencowe Resources
(blencoweresourcesplc.com)
(https://blencoweresourcesplc.com/management-directors/)
Independence - None of the Directors are considered to be independent, as they
have shareholdings in the Company as noted on page 11. It is intended that
additional Directors will be appointed in future and that independence will be
one of the key factors considered at that time. As at the date of this Report
no prospective Directors have been identified and no arrangements exist
(formal or informal) for the appointment of any other Director.
Appointments - The Board is responsible for reviewing and the structure, size
and composition of the Board and making recommendations to the Board with
regards to any required changes. The Non-executive directors informally
scrutinise and hold to account the performance of management and the Executive
Chairman, there are no other Executives on the Board. The Board are satisfied
with the current size and composition of the Board and management.
Commitments - All Directors have disclosed any significant commitments to the
Board and confirmed that they have sufficient time to discharge their duties.
Induction - All new Directors received an induction as soon as practical on
joining the Board.
Conflict of interest - A Director has a duty to avoid a situation in which he
or she has, or can have, a direct or indirect interest that conflicts, or
possibly may conflict with the interests of the Company. The Board had
satisfied itself that there is no compromise to the independence of those
Directors who have appointments on the Boards of, or relationships with,
companies outside the Company. The Board requires Directors to declare all
appointments and other situations which could result in a possible conflict of
interest.
Accountability
The Board is committed to provide shareholders with a clear assessment of the
Group's position and prospects. This is achieved through this report and as
required other periodic financial and trading statements.
Going concern - As part of their going concern assessment set out in note 2.3,
the Board of Directors have reviewed cash flow forecasts reviewed for the 12
months from the date these financial statements were signed and considered the
medium term outlook through to December 2025 as described in the Viability
Statement. The Directors have a reasonable expectation that the Group will be
able to continue in operation and meet its liabilities as they fall due over
the period to December 2025 provided further funding can be raised as
required. Due to the requirement to raise additional funding, a material
uncertainty with regard to going concern has been disclosed at note 2.3.
Risk is monitored and assessed by the Board as a whole and are responsible for
ensuring that the financial performance of the Company is properly monitored
and reported. This process includes reviews of annual and interim accounts,
results announcements, internal control systems, procedures and accounting
policies. Risk management is carried out by the Board of Directors. The Board
identifies and evaluates financial risks, and the key risk factors for the
Company are contained in the Financial Statements for the year ended 30
September 2023.
Internal controls - The Board of Directors reviews the effectiveness of the
Company's system of internal controls in line with the requirement of the
Code. The internal control system is designed to manage the risk of failure to
achieve its business objectives. This covers internal financial and
operational controls, compliance and risk management. Key controls consist
of segregation of duties, authorisation and approval policies and accounting
controls such as monthly reconciliations. The Directors consider the Company
has appropriate and effective internal controls in place for the year under
review and up to the date of approval of the Annual Report and Financial
Statements. The Directors acknowledge their responsibility for the Company's
system of internal controls and for reviewing its effectiveness. Risk is
monitored, assessed and managed by the Board as a whole who are responsible
for ensuring that the financial performance of the Company is properly
monitored and reported. This process includes reviews of annual and interim
accounts, results announcements, internal control systems, procedures and
accounting policies. The finance function is outsourced to FIM Capital Limited
and details of the duties performed are in a formal agreement. The Board
confirms the need for an ongoing process for identification, evaluation and
management of significant risks faced by the Company. The Directors carry out
a risk assessment before signing up to any commitments.
The Audit Committee
The Audit Committee comprises of Cameron Pearce, chairman of the committee,
and Alex Passmore and aims to meet at least twice a year and is responsible
for ensuring that the Group's financial performance is properly monitored,
controlled and reported to the Board. During the year of review, the Audit
Committee met twice. The Audit Committee is responsible for the scope and
effectiveness of the external audit and compliance by the Group with statutory
and other regulatory requirements. Given the size of the Group and the
relative simplicity of the systems, the Board considers that there is no
current requirement for an internal audit function. The procedures that have
been established to provide internal financial control are considered
appropriate for a Group of its size and include controls over expenditure,
regular reconciliations and management accounts.
The Group has no internal audit function at present, as it is not considered
necessary given the current size and operations of the entity. This will be
kept under review as the nature of operations becomes more complex with the
planned development of the project.
The Audit Committee monitors in discussion with the auditors:
· the integrity of the financial statements of the Group and
significant financial reporting judgments contained in them, such as the
assessment of impairment to the Group's intangible assets.
· any formal announcements relating to the Group's financial
performance
· the Group's internal financial controls and risk management
systems
· the external auditor's independence and objectivity and the
effectiveness of the audit process, taking into consideration relevant UK
professional and regulatory requirements.
The Directors are responsible for taking such steps as are reasonably
available to them to safeguard the assets of the Company and to prevent and
detect fraud and other irregularities.
External auditor's independence
Since the last tender which was conducted in 2018, Crowe U.K LLP has acted as
independent auditor for six years. Crowe U.K LLP has completed mandatory
partner rotation this year in accordance with their firm's policy. The Audit
Committee have held discussions with the external auditors to confirm there
are no non-audit services provided, and no other independence considerations
they should be aware of.
Remuneration and Nominations Committee
A Remuneration and Nominations Committee was established during 2020 and is
made up of the two non-executive directors. The Committee comprises Sam Quinn,
chairman of the committee, and Alex Passmore. They are not considered to be
independent directors. The Board considers the committee composition of two
directors to be sufficient due to the size of the company at this time. The
Remuneration and Nomination Committee meets at least annually and is
responsible for setting the remuneration policy for all executive directors
and the Company's chairman, including any compensation payments; recommends
and monitors the level and structure of remuneration for senior management;
evaluates the board of directors and examines the skills and characteristics
required of board candidates. During the year of review, the Remuneration and
Nomination Committee met once.
Remuneration paid to Directors in the period under review is disclosed in the
Directors' Remuneration Report.
The Committee is dedicated to implementing a remuneration policy that promotes
long-term incentives and aligns the interests of directors with those of
shareholders. Share and option awards should be phased, contain performance
milestones where appropriate and encourage long term participation.
The Committee considers in defining the remuneration policy that
arrangements should be clear and transparent, should avoid undue complexity,
and should be proportional to the services provided in delivering the
Company's strategy and purpose.
The Remuneration Committee to date has focused on share options and bonus
payments as the main incentives for executives, given the stage of development
of the Company and to further align senior management with shareholder
interests. Typically share options are subject to vesting conditions, such as
completion of feasibility studies or the introduction of strategic partners.
In addition share price hurdles have been used to provide further shareholder
alignment. Given the nature of the Company as the developer of a mining
project and the potential for rerating of the Company's value as the project
advances, having a direct equity exposure is deemed to be the most desirable
form of management incentive. In addition, cash bonus payments are generally
kept to a minimum to preserve the Company's capital. Share options will
typically expire three months following the cessation of employment.
In accordance with the Company's Articles of Association, at every annual
general meeting at least one third of the current directors who are subject to
retirement by rotation will be put forward to retire.
Shareholder relations
Communication and dialogue - Open and transparent communication with
shareholders is given high priority and there is regular dialogue with
institutional investors, as well as general presentations made at the time of
the release of the annual and interim financial results. All Directors are
kept aware of changes in major shareholdings in the Company and are available
to meet with shareholders who have specific interests or concerns. The Company
issues its results promptly to the market via RNS and also publishes them on
the Company's website: www.blencoweresourcesplc.com
(https://blencoweresourcesplc.com/) . Regular market news updates are made in
relation to the Company including the status of its exploration and
development programme which is also included on the Company's website.
Shareholders and other interested parties can subscribe to receive news
updates by email by registering online on the website free of charge.
The Directors are available to meet with institutional shareholders to discuss
any issues and gain an understanding of the Company's business, its strategies
and governance. Meetings are also held with the corporate governance
representatives of institutional investors when requested.
Annual General Meeting - At every AGM individual shareholders are given the
opportunity to put questions to the Chairman and to other members of the Board
that may be present. Notice of the AGM is sent to shareholders at least 21
working days before the meeting. Details of proxy votes for and against each
resolution, together with the votes withheld are announced to the London Stock
Exchange and are published on the Company's website as soon as practical after
the meeting.
Viability statement
In accordance with provision 31 of the UK Corporate Governance Code (2018),
the Board has assessed the prospects of the Group over a two-year period,
taking account of the Group's current position and principal risks. For
information regarding Group's going concern position and funding requirements
over the next twelve months, please see note 2.3.
Time frame
The Board believes that two years is currently the most appropriate time frame
over which the Board should assess the long-term viability of the Group. The
Group's current activities do not generate any revenues or positive operating
cash flow, and the completion of the Definitive Feasibility Study for the
Orom-Cross Graphite Project will require further capital expenditures.
Assessing viability
The main assumption in the Board making its viability assessment is the
ability of the Group to raise further funds in order to progress from the
exploration phase into feasibility and eventually into production of revenues.
The Group may not be able to obtain additional financing as and when needed
which could result in a delay or indefinite postponement of exploration and
development activities.
Principal risk
The Directors have carried out a robust assessment of the principal risks
facing the Group as described on the preceding pages including those that
threaten its business model, future performance, solvency or liquidity. The
Directors are confident that they have put in place a strong management team
with wide-ranging expertise in mineral exploration and development who are
capable of dealing with the risk management in order to safeguard the Group's
assets. The directors are aware that the risks that could have the most
adverse effect are funding and capital markets, potential other risks include
the political risk in the country of business.
Based on the financial impact of the analysis outlined above and the
associated risks, management actions and controls that are either in place or
could be implemented, the Board has been able to conclude that the Company
will be able to deliver the Orom-Cross Graphite Project.
Confirmation of viability
Taking account of these matters, the Directors have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities
as they fall due over the period to December 2025, assuming that the financing
referred to above is completed as described. The Company's going concern
statement is detailed in note 2.3.
By Order of the Board
Cameron Pearce
Director
30 January 2024
Statement of Blencowe Plc's policy on Directors'
Remuneration
The Directors' Remuneration Report sets out the Company's policy on the
remuneration of Directors together with the details of Directors' remuneration
packages and services contracts for the year ended 30 September 2023.
As set out in the Company's Prospectus dated 30 March 2020, each of the
Directors may be paid a fee at such rate as may from time to time be
determined by the Board. All the Directors are entitled to be reimbursed by
the Company for travel, hotel and other expenses incurred by them in the
course of their directors' duties relating to the Company.
Any fees payable to the Directors after an Acquisition will be determined as
part of the negotiations for the Acquisition, and will be dependent on whether
the Directors remain on the board of the Company in any event.
There have been no changes to the Directors' remuneration or remuneration
policy since the publication of the Company's Prospectus dated 30 March 2020
with the exception of those mentioned below. The terms and conditions of
appointment for all the members of the Board are available for inspection at
our registered office.
Terms of employment
Cameron Pearce was appointed on 8 June 2018 by the Company to act as a
Non-Executive Director and Chairman of the Company. Following the Company's
readmission to the London Stock Exchange ("LSE") on 28 April 2020, Mr Pearce
was reappointed with fees of £96,000 per annum. If there is a change of
control (as defined in the letter of appointment), Mr Pearce will be entitled
to 100% of his annual fee as a lump sum payment if the Company terminates his
employment, or if Mr Pearce chooses to terminate his appointment within 12
months following a change of control.
Sam Quinn was appointed on 8 June 2018 by the Company to act as a
Non-Executive Director, Following the readmission of the Company to the LSE on
28 April 2020, Mr Quinn was engaged as a Non-Executive director with fees of
£24,000 per annum. If there is a change of control (as defined in the
letter of appointment), Mr Quinn will be entitled to 100% of his annual fee as
a lump sum payment if the Company terminates his employment, or if Mr Quinn
chooses to terminate his appointment within 12 months following a change of
control.
Alex Passmore was appointed on 8 June 2018 by the Company to act as a
Non-Executive Director with fees of £12,000 per annum. On 15 March 2021, the
Board agreed to increase Mr Passmore's fees from 1 March 2021 to £18,000 per
annum. If there is a change of control (as defined in the letter of
appointment), Mr Passmore will be entitled to 100% of his annual fee as a lump
sum payment if the Company terminates his employment, or if Mr Passmore
chooses to terminate his appointment within 12 months following a change of
control.
Remuneration Policy
Base salary levels will take into account market data for the relevant role,
internal relativities, the individual's experience and their current base
salary. Where an individual is recruited below market norms, they may be
re-aligned over time (e.g. two to three years), subject to performance in the
role. Benefits will generally be in accordance with the approved policy.
Currently, there are no benefits in place.
The Remuneration and Nomination Committee comprises Sam Quinn, who acts as
chairman of the committee and Alex Passmore, and meets at least annually.
The Remuneration Committee reviews the scale and structure of the Directors'
fees, considering the interests of the shareholders and the performance of the
Company and Directors. Bonuses, pay rises and the grant of long term
incentives such as share options are linked to the achievement of key funding
and project milestones that are set from time to time by the Committee.
The items included in this report are unaudited unless otherwise stated.
The Company maintains contact with its shareholders about remuneration in the
same way as other matters and, as required by Section 439 of the Companies Act
2006, this remuneration report will be put to an advisory vote of the
Company's shareholders at the forthcoming Annual General Meeting
Directors' emoluments and compensation (audited)
Set out below are the emoluments of the Directors:
Cameron Pearce Sam Quinn Alexander Passmore Total
30 September 2022
Base fee 96,000 24,000 18,000 138,000
Bonuses 16,000 4,000 3,000 23,000
Share Based Payments 21,068 14,045 7,023 42,136
Total 30 September 2022 133,068 42,045 28,023 203,136
30 September 2023
Base fee 96,000 24,000 18,000 138,000
Share based payments 5,239 5,239 2,619 13,097
Total 30 September 2023 101,239 29,239 20,619 151,097
The percentage of directors' emoluments of the total administrative costs for
the year is 12% (2022: 30%). The directors' base fees increased did not
increase (2022: Nil) while the base salary costs of the key management
employees did not increase (2022: 28%).
Statement of Directors' shareholding and share interest (audited)
The Directors who served during the year ended 30 September 2023, and their
interests at that date, are disclosed on page 11.
Issue of options
As at the reporting date, the number of shares options that the Company has
issued to the Board and Senior Management are as follow;
Cameron Pearce (Chairman) 5,000,000
Mike Ralston (CEO) 5,500,000
Lionshead Consultants Ltd (Sam Quinn) (Non Exec Director) 3,750,000
Alexander Passmore (Non Exec Director) 1,750,000
Iain Wearing (COO) 5,000,000
For further information, please see notes 17 and 20.
Other matters
The Company does not currently have any annual or long-term incentive schemes
(other than the one stated above) in place for any of the Directors and as
such there are no disclosures in this respect.
The Company does not have any pension plans for any of the Directors and does
not pay pension amounts in relation to their remuneration.
The Company has not paid out any excess retirement benefits to any Directors
or past Directors. The Company has not paid any compensation to past
Directors.
By Order of the Board
Sam Quinn
Director
30 January 2024
Independent Auditor's Report to the Members of Blencowe Resources Plc
Opinion
We have audited the financial statements of Blencowe Resources Plc (the
"Parent Company") and its subsidiary (the 'Group') for the year ended 30
September 2023 which comprise the Consolidated statement of comprehensive
income, Consolidated statement of financial position, Parent Company statement
of financial position, Consolidated statement of changes in equity, Parent
Company statement of changes in equity, Consolidated statement of cash flows,
Parent Company statement of cash flows and notes to the financial statements,
including significant accounting policies. The financial reporting framework
that has been applied in the preparation of the Group and the Parent Company
financial statements is applicable law and UK-adopted international accounting
standards.
In our opinion:
· the financial statements give a true and fair view of the state
of the Group's and of the Parent Company's affairs as at 30 September 2023 and
of the Group's loss for the year then ended;
· the Group and the Parent Company financial statements have been
properly prepared in accordance with UK-adopted international accounting
standards: and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty in relation to going concern
We draw attention to note 2.3 to the financial statements, which explains that
the Group and Parent Company's ability to continue as a going concern is
dependent on the availability on further fundraising. These conditions
indicate the existence of a material uncertainty which may cast significant
doubt over the Group's and Parent Company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. We have highlighted going concern as a
key audit matter due to the estimates and judgements the Directors are
required to make in their going concern assessment, and their effect on our
audit strategy. Our audit work in response to this key audit matter included:
· We obtained the going concern assessment prepared by the
directors, and performed a detailed review of the supporting cash flow
forecasts. We challenged the key assumptions based on expected activity within
the going concern period, and comparison to historical actual monthly
expenditure.
· We checked the mathematical accuracy of the projections and
agreed the opening cash position to bank statements. We confirmed that the
period of going concern assessment covered at least twelve months from the
date of approval of the financial statements, and enquired regarding any
matters shortly after this date that would impact the going concern
consideration.
· We reviewed the prior year going concern projections against the
actual performance in the current financial year, in order to assess
management's ability to forecast accurately.
· We assessed the systems and controls in place for the preparation
of management's going concern projections.
· We reviewed the requirements of the grant awarded by the US
Development Funding Council in September 2023 regarding works to be performed
in order to receive each tranche of funding. We discussed with the directors
how these were factored into budgets and exploration plans during the going
concern assessment period.
· We held discussions with the directors on how they plan to raise
the additional funding required by the cash flow forecasts. This was
considered against their previous success in fundraising for the project.
· We reviewed the completeness of disclosures made in the financial
statements in relation to going concern, and that these are in line with the
going concern assessment provided to us by the directors.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An
item is considered material if it could reasonably be expected to change the
economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of
misstatements identified.
Based on our professional judgement, we determined overall materiality for the
financial statements as a whole to be £155,000 (2022 £140,000), based on 2%
of total assets. Materiality for the parent company financial statements as a
whole was set at £140,000 (2022: £120,000) based on 2% of total assets.
We use a different level of materiality ('performance materiality') to
determine the extent of our testing for the audit of the financial
statements. Performance materiality is set based on the audit materiality as
adjusted for the judgements made as to the entity risk and our evaluation of
the specific risk of each audit area having regard to the internal control
environment. Performance materiality was set at 70% of materiality for the
financial statements as a whole, which equates to £108,500 (2022: £98,000)
for the Group and £98,000 (2022: £84,000) for the parent.
Where considered appropriate performance materiality may be reduced to a lower
level, such as, for related party transactions and directors' remuneration.
We agreed with the Audit Committee to report to it all identified errors in
excess of £7,700 (2022: £7,000). Errors below that threshold would also be
reported to it if, in our opinion as auditor, disclosure was required on
qualitative grounds.
Overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its
environment, including the Group's system of internal control, and assessing
the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have
represented a risk of material misstatement.
The Group operates through the Parent Company based in the United Kingdom
whose main function is the incurring of administrative costs and providing
funding to its exploration subsidiary in Uganda. The Parent Company, and its
Ugandan subsidiary, were both considered to be a significant components.
In establishing our overall approach to the group audit, we determined the
type of work that needed to be performed in respect of each component. As
significant components, full scope audit were performed for both the Parent
Company and the Ugandan subsidiary. All audit work was carried out by the
group audit team.
Given the Ugandan subsidiary is in the exploration stage of its work, we did
not consider it necessary to visit Uganda. Documentation and explanations from
Uganda were obtained by email and through telephone calls.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
We set out below, together with the material uncertainty in relation to going
concern above, those matters we considered to be key audit matters.
Key audit matter How our scope addressed the key audit matter
1. Carrying value of intangible assets (note 9) We performed the following procedures as part of our audit of management's
assessment of the carrying value of intangible assets:
The Group carries intangible assets totalling £7.6m (2022: £6.6m) in
relation to the Orom-Cross project in Uganda. These costs are capitalised in · We obtained and reviewed the directors' assessment of the
accordance with the requirements of IFRS 6. indicators of impairment, as set out in IFRS 6 "Exploration for and evaluation
of mineral resources".
· We assessed the design and implementation of controls over the
At each reporting date, the directors are required to assess whether there are impairment assessment process.
any indicators of impairment, that would require an impairment assessment to
be carried out. The directors concluded there were no indicators of · We obtained copies of all licenses held by the Group, and
impairment. performed procedures to confirm the Group's control of the licenses, that they
remain valid, and to check there is an expectation that any exploration
licenses that have expired will be renewed in the normal course of business.
The directors' consideration of the impairment indicators requires them to · We made specific enquiries of the directors and key staff
make certain judgements, and may include certain estimates. These matters, involved in the exploration work, and reviewed budgets and forecasts to
together with the materiality of the exploration and evaluation assets make support the Group continuing with further exploration work in each of its
this a key audit matter. license areas.
· We considered the results of the bulk sampling works completed
during the period, for any matters that may indicate impairment.
· We reviewed the adequacy of disclosures in the financial
statements in relation to the impairment consideration.
Based on our work performed, we consider the directors' assessment, and the
financial statements disclosures to be appropriate.
Our audit procedures in relation to these matters were designed in the context
of our audit opinion as a whole. They were not designed to enable us to
express an opinion on these matters individually and we express no such
opinion.
Other information
The other information comprises the information included in the annual report
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report.
Our opinion on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements themselves. If, based
on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors' remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion based on the work undertaken in the course of our audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the directors' report and strategic report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent
Company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the company, or
returns adequate for our audit have not been received from branches not
visited by us; or
· the company financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit
Corporate governance statement
We have reviewed the directors' statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the entity's voluntary compliance with the provisions of the UK
Corporate Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each
of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements and our knowledge obtained during the
audit:
· Directors' statement with regards the appropriateness of adopting
the going concern basis of accounting and any material uncertainties
identified set out on page 17;
· Directors' explanation as to their assessment of the Group's
prospects, the period this assessment covers and why they period is
appropriate set out on pages 19 and 20.
· Directors' statement on whether they have a reasonable
expectation that the Group will be able to continue in operation and meets its
liabilities set out on page 17;
· Directors' statement on fair, balanced and understandable set out
on page 13;
· Board's confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 5;
· Section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out on page
17; and
· Section describing the work of the audit committee set out on
page 18.
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement set out
on page 13, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group's and the Parent Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Group, and the procedures in place for
ensuring compliance. The most significant regulations identified were the
Companies Act 2006, listing rules of the London Stock Exchange and the
requirements of the Group's mining and exploration licenses. Our work included
direct enquiry of the directors, who oversee all legal proceedings, reviewing
Board minutes and inspection of correspondence.
· We made enquiries of management, the Audit Committee and the
Group's external legal counsel in Uganda about any litigations and claims and
compliance with local legislation in Uganda.
· We communicated the relevant laws and regulations identified to
all members of the engagement team, and remained alert to any indication of
non-compliance with laws and regulations, or potential fraud, throughout our
audit work.
· As part of our audit planning process we assessed the different
areas of the financial statements, including disclosures, for the risk of
material misstatement. This included considering the risk of fraud where
direct enquiries were made of management and those charged with governance
concerning both whether they had any knowledge of actual or suspected fraud
and their assessment of the susceptibility of fraud. We considered the risk
was greater in areas that involve significant management estimate or
judgement. Based on this assessment we designed audit procedures to focus on
the key areas of estimation or judgement, this included risk-based testing of
journal transactions using data analytic software, both at the year end and
throughout the year.
Owing to the inherent limitations of an audit, there is an unavoidable risk
that some material misstatements of the financial statements may not be
detected, even though the audit is properly planned and performed in
accordance with the ISAs (UK). The potential effects of inherent limitations
are particularly significant in the case of misstatement resulting from fraud
because fraud may involve sophisticated and carefully organized schemes
designed to conceal it, including deliberate failure to record transactions,
collusion or intentional misrepresentations being made to us.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor's report.
Other matters which we are required to address
We were appointed by the board of Directors on 14 December 2018 to audit the
financial statements for the period ending 30 September 2018. Our total
uninterrupted period of engagement is six years, covering the periods ending
30 September 2018 to 30 September 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the Group or the Parent Company and we remain independent of the
Group and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our report
This report is made solely to the Parent Company's members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the Parent Company's members
those matters we are required to state to them in an auditor's report and for
no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Parent Company and the Parent
Company's members as a body, for our audit work, for this report, or for the
opinions we have formed.
Nick Jones
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London, U.K.
Consolidated Statement of Comprehensive Income
for the year ended 30 September 2023
Notes 30 Sep 2023 30 Sep 2022
GBP GBP
Exploration costs (53,347) (4,853)
Impairment - Akelikongo project 9 - (404,533)
Administrative fees and other expenses 5 (1,298,872) (681,488)
Adjustments to surface liability 15 - 51,316
Operating loss (1,352,219) (1,039,558)
Finance costs 15 (45,748) (45,916)
Loss before tax (1,397,967) (1,085,474)
Taxation 8 - -
Loss for the year attributable to owners of the parent (1,397,967) (1,085,474)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operation: 31,282 (4,205)
Other comprehensive income/(loss), net of tax 31,282 (4,205)
Total comprehensive loss attributable to owners of the parent (1,366,685) (1,089,679)
Basic and diluted loss per share (pence) 10 (0.70) (0.68)
Consolidated Statement of Financial Position as at 30
September 2023
Notes 30 Sep 2023 30 Sep 2022
GBP GBP
Non-Current Assets
Intangible assets 9 7,604,564 6,615,253
Current assets
Trade and other receivables 13 31,863 85,847
Cash and cash equivalents 129,853 346,994
Total current assets 161,716 432,841
Total assets 7,766,280 7,048,094
Current liabilities
Creditors: Amounts falling due within one year 14 (1,076,169) (326,375)
Total current liabilities (1,076,169) (326,375)
Non-current liabilities
Surface liabilities 15 (818,915) (823,852)
Total liabilities (1,895,084) (1,150,227)
Net assets 5,871,196 5,897,867
Equity
Share capital 16 1,338,566 1,181,316
Share premium 16 8,637,399 7,480,829
Share options reserve 428,342 402,148
Translation reserve 2.9 30,739 (543)
Accumulated losses (4,563,850) (3,165,883)
Total equity 5,871,196 5,897,867
These financial statements were approved by the Board of Directors and
authorised for issue on 30 January 2024 and signed on its behalf by:
Cameron
Pearce Sam
Quinn
Director
Director
Parent Statement of Financial Position as at 30 September 2023
Notes 30 Sep 23 30 Sep 22
GBP GBP
Fixed assets
Investment in subsidiaries 11 6,027,940 4,892,924
Non-current assets 12 671,905 521,944
Total fixed assets 6,699,845 5,414,868
Current assets
Trade and other receivables 13 342,197 315,030
Cash and cash equivalents 129,853 346,994
Total current assets 472,050 662,024
Total assets 7,171,895 6,076,892
Current liabilities
Creditors: Amounts falling due within one year 14 (567,867) (159,530)
Total current liabilities (567,867) (159,530)
Net assets 6,604,028 5,917,362
Equity
Share capital 16 1,338,566 1,181,316
Share premium 16 8,637,399 7,480,829
Share options reserve 428,342 402,148
Accumulated losses (3,800,279) (3,146,931)
Total equity 6,604,028 5,917,362
The Company has taken advantage of the exemption allowed under section 408 of
the Companies Act 2006 and has not presented its own Statement of
Comprehensive Income in these financial statements. The loss after tax of the
parent Company for the year was £653,348 (2022: £1,178,756).
The Financial Statements were approved and authorised for issue by the Board
of Directors on 30 January 2024 and were signed on its behalf by:
Cameron
Pearce Sam
Quinn
Director
Director
Consolidated Statement of Changes in Equity for the year ended 30 September
2023
Share Share premium Share option reserve Accumulated losses Translation reserve Total equity
capital
GBP GBP GBP GBP GBP GBP
Balance as at 30 Sep 2021 901,316 5,132,081 317,876 (2,080,409) 3,662 4,274,526
Loss for the year - - - (1,085,474) - (1,085,474)
Exchange differences on translation of foreign operations - - - - (4,205) (4,205)
Total comprehensive loss - - - (1,085,474) (4,205) (1,089,679)
Transactions with owners
New shares issued (note 16) 280,000 2,520,000 - - - 2,800,000
Share issue costs - (171,252) - - - (171,252)
Share based payment charge - - 84,272 - - 84,272
Total transactions with owners 280,000 2,348,748 84,272 - - 2,713,020
Balance as at 30 Sep 2022 1,181,316 7,480,829 402,148 (3,165,883) (543) 5,897,867
Loss for the year - - - (1,397,967) - (1,397,967)
Exchange differences on translation of foreign operations - - - - 31,282 31,282
Total comprehensive loss - - - (1,397,967) 31,282 (1,366,685)
Transactions with owners
New shares issued (note 16) 157,250 1,227,750 - - - 1,385,000
Share issue costs - (71,180) - - - (71,180)
Share based payment charge - 26,194 - - 26,194
Total transactions with owners 157,250 1,156,570 26,194 - - 1,340,014
Balance as at 30 Sep 2023 1,338,566 8,637,399 428,342 (4,563,850) 30,739 5,871,196
Parent Statement of Changes in Equity for the year ended 30 September 2023
Share Share premium Share option reserve Accumulated losses Total equity
capital
GBP GBP GBP GBP GBP
Balance as at 30 Sep 2021 901,316 5,132,081 317,876 (1,968,175) 4,383,098
Loss for the year - - - (1,178,756) (1,178,756)
Total comprehensive loss - - - (1,178,756) (1,178,756)
Total transactions with owners
New shares issued (note 16) 280,000 2,520,000 - - 2,800,000
Share issue costs - (171,252) - - (171,252)
Share based payment charge - - 84,272 - 84,272
Total transactions with owners 280,000 2,348,748 84,272 - 2,713,020
Balance as at 30 Sep 2022 1,181,316 7,480,829 402,148 (3,146,931) 5,917,362
Loss for the year - - - (653,348) (653,348)
Total comprehensive loss - - - (653,348) (653,348)
Total transactions with owners
New shares issued (note 16) 157,250 1,227,750 - - 1,385,000
Share issues costs - (71,180) - - (71,180)
Share based payment charge - - 26,194 - 26,194
Total transactions with owners 157,250 1,156,570 26,194 - 1,340,014
Balance as at 30 Sep 2023 1,338,566 8,637,399 428,342 (3,800,279) 6,604,028
Consolidated Statement of Cash Flows for the year ended 30 September 2023
Notes 30 Sep 2023 30 Sep 2022
GBP GBP
Operating activities
Loss after tax (1,397,967) (1,085,474)
Finance costs 45,748 45,916
Adjustment to surface liability 15 - (51,316)
Share based payment 17 26,194 84,272
Impairment - Akelikongo costs 9 - 404,533
Unrealised currency translation 182,264 (208,371)
Changes in working capital
Decrease/(increase) in trade and other receivables 53,984 (33,267)
Increase in trade and other payables 272,664 76,483
Net cash flows utilised by operating activities (817,113) (767,224)
Cash flows from investing activities
Investment in exploration assets 9 (713,848) (1,423,236)
Net cash flows utilised by investing activities (713,848) (1,423,236)
Cash flows from financing activities
Shares issued (net of issue cost) 16 1,313,820 2,444,166
Net cash flows from financing activities 1,313,820 2,444,166
(Decrease)/increase in cash and cash equivalents (217,141) 253,706
Cash and cash equivalents at the beginning of the year 346,994 93,288
Cash and cash equivalents at the end of the year 129,853 346,994
Net Debt note
Cash at bank Surface Total
and in hand Liability
GBP GBP GBP
At 1 October 2021 93,288 (887,560) (794,272)
Cash flows 253,706 - 253,706
Other non-cash changes - (90,695) (90,695)
As 30 September 2022 346,994 (978,255) (631,261)
As 30 September 2022 346,994 (978,255) (631,261)
Cash flows (217,141) - (217,141)
Other non-cash changes - 159,340 159,340
As 30 September 2023 129,853 (818,915) (689,062)
Parent Statement of Cash Flows for the year ended 30 September 2023
30 Sep 2023 30 Sep 2022
Notes GBP GBP
Operating activities
Loss after tax (653,348) (1,178,756)
Less finance income (55,873) (24,354)
Increase in bad debt provision 12,13 11,742 9,408
Share based payment 17 26,194 84,272
Changes in working capital
Increase in trade and other receivables (27,167) (120,783)
(Decrease)/increase in trade and other payables (58,641) 64,002
Net cash flows from operating activities (757,093) (1,166,211)
Cash flows from investing activities
Loan advanced to subsidiary (105,828) (68,278)
Investment in subsidiary, relating to exploration costs paid 11 (668,040) (955,971)
Net cash flows from investing activities (773,868) (1,024,249)
Cash flows from financing activities
Shares issued (net of issue cost) 16 1,313,820 2,444,166
Net cash flows from financing activities 1,313,820 2,444,166
Increase/(decrease) in cash and cash equivalents (217,141) 253,706
Cash and cash equivalents at the beginning of the year 346,994 93,288
Cash and cash equivalents at the end of the year 129,853 346,994
1. General
Blencowe Resources Plc (the "Company") is a public limited company
incorporated and registered in England and Wales on 18 September 2017 with
registered company number 10966847 and its registered office is situated in
England and Wales at 167-169 Great Portland Street, Fifth Floor London, W1W
5PF.
The Group did not earn any trading income during the year under review but
incurred expenditure associated with financing and operation of the Group and
developing its principal assets.
2. Accounting Policies
2.1 Basis of preparation
The principal accounting policies applied in the preparation of the Company
and Group's Financial Statements are set out below. These policies have been
consistently applied to the periods presented, unless otherwise stated.
The Company and Group's Financial Statements have been prepared in accordance
with UK adopted international accounting standards ("IFRS"). The Company
Financial Statements have been prepared using the measurement bases specified
by IFRS for each type of asset, liability, income and expense.
The Group's Financial Statements are presented in GBP, which is the Company's
functional currency. All amounts have been rounded to the nearest pound,
unless otherwise stated.
2.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company and its subsidiary Consolidated African Resources Limited ("CARU") )
(formerly Blencowe Resources Uganda Ltd ("BRUL").
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control. Control is achieved when the Group
is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over an
investee, including:
• the contractual arrangement with the other vote
holders of the investee;
• rights arising from other contractual arrangements;
and
• the Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and profits and
losses resulting from intra-group transactions that are recognised, are
eliminated in full.
2.3 Going concern
At 30 September 2023, the Group had £7,766,280 of total assets (2022:
£7,048,094), of which £129,853 are held as cash and cash equivalents (2022:
£346,994).
In making an assessment of going concern for the Group and Company, the Board
of Directors have reviewed cash flow forecasts covering a period of 12 months
from the date these financial statements were approved, and have concluded
that it is appropriate to prepare the financial statements on a going concern
basis.
The Group has successfully been granted a $5 million grant through the US
Development Finance Corporation (DFC). This funding will be provided in a
number of tranches aligned to completion of works related to the Definitive
Feasibility Study. The DFC grant will not cover the entirety of the DFS costs
and hence additional funding will be required during the going concern period.
These conditions are considered to indicate the existence of a material
uncertainty, which may cast doubt over the Group's and Company's ability to
continue as a going concern. The financial statements do not include
adjustments that would arise in the event of the Group and Company not being a
going concern.
2.4 Changes in significant accounting policies
The Group has adopted all new IFRS and amendments to IFRS applicable for this
period. There has been no change to the Group's accounting policies as a
result, and no other significant impact to the financial statements.
2.5 Standards, amendments and interpretations to published standards
not yet effective
The Directors have reviewed the IFRS standards in issue which are effective
for annual accounting years ending on or after the stated effective date. In
their view, none of these standards would have a material impact on the
financial statements of the Group.
2.6 Intangible assets
Exploration and evaluation assets
The Group recognises expenditure as exploration and evaluation assets when it
determines that those assets will be successful in finding specific mineral
resources. Expenditure included in the initial measurements of exploration and
evaluation assets and which are classified as intangible assets relate to the
acquisition of rights to explore, exploratory drilling, sampling and
activities to evaluate the technical feasibility and commercial viability of
extracting a mineral resource. Capitalisation of pre-production expenditure
ceases when the mining property is capable of commercial production.
Impairment
Exploration and evaluation assets are not subject to amortisation until
production commences but are assessed for impairment when an event or trigger
requires an assessment to be carried out. The assessment is carried out by
allocating exploration and evaluation assets to cash generating units
("CGU's"), which are based on specific projects or geographical areas.
Currently there is only one CGU relating to the Orom-Cross Project. Whenever
the exploration for and evaluation of mineral resources in cash generating
units does not lead to the discovery of commercially viable quantities of
mineral resources and the Group has decided to discontinue such activities of
that unit, the associated expenditures are written off to the Statement of
Comprehensive Income.
Exploration and evaluation assets recorded at fair-value on acquisition
Exploration assets which are acquired are recognised at fair value. When an
entity is acquired whose only significant assets are its exploration asset
and/or rights to explore, the Directors consider that the fair value of the
exploration assets is equal to the consideration.
2.7 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another.
(i) Financial assets
Financial assets are classified at initial recognition. The classification of
financial assets at initial recognition that are debt instruments depends on
the financial asset's contractual cash flow characteristics and the Group's
business model for managing them. The Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised
cost, it needs to give rise to cash flows that are 'solely payments of
principal and interest (SPPI)' on the principal amount outstanding. This
assessment is referred to as the SPPI test and is performed at an instrument
level.
Classification and measurement is based on both whether contractual cash flows
are solely payments of principal and interest; and whether the debt instrument
is held to collect those cash flows. In the case of the Group, all financial
assets meet this criteria and they are held at amortised cost.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking information to
recognise expected credit losses - the ECL model.
ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Company expects
to receive, discounted at the original effective interest rate. The expected
cash flows will include cash flows from the sale of collateral held or other
credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12 months (a '12-month ECL'). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a 'lifetime ECL').
For the Company's receivables from its subsidiary, management have assessed
there to be no significant change in credit risk and have assessed a 12 month
ECL at 5% to be appropriate for the current year. Therefore, the Company does
not track changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date.
(ii) Financial liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at amortised cost. The Group's financial liabilities include trade
and other payables and surface liabilities.
Subsequent measurements
Surface liabilities and trade and other payables.
After initial recognition, surface liabilities and trade and other payables
are subsequently measured at amortised cost using the effective interest rate
method. Gains and losses are recognised in the statement of profit or loss
when the liabilities are derecognised, as well as through the effective
interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest rate. The effective interest rate amortisation is included as finance
costs in the statement of profit or loss.
Derecognition
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss.
2.8 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from proceeds.
Warrants
Warrant options are classified as equity. The fair value of the warrants has
been calculated using the Black-Scholes option pricing model. For more
information, please see note 17.
Share options
The Group accounts for the equity-settled share options it has issued in
accordance with IFRS 2. The share options are recognised at their fair value
at the date of grant. The total share based payment charge expensed is
recognised over the vesting period, which is the period over which performance
conditions are to be satisfied. The fair value is calculated using the
Black-Scholes option pricing model, adjusted for the probability of meeting
market based vesting conditions where these are included. The inputs used in
the model are based on management's best estimate.
No expense is recognised for options that do not ultimately vest, except for
awards where vesting is conditional on a market condition or non-vesting
condition, which are treated as vesting irrespective of whether or not the
market or non-vesting condition is satisfied, provided all other performance
or service conditions are satisfied.
2.9 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the group's entities are
measured using the currency of the primary economic environment in which the
entity operates ('the functional currency'). The consolidated financial
statements are presented in Great British Pounds currency (GBP).
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date are
retranslated to the functional currency at the exchange rate at that date.
Foreign exchange gains and losses resulting from the settlement of such
transactions, and from the translation of monetary assets and liabilities
denominated in foreign currencies at year end exchange rates, are generally
recognised in profit or loss.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items in a foreign currency that are measured in terms of historical cost are
translated using the exchange rate at the date of the transaction. Foreign
currency differences arising on the consolidation of the Group's companies are
accumulated in the translation reserve. The Company's only subsidiary is
Blencowe Resources Uganda Limited, whose functional currency is USD
2.10 Earnings per share
The Company presents basic and, when appropriate, diluted earnings per share
("EPS") data for its Ordinary Shares. Basic EPS is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of Ordinary Shares outstanding during the year.
Diluted EPS is calculated by adjusting the earnings and number of shares for
the effects of dilutive potential Ordinary Shares.
2.11 Income tax
Income tax expense comprises current tax and deferred tax.
Current income tax
A 19% rate of corporate income tax applies to the Company. From 1 April 2023
the main corporation tax increased from 19% to 25%, and a new 19% small
profits rate of corporation tax was introduced for companies whose profits do
not exceed £50,000.
Deferred income tax
Deferred tax is recognised in profit or loss except to the extent that it
relates to a business combination, or items recognised directly in equity or
in other comprehensive income. Deferred income tax is recognised on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the Financial Statements. Deferred income tax assets and
liabilities are measured on an undiscounted basis at the tax rates that are
expected to apply to the period when the related asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted at the date of the Consolidated Statement of
Financial Position.
2.12 Investment in subsidiary
Investments in subsidiary are done at cost less impairment, with the
investment balance being added to the exploration costs paid on behalf of the
subsidiary.
2.13 Cash and cash equivalents
Cash and cash equivalents in the Company and Group statements of financial
position comprise bank balances only.
3. Critical accounting estimates and judgments
In preparing the Company and Group Financial Statements, the Directors are
required to make judgements, estimates and assumptions that affect the amounts
reported. These estimates and judgements are continually reviewed and are
based on experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances.
Accounting estimates and assumptions are made concerning the future and, by
their nature, may not
accurately reflect the related actual outcome. There are no key assumptions
and other sources of estimation uncertainty that have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year.
Critical accounting estimates
Interest charge on amounts falling after one year
At year end, the NPV of the liability for surface rights to the owners of
the land was £818,915 (2022: £978,255). Interest is charged on the
liabilities at a rate of 5%, if the discount rate used to calculate the
present value of the liabilities was to increase by 1%, the carrying value of
the surface rights liability would increase by around £34,506 (2022:
£60,000). The interest charged during the year was for the surface rights was
£45,748 (2022: £45,916), if the rate was increased by 1% then the interest
charge would increase by approximately £6,235 (2022: £5,000). For further
information on the lease, please see note 15.
Critical accounting judgements
Impairment of intangible assets - exploration and evaluation costs
IFRS 6 requires entities recognising exploration and evaluation assets to
perform an impairment test on those assets when specific facts and
circumstances indicate an impairment test is required. The assessment involves
judgement as to the status of licenses and the likelihood of renewal of
exploration licenses which expire in the near future. The directors also make
a judgement on the ability to meet license obligations, budgets and plans for
future exploration activity, the results of that exploration activity, and to
assess the recoverability of the capitalised exploration and evaluation costs
on development of the project.
Going concern
In their assessment of going concern, the Directors have prepared cash flow
forecast showing the Groups' expected future expenditure. The Directors were
required to make estimated and judgements over future cash flows and funding.
For further information about the Group's going concern, please see note 2.3.
4. Operating Segment activities
The Group is engaged in the business of mining. At this stage in the Group's
development, the Group is focusing on financing and continued development of
the Orom-Cross Graphite Project in Uganda. This is considered to be the only
operating segment.
5. Administrative fees and other expenses
30 Sep 2023 30 Sep 2022
GBP GBP
Directors' remuneration (see note 6) 140,051 163,770
Professional fees 226,471 274,333
Salaries (see note 7) 150,000 142,500
Listing fees 41,123 26,910
Audit fees 35,000 29,000
Share option/warrant cost (see note 17) 26,194 84,272
Administration fees 47,000 47,000
Broker fees 41,000 38,048
Travelling expenses 16,852 34,167
Ugandan taxes (note 8) 392,425 -
Miscellaneous fees 72,625 40,505
Foreign currency (gain)/loss 110,131 (199,017)
Total 1,298,872 681,488
Key management remuneration, together with any share-based payments, are
disclosed in note 7.
6. Directors' remuneration
30 Sep 2023 30 Sep 2022
GBP GBP
Base fees 138,000 138,000
Employer NI 2,051 2,770
Bonuses - 23,000
Share based payments 13,097 42,136
Total 153,148 205,906
In addition, the Directors received options which are disclosed in note 17.
7. Key management personnel
The number of key management (excluding members the Board) employees
throughout the year was as follows;
30 Sep 2023 30 Sep 2022
By the Company 2 2
By the Group 2 2
The key management employees who served during the year, together with details
of their interest in the shares of the Company as at the reporting date were:
Number of shares Value of the shares
Michael Ralston - CEO 3,225,000 £188,950
Iain Wearing - COO 408,333 £22,500
The total base salary costs recognised as an expense for the year was
£150,000 (2022: £142,500). A further £90,000 (2022: £75,000) was
capitalised as they are related to the Orom-Cross Graphite Project. Total
share-based payments for the year were £13,097 (2022: £42,136). There was no
other component of compensation.
8. Taxation
A 19% rate of corporate income tax applies to the Company. From 1 April 2023
the main corporation tax increased from 19% to 25%, and a new 19% small
profits rate of corporation tax was introduced for companies whose profits do
not exceed £50,000.
Analysis of charge in the year 30 Sep 2023 30 Sep 2022
GBP GBP
Current tax:
UK Corporation tax on loss for the year - -
Deferred tax - -
Tax on loss on ordinary activities - -
30 Sep 2023 30 Sep 2022
GBP GBP
Loss on ordinary activities before tax (1,397,967) (1,085,474)
Tax charge at 19% (265,614) (206,240)
Tax effect of expenses not deductible for tax 24,993 34,709
Tax losses for which no deferred tax asset is recognised 240,621 171,531
Taxation charge for the year - -
The Parent Company has accumulated tax losses arising in the UK of £3,002,632
(2022: £2,480,826) that are available, under current legislation, to be
carried forward against future profits.
Following an inspection by the Ugandan tax authorities of the tax affairs of
CARU covering the period between January 2014 and December 2022, the Group has
incurred a capital gains tax charge of £392,425. This related to the
acquisition by the Company of CARU in 2019. The amount was chargeable to the
former owners, however this was not settled by them and under Ugandan
legislation the liability is reclaimable from the acquirer if it cannot be
obtained from the seller. This amount has been included within administrative
expenses, as it does not relate to the profits or gains made by the Group.
9. Intangible and other assets
For the year ended 30 September 2023 intangible assets represent only
capitalised costs associated with the Group's exploration, evaluation and
development of mineral resources.
Group Exploration assets Total
GBP GBP
Balance at 30 September 2021 5,296,289 5,296,289
Additions - during the year 1,423,236 1,423,236
Impairment-Alelikongo costs (404,533) (404,533)
Exchange differences 300,261 300,261
Balance at 30 September 2022 6,615,253 6,615,253
Additions - during the year 1,190,977 1,190,977
Exchange differences (201,666) (201,666)
Balance at 30 September 2023 7,604,564 7,604,564
On 22 February 2022 the Group entered project Akelikongo which is a Nickel
project with SIPA this project was to be acquired in stages. On completion of
the first stage, the Board made a decision to terminate the agreement on 6
September 2022 so that they could focus on the Orom-Cross project, following
the positive results from its pre-feasibility study. As a result, the costs
capitalised relating to the Akelikongo project were fully impaired at that
date.
Additions during the year represent exploration costs at Orom-Cross Graphite
Project. Management performed a review for indications of impairment as at 30
September 2023 and concluded no impairment was required.
10. Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
30 Sep 2023 30 Sep 2022
Earnings
Loss from continuing operations for the year attributable to the equity (1,397,967) (1,085,474)
holders of the Company (£)
Number of shares
Weighted average number of Ordinary Shares for the purpose of basic and 200,041,594 160,790,224
diluted earnings per share
Basic and diluted loss per share (pence) (0.70) (0.68)
11. Investment in subsidiary
Details of the Company's subsidiary at 30 September 2023 are as follows:
Name of the subsidiary Place of incorporation Portion of ordinary shares held Principal activity
Consolidated African Resources Limited (Formerly Blencowe Resources Uganda Uganda 100% Exploration
Limited)
30 Sep 2023 30 Sep 2022
Investments in subsidiary
Investments at the beginning of the year as previously stated 4,892,924 3,936,953
Additions during the year 1,135,016 955,971
Total investment in subsidiary 6,027,940 4,892,924
12. Long term: non-current assets
30 Sep 2023 30 Sep 2022
Group Company Group Company
GBP GBP GBP GBP
Loan to subsidiaries (see below) - 707,268 - 549,415
Less: ECL provision - (35,363) - (27,471)
Total - 671,905 - 521,944
On 18 December 2020 the Company and its subsidiary entered into a loan
agreement. This agreement replaces any previous loan agreements. The facility
is for an amount up to £5,000,000 and carries a base interest of 5% plus
Bank of England interest rate per annum chargeable at year end. Following the
acquisition of CARU, the loan is considered to be a long-term asset.
During the year, the Company agreed to cover some expenses for Consolidated
African Resources Limited (CARU) for the value of £96,051 (2022: £88,148).
The amount borrowed at the year end was £589,062 (2022: £487,081). The total
interest charged for the year ended 30 September 2021 was £55,873 (2022:
£24,351). The interest payable at the year end was £118,206 (2022:
£62,334).
The value of the loan is subject to 12 months ECL of 5%, representing the
possible default events over the next 12 months of the financial instrument.
Due to the increase of expenses paid by the Company on behalf of CARU, the
loan and its interest has increased, this has led to an increase in the
provision during the year.
30 Sep 2023 30 Sep 2022
Group Company Group Company
GBP GBP GBP GBP
Brought forward ECL provision - 27,471 - 23,463
Provision expense - 7,892 - 4,008
Carried forward ECL provision - 35,363 - 27,471
13. Trade and other receivables
30 Sep 2023 30 Sep 2022
Group Company Group Company
GBP GBP GBP GBP
Other receivables 9,421 9,421 24,765 24,364
Amounts due from subsidiary - 310,334 - 229,584
Prepayments 22,442 22,442 61,082 61,082
Total 31,863 342,197 85,847 315,030
Included within other receivables is amounts receivable from CARU.
Group Company Group Company
GBP GBP GBP GBP
Amount receivable from CARU (formerly BRUL) - 326,667 - 241,667
Less: ECL provision - (16,333) - (12,083)
Total - 310,334 - 229,584
In the current year the value of the receivable was subject to 12 months ECL
of 5%. The increase in the provision expense is due to the charge of
management fees from the Company to its subsidiary CARU. As of the year end,
the amount that CARU (formerly BRUL) owes the Company on management services
was £326,667 (2022: £241,667).
30 Sep 2023 30 Sep 2022
Group Company Group Company
GBP GBP GBP GBP
Brought forward ECL provision - 12,083 - 7,084
Provision expense - 4,250 - 4,999
Carried forward ECL provision - 16,333 - 12,083
14. Creditors: Amounts falling due within one year
30 Sep 2023 30 Sep 2022
Group Company Group Company
GBP GBP GBP GBP
Trade Payables 644,585 528,708 140,018 127,577
Land Owners Liability - - 154,403 -
Ugandan taxes (note 8) 392,425 - - -
Accruals 39,159 39,159 31,954 31,953
Total 1,076,169 567,867 326,375 159,530
15. Creditors: Amounts falling after one year
The Ugandan Mining Act 2003 requires an applicant for a mining lease to obtain
surface rights from landowners in the mineral area before the respective
mining lease can be granted. Accordingly, when the Group acquired its
subsidiary, it obtained surface rights by way of 49 years lease over the area.
The liability to the landowners is to be paid in 10 instalments on a section
basis as the project progresses. The progress on each section is not limited
to any time frames and is at the Group's discretion.
On 10 September 2022 the surface rights agreement was revised and signed
between the Locomo Communal Land Association and Consolidated African
Resources Limited, the surface rights remain at 49 years. The liability to the
land owners will be paid in 8 instalments at defined dates with the final
payment due in 2035.
30 Sep 2023 30 Sep 2022
GBP
GBP
Total payable as at 1 October 978,255 887,560
Change in estimate - (51,316)
Utilisation (148,468) -
Interest charged during the period 45,748 45,916
Exchange (gain)/loss (56,620) 96,095
Total payable as at 30 September 818,915 978,255
Analysis between current and non-current liability
Payable within 12 months - 154,403
Payable after 12 months 818,915 823,852
818,915 978,255
The value of the liability is measured at the present value of the contractual
payments due to the Land Owners' Association over the lease term, with the
discount rate of 5%.
At the statement of financial position date, the Group undiscounted amount
payable to the Land Owners is;
2023 2022
GBP GBP
Payable within 1 years - 154,403
Payable within 2-5 years 290,388 308,806
Payable after 5 years 871,164 926,418
1,161,552 1,389,627
Share
capital
Number of shares issued Nominal value per share Share capital Share Premium Total share capital
GBP GBP GBP GBP
At 30 Sep 2021 121,929,950 901,316 5,132,081 6,033,397
Issue of Ordinary Shares 56,000,000 0.005 280,000 2,520,000 2,800,000
Share issue costs - - - (171,252) (171,252)
At 30 Sep 2022 177,929,950 1,181,316 7,480,829 8,662,145
Issue of Ordinary Shares 18,750,000 0.005 93,750 656,250 750,000
Issue of Ordinary Shares 12,700,000 0.005 63,500 571,500 635,000
Share issue costs - - - (71,180) (71,180)
At 30 Sep 2023 209,379,950 1,338,566 8,637,399 9,975,965
During the year ended 30 September 2023, the Company issued the following
shares;
Date Number of Ordinary Shares issued Nominal Share Value Share price
GBP GBP
26 October 2022 18,750,000 0.005 0.0400
18 May 2023 12,700,000 0.005 0.0500
All of the shares issued are classed as ordinary and have similar rights
attached to them. 9,375,000 warrants classified as equity were issued with the
26 October 2022 share issue, and a further 6,350,000 warrants classified as
equity were issued with the 18 May 2023 share issue.
The Directors are authorised to issue 209,379,950 ordinary shares. As at 30
September 2023 the number of shares issued and fully paid were 209,344,950
(2022: 177,594,950), 35,000 shares are unpaid at 30 September 2023 (2022:
unpaid shares 335,000).
16. Share based payments
Warrants
The following warrants were issued in exchange for a good or service:
30 Sep 2023 30 Sep 2022
Warrants Number warrants Weighted Average exercise price Number warrants Weighted Average exercise price
Outstanding on 01 Oct 1,250,000 6.00p 1,250,000 6.00p
Issued during the year - - - -
Cancelled/ Exercised (1,250,000) - - -
Outstanding on 30 Sep - 6.00p 1,250,000 6.00p
Weighted average remaining contractual Life - 0.57 years
The warrants have no vesting period and have been recognised in full upon
issue. If the warrants remain unexercised after a period of three years from
the date of grant, they will expire. The holder may exercise the subscription
right at any time within the subscription period.
The above warrants were valued using the Black Scholes valuation method. The
assumptions used are detailed below. The expected future volatility has been
determined by reference to the average volatility of similar entities:
Warrants 30 Sep 2022
Weighted Average Share Price 6.00p
Weighted Average Exercise Price 6.00p
Expected Volatility 56%
Expected Life 3 years
Risk-free Rate 0.23%
Expected Dividend Nil
Weighted Average Fair Value (GBP) 32,603
Options
The following options were issued in exchange for a good or service:
30 Sep 2023 30 Sep 2022
Options Number Options Weighted Average exercise price Number Options Weighted Average exercise price
Outstanding on 01 Oct 16,000,000 6.00p 10,000,000 6.00p
Issued during the year 5,000,000 5.00p 6,000,000 6.00p
Cancelled/ Exercised - - - -
Outstanding on 30 Sept 21,000,000 5.76p 16,000,000 6.00p
Weighted average remaining contractual Life 3.23 years 3.78 years
The options issued prior to 1 October 2021 have no vesting periods and have
been recognised upon issue. If the options remain unexercised after a period
of five years from the date of grant, they will expire. The share options
cannot be exercised if the holder has ceased employment.
The options issued in the current year and prior year include a market based
vesting condition, the share options would only vest if the share price of the
Company trades in excess of 10p per share for 10 consecutive days.
The above options were valued using the Black Scholes valuation method,
adjusted for the probability of meeting the market-based vesting condition.
The assumptions used for the options granted in the current and prior period
are detailed below. The expected future volatility has been determined by
reference to the average volatility of similar entities during the year:
Options 30 Sep 2023 30 Sep 2022
Share Price 4.6p 4.3p
Exercise Price 5.00p 6.00p
Expected Volatility 67% 48%
Expected Life 5 years 5 years
Risk-free Rate 3.47% 0.76%
Expected Dividend Nil Nil
Fair Value (GBP) 26,194 84,272
Deferred Tax
No deferred tax asset has been recognised in respect of share options and
warrants due to the uncertainty of the future trading profits.
17. Financial instruments
17.1 Categories of financial instruments
30 Sep 2023 30 Sep 2022
Group Company Group Company
GBP GBP GBP GBP
Financial assets at amortised cost
Trade and other receivables 9,421 319,755 24,765 253,948
Cash and cash equivalents 129,853 129,853 346,994 346,994
Financial liabilities at amortised cost
Trade and other payables 1,076,169 567,867 326,375 159,530
Surface liability 818,915 - 978,255 -
17.2 Financial risk management objectives and policies
The Company's major financial instruments include cash and cash equivalents,
trade and other payables and other receivables. The fair value of the Groups
financial instruments are equal to their carrying value. Details of these
financial instruments are disclosed in respective notes. The risks associated
with these financial instruments, and the policies on how to mitigate these
risks are set out below. The management manages and monitors these exposures
to ensure appropriate measures are implemented in a timely and effective
manner.
Currency risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the United
States Dollar ("USD") and Ugandan shilling ("UGX"). Foreign exchange risk
arises from recognised monetary assets and liabilities. The Group also
exposes to currency exposure, BRUL expenses are paid in both USD and UGX, with
the amount payable to the land owners denominated in UGX.
The table below summaries the financial assets and liabilities denominated in
foreign currencies.
30 Sep 2023 30 Sep 2022
USD UGX USD UGX
Financial Assets 891 - 1,534 -
Financial Liabilities 41,827 818,915 35,509 978,256
With all other variables held constant, the effect on profit and loss had the
functional currency of the Group weakened or strengthened against USD/UGX by
5% at the year end results in a £29,532 (2022: £28,709) change in value.
Credit risk
Credit risk arises on cash balances. The amount of credit risk is equal to the
amounts stated in the statements of financial position for each of the assets
(notes 12 & 13).
The Group's policy to manage this risk is to deal with banks that are
regulated entities. The Group's principal banker, Barclays Bank PLC, is
regulated by the United Kingdom Financial Services Authority, and has a credit
rating of A1 (2022: A1).
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities and the availability of funding through an adequate
amount of committed credit. The Company aims to maintain flexibility in
funding.
The maturity of the Company's financial liabilities at the statement of
financial position date, based on the contracted undiscounted payments is
disclosed in notes 14, falls within one year and payable on demand.
Capital risk
The Company defines capital as the total equity of the Company. The Company's
objectives when managing capital are to safeguard the Company's ability to
continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders and to maintain an optimal capital structure
to reduce the cost of capital.
18. Related party transactions
Details of Directors' remuneration are disclosed in note 6.
Sam Quinn is a director and shareholder of the Company and a Director of
Lionshead Consultants Limited. During the year, Lionshead Consultants
Limited charged consultancy fees of £36,000 (2022: £24,000).
19. Events after the reporting date
On 10 October 2023, the Company announced that it had received its first US$1
million mobilisation tranche payment from the Development Finance Corporation.
On 25 January 2024 an additional US$1 million tranche was received from the
Development Finance Corporation and the total received now is US$2 million.
This represents 40% of the full US$5 million DFC grant for the Definitive
Feasibility Study costs.
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