REG - Blencowe Resources - Annual Results 30 September 2022 & Notice of AGM
13/01/2023 07:00
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RNS Number : 5854M Blencowe Resources PLC 13 January 2023
Blencowe Resources Plc
("Blencowe" or the "Company")
Annual Results for the year ended 30 September 2022
And Notice of Annual General Meeting
Blencowe Resources Plc, ("Blencowe Resources" or the "Company") (LSE: BRES) is
pleased to announce its audited financial results for the year ended 30
September 2022 (the "Annual Report") and it's notice of Annual General Meeting
("Notice of AGM").
The Annual Report, Notice of AGM and the associated Form of Proxy will be
posted to shareholders and copies will also be available on the Company's
website at shortly.
The Annual General Meeting will be held at 55 Athol Street, Douglas, Isle of
Man at 10.00a.m. on 15 February 2023.
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 Securities 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 2022
Shareholders and Stakeholders,
Upon reflection these past 12 months have been one of the most challenging
ever in terms of macro-market forces, particularly relating to our London
listing, with Brexit fallout, Ukraine invasion, rising inflation and
subsequent interest raises to counter these, and a choppy political landscape
with no less than two UK Prime Ministers in Number 10 during the reporting
period, all to deal with. This is before we manage our own internal project.
Nevertheless, it has proven to me once again that the Board and Executive
Management of Blencowe are a very resourceful team, together with our key
supporters, and we jointly have considerable experience dealing with all
manner of challenges relating to resources development over many years, so
none of this was going to get in our way and prevent the continued advancement
of Orom-Cross, which is fast turning into a world class graphite project. I
would like to thank the full team for everything they have contributed over
this period to ensure that we remain on-track to deliver a unique and special
mining operation ahead.
The Company completed a second diamond drill programme in 2021 which resulted
in a JORC Mineral Resource upgrade in 1H 2022 up to 24.5Mt of graphite at a
6.0% in situ average grade. It must be noted that this JORC Resource has
resulted from exploration on circa 1-2% of the estimated overall Orom-Cross
deposit which illustrates how much graphite there is at site, and the
incredible upside potential that exists to extend both mine life and
production volumes in the years ahead.
Further excellent metallurgical test work by SGS in Canada resulted in proving
Orom-Cross can upgrade to a very pure concentrate around 96-97% LOI from the
composite mix of the two deposits (Northern Syncline and Camp Lode) and
equally importantly with high recoveries and low impurities. These will
assist greatly in taking the end product through final testing ahead to the
99.95% SPG (spherical purified graphite) product that is used in the
production of lithium-ion batteries, which is by far the largest demand
accelerator for graphite use ahead. To prove Orom-Cross can deliver a high
grade end product is key to getting pre-qualification for sales and ultimately
delivering binding offtake agreements within the Definitive Feasibility Study
(DFS) in 2023. These test results also proved that our end product retains a
high percentage of coarse (large) flakes that sell for significantly more than
the smaller flakes, and which will help us deliver a higher weighted average
selling price for the full basket of end products. In the words of one of
our key marketing consultants who has been closely involved in graphite for
over 30 years, Orom-Cross displays one of the best concentrates he has ever
seen, and thus should be well received by end users as we move to showcase our
products in 2023.
The 24.5Mt JORC Resource underpinned a successful Pre-Feasibility Study (PFS)
conducted over 1H 2022, which delivered exceptional results from an initial 14
year life of mine. As noted above this LOM can and will be greatly extended
in the future with additional drilling, when required. Some of the
highlights of this PFS included low overall operating costs (US$499/t FOB
port), high weighted average selling price (US$1,307/t) and from these very
healthy margins which delivered an NPV8 of US$482M and an IRR8 of 49%. The
initial capital requirement for all plant and infrastructure to deliver this
was reduced (from PEA/2021: US$80M) to US$62M which makes the start-up
proposition more feasible. Nothing was highlighted within the PFS that might
derail this project and as such the Company moved into the next and final
studies phase, the Definitive Feasibility Study.
The DFS was initially going to include a pilot plant at site, which could
start-up graphite operations on a smaller scale and provide product for end
user screening, to ultimately become pre-qualified for more substantial sales
contracts later on. However, Blencowe more recently uncovered sources who
had successfully bulk sample tested other graphite projects in existing pilot
plant facilities in China, with resultant binding contracts once fully
completed. As China currently represents around 95% of the end market for
graphite sales it is believed that pre-qualification into China is sensible,
and as such Blencowe has decided to trial a bulk sample of 100 tonnes
Orom-Cross raw material through this same facility. This will form a key
part of the DFS program in 2023 and will be followed by SPG testing, and
ultimately OEM (original equipment manufacturers) testing. These are the
necessary steps to provide the basis for full sales contracts and work is
already underway to deliver these bulk samples to start the process. It is
also expected that Blencowe will lock in an EPC contractor within the DFS
process, and all study work will be managed and ultimately peer reviewed using
the leading graphite technical specialist engineering firm based in Perth,
Australia
The other key aspect of the DFS is project funding, and Blencowe has been
working through various options to secure an effective and efficient funding
solution for both the DFS and the full project implementation. The Company
will provide further updates to the market on this as it eventuates.
Finally, the world is changing fast and within this moving landscape is an
increased awareness in ESG (environmental, social and governance) aspects.
These are becoming very important as everyone from potential investors to
funding partners to end users all require a life cycle sustainable project
with an end product that can meet specific standards. Blencowe has many
advantages in this regard, including use of green (hydro) energy, solid
community agreements and most importantly an awareness of the need to
constantly evolve in this key area. An initial ESG review has already been
conducted in 2022 using a leading international firm and sustainability will
play a big role in the future development of Orom-Cross.
All the work delivered over this year has transformed Orom-Cross from an early
stage exploration project to an advanced pre-production powerhouse. In the
wider context this is important as the global shift away from fossil fuels
towards renewable energy provides a huge opportunity ahead for Orom-Cross, and
Blencowe wants to position this exceptional project at the forefront of its
peers in all aspects. As demand for lithium-ion batteries accelerates over
the next decade and hundreds of gigafactories that will manufacture these
batteries open their doors and begin demanding huge volumes of input
materials, the forecast demand for flake graphite is anticipated to grow
exponentially.
Blencowe is moving quickly to establish itself as the proud owner of one of
the largest, highest quality, low cost flake graphite projects in the world.
The future is therefore very exciting.
Mike Ralston
Chief Executive office
Strategic Report
The Directors present the Strategic Report for the year ended 30 September
2022.
Results
The results are set out in the Consolidated Statements of Comprehensive
Income. The total comprehensive loss attributable to the equity holders of the
Group for the period was £1,089,679 (2021: £691,064).
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 Blencowe
Resources Uganda Limited.
On 22 February 2022 the Group entered into an agreement with SIPA Exploration
Uganda Ltd to acquire a Nickel Sulphide Project in Uganda (Akelikongo). The
company was to acquire a 100% of the project through an earn-in over four
separate milestones. The earn in investment required the company to spend
US$2.75million over a period of 3 years to acquire a 100% of the project.
On 6 September 2022 the Company announced that it had terminated the agreement
with SIPA Exploration Uganda Ltd with respect to the Nickel project and it was
no longer required to meet any of the spend obligations. A total amount of
£404,533 had been spent and capitalised with respect to the Akelikongo
project and this was fully impaired to the profit and loss during the year.
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 £1,085,474 for the year ended 30 September 2022 (2021: loss before tax of
£694,726).
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 £1,423,236 (2021: £976,084) of capitalised exploration
costs, of which £1,018,703 related to Orom Cross Graphite Project which were
required to carry out the initial drilling costs and testing of the mineral,
and £404,533 relating to the Akelikongo project. The costs relating to
Akelikongo were subsequently impaired and released to the statement of
comprehensive income. These exploration costs are in line with the Board
expectations.
In 2022 the Group raised funds of £2,628,748 (2021: £1,373,414) net of issue
costs from the equity markets. Please see note 20 for further details of the
funds raised after the year end.
At 30 September 2022 the Group had a cash balance of £346,994 (2021:
£93,288).
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 BRUL 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. BRUL
will give employment priorities to the local capable members of Akurumo parish
Since the acquisition of BRUL 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 Covid-19
or from the Russia-Ukraine 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.
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 Company. 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 will 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 Company's potential earnings will be largely derived from the sale of
graphite, the Company'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 Company.
Commodity prices fluctuate and are affected by numerous factors beyond the
control of the Company. 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 Company 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 Company. The
exchange rates are affected by numerous factors beyond the control of the
Company, 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
As of October 2022, the Group has been able to raise £750,000, which will
support the Group's financial position in the short term. 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 may need to raise additional capital
beyond the Working Capital Period to fund additional exploration work for the
future development of the Orom-Cross Graphite Project.
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.
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 LES 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.
On 22 February 2022 the Group acquired project Akelikongo which is a Nickel
project with SIPA this project was to be acquired in stages. The Board made a
decision to terminate the agreement on 6 September 2022 so that they could
focus on the Orom project, following the positive results from the
pre-feasibility study. The Board believed it was a strategic decision to
deliver better shareholder value by focusing its attention on bringing the
Orom-graphite project to operation more quickly.
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, both collectively and individually,
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
12 January 2023
Directors' Report
The Directors submit their report with the audited Financial Statements for
the year ended 30 September 2022.
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 £1,089,679 (2021:
£691,064). 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), identifying and evaluating suitable acquisition targets, and
general corporate overheads.
The Group paid no distribution or dividends during the financial year (2021:
£Nil).
Subsidiary change of name
On 10 June 2022 Consolidated Africa Resources Ltd a 100% owned subsidiary of
Blencowe Resources Plc changed its name to Blencowe Resources Uganda 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 2.50%
Cameron Pearce 7,516,667 3.82%
Alexander Passmore 1,550,000 0.79%
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 2022:
% of issued share capital of the Company
Shareholder
Jim Nominees Limited 27.21%
Pershing Nominees Limited 14.53%
Hargreaves Lansdown (Nominees) Limited 12.43%
ISI (Nominees) Limited 4.31%
Spreadex Limited 3.80%
Financial risk management
The Group's principal financial instruments comprise cash balances, accounts
payable and accounts receivable 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
(including currency risk and price 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.
Employee and Greenhouse Gas (GHG) Emissions
The Group is trading with two employees (see note 7) and the Directors
disclosed.
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.
The Board receives guidance from FIM Secretary Limited, the Company Secretary
to the Group, covering updates to relevant legalisation and rules to ensure
they remain fully informed and able to make informed decisions.
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
12 January 2023
Corporate Governance
The Group recognises the importance of, and is committed to, high standards of
Corporate Governance. At the date of this Report, and 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.
In addition, 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 Group is in compliance with the UK Corporate
Governance Code 2018 with the exception of the following:
· Given the composition of the Board, certain provisions of the
UK Corporate Governance Code, are considered by the Board to be inapplicable
to the Company. 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
· 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.
· The UK Corporate Governance Code also recommends the submission
of all directors for re-election at annual intervals. No Director will be
required to submit for re-election until the first annual general meeting of
the Company following the acquisition.
· No new Directors' nominations were brought forward by the
Nomination Committee during the year.
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 2022.
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 risk 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.
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.
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 in the Republic
of Uganda.
Attendance at meetings:
Member Meeting attended
Cameron Pearce Executive Chairman 10
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.
Independence - None of the Directors are considered to be independent, as they
have shareholdings in the Company as notes. It is intended that additional
Directors will be appointed in future and that independence will be one of the
key factors taken into account 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.
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, 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.
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 Company has necessary procedures
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. 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 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
· 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 five years.
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. 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 pension rights and any compensation payments, recommends and
monitors the level and structure of remuneration for senior management and
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.
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 Company over a four-year period,
taking account of the Company'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 2.7.
Time frame
The Board believes that four years is 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 development of the Orom-Cross Graphite Project to commence
production and generate revenues will require significant capital
expenditures. The Orom-Cross Graphite Project is not expected to generate
positive net cash flow until approximately 2025, some three years from now.
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. The expected cost of bringing the project to an
initial production target of 75,000t is USD62,000,000.
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
wide-ranging expertise in mineral exploration 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 Company 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 2.7.
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 2022.
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, taking into account the interests of the shareholders and the
performance of the Company and Directors.
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' Remuneration report
Statement of Blencowe Plc's policy on Directors' Remuneration
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 with fees of £36,000 per
annum. 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. The appointment is for an initial term of 24 months and thereafter can
be terminated by the Company on six months written notice or by Mr Pearce on
three months written notice. 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 with fees of £24,000 per annum. 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. The appointment
is for an initial term of 24 months and thereafter the appointment can be
terminated by the Company on six months written notice or by Mr Quinn on three
months written notice. 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. Following the
readmission of the Company to the LSE on 28 April 2020, Mr Passmore was
engaged as a Non-Executive director with fees of £24,000 per annum. On 12 May
2020, the Board agreed to keep Mr Passmore's fees at £12,000 per annum until
further capital is raised. On 15 March 2021, the Board agreed to increase Mr
Passmore's fees from 1 March 2021 to £18,000 per annum. The appointment is
for an initial term of 24 months and thereafter the appointment can be
terminated by the Company on six months written notice or by Mr Passmore on
three months written notice. 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.
Directors' emoluments and compensation (audited)
Set out below are the emoluments of the Directors:
Cameron Pearce Sam Quinn Alexander Passmore Total
30 September 2021
Base fee 96,000 24,000 15,000 135,000
Share Based Payments 71,318 49,923 21,395 142,636
Total 30 September 2021 167,318 73,923 36,395 277,636
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
The percentage of directors' emoluments of the total administrative costs for
the year is 30% (2021: 34%). The directors' base fees increased did not
increase (2021: 36%). While the base salary costs of the key management
employees increased by 28% (2021: 82%).
Statement of Directors' shareholding and share interest
The Directors who served during the year ended 30 September 2022, and their
interests at that date, are disclosed.
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.
As the Company currently has no trade, no performance graph and table has been
included but will be included in future accounting periods.
By Order of the Board
Sam Quinn
Director
12 January 2023
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 2022 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 financial statements is
applicable law and UK-adopted international accounting standards. The
financial reporting framework that has been applied in the preparation of 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 2022 and
of the Group's loss for the year then ended;
· the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· 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 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 related to going concern
We draw attention to note 2.7 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 held discussions with the directors on how they plan to raise
the 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 £140,000 (2021 £105,000), based on 2%
of total assets. Materiality for the Parent Company financial statements as a
whole was set at £120,000 (2021: £90,000) 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 £98,000 (2021: £74,550) for the
group and £84,000 (2021: £63,900) 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 those charged with governance to report to it all identified
errors in excess of £7,000 (2021: £5,250). 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 the exploration subsidiary in Uganda. In addition to the Parent
Company, the Ugandan subsidiary was considered to be a significant component.
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. A full
scope audit of both the Parent Company and the Ugandan subsidiary were 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 remotely.
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 related to going
concern above, those matters we considered to be key audit matters.
Key audit matter How the scope of our audit addressed the key audit matter
1. Carrying value of intangible assets (note 9) We obtained and reviewed the directors' assessment of the indicators of
impairment, as set out in IFRS 6 "Exploration for and evaluation of mineral
resources". The following work was undertaken:
The Group carries intangible assets totalling £6.6m (2021: £5.3m) in · We obtained copies of all licenses held by the Group, and
relation to the Orom-Cross project in Uganda. These costs are capitalized in performed procedures to confirm the Group's control of the licenses, that they
accordance with the requirements of IFRS 6. remain valid, and to check there is an expectation that exploration licenses
will be renewed in the normal course of business.
At each reporting date, the directors are required to assess whether there are
any indicators of impairment, that would require an impairment assessment to · We made specific enquiries of the directors and key staff
be carried out. The directors concluded there were no indicators of involved in the exploration work, and reviewed budgets and forecasts to
impairment. support the Group continuing with further exploration work in each of its
license areas.
The directors' consideration of the impairment indicators requires them to
make certain judgements, and may include certain estimates. These matters, · We considered the results of the pre-feasibility study completed
together with the materiality of the exploration and evaluation assets make during the period, for any matters that may indicate impairment.
this a key audit matter.
· 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 strategic report and the directors' 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
Responsibilities of the directors for the financial statements
As explained more fully in the directors' responsibilities statement set out
in the notes, 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, and external legal counsel in
Uganda about any litigations and claims and compliance with local legislation
in Uganda.
· We performed detailed substantive testing over the expenses in
connection with the Akelikongo project that was exited during the period. We
held discussions with management, and reviewed documentation from external
sources to confirm the project was a bona-fide transaction, and that there
were no indications of undisclosed related party involvement.
· 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 five years, covering the periods ending
30 September 2018 to 30 September 2022.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group's or the company and we remain independent of the
group's and the 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 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 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 company and the company's members as a
body, for our audit work, for this report, or for the opinions we have formed.
Matthew Stallabrass
Senior Statutory Auditor
For and on behalf of
Crowe U.K. LLP
Statutory Auditor
London, U.K.
Date: 12 January 2023
Consolidated Statement of Comprehensive Income for the year ended 30 September 2022
Notes 30 Sep 2022 30 Sep 2021
GBP GBP
Exploration costs (4,853) (11,690)
Impairment - Akelikongo project (404,533) -
Administrative fees and other expenses 5 (681,488) (815,415)
Adjustments to surface liability 15 51,316 177,639
Operating loss (1,039,558) (649,466)
Finance costs (45,916) (45,260)
Loss before tax (1,085,474) (694,726)
Income tax 8 - -
Loss for the year attributable to owners of the parent (1,085,474) (694,726)
Other comprehensive income
Exchange differences on translation of foreign operation: (4,205) 3,662
Other comprehensive (loss)/income, net of tax (4,205) 3,662
Total comprehensive loss attributable to owners of the parent (1,089,679) (691,064)
Basic and diluted loss per share (pence) 10 (0.68) (0.61)
Consolidated Statement of Financial Position as at 30 September 2022
Notes 30 Sep 2022 30 Sep 2021
GBP GBP
Non-Current Assets
Intangible assets 9 6,615,253 5,296,289
Current assets
Trade and other receivables 13 85,847 52,580
Cash and cash equivalents 346,994 93,288
Total current assets 432,841 145,868
Total assets 7,048,094 5,442,157
Current liabilities
Creditors: Amounts falling due within one year 14 (326,375) (280,071)
Total current liabilities (326,375) (280,071)
Non-current liabilities
Surface liabilities 15 (823,852) (887,560)
Total liabilities (1,150,227) (1,167,631)
Net assets 5,897,867 4,274,526
Equity
Share capital 16 1,181,316 901,316
Share premium 16 7,480,829 5,132,081
Share options reserve 17 402,148 317,876
Translation reserve 2.9 (543) 3,662
Accumulated losses (3,165,883) (2,080,409)
Total equity 5,897,867 4,274,526
These financial statements were approved by the Board of Directors and
authorised for issue on 12 January 2023 and signed on its behalf by:
Cameron
Pearce Sam
Quinn
Director
Director
Parent Statement of Financial Position as at 30 September 2022
Restated
Notes 30 Sep 22 30 Sep 21
GBP GBP
Fixed assets
Investment in subsidiaries 11 4,892,924 3,936,953
Non-current assets 12 521,944 445,804
Total fixed assets 5,414,868 4,382,757
Current assets
Trade and other receivables 13 315,030 187,163
Cash and cash equivalents 346,994 93,288
Total current assets 662,024 280,451
Total assets 6,076,892 4,663,208
Current liabilities
Creditors: Amounts falling due within one year 14 (159,530) (280,110)
Total current liabilities (159,530) (280,110)
Net assets 5,917,362 4,383,098
Equity
Share capital 16 1,181,316 901,316
Share premium 16 7,480,829 5,132,081
Share options reserve 17 402,148 317,876
Accumulated losses (3,146,931) (1,968,175)
Total equity 5,917,362 4,383,098
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 £1,178,756 (2021: £651,982).
The Financial Statements were approved and authorised for issue by the Board
of Directors on 12 January 2023 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 2022
Share Share premium Share option reserve Accumulated losses Translation reserve Total equity
capital
GBP GBP GBP GBP GBP GBP
Balance as at 30 Sep 2020 783,333 3,876,650 100,471 (1,453,551) - 3,306,903
Loss for the year - - - (694,726) - (691,064)
Exchange differences on translation of foreign operations - - - - 3,662 3,662
Total comprehensive loss - - - (694,726) 3,662 (691,064)
Transactions with owners
New shares issued (note 16) 117,983 1,344,300 - - - 1,462,283
Share issue costs - (88,869) - - - (88,869)
Issue of share options/warrants - - 285,273 - - 285,273
Movement on warrant reserve - - (67,868) 67,868 - -
Total transactions with owners 117,983 1,255,431 217,405 67,868 - 1,658,687
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)
Issue of share options - 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
Parent Statement of Changes in Equity for the year ended 30 September 2022
Share Share premium Share option reserve Accumulated losses Total equity
capital
GBP GBP GBP GBP GBP
Balance as at 30 Sep 2020 783,333 3,876,650 100,471 (1,384,061) 3,376,393
Loss for the year - - - (651,982) (651,982)
Total comprehensive loss - - - (651,982) (651,982)
Total transactions with owners
New shares issued (note 16) 117,983 1,344,300 - - 1,462,283
Share issue costs - (88,869) - - (88,869)
Issue of share options/warrants - - 285,273 - 285,273
Movement on warrants reserves - - (67,868) 67,868 -
Total transactions with owners 117,983 1,255,431 217,405 67,868 1,658,687
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
Issue of share options/warrants - - 84,272 - 84,272
Share issue costs - (171,252) - - (171,252)
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
Consolidated Statement of Cash Flows for the year ended 30 September 2022
Notes 30 Sep 2022 30 Sep 2021
GBP GBP
Operating activities
Loss after tax (1,085,474) (694,726)
Finance costs 45,916 45,260
Adjustment to Surface Liability 15 (51,316) (177,639)
Share issue/warrant cost 17 84,272 285,273
Impairment - Akelikongo costs 9 404,533 -
Unrealised currency translation (208,371) 55,785
Changes in working capital
(Increase)/decrease in trade and other receivables (33,267) 19,441
Increase/(decrease) in trade and other payables 76,483 (9,494)
Net cash flows utilised by operating activities (767,224) (476,100)
Cash flows from investing activities
Investment in exploration assets 9 (1,423,236) (976,084)
Net cash flows utilised by investing activities (1,423,236) (967,084)
Cash flows from financing activities
Payment of Surface Liability - (33,798)
Shares issued (net of issue cost) 16 2,444,166 1,373,414
Net cash flows from financing activities 2,444,166 1,339,616
Increase/(decrease) in cash and cash equivalents 253,706 (112,568)
Cash and cash equivalents at the beginning of the year 93,288 205,856
Cash and cash equivalents at 30 September 346,994 93,288
Non-cash transaction
As part of the share issue on 15 December 2021, £184,582 was settled against
creditor balances outstanding. This amount has been reflected in the working
capital movement and the cash received on shares issued.
Net Debt note
Cash at bank Surface Total
and in hand Liability
GBP GBP GBP
At 1 October 2020 205,856 (1,024,737) (818,881)
Cash flows (112,568) 33,798 (112,568)
Other non-cash changes - 103,379 137,179
As 30 September 2021 93,288 (887,560) (794,272)
As 30 September 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)
Parent Statement of Cash Flows for the year ended 30 September 2022
30 Sep 2022 30 Sep 2021
Notes GBP GBP
Operating activities
Loss after tax (1,178,756) (651,982)
Less finance income (24,354) (21,564)
Increase in bad debt provision 12,13 9,408 12,048
Share issue/warrant cost 17 84,272 285,273
Changes in working capital
Increase in trade and other receivables (120,783) (80,559)
Increase/(decrease) in trade and other payables 64,002 (25,632)
Net cash flows from operating activities (1,166,211) (482,416)
Cash flows from investing activities
Loan advanced to subsidiary (68,278) (102,982)
Investment in subsidiary, relating to exploration costs paid 11 (955,971) (900,467)
Net cash flows from investing activities (1,024,249) (1,003,450)
Cash flows from financing activities
Shares issued (net of issue cost) 16 2,444,166 1,373,414
Net cash flows from financing activities 2,444,166 (1,373,414)
Increase/(decrease) in cash and cash equivalents 253,706 (112,452)
Cash and cash equivalents at the beginning of the year 93,288 205,740
Cash and cash equivalents at 30 September 346,994 93,288
Non-cash transaction
As part of the share issue on 15 December 2021, £184,582 was settled against
creditor balances outstanding. This amount has been reflected in the working
capital movement and the cash received on shares issued.
Notes to the Financial Statements for the year ended 30 September 2022
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.
Prior year adjustment
The Parent Company statement of financial position has been restated to
reclassify expenditure incurred by the Company on the Orom Cross project from
intangible assets to investments in subsidiary. This has been done as
exploration intangible assets can only be recognised by the company which
holds the rights to explore. This is a change in classification only and
results in a decrease in intangible assets and increase in investment of
£1,936,953 at 30 September 2021. (Note 9)
2.2 Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company and its subsidiary Blencowe Resources Uganda Ltd ("BRUL") (formerly
Consolidated African Resources (Uganda) Ltd ("CARU") ).
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 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.
2.4 Standards, amendments and interpretations to published standards not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, were in issue but not yet effective, and have
not been early adopted by the Group:
· IFRS 17 Insurance Contracts - Effective for periods beginning on
or after 1 January 2023
· Classification of liabilities as current or non-current
(Amendments to IAS 1) - Effective for periods beginning on or after 1 January
2023
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2) - Effective for periods beginning on or after 1 January
2023
· Definition of Accounting Estimate (Amendments to IAS 8) -
Effective for periods beginning on or after 1 January 2023
· Deferred Tax Related to Leases and Decommissioning Obligations -
Amendments to IAS 12 Income Taxes - Effective for periods beginning on or
after 1 January 2023
· Leases - amendments IFRS 16 to clarify how a seller-lessee
subsequently measures sale and leaseback transactions - Effective for periods
beginning on or after 1 January 2024.
· Classification of debt with covenants (Amendments to IAS 1) -
Effective for periods beginning on or after 1 January 2024.
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.
2.5 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.
2.6 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 trade receivables, the Group applies a simplified approach in calculating
ECLs. 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 EIR method. Gains and
losses are recognised in the statement of profit or loss when the liabilities
are derecognised, as well as through the EIR 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 EIR. The EIR
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 and other comprehensive income.
2.7 Going concern
The Company's business activities, together with the factors likely to affect
its future development, performance and positions are set out in the Chief
Executive Officer's Statement.
The Group had £7,048,094 of total assets at 30 September 2022 (2021:
£5,442,157), of which £346,994 are held as cash and cash equivalents (2021:
£93,288).
As part of their going concern assessment, 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 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.
Subsequent to the year-end the Group has raised additional funding through a
share capital raised in order to further the development of the Group's
activities (see note 20) however, the Board of Directors appreciate that
significant further funding will be required to achieve the desired project
outcome of cash generative production in 2025. The raising of further funding
is not guaranteed and will be dependent on a successful definitive feasibility
study to demonstrate the commercial potential of the project, for these
reasons there is a material uncertainty in respect of going concern.
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. 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 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.
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 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 NPV of the surface rights owed to the owners of the land is
£978,255 (2021: £887,560). 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 decrease by around £60,000 (2021: £25,000). The interest
charged during the year was for the surface rights was £45,916 (2021:
£45,260), if the rate was increased by 1% then the interest charge would
increase by approximately £5,000 (2021: £17,000). 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 2.7.
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. Which is the only operating segment, and all
non-current assets are located in Uganda.
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 project.
5. Administrative fee and other expenses
30 Sep 2022 30 Sep 2021
GBP GBP
Directors' remuneration (see note 6) 173,413 138,787
Professional fees 274,333 100,256
Salaries (see note 7) 142,500 58,000
Listing fees 26,910 42,535
Audit fees 29,000 25,000
Share option/warrant cost (see note 17) 84,272 285,273
Administration fees 47,000 52,000
Broker fees 38,048 48,990
Travelling expenses 34,167 1,529
Miscellaneous fees 30,862 3,855
Foreign currency (gain)/loss (199,017) 59,190
Total 681,488 815,415
Key management remuneration, together with any share-based payments, are
disclosed in note 7.
6. Directors' remuneration
30 Sep 2022 30 Sep 2021
GBP GBP
Base fees 138,000 135,000
Employer NI 2,770 2,095
Bonuses 23,000 -
Directors expenses 9,643 1,691
Share based payments 42,136 142,636
Total 215,549 281,423
In addition, the Directors received options which are disclosed in note 17.
The total value of warrants issued to the Directors during the financial year
is £Nil (2021: £Nil).
7. Key management personnel
The number of key management (excluding members the Board) employees
throughout the year was as follows;
30 Sep 2022 30 Sep 2021
By the Company 2 2
By the Group 2 2
The key management employees who were appointed 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 2,725,000 £163,950
Iain Wearing - COO 208,333 £12,500
The total base salary costs for the year was £142,500 (2021: £111,000) of
which £75,000 (2021: £53,000) were capitalised as they are related to the
Orom-Cross Graphite Project. Total share-based payments for the year were
£42,136 (2021: £142,636). There was no other component of compensation.
8. Taxation
Analysis of charge in the year 30 Sep 2022 30 Sep 2021
GBP GBP
Current tax:
UK Corporation tax on loss for the year - -
Deferred tax - -
Tax on loss on ordinary activities - -
30 Sep 2022 30 Sep 2021
GBP GBP
Loss on ordinary activities before tax (1,178,756) (584,114)
Expenses not deductible for tax 182,679 341,988
Total taxable loss for the year (996,077) (242,126)
Analysis of charge in the year
Loss on ordinary activities multiplied by rate of corporation tax in the UK of (189,255) (46,004)
19% (2021: 19%)
Tax losses carried forward (189,255) (46,004)
Current tax charged - -
The Parent Company has accumulated tax losses arising in the UK of £2,480,826
(2021: £1,484,749) that are available, under current legislation, to be
carried forward against future profits.
9. Intangible and other assets
For the year ended 30 September 2022 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 2020 4,377,127 4,377,127
Additions - during the year 976,084 976,084
Exchange Differences (56,922) (56,922)
Balance at 30 September 2021 5,296,289 5,296,289
Additions - during the year 1,423,236 1,426,236
Impairment - Akelikongo costs (404,533) (404,533)
Exchange Differences 300,261 300,261
Balance at 30 September 2022 6,615,253 6,615,253
Company Exploration assets Total
GBP GBP
Balance at 30 September 2021 as previously stated 1,936,953 1,936,953
Prior year adjustment to reallocate to investment in subsidiary (note 11) (1,936,953) (1,936,953)
Balance at 30 September 2021 (as restated), and as at 30 September 2022 - -
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 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.
Other additions during the year represent exploration costs at Orom-Cross
Graphite Project which were required to carry out the initial drilling costs
and testing of the mineral. Management performed a review for indications of
impairment as at 30 September 2022 and concluded no impairment was required.
The exploration assets in the Company have been restated at 30 September 2021
and reclassified to the investment in subsidiary as this entity is the mining
licence holder.
10. Loss per share
The calculation of the basic and diluted loss per share is based on the
following data:
30 Sep 2022 30 Sep 2021
Earnings
Loss from continuing operations for the year attributable to the equity (1,085,474) (694,726)
holders of the Company (£)
Number of shares
Weighted average number of Ordinary Shares for the purpose of basic and 160,790,224 114,070,173
diluted earnings per share
Basic and diluted loss per share (pence) (0.68) (0.61)
11. Investment in subsidiary
Details of the Company's subsidiary at 30 September 2022 are as follows:
Name of the subsidiary Place of incorporation Portion of ordinary shares held Principal activity
Blencowe Resources Uganda Ltd (Formerly Consolidated African Resources Uganda 100% Exploration
(Uganda) Ltd)
30 Sep 2022 30 Sep 2021
Investments in subsidiary
Investments at the beginning of the year as previously stated 3,936,953 2,000,000
Prior year adjustment to reclassify from exploration assets (note 9) - 1,936,953
Additions during the year 955,971 -
Total investment in subsidiary 4,892,924 3,936,953
12. Long term: non-current assets
30 Sep 2022 30 Sep 2021
Group Company Group Company
GBP GBP GBP GBP
Loan to subsidiaries (see below) - 549,415 - 469,267
Less: ECL provision - (27,471) - (23,463)
Total - 521,944 - 445,804
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 an interest of 5% per annum
chargeable at year end.
Following the acquisition of BRUL, the loan now is considered to be a
long-term asset.
During the year, the Company agreed to cover some expenses for Blencowe
Resources Uganda Ltd (BRUL) for the value of £88,148 (2021: £102,983). The
amount borrowed at the year end was £487,081 (2021: £431,288). The total
interest charged for the year ended 30 September 2021 was £24,354 (2021:
£21,564). The interest payable at the yearend was £62,334 (2021: £37,979).
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 BRUL, the
loan and its interest has increased, this has led to an increase in the
provision during the year.
30 Sep 2022 30 Sep 2021
Group Company Group Company
GBP GBP GBP GBP
Brought forward ECL provision - 23,463 - 18,499
Provision expense - 4,008 - 4,964
Carried forward ECL provision - 27,471 - 23,463
13. Trade and other receivables
30 Sep 2022 30 Sep 2021
Group Company Group Company
GBP GBP GBP GBP
Other receivables 24,765 253,948 8,752 143,335
Prepayments 61,082 61,082 43,828 43,828
Total 85,847 315,030 52,580 187,163
Included within other receivables is amounts receivable from BRUL.
Group Company Group Company
GBP GBP GBP GBP
Amount receivable from BRUL (formerly CARU) - 241,667 - 141,667
Less: ECL provision - (12,083) - (7,084)
Total - 229,584 - 134,583
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 BRUL. As of the year end,
the amount that BRUL (formerly CARU) owes the Company on management services
was £241,667 (2021: £141,667).
30 Sep 2022 30 Sep 2021
Group Company Group Company
GBP GBP GBP GBP
Brought forward ECL provision - 7,084 - -
Provision expense - 4,999 - 7,084
Carried forward ECL provision - 12,083 - 7,084
14. Creditors: Amounts falling due within one year
30 Sep 2022 30 Sep 2021
Group Company Group Company
GBP GBP GBP GBP
Trade Payables 140,018 127,577 238,614 238,653
Land Owners Liability 154,403 - - -
Accruals 31,954 31,953 41,457 41,457
Total 326,375 159,530 280,071 280,110
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 Blencowe Resources Uganda
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 2022 30 Sep 2021
GBP GBP
Total payable as at 1 October 887,560 1,024,737
Change in estimate (51,316) (177,639)
Interest charged during the period 45,916 45,260
Exchange loss/(gain) on valuation 96,095 (4,798)
Total payable as at 30 September 978,255 887,560
Analysis between current and non-current liability
Payable within 12 months 154,403 -
Payable after 12 months 823,852 887,560
978,255 887,560
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;
2022 2021
GBP GBP
Payable within 1 years 154,403 -
Payable within 2-5 years 308,806 279,964
Payable after 5 years 926,418 979,875
1,389,627 1,259,839
16. Share capital
Number of shares issued Nominal value per share Share capital Share Premium Total share capital
GBP GBP GBP GBP
At 30 Sep 2020 98,333,326 783,333 3,876,650 4,659,983
Issue of Ordinary Shares 23,596,624 0.005 117,983 1,344,300 1,462,283
Share issue costs - - - (88,869) (88,869)
At 30 Sep 2021 121,929,950 901,316 3,876,650 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
During the year ended 30 September 2022, the Company issued the following
shares;
Date Number of Ordinary Shares issued Nominal Share Value Share price
GBP GBP
15 December 2021 40,000,000 0.005 0.0500
19 April 2022 16,000,000 0.005 0.0500
All of the shares issued are classed as ordinary and have similar rights
attached to them. 20,000,000 warrants classified as equity were issued with
the 15 December 2021 share issue, and a further 8,000,000 warrants classified
as equity were issued with the 19 April 2022 share issue.
The Directors are authorised to issue 196,679,950 ordinary shares. As at 30
September 2022 the number of shares issued and fully paid were 177,594,950
(2021: 121,929,950), 335,000 of the shares issued in December 2021 are still
unpaid at year end.
17. Share based payments
Warrants
The following warrants were issued in exchange for a good or service:
30 Sep 2022 30 Sep 2021
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 - - - -
Outstanding on 30 Sep 1,250,000 6.00p 1,250,000 6.00p
Weighted average remaining contractual Life 0.57 years 1.57 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 2021
Weighted Average Share Price 6.00p
Weighted Average Exercise Price 6.00p
Expected Volatility 51%
Expected Life 3 years
Risk-free Rate 0.23%
Expected Divided Nil
Weighted Average Fair Value (GBP) 32,603
Options
The following options were issued in exchange for a good or service:
30 Sep 2022 30 Sep 2021
Options Number Options Weighted Average exercise price Number Options Weighted Average exercise price
Outstanding on 01 Oct 10,000,000 6.00p - -
Issued during the year 6,000,000 6.00p 10,000,000 6.00p
Cancelled/ Exercised - - - -
Outstanding on 30 Sep 16,000,000 6.00p 10,000,000 6.00p
Weighted average remaining contractual Life 3.78 years 4.21years
The options issued prior to 01 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 during the 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. The
assumptions used are detailed below. The expected future volatility has been
determined by reference to the average volatility of similar entities:
Options 30 Sep 2022 30 Sep 2021
Weighted Average Share Price 5.22p 6.13p
Weighted Average Exercise Price 6.00p 6.00p
Expected Volatility 48% 54%
Expected Life 5 years 5 years
Risk-free Rate 0.76% 0.27%
Expected Divided Nil Nil
Weighted Average Fair Value (GBP) 369,545 285,273
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.
18. Financial instruments
18.1 Categories of financial instruments
30 Sep 2022 30 Sep 2021
Group Company Group Company
GBP GBP GBP GBP
Financial assets at amortised cost
Trade and other receivables - 253,948 - 150,419
Cash and cash equivalents 346,994 346,994 93,288 93,288
Financial liabilities at amortised cost
Trade and other payables 326,375 159,530 280,071 280,110
Surface liability 978,255 - 887,560 -
18.2 Financial risk management objectives and policies
The Company's major financial instruments include cash and cash equivalents, trade and other payables and trade 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 2022 30 Sep 2021
USD UGX USD UGX
Financial Assets 1,534 - 566 -
Financial Liabilities 35,509 978,256 185,268 887,560
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 £28,709 (2021: £35,000) 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 (2021: 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.
19. 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 £24,000 (2021: £24,000).
20. Events after the reporting date
On 26 October 2022 the Group raised additional funds through a strategic
investment by AIM-Listed Jangada Mines Plc and two existing major
shareholders. £750,000 was raised through a placing of 18,750,000 ordinary
shares at 4p per share. The proceeds will be used to fund the delivery of 100
tonne bulk sample from Orom-Cross to China and general working capital.
On 27 October 2022 5,000,000 share options were issued to the directors and
senior management of the company at 5p per share, these shares will not vest
unless the share price of the company trades in excess of 10p per share for 10
consecutive days.
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