REG - Caracal Gold PLC - Annual Report and Accounts 2023
19/09/2024 09:00
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RNS Number : 7657E Caracal Gold PLC 19 September 2024
19 September 2024
Caracal Gold Plc
('Caracal' or the 'Company')
Annual Report and Accounts 2023
Caracal Gold Plc, the East African gold producer with over 1,300,000 oz JORC
compliant gold resources, announces that its Annual Report and Accounts for
the year ended 30 June 2023 is set out below.
Caracal also provides further updates across the Company:
Audit and Accounting
The completion of the audit for the year ended 30 June 2023 has taken
considerably longer than expected. This now enables the Company to progress
and finalise the interim results for the six month period ended 31 December
2023. The Company expects to release these interim results within the next few
weeks.
Furthermore, work has begun on the audit for the year ended 30 June 2024 with
the Company's new auditors. The Company will update shareholders on the
progress on the audit for the year ended 30 June 2024 in due course.
Prospectus
The Company continues to progress the prospectus with the Financial Conduct
Authority and completion of the work on the accounts as outlined above will
enable this to be finalised.
For further information visit www.caracalgold.com
(http://www.caracalgold.com/) or contact the following:
Caracal Gold plc robbie@kilimapesa.com
simon@caracalgold.com
Robbie McCrae
Simon Grant-Rennick
VSA Capital Limited +44 203 005 5000
Financial Adviser and Broker
Andrew Raca (Corporate Finance)
DGWA, the German Institute for Asset and info@dgwa.org
Equity Allocation and Valuation
European Investor and Corporate Relations Advisor
Katharina Löckinger
Notes:
Caracal Gold plc is an expanding East African focused gold producer with a
clear path to grow production and resources both organically and through
strategic acquisitions. Its aim is to rapidly increase production to
+50,000ozs p.a. and build a JORC compliant resource base of +3Moz. The Company
is progressing a well-defined mine optimisation strategy at its 100%
owned Kilimapesa Gold Mine in Kenya, where there is significant mid-term
expansion potential and the ability to increase gold production to 24,000oz
p.a. and the resource to +2Moz (current JORC compliant resources of approx.
706,000oz). Alongside this, Caracal owns 100% of Tyacks Gold Ltd which owns
the Nyakafuru Project in Tanzania, which has an established high-grade
shallow gold resource of 658,751oz at 2.08g/t contained within four deposits
over 280 km2 and appears amenable to development as a large scale conventional
open pit operation.
Caracal's experienced team has a proven track record in successfully
developing and operating mining projects throughout Africa.
The Company is a responsible mining and exploration company and supports the
positive social and economic change that it contributes to the communities in
the regions that it operates. It is a proudly East African-focused company: it
buys locally, employs locally, and protects the environment and its employees
and their families' health, safety, and wellbeing.
Company Registration No. 09829720 (England and Wales)
CARACAL GOLD PLC
DIRECTORS' REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
COMPANY INFORMATION
Directors
Simon Grant Rennick
Robbie
McCrae
Stefan
Muller
Company number 09829720
Company Secretary Bowsprit
Mercantile Services Limited
Birchin Court
20 Birchin Lane
Bank
London EC3V 9DU
Registered Office
7-28 Eastcastle Street,
London
W1W 8DH
Auditors
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London E14 4HD
Registrar
Share Registrars Ltd
3 The Millennium Centre
Crosby Way
Farnham
Surrey GU9 7XX
Legal Adviser to
DMH Stallard LLP
the Company
6 New
Street Square
London
EC4A 3BF
CONTENTS
Strategic Report
- Chairman's Statement 3
- Chief Executive's Statement 5
- Strategy and Business Model 10
- Group Resources and Reserves Statement 11
- Environment, Social and Governance Policy 12
- Principal Risks and Uncertainties 15
- Section 172 Statement 17
Directors' Report 19
Corporate Governance Report 24
Directors' Remuneration Report 32
Independent Auditors' Report 37
Consolidated Statement of Comprehensive Income 46
Consolidated Statement of Financial Position 47
Parent Statement of Financial Position 48
Consolidated Statement of Cash Flows 49
Parent Statement of Cash Flows 50
Consolidated Statement of Changes in Equity 51
Parent Statement of Changes in Equity 52
Notes to the Consolidated and Parent Financial Statements 53
CHAIRMAN'S STATEMENT
Dear Shareholders
I am pleased to be able to be in touch with you all, as the Chairman of
Caracal Gold Plc. I have only been in the chair since April 26(th), 2023, but
it's been a very hands-on situation. Everyone will know of the problems the
Company had at the beginning of 2023. Please rest assured your board have been
working hard to resolve them. This work has included managing the departure of
several board members, commissioning a governance review, managing several
fundraises and improving the Company's internal corporate governance including
secretarial support and financial support which should bear fruit in the
future.
The ongoing board of CEO Robert (Robbie) McCrae, Non-Executive Director Stefan
Muller and I have had a tough time to ensure the survival of the Company. This
has been done by reducing staff across the board and managing outstanding
invoices. We have also managed to produce some gold - approximately 632.5oz
from July 2023 to date.
The Company's shares were suspended from the Standard Listing segment of the
Main Market of the London Stock Exchange for failure to file the annual report
and accounts on time. This delay was caused by lack of both financial and
human resources. We are now able to publish these accounts. However, we draw
your attention to the Auditors' Report which highlights these issues and
includes a disclaimer of opinion, as the auditors have not been able to obtain
sufficient appropriate audit evidence to provide a basis for an opinion. This
includes insufficient evidence to support the Company's assessment of its
ability to continue as a Going Concern. The Board have noted these
uncertainties and issues are intent on correcting them and are actively
pursuing various funding options to ensure the Company will continue as a
Going Concern.
In addition, PKF have indicated that they will not stand for reappointment as
the company auditors. The Company is in the process of securing the
appointment of a Public Interest Entity (PIE) auditor and will announce same
when appointment is finalised.
We are also examining candidates to strengthen the board and it is my
intention that board committees will shortly be supplemented with additional
directors who will add their skills to your board.
The Company takes the issue of sustainable development very seriously and
responsible stewardship of the mineral resource and the land.
We continue to be a good corporate citizen in this area, despite our own
corporate situations.
The Company still has potential assets outside of Kenya in Tanzania and hope
to be able to look at these in detail in the coming months as things develop,
but as we all know funds will be needed to be available to do this. The
Kilimapesa Gold mine underground workings have been targeted by artisanal
miners and as such mining of the open pits has been stopped to ensure safety
of the staff and equipment. On the 13th of June 2024, the Ministry of Mines
via the Regional Mining Officer from the region commenced operations to remove
the artisanal miners, whilst this operation is ongoing the Company considered
that certain staff should remain at home for their safety.
As part of the work to be done for the Kilimapesa expansion project, the
Company has engaged Minopex (a DRA Global owned company) to carry out a review
of the expansion project. Minopex will provide an updated economic assessment
and comprehensive technical report for the project and then follow through to
execute the expansion on behalf of the Company. The Company also plan to
engage Minopex to manage the operation of the processing plant and laboratory.
I thank you for your support of Caracal and expect that the future will be
brighter but we will require financial support.
Chairman
17 September 2024
CHIEF EXECUTIVE'S STATEMENT
2022/23 was a challenging year for Caracal Gold PLC and all of its
stakeholders.
The period commenced with the company's focus being firmly on progressing the
financing for the Kilimapesa expansion project. In parallel to the financing
process, we published an updated Mineral Resource Estimate (MRE) for
Kilimapesa, built capacity across the management, operational and project
management teams, work on the Tyack's project in Tanzania commenced and work
commenced on an 18 month audit for the group which was published on the 9(th)
November 2022.
On the 29(th) November 2022 we announced US $10.5m and then on 12(th) December
2022 an additional US $3m of non-dilutive funding for the expansion of the
Kilimapesa project. To our disappointment the provider of the US $10.5m
facility decided early in January 2023 not to proceed with the funding.
A potential commercial sized discovery was made by the Kilimapesa exploration
team, the discovery Vim Rutha sits within a 4,9km shear zone which runs
parallel to the Kilimapesa Hill deposit. And numerous drill holes intersected
shallow, high grade mineralisation.
Turning to Tanzania, we completed a review project which included relogging
and sampling of the core which confirmed the existing JORC resource and
highlighted the additional exploration and development potential of the
project. Late in June 2022 we settled the acquisition of the project through a
share issue to the vendors. A number of 3(rd) parties showed interest in a
possible joint venture for the development of the project and the discussions
are ongoing.
Caracal's resource fundamentals remain and once the funding for the Kilimapesa
expansion is secured and the expansion complete we will have a strong platform
from which to grow.
CORPORATE REVIEW
Board changes
Due to identified shortcomings, the Board has initiated a comprehensive review
of its corporate governance, regulatory compliance and communications policies
in order to strengthen internal procedures. This is expected to be a
wide-ranging review and will include a review of the board structure,
including the mix of executives and non-executives, and any requirements for
different skill sets to ensure a robust and efficacious board structure.
Furthermore, a review of all corporate governance-related matters, practices
and policies and a review of all board sub-committees, is being conducted.
On 16(th) February 2023, the Company announced that a legal counsel has been
engaged to conduct a comprehensive review of its corporate governance,
regulatory compliance, and communications policies to strengthen internal
procedures.
The Board has decided that the Company's financial advisor as well as an
independent firm of solicitors, will be consulted to assist the Chairman in
this review and the Board expects all the above to be concluded as soon as
practically possible. Work on the Corporate Governance is continuing to
progress well. This process will be completed and announced via the prospectus
which is expected late 2024.
During the period there were the following changes to the Board:
- Mr Simon Gaines-Thomas resigned as non-executive Chairman on the
13(th) January 2023.
- Mr Simon Grant Rennick was appointed as executive Chairman on the
26(th) April 2023.
- Ambassador Dan Kazungu's 12 month contract as a non-executive
Director came to an end on the 12(th) June 2023.
- Mr Riaan Lombard resigned from his position as executive Director on
the 12(th) June 2023.
- Mr Gerard Kisbey-Green resigned from his position as non-executive
Director on the 12(th) June 2023.
Financial Review
The year ended 30(th) June 2023 presented significant challenges for the
Company, primarily characterised by halted gold production, increased
liabilities, and liquidity pressures. This review delves into the key aspects
of our balance sheet, income statement, and cash flows, reflecting our
strategic responses to these challenges.
During the prior year the Company changed its accounting reference date from
31 December to 30 June to align itself with its newly acquired subsidiary.
Consequently, the prior year covers an 18 month period, whereas the current
year is a 12 month period and so is not entirely comparable year on year.
Statement of Financial Position
The balance sheet this year shows increased liabilities, which rose from
£12.3m to £16.4m due to increased borrowing necessitated by funding
shortages. The lack of gold production led to a stagnation in asset growth
(total assets fell from £10.2m to £9.2m), complicating our financial
stability and liquidity. A prior year adjustment was also made to adjust for
Right of Use Assets.
Income Statement
The income statement was significantly impacted by the cessation of gold
production due to poor operational performance. Revenue was down 38% from
£6.9m to £4.2m from the prior period (which was 18 months rather than 12
months), leading to a loss before and after taxation of £5.2m (2022: 15 month
period loss of £15.5m). Even though costs are lower than the prior period, we
continue to undertake cost management measures, including reductions in
non-essential operational expenditures and renegotiations of contract terms,
to mitigate financial outflows. Despite these efforts, our financial results
reflect the adverse conditions, with increased financing costs of £1.6m
(2022: £0.8m).
Liquidity and Cash Flow
Cash flows from operating activities were negative, though improved on prior
period, at £1.4m (2022: £7.4m), reflecting the direct impact of halted
production. The Group faced heightened liquidity issues, necessitating careful
cash management and the pursuit of alternative financing options, including
new convertible loan notes and some small equity raises totalling £0.2m
(2022: £8.4m). Investment activities were minimal, restricted to essential
maintenance and preservation of our core assets. Our ending cash position of
£63,000 (2022: £80,000) has been tightly managed but remains a concern that
requires ongoing attention and strategic action.
In conclusion, this financial year has tested our resilience and adaptability
in the face of severe operational and financial challenges. We are actively
working on strategies to resume production, manage liabilities, and improve
liquidity. Our focus remains on securing stable funding, optimising our asset
base, and preparing for a sustainable operational restart. As we move forward,
we are committed to overcoming these hurdles and restoring shareholder value
through increasing production and prudent financial management .
Post Balance Sheet Events
Board changes
On 19(th) July 2023, the Company announced that Non-Executive Director, Rachel
Johnston, had informed management of her resignation to pursue other
opportunities.
Fundraisings
On 29(th) September 2023, the Company announced it had raised £92,750 by way
of Subscription, through the issue of 30,916,667 new Ordinary Shares of
£0.001 in the Company at a price of £0.003 per Ordinary Share. The
subscribers from the subscription were issued with one option for every two
new Ordinary Shares subscribed for, with an option exercise price of £0.006
per option. The option will expire December 31(st) 2024. The Company also
entered into a Loan Agreement with Robbie McCrae the CEO of Caracal. The
principal amount of the Loan Agreement was US $40,000 (Forty thousand United
States Dollars). It had a duration of two years and will accrue interest at
10% per annum.
On 14(th) November 2023 the Company announced that it had entered into a US
$1,400,000 Financing Agreement with Koenig Vermoegensverwal MBH. The Company
agreed to make monthly payments and each monthly payment shall be calculated
as the higher of US $50,000 and 50% of free cash flow of the Company. The
total repayment has been agreed as follows:
· $1,750,000 if settled on or before 30 June 2024
· $2,100,000 if settled on or before 31 December 2024
· $2,450,000 if settled on or before 30 June 2025
· $2,800,000 if settled on or before 31 December 2025
In addition, the Company announced it had entered into a Loan Agreement with
Robbie McCrae, the CEO of Caracal. The principal amount of the loan is
$150,000. The final repayment date will be 31(st) December 2025, accruing
interest at 10% per annum above the Bank of England's Bank Rate.
On 19(th) January 2024 the Company announced that it had entered into a loan
agreement for $250,000 with CSS Alpha Global Pte Ltd on the following
principal terms:
· The term of the Loan was 12 months.
· The Loan was to carry interest of 3% per month.
· There will be a three-month grace period and thereafter the Loan will
be repaid in nine equal instalments.
· The Loan is secured by a debenture against Caracal Gold Plc in favour
of the Lender.
· The Loan is also secured by a personal guarantee from the Company's
CEO for 50% of the principal amount. Mr. McCrae will receive a payment from
the Company amounting to 10% of the amount secured by his personal guarantee.
In addition, as part of the transaction the parent company of the Lender
received 13,000,000 new Ordinary Shares of £0.001 in the Company.
On 23(rd) January 2024 the Company announced that it had raised £140,000 by
way of a Subscription, through the issue of 46,666,667 new Ordinary Shares of
£0.001 in the Company at a price of £.0.003 per Subscription Share. The
subscribers from the Subscription were issued with one warrant for every new
Subscription Share subscribed for, with an exercise price of £0.0042 per
Warrant. The Warrants will expire in three years from issue.
On 26(th) March 2024, the Company announced it had raised £780,000 by way of
a Subscription, through the issue of 260,000,000 new Ordinary Shares of
£0.001 in the Company at a price of £0.003 per Subscription Share.
The funds of the subscription have been paid in five equal instalments of
£156,000 and the Company will issue 260,000,000 new Ordinary Shares upon
completion of the final instalment.
Instalments Amount Date of instalment
First instalment £156,000.00 25(t)(h) March 2024
Second instalment £156,000.00 28(t)(h) March 2024
Third instalment £156,000.00 5(t)(h) April 2024
Fourth instalment £156,000.00 9(t)(h) April 2024
Fifth instalment £156,000.00 12(t)(h) April 2024
The subscribers from the Subscription were issued with one warrant for every
new Subscription Share subscribed for, with an exercise price of £0.0042 per
Warrant. The Warrants will expire in three years from Admission of the
Subscription Shares to trading.
On 21 June 2024, the Company announced it had conditionally secured further
funding through a Strategic Investor of up to $6m. This will be a three
phased investment in both cash and equity. Further details regarding this
proposed investment can be found on the Company's website.
Suspension
Trading in the Company's ordinary shares on the Main Market of the LSE has
been suspended as of 7.30am on 1(st) November 2023 due to the Company's delay
in publishing its annual report and accounts for the year ended 30 June 2023.
The Company expects to request a restoration of the listing of its ordinary
shares (including the New Ordinary Shares) on the Main Market of the LSE upon
publication of the annual report and accounts, and its interim accounts for
the period ended 31 December 2023.
OUTLOOK
2024 is set to be a challenging period for the Group as it regroups and
endeavours to finalise the financing for the Kilimapesa project and ensure the
prospectus is completed and approved by the FCA in a timely manner.
The auditors have stated that they are unable to form an opinion on these
financial statements due to the cumulative effect of the uncertainties, as
noted in their report.
The Board and management are doing everything in their power to secure the
appropriate financial and human resources to turn the resource and reserve
into a sustainable asset for the benefit of all our stakeholders.
I would like to take this opportunity to thank our shareholders, employees,
members of the Board, our local communities and all stakeholders for their
continued commitment to the Company and ongoing support during this very
challenging period.
Chief Executive Officer
17 September 2024
STRATEGY AND BUSINESS MODEL
The Directors' overall strategy is to grow the Company's gold resources whilst
scaling its ability to efficiently and profitably extract them. The approach
has been to gain a foothold in the East African region through Kilimapesa,
which was selected for both its immediate potential and exploration upside of
the surrounding tenements. With a deep local knowledge and physical presence
in the East African region we will continue to look for acquisition
opportunities and the geological potential of the surrounding tenements, as
well as grow relationships with potential partners and stakeholders.
Additional funding is being sourced to complete the Kilimapesa expansion
project.
Whilst the Directors' core focus remains on the Group's proven resource at
Kilimapesa through exploration and ramping up production the Company has
acquired a complimentary project in Tanzania through the acquisition of 100%
of Tyacks Ltd. Tyacks own the Nyakafuru gold project which has 650,000oz in
JORC compliant resources, the Company has completed an initial review of the
project and is planning additional drilling and research when funding is
secured. This funding is expected to be secured following the completion of
the Prospectus during the next few months.
The Directors acknowledge there have been shortcomings in the corporate
governance and financing of the business and they are actively applying
financial and human resources in order to improve this aspect of the business.
GROUP RESERVES AND RESOURCES STATEMENT
On 13 July 2023, the Company announced its Mineral Resource Estimate for its
assets in Kenya and Tanzania. This announcement is set out below.
"Over the last 18 months the Company has assembled a portfolio of projects
which host over 1.3moz of JORC compliant gold resources. With the work
completed on exploration during this 18-month period the Company is confident
that once exploration drilling recommences it can significantly increase the
resources in its project areas.
Summary Measured and Indicated Inferred Total
Tonnes (Mt) Grade (Au g/t) Ounces (k) Tonnes (Mt) Grade (Au g/t) Ounces (k) Tonnes (Mt) Grade (Au g/t) Ounces (k)
KENYA
Kilimapesa Hill 6.92 1.45 318 5.22 1.48 248 12.15 1.5 566
Red Ray 0.88 2.84 80 1.03 1.83 60 1.91 2.28 140
Sub-Total 7.80 1.59 398 6.25 1.53 308 14.06 1.56 706
TANZANIA
Voyager Mentelle 5.9 1.71 322 1.9 1.47 89 7.7 1.65 411
Leeuwin Grange 2.2 1.62 114 2.4 1.75 134 4.6 1.69 248
Sub-Total 8.1 1.67 436 4.3 1.61 223 12.3 1.67 659
GROUP TOTAL 15.9 1.63 834 10.55 1.57 531 26.36 1.61 1,365
Qualified Person:
Mr. Franck Bizouerne, P.Geo., Group Mineral Resource Manager of Caracal
Gold PLC, is the Company's Competent Person under JORC Code "Standards of
Disclosure for Mineral Projects" and has reviewed and assumes responsibility
for the scientific and technical content in this press release."
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") POLICY
ESG PILLARS
Environmental Minimise our footprint and act with environmental stewardship in the areas of
compliance, energy consumption and carbon emissions, water quality and
consumption, noise, dust, air, vibrations, rehabilitation and closure
Social Protect (health & safety) and grow our people (training, inclusion,
retention). Enhance and share the benefits across local communities and
stakeholders (social impact, cultural heritage, local procurement and local
recruitment)
Governance Strong ethical principles and controls to ensure we do business the right way
(sound structure, corporate policies, codes of conducts, risk identification
and management as well as public disclosure)
ENVIRONMENTAL
Despite facing financial constraints and halted production, Caracal
acknowledges the pressing need to prioritise environmental protection in our
operations. While our current circumstances may limit our capacity to invest
in sustainable practices, we are committed to doing better in the future. As
we strive to overcome our financial challenges and regain stability, we
recognise the imperative of allocating resources towards environmental
initiatives and the Board will look to take decisive action as soon as
circumstances permit.
SOCIAL
Employees
Caracal Gold's people are the driving force behind our exploration and mining
activities. We seek to treat our people fairly and with respect and ensure
they have the opportunity to develop and reach their potential. We comply with
the labour legislation where we work.
Health and Safety
Caracal Gold places its employees first, as they represent the backbone of the
Company and our ongoing success relies on them staying safe, healthy and happy
in their jobs. We work in complex environments with a wide range of potential
risks to be managed and so providing a safe working environment is our highest
priority. Our business principles, policies and management plans are based on
targeting the achievement of a "zero harm" performance.
At the Kilimapesa mine, an occupational health and safety plan is in place to
manage risks and opportunities, prevent work-related injuries and ill health
to workers and providing safe and healthy workplaces. During the reporting
period, we have had zero fatalities and no Lost Time in Injury (LTI).
Stakeholder engagement
Caracal Gold believes that a strong social license to operate in our host
countries and local communities is built on mutual respect and open two-way
dialogue. This social license is fundamental to the long-term viability and
success of our business.
Our stakeholders include our employees, contractors, suppliers, business
partners, local communities and government authorities, including all
individuals who live in proximity to our operations or who may be impacted by
our business relationships.
Community stakeholder engagement is conducted on a weekly basis through a
dedicated Community Liaison Officer and the local monitoring committee ("the
Moyoi committee") which was created to facilitate communication between the
community and the mine.
COMMUNITY
Caracal Gold recognises that our activities have impacts on the communities
where we work and will look to developed community initiatives as they become
affordable for the Company.
GOVERNANCE
The Company's Corporate Governance Report is set out on pages 24 to 31.
In June 2022, the ESG Committee was created and held its first meeting. Its
aim is to advise the Board of Directors and support the Company's management
team in relation to the development and implementation of the Corporation's
ESG initiatives, policies, compliance systems, and monitoring processes.
A suite of group governance policies has been drafted and a thorough review of
governance is currently ongoing. These policies address subjects of ethical
conduct, anti-bribery and corruption, whistleblowing as well as environmental
and social responsibility, and health and safety.
CLIMATE-RELATED FINANCIAL DISCLOSURES
The Group recognises that climate change represents one of the most
significant challenges facing the world today. Under the Listing Rules
compliance with the Task Force on Climate-Related Financial Disclosures
("TCFD") is required for premium and standard listed companies on a comply or
disclose basis. These new listing rules came into effect on 1(st) January 2021
for UK premium listed companies and 1(st) January 2022 for those on the
standard list.
TCFD Purpose
In contrast to the Streamlined Energy and Carbon Reporting (SECR) disclosures
which requires listed companies to disclose their greenhouse gases emissions,
CO(2) and energy usage, TCFD is primarily designed to protect shareholders
from the impacts of climate change by ensuring companies disclose key
information within these areas and communicate how they're thinking about and
assessing climate-related risks and opportunities as part of their resilience
and risk assessment processes.
TCFD adherence requires disclosure of greenhouse gas (GHG) emissions as part
of the Metrics and Targets section. This creates a degree of overlap with SECR
requirements, however TCFD's focus is understanding how GHG emissions may
expose a company to future changes in law, regulation or market dynamics which
penalise higher polluting industry sectors, sub sectors or companies.
Climate Change Risks and Opportunities
Due to current financial constraints and a lack of specialised expertise, we
have not yet fully assessed these risks or integrated them into our
operations. We also do not have the information available to report on the
Group's emissions by scope. We are committed to improving our capabilities in
this area and will prioritise the necessary resources and expertise to
adequately report on TCFD metrics in the future. Our long-term goal is to
ensure that we can effectively manage and mitigate climate-related risks,
safeguarding the sustainability of our operations.
We have identified the key climate risks to our Company as follows and will be
preparing a risk register to ensure the mitigation of these risks is captured
in the coming financial period.
Physical Risks: Extreme weather events, such as heavy rainfall, floods, and
droughts, can disrupt mining operations, damage infrastructure, and increase
operational costs.
Regulatory Risks: Increasingly stringent environmental regulations and
policies aimed at reducing carbon emissions can lead to higher compliance
costs and potential restrictions on mining activities.
Market Risks: Fluctuations in commodity prices driven by climate change
impacts can affect the demand and profitability of gold mining, influencing
the company's financial performance.
Reputational Risks: Failure to address climate-related issues can harm the
company's reputation, affecting stakeholder trust and potentially leading to
loss of investment and market opportunities.
Streamlined Energy and Carbon Reporting
As per the Streamlined Energy and Carbon Reporting ("SECR") Regulations
published in 2018 quoted companies and large unquoted companies that have
consumed more than 40,000 kilowatt-hours (kWh) of energy in the reporting
period must include energy and carbon information within their directors'
report. The Company does not currently exceed this threshold and therefore is
presently exempt from the SECR reporting requirements.
The subsidiaries are excluded from reporting under this requirement as they
are outside of the European Union. However, the Group will continue to monitor
these requirements and will work towards full and accurate reporting on
consumption in the near future.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company operates in an uncertain environment and is subject to a number of
risk factors. The Directors have carried out a robust assessment of the risks
and consider the following risk factors are of particular relevance to the
Group's activities, although it should be noted that this list is not
exhaustive and that other risk factors not presently known or currently deemed
immaterial may apply.
The impact levels of high and medium have been based on an evaluation of each
risk's potential effect on our operations, financial performance, and
strategic objectives. This assessment is mainly judgemental, considering
factors such as likelihood, potential financial loss, operational disruption,
and long-term implications for the Group.
Description Impact Mitigation
Strategic Risks
· Concentration Risk - Group's reliance on its assets in Kenya, and Medium · Board actively seeking to diversify current portfolio risk by
Tanzania as a non-producing asset. acquiring further exploration and production assets.
· Whilst the Group will not experience competition for its sales, it · Adding to the Group's technical team capability and deploying capital
may encounter competition in identifying and acquiring further rights for prudently to maximise return for shareholders.
attractive gold properties.
· Programme of training and educating successors in roles for key
· The Group's success depends in large measure on its key personnel - personnel.
loss of key personnel may have a material effect on implementing the Group
strategy.
Financial Risks
· Raising additional funding to develop further exploration, High · Regular review of cashflow, working capital and funding options.
development and production programmes.
· Build strong and sustainable relationships with key shareholders
· Dependency on UK stock market trading to raise further cash when
necessary. · Prudent approach to budgeting and strong financial stewardship -
managing commitments and liquidity to ensure the Group has sufficient capital
· The profitability of operations and cash flows generated will be to meet spending commitments.
significantly affected by changes in the gold price.
· The use of hedging and risk management will be reviewed on an ongoing
· Changes in the Group's capital costs and operating costs are likely basis and implemented where necessary.
to have a significant impact on its profitability.
· Employment of a new CFO who is a qualified Chartered Accountant to
· Maintenance of proper and accurate financial records to enable timely implement an adequate financial reporting system.
financial reporting and cash management.
HSSE and Operational Risks
· The Group's mining licences and contracts are dependent on renewal to High · As a group Caracal manages its relationships with the local and
continue operating - any failure to secure continuation will have a material
federal authorities carefully by actively engaging the authorities.
effect on the Group.
· Careful consideration and assessment of third-party contractors
· Dependence on availability of leases, services and personnel from technical, financial and HSSE capabilities prior to entering into contracts
third parties. for services.
· Material incidents such as adverse weather conditions or mechanical · Ensure that all stages of the exploration and production work
difficulties. Shortages of power, water and weather conditions may all impact programme have been rigorously stress tested and risk assessed.
operations.
Legal and Compliance Risks
· Inability to provide accurate and timely financial reporting to High · Employment of a qualified chartered accountant to ensure financial
comply with reporting requirements of the Companies House and the FCA. and compliance reporting is provided in a timely manner.
· Inaccurate reporting on Reserves and Resources as mineral reserve · The Group hires qualified technicians to write and analyse resource
data is not necessarily indicative of future results of operations. data
· Fraud, corruption and bribery. · Employment of suitably qualified staff and external advisers to
ensure full compliance
· Litigation.
· The Group has an Anti-Fraud, Corruption and Bribery Policy in place
· The Group's involvement in exploration may result in the Group which all employees are made aware of, alongside a Whistle blowing policy.
becoming subject to liability for pollution, leaks and other damage to the
environment. · Insurance in place
· Risk assessment and due diligence of all counterparties that the
Group deals with
· Please see ESG policy
Country Risks
· Changes to the current political and regulatory environment in Kenya High · Engaging in constructive discussions with Government and key
may adversely affect the Group stakeholders.
· Governments, regulations and the environmental laws may adversely · Employment of suitably qualified staff and external advisers to
change ensure full compliance
· Licence renewal and continuance in force of appropriate surface · Regular monitoring of political, regulatory and HSSE changes.
and/or surface use contract may have a material adverse impact if not renewed.
· Diversification of operations and assets in different countries
· Sovereign risk including political, economic or social uncertainty, reduces single country risk.
changes in policy, law or regulation
SECTION 172 STATEMENT
The Directors acknowledge their duty under s.172 of the Companies Act 2006 and
consider that they have, both individually and together, acted in the way
that, in good faith, would be most likely to promote the success of the
Company for the benefit of its members as a whole. The Directors have regard
to the interests of our Company employees and other stakeholders including our
impact in the community, the environment and our reputation, when making their
decisions. The Directors consider what is likely to promote the success of the
Company for our members in the long-term in all their decision making. In
doing so, they have had regard (amongst other matters) to:
· the likely consequences of any decision in the long term:
The Company's long-term strategic objectives, including progress made during
the year and principal risks to these objectives, are shown on pages 15-16
above. The Company has invested significant funding to follow its strategy to
upgrade and improve the mine site at Kilimapesa. These investments have been
made to protect the long-term viability of the mine and the future of its
employees.
· the interests of the Company's employees:
Our employees are fundamental to us achieving our long-term strategic
objectives and the Company continues to invest in the well-being and training
of its employees through regular training sessions. Caracal also has a
preference to hire locally wherever possible.
· the need to foster the Company's business relationships with
suppliers, customer and others, including government:
A consideration of our relationship with wider stakeholders and their impact
on our long-term strategic objectives is disclosed above in our ESG policy
statement on pages 12-14.
The Company has ensured that local suppliers are involved in the supply of
goods and services to the Company by ensuring their involvement in the
tendering process.
We maintain good relationships with both local and federal government
officials.
· the impact of the Company's operations on the community and the
environment:
The Group operates honestly and transparently by constantly reporting to the
market and shareholders and by the senior staff and Board being available for
discussion of specific issues. We consider the impact on the environment on
our day-to-day operations and how we can minimise this. The Company is fully
integrated with the local community and has appointed a Community Liaison
Manager to maintain these relationships.
· the desirability of the Company maintaining a reputation for high
standards of business conduct:
Our intention is to behave in a responsible manner, operating within the high
standard of business conduct and good corporate governance. The Company has
built a team of external professional advisors whose role is to provide advice
and guidance on all aspects of the company's business and interactions with
business and government.
Group Policies are being continuously developed on good governance and
employee relationships within the business.
· the need to act fairly as between members of the Company:
Our intention is to behave responsibly towards our shareholders and treat them
fairly and equally, so that they too may benefit from the successful delivery
of our strategic objectives.
· the need to have continued engagement, transparency and faith from
all our shareholders.
We regularly engage with key shareholders and gauge their thoughts on the
activities and operations of the company, whether it be expansion, exploration
drilling results or general questions about the future running of the
business.
In future the board and the Chief Executive Officer are looking at a more
comprehensively enhanced Investor Relations programme.
__________________
Director
17 September 2024
DIRECTORS' REPORT
The directors present their report together with the audited consolidated
financial statements of Caracal Gold Plc for the year ended 30 June 2023.
Principal Activity
The principal activity of the Company and its subsidiaries (the "Group") is
the exploration, development and mining of gold in Kenya, exploration assets
in Tanzania and the development of further projects to expand its operations
within this industry.
In prior financial year, on 31 August 2021, the Company acquired the holding
company of Mayflower Gold Investments Limited (MGIL) and thus a 100% indirect
interest in Kilimapesa Gold Pty Ltd (KPGL), whose principal activity is an
established gold mine and gold processing operation in Kenya. This was
accounted for as a reverse acquisition - See note 5 below for further details.
A contemporaneous placing was also completed on this date to raise funds for
the Group's ongoing working capital requirements.
Results and Dividends
The results for the period and the financial position of the Group are shown
in the following consolidated financial statements. The Group has incurred a
pre-tax loss of £5.2m (2022: 18 month period loss of £15.5m). The Group has
net liabilities of £7.3m (2022: £2.1m).
During the prior year the Company changed its accounting reference date from
31 December to 30 June to align itself with its newly acquired subsidiary.
Consequently, the prior year covers an 18 month period, whereas the current
year is a 12 month period and so is not entirely comparable year on year.
The Directors do not recommend the payment of a dividend (2022: £Nil). The
nature of the Company's business means that it is unlikely that the Directors
will recommend a dividend in the next few years. The Directors believe the
Company should seek to generate capital growth for its Shareholders.
Financial and Performance Review
Income Statement
The gross loss for the period was £5.2m compared to the 15 month period prior
year loss of £15.5m. This represents a decrease in one-off costs from the
reverse acquisition and listing on the LSE in prior year rather than an
underlying improvement in the production of the mine. Revenue was down 38%
from £6.9m to £4.2m due to the reduction of gold production caused by
several technical issues and underfunding of operations.
Administration costs decreased to £7.2m to £4.4m, as the Group continued to
undertake cost management measures.
The one-off income in the year of £1.9m was related to the settlement of
outstanding contingent liabilities through the renegotiation of the Tyacks
Sale and Purchase Agreement (and settlement in shares) and the cancellation of
the Performance Shares.
Statement of Financial Position
The increase in Intangible Assets from £2.4m to £3.1m represents further
spend on the exploration and evaluation assets, taking total assets to £9.2m
(2022: £10.2m) at year end.
The statement of financial position this year shows increased liabilities,
which rose from £12.3m to £16.4m due to increased borrowing necessitated by
funding shortages. The lack of gold production led to a reduction in assets
(total assets fell from £10.2m to £9.2m), complicating the financial
stability. In response, the company is endeavouring to raise further funds
to ensure we can stabilise our financial position and prepare for future
production.
Cash flows
Net cash outflows from operating activities decreased from £7.4m to £1.4m,
which though an improvement still reflect the reduced operating capacity of
the mine. Financing cashflows reduced from £8.9m to £2.9m, with the Group
still requiring to source external funding to ensure that the mine reaches
sustainable production levels in the imminent future.
Key Performance Indicators ("KPI's")
The Board has identified financial KPIs for the Group which allow them to
monitor financial performance and plan future investment activities. These are
detailed below.
(Restated)
30 June 30 June
2023 2022
Revenue £4,233,000 £6,858,000
Loss for the period £6,241,000 £15,529,000
Cash and cash equivalents £63,000 £80,000
Please note, that these KPIs are provisional and the Board will be looking to
increase the number of KPIs, including non-financial KPIs, reported to the
shareholders as the Group continues on its growth strategy.
Business Review and Future Developments
A review of the business and likely future developments of the Company are
contained in the CEO's Statement above.
Going Concern
The directors have prepared the financial statements on a going concern basis.
During the financial year, the Group has encountered significant challenges,
including halted gold production, increased liabilities, liquidity pressures
and lack of both financial and human resources. In response to these
challenges, the directors have implemented cost-cutting measures,
renegotiation of debt, and are currently pursuing various options to raise
additional financing.
The directors have carefully considered the Group's current cash position,
cash flow forecasts, and the future expected financial resources. Based on
this review, the directors believe that the Group will have adequate resources
to continue in operational existence for the foreseeable future.
However, we draw attention to the audit report, which includes a disclaimer of
opinion on the financial statements. The auditors were unable to obtain
sufficient appropriate audit evidence to support the directors' assessment of
the Group's ability to continue as a going concern. This was due to the lack
of reliable management accounts and up to date financial reporting which can
clearly state the current financial position of the Group. Consequently, they
have not been able to express an opinion on this matter.
The directors acknowledge the auditors' disclaimer of opinion but remain
confident in the Group's ability to continue as a going concern based on the
strategies and plans that are being put in place. As such, the financial
statements have been prepared on a going concern basis, and no adjustments
have been made to reflect any potential inability of the Group to continue as
a going concern.
Risk Management
There is no formal programme of hedging for either commodity, interest rate or
foreign exchange at this stage. However, where appropriate, such risks are
managed through purchase or sale contracts with suppliers, banks or other
institutions or companies.
Financial risk management is detailed out in note 4 to these consolidated
financial statements.
Principal Risks and Uncertainties
The principal risks and uncertainties are included in the Strategic Report
above and note 4 to these consolidated financial statements.
Gender of Directors and Employees
The Board of Directors consists of three white male Directors. The Board
recognises that it currently does not meet the requirements of the diversity
targets as detailed out in Policy Statement PS 22/3 of the Listing Rules and
DTR requirements, on gender or ethnicity. It has no female or ethnic
minority representation on the current Board. It is aware of these facts and
that as it grows, it will look to recruit and develop a diverse and more
gender-balanced team.
Share Capital and Substantial Share Interests
The Company has been notified of the following interests of 3 per cent. or
more in its issued share capital as at 13 June 2024:
Shareholding Percentage of the Company's Ordinary Share Capital
Vidacos Nominees Limited 555,746,490 26.0%
Hargreaves Lansdown (Nominees) Limited 483,003,512 22.6%
HSDL Nominees Limited 281,117,867 13.2%
Interactive Investor Services Limited 297,913,618 13.9%
GHC Nominees Limited 99,416,843 4.7%
HSBC Client Holdings Nominee (UK) Limited 91,502,018 4.3%
Mr John Mark Stanley 66,666,667 3.1%
Aurora Nominees Limited 78,795,207 3.7%
Directors
The directors of the Company who served during the year ended 30 June 2023 and
to the date of this report are listed below:
Robbie McCrae
Simon Grant Rennick appointed 26
April 2023
Stefan Muller appointed 18
July 2022
Simon Games-Thomas resigned 9 January 2023
Rachel Johnston resigned 19 July 2023
Gerard Kisbey-Green resigned 12
June 2023
Riaan Lombard resigned 12 June
2023
H.E. Dan Kazungu resigned 12 June 2023
Directors' interests
The beneficial interests of the Directors who held office at 30 June 2023 and
their connected parties in the share capital of the Company is included in the
Remuneration Report on pages 32-36.
Directors' remuneration
Directors' remuneration is disclosed in the Remuneration Report.
Supplier Payment Policy
It is the Company's payment policy to pay its suppliers in conformance with
industry norms. However, it is recognised that during this difficult liquidity
period trade payables have not been paid in a timely manner and within
contractual terms. The Board are aware of this failure and have been in
contact with all creditors to establish repayment plans as soon as further
funding is forthcoming.
Environmental And Social Governance ("ESG") And Streamlined Energy And Carbon
Reporting
This is referred to in the Strategic Report above.
Financial risk and management of capital
The major balances and financial risks to which the Company is exposed to and
the controls in place to minimise those risks are disclosed in Note 4.
The Board considers and reviews these risks on a strategic and day-to-day
basis in order to minimise any potential exposure.
Corporate Governance
A report on Corporate Governance is set out below in the Corporate Governance
Report.
Provision of Information to Auditors
The Directors who held office at the date of approval of this Report of the
Directors confirm that, so far as they are individually aware, there is no
relevant audit information of which the Group's auditor is unaware; and each
Director has taken all the steps that they ought to have taken as Director to
make themselves aware of any relevant audit information and to establish that
the Group's auditor is aware of that information.
PKF Littlejohn have stated that they will not be seeking reappointment as the
Company's auditors for the next financial year as a result of the Disclaimer
of Opinion. The Board have initiated the process of appointing a new audit
firm and will update our stakeholders accordingly once the selection process
is complete. The Board would like to thank PKF Littlejohn for their
professional service and support over the past years.
Annual general meeting
The Company will hold its annual general meeting for 2024 and the date will be
announced on the Company website.
Political and charitable contributions
The Company have not yet made a charitable donation in 2023 (2022: £nil). No
political donations were made in either year.
Post Balance Sheet Events
Details of post reporting date events are disclosed in Note 30 to the
accounts.
Website Publication
The Directors are responsible for ensuring the Annual Report and the financial
statements are made available on its website. Financial statements are
published on the Company's website in accordance with legislation in the
United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the Company's website is the responsibility of
the Directors. The Directors' responsibility also extends to the ongoing
integrity of the financial statements contained therein.
Statement of Directors Responsibilities
The Directors are responsible for preparing the Annual Report, Report of the
Directors, Remuneration Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare consolidated financial
statements for each financial year. Under that law the Directors have
elected to prepare the consolidated 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 of the Company and of the
profit or loss for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and accounting estimates that are reasonable and prudent;
and
· prepare the consolidated financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the consolidated financial statements comply with the
Companies Act 2006. They are also responsible for safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
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 the financial statements may differ from legislation in other
jurisdictions.
Directors' Responsibility Statement Pursuant to Disclosure and Transparent
Rules
Each of the Directors, confirm that, to the best of their knowledge and
belief:
• The Financial Statements prepared in accordance with UK-adopted
international accounting standards and give a true and fair view of the
assets, liabilities, financial position and loss of the Group and Company; and
• the Annual Report and Financial Statements, including the Business
review, includes a fair review of the development and performance of the
business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that they face.
This report was approved and authorised for issue by the board on 17 September
2024 and signed on its behalf by:
Director
CORPORATE GOVERNANCE REPORT
Introduction:
As a Standard listed company Caracal is not required to follow the UK Code of
Corporate Governance. However, the Directors recognise the importance of
sound corporate governance and are currently in the process of applying The
Quoted Company Alliance Corporate Governance Code for Small and Medium size
Companies (2018) (the 'QCA Code') to their corporate processes. They believe
this is the most appropriate recognised governance code for a company of the
Company's size and with a Standard Listing on the London Stock Exchange.
They are aware that there are currently several areas of non-compliance which
include: (i) the formal developments and publication of Key Performance
Indicators ("KPIs") that are relevant to the business (only financial KPIs
have been included above), (ii) the adoption of an appropriate Corporate &
Social Responsibility ("CSR") policy and (iii) the formal sitting of separate
Committees. The Board will, once the funding has been finalised, ensure that
all areas on non-compliance are addressed, new processes are implemented and
adhered to. The Board's short term focus is to address the issues pertaining
to going concern.
The QCA Code has ten principles of corporate governance that the Company is
committed to apply within the foundations of the business by the end of the
next financial reporting period. These principles are:
1. Establish a strategy and business model which promote long-term value
for shareholders;
2. Seek to understand and meet shareholder needs and expectations;
3. Take into account wider stakeholder and social responsibilities and
their implications for long term success;
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation;
5. Maintain the board as a well-functioning balanced team led by the
Chair;
6. Ensure that between them the Directors have the necessary up to date
experience, skills and capabilities;
7. Evaluate board performance based on clear and relevant objectives,
seeking continuous improvement;
8. Promote a corporate culture that is based on ethical values and
behaviours;
9. Maintain governance structures and processes that are fit for purpose
and support good decision-making by the Board; and
10. Communicate how the Company is governed and is performing by maintaining
a dialogue with shareholders and other relevant stakeholders.
Here follows a short explanation of how the Company applies each of the
principles, including where applicable an explanation of why there is a
deviation from those principles.
Principle One
Business Model and Strategy
The Group has a mining licence in Kenya and has also acquired several
exploration licences in Tanzania. It has a clear strategy of exploring and
developing this and future opportunities which has been set out in the Chief
Executive's Statement. Further to earlier comments on risk and strategy the
company is committed to broadening its area and scope of operations as
appropriate.
Principle Two
Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. Shareholders will be encouraged
to attend the AGM and ask the directors questions and the website will be
maintained to ensure all contemporary communications are added timeously.
Principle Three
Considering wider stakeholder and social responsibilities
The Board recognises that the long-term success of the Company is reliant upon
open communication with its internal and external stakeholders: investee
companies, shareholders, contractors, suppliers, regulators and other
stakeholders. The Company has created close ongoing relationships with a broad
range of its stakeholders and will ensure that it provides them with regular
opportunities to raise issues and provide feedback to the Company. The
Company is committed to delivering lasting benefit to the local communities
and environments where we work as well as to our shareholders, employees and
contractors. As the company evolves, we anticipate that this aspect of
community engagement will evolve further.
Principle Four
Risk Management
The Board is responsible for ensuring that procedures are in place and are
being implemented effectively to identify, evaluate and manage the significant
risks faced by the Group. The Group maintains appropriate insurance cover
in respect of legal actions against the Directors as well as against material
loss or claims against the Group. The principal risks and uncertainties are
as set out in the Strategic Report.
The Group does not currently have an internal audit function due to the small
size of the Group and limited resources available. The requirement for an
internal audit function is kept under review.
Principle Five
A Well-Functioning Board of Directors
The Board will maintain a balance of executives and non-executive directors.
At the start of the period there were 4 non-executive Directors including the
Chairman and 2 executive Directors. During the period the non-executive
Chairman (13(th) Jan 2023), Mr Gerard Kisbey-Green and Mr Daniel Kazungu
resigned as non-executive Directors and Mr Riaan Lombard resigned as executive
Director (12(th) June 2023). Mr Simon Grant Rennick joined the Board as
executive Chairman (April 2023). At the end of the period the Board consisted
of 2 executive and 2 non-executive Directors. Post the period end Ms Rachel
Johnston resigned as non-executive Director. The Board intend to appoint 2
additional non-executive Directors in the future.
Further information about the directors can be found on the company website at
www.caracalgold.com (http://www.caracalgold.com) . The biographical details of
these Directors are set out within Principle Six below. All Directors are
subject to re-election in accordance with the Company's articles of
association ("Articles"). The Company's Articles state that one-third of the
Directors shall retire by rotation and be subject to re-election at each
Annual General Meeting.
The Board meets formally in person and by telephone multiple times throughout
the year and at least four times per year. The Board also holds regular
informal project appraisal and strategy discussions, to examine operations,
opportunities and assess risks.
The directors encourage a collaborative Board culture to ensure that each
decision reached is always in the Company's and its shareholders' best
interests and that any one individual opinion never dominates the
decision-making process. The Board seeks, so far as possible, to achieve
decisions by consensus and all directors are encouraged to use their
independent judgement and to challenge all matters whether strategic or
operational.
The Group currently does not have a separate Remuneration and Audit Committee
but all three Directors are active on each Committee. These Committees
will be reconstituted in the near future on appointment of an increased number
of directors. The Committees operated for a short time during the period under
review but issues pertaining to both these Committees have now formed part of
the main Board until the appointment of more directors as mentioned
previously.
Attendance at Board and Committee Meetings
The Group will report annually in the Directors' Report on the number of Board
and committee meetings held during the year and the attendance record of
individual Directors. Directors meet formally and informally both in person
and by telephone. To date the following directors have attended the following
meetings:
Director Board Meetings Audit Committee Remuneration Committee
Simon Grant Rennick 3 - -
Robbie McCrae 12 - -
Gerard Kisbey-Green 11 - -
Simon Games- Thomas 6 1 1
Rachel Johnston 12 1 1
Dan Kazungu 12 1 1
Stefan Muller 10 - -
Principle Six
Appropriate Skills and Experience of the Directors
The Company believes that the Directors have wide ranging experience working
for/and/or advising businesses operating within the natural resources
sector. They also have an extensive network of relationships to reach key
decision-makers to help achieve their strategy.
The Board recognises that it currently does not meet the requirements of the
diversity targets as detailed out in Policy Statement PS 22/3 of the Listing
Rules and DTR requirements, on gender or ethnicity. It has no female or
ethnic minority representation on the current Board. It is aware, that as it
grows, it will look to recruit and develop a diverse and more gender-balanced
team.
Although there is no formal process to keep Directors' skill sets up to date
at present the Board will look to implement access to training where skill
gaps have been highlighted. However, the Company's lawyers and brokers provide
regular updates on governance, financial reporting and Listing rules and the
Board is able to obtain advice from other external bodies when necessary.
Board Advice During the Period
During the period the Board received advice from Marriot Harrison with respect
to corporate governance and compliance.
Biographies of the current Board are as included below. The Company have not
included the Directors who are not in position at the date of this report and
accounts.
Simon Grant Rennick - Chairman (born 1957, aged 66)
Mr Grant Rennick is a graduate of the Cambourne School of Mines. His
expertise encompasses not only mining and minerals but also metals,
agriculture, and property. He has managed mining companies, both public and
private, in Uganda, Malawi, Kenya, Mexico and Botswana; metal trading
businesses in Bermuda and in the UK; was a co-founder of Industrial Mineral
Finance House which provides consultancy services covering all aspects of the
industrial minerals' sector; and established a property development business
(since sold).
Robert Andrew McCrae, Executive Director (born 1973, aged: 50)
Robert McCrae has over 25 years' experience in the mining and exploration
industry in Africa. Mr McCrae qualified with a BCom Economics and Financing
from the University of Witwatersrand. He has been involved in the exploration,
development and financing of projects in over 15 African countries across a
broad range of commodities including precious metals, gemstones, base metal,
bulk commodities and industrial minerals. He has managed both the development
of these projects for both private and listed companies and has acted in roles
of project owner as well as project/construction contractor. Mr McCrae was the
founding shareholder of Mining Project Development ltd, which owned the Zanaga
Iron Ore Project in the Republic of Congo prior to its acquisition by
Glencore.
Mr McCrae has held senior executive management positions with a number of
Australian Securities Exchange listed mining and exploration companies,
including CEO of Minbos Resources, which had several high-grade phosphate
projects in Angola and the Democratic Republic of Congo and COO of Black
Mountain Resources which operated a high grade vermiculite mine and phosphate
exploration project located in Uganda. He was also a founder of Luiri Gold
Limited, which explored and developed gold projects in Zambia and where he was
also involved on the listing onto the Toronto Stock Exchange. Between 1994 and
2006, Mr McCrae was Director, Business Development of MDM Engineering (Pty)
ltd, an African focused natural resource contracting and process engineering
companies in Africa, which was responsible for the construction of processing
plants for a number of major gold and copper operations throughout Africa.
Stefan Muller, non-executive Director (born 1971, aged: 52)
Mr. Müller has extensive corporate and financial experience having supported
over 250 capital market transactions during his career and served on the
boards of a number of national and international companies. He started his
career at Dresdner Bank AG in international securities trading before
becoming Senior Vice President at Bankhaus Sal Oppenheim (Europe's largest
private bank at the time). He subsequently worked in asset management before
founding DGWA - Deutsche Gesellschaft für Wertpapieranalyse GmbH (German
Institute for Asset and Equity Allocation and Valuation), a German
Investment Banking Boutique focused on the global mining and resources
industry, where he is still CEO. He is also a board member of the German
Federation of International Mining and Mineral Resources (FAB), and a member
of the DIN Technical Committee, which is establishing a new ISO standard for
lithium. His corporate and financial experience will support the Company in
delivering on its growth strategy.
Principle Seven
Evaluation of Board Performance
Internal evaluation of the Board, the Committees and individual Directors will
be undertaken on an annual basis in the form of peer appraisal and discussions
to determine the effectiveness and performance against targets and objectives.
As a part of the appraisal the appropriateness and opportunity for continuing
professional development whether formal or informal is discussed and assessed.
Principle Eight
Corporate Culture
The Board recognises that their decisions regarding strategy and risk will
impact the corporate culture of the Group as a whole which in turn will impact
the Group's performance. The Directors are very aware that the tone and
culture set by the Board will greatly impact all aspects of the Group and the
way that consultants or other representatives behave. The corporate governance
arrangements that the Board has adopted are designed to instil a firm ethical
code to be followed by Directors, consultants and representatives alike
throughout the entire organisation. The Group strives to achieve and maintain
an open and respectful dialogue with representatives, regulators, suppliers
and other stakeholders. Therefore, the importance of sound ethical values and
behaviours is crucial to the ability of the Group to successfully achieve its
corporate objectives. The Board places great importance on this aspect of
corporate life and seeks to ensure that this flows through everything that the
Group does. The Directors are focused on ensuring that the Group maintains
an open culture facilitating comprehensive dialogue and feedback and enabling
positive and constructive challenge. The Group has adopted, a code for
Directors' dealings in securities which is appropriate for a company whose
securities are traded on this main market and is in accordance with the
requirements of the Market Abuse Regulation which came into effect in 2016.
Issues of bribery and corruption are taken seriously. The Group has a
zero-tolerance approach to bribery and corruption and has recently put an
anti-bribery and corruption policy in place to protect the Group, its
employees and those third parties to which the business engages with.
Principle Nine
Maintenance of Governance Structures and Processes
The Group's governance structures are appropriate for a company of its size.
The Board also meets regularly and the Directors continuously maintain an
informal dialogue between themselves. The Chairman is responsible for the
effectiveness of the Board as well as primary contact with shareholders, while
the execution of the Group's investment strategy is a matter reserved for the
Chief Executive. The current Governance structure is outlined below:
Audit committee
The committee met once during the period and seized to function after the
Chairman of the committee resigned. The company will reinstate the committee
in due course. Currently, the Board act as the Audit Committee.
The Audit Committee comprised the three directors: Simon Games-Thomas, Rachel
Johnston and H.E. Dan Kazungu and the Chief Financial Officer and met once
during the period. This responsibility has now been taken over by the Board
who will follow the committee's terms of reference which are in accordance
with the UK Corporate Governance Code. The committee has been established to
review the company's financial and accounting policies, interim and final
results and annual report prior to their submission to the board, together
with management reports on accounting matters and internal control and risk
management systems. It reviews the auditors' management letter and considers
any financial or other matters raised by both the auditors and employees.
The committee considers the independence of the external auditors and ensures
that, before any non-audit services are provided by the external auditors,
they will not impair the auditors' objectivity and independence. Before the
current auditors were appointed, they had acted as the Company's Reporting
Accountants. Any future work by the auditors for non-audit services will need
to be approved by the Board to ensure it does not affect the independence or
objectivity of the external auditor.
The Group does not currently have an internal audit function but will continue
to monitor the situation and look to hire an internal auditor if this is
deemed necessary in the light of the resignation of PKF Littlejohn LLP.
Remuneration committee
The committee met once during the period and ceased to function after the
Chairman of the committee resigned. The company will reinstate the committee
in due course. Currently, the Board act as the Remuneration Committee.
Before this departure, the Remuneration Committee comprised the three
directors: H.E. Dan Kazungu (Chair), Simon Games-Thomas and Rachel Johnston
and met once in the period before the Board took over its functions. The
primary function of the Committee is to advise the board on overall
remuneration packages of the directors after consideration of remuneration
policies, employment terms, current remunerations of the Board and advisors
and the policies of comparable companies in the Industry. No third parties
have provided advice that materially assisted the Remuneration Committee
during the year.
The remuneration committee determines the company's policy for the
remuneration of executive directors, having regard to the UK Corporate
Governance Code and its provisions on directors' remuneration. This is set out
in the Directors' Remuneration report.
Principle Ten
Shareholder Communication
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders in compliance with regulations
applicable to companies quoted on the LSE's Main Market. All shareholders
are encouraged to attend the Company's Annual General Meeting where they will
be given the opportunity to interact with the Directors.
Investors also have access to current information on the Company through its
website, www.caracalgold.com (http://www.caracalgold.com) , and via the
Executive Chairman, who is available to answer investor relations enquiries.
REPORT OF THE BOARD/AUDIT COMMITTEE
This report is prepared in accordance with the Quoted Companies Alliance (QCA)
corporate governance code for small and mid-sized quoted companies, revised in
April 2018. A summary of the Committee's role and membership can be found in
the Governance section of this Annual Report. Only one official committee
meeting was held in the year, since this time the whole Board has been acting
as the Committee and have met with the external auditors during the planning
and at the end of the audit process to ensure the following significant issues
were considered.
Significant issue Summary of significant issue Actions and conclusion
Valuation of PPE and valuation of Producing Mines (Group) There is the requirement in terms of IAS 36 to ensure that the carrying value Management prepared a Group discounted Cash Flow Model of the Mine which shows
of PPE (£2.3 m) and mine development assets (£3m) are supported. There is a an NPV of the Mine in excess of the carrying value.
risk that the carrying value of these assets are overstated and therefore
impairment will need to be recorded against the book values. This included a review of the key inputs to ensure that when challenged by
certain sensitivities the carrying value of the assets was still not impaired.
The Directors concluded that no impairment needs to be recorded. The Directors
note the disclaimer in the audit report concerning the lack of financial
reports available to the Auditors to be able to support the realisable value
of the assets.
Valuation and allocation and classification of exploration and evaluation There is a risk that these assets have been incorrectly capitalised in Management prepared an assessment of impairment indicators and considered
assets (Group) accordance with IFRS 6 and that there could be indicators of impairment as at whether there are any of the indicators of impairment in line with the
30 June 2023. Management's assessment of impairment under IFRS 6 requires criteria set out in IFRS 6. This did not highlight any impairment indicators
estimation and judgement, particularly in early-stage exploration projects. and as such an IAS 36 impairment assessment was not required. The Directors
There is a risk that the carrying value of these intangible assets are note the disclaimer in the audit report and will consider impairments during
overstated. the next financial year, if appropriate.
Valuation and allocation, existence and completeness of inventory (Kilimapesa Inventory includes mined gold and consumables for use in exploration The Directors are satisfied that a stock count was completed at year end and
Gold (PTY) Limited) activities and materials for operational use at the mine site and represents a the correct valuation of stock was reported. They are aware that the
key balance for the company. There is a risk of material overstatement of auditors were not able to attend this stock count due to their engagement
inventory balances due to incorrect valuation basis or inaccurate reporting of after the year end, but were comfortable that the procedures followed led to
stock quantities held at year end. accurate reporting of this balance.
Going Concern Assessment of the Groups' ability to continue as a going concern as part of The Group has new debt servicing in place from Koenig ($1.4m) and a $5m CLN
the preparation of the financial statements. This includes considering whether facility with Orca of which only $1m has been drawn at year end. It has more
the Group has adequate resources to continue in operation for the foreseeable recently secured a bridging loan of $250,000 with CSS Alpha and on 21 June
future from the date of anticipated signing of the financial statements. The 2024 announced further funding from Cynergy Global Limited (see note 30 for
assessment of going concern covers a period of at least 12 months from the further details). Finally, it is also in the process of raising further
date of signing the financial statements. finance though the issue of shares on the LSE, which is expected to be
completed by Q4 of 2024.
However, we draw attention to the audit report, which includes a disclaimer of
opinion on the financial statements as the auditors were unable to obtain
sufficient appropriate audit evidence to support the directors' assessment of
the Group's ability to continue as a going concern.
The Directors acknowledge the auditors' disclaimer of opinion but remain
confident in the Group's ability to continue as a going concern based on the
strategies and plans that are being put in place.
External Auditor's Fees for Non-Audit Services
There were no fees for Non-Audit Services in the current year. The
external auditor acted as the Company's Reporting Accountant in the prior
year. This was approved by the Board as they concluded that it did not affect
the independence or objectivity of the external auditor and it was considered
to be one-off non-recurring work. Fees paid during the year for audit and
non-audit services may be found in note 8 to the accounts.
Objectivity and Independence
The Board/Committee continues to monitor the Auditor's objectivity and
independence and is satisfied that PKF and the Company have appropriate
policies and procedures in place to ensure that these requirements are not
compromised.
Appointment of External Auditor
PKF Littlejohn have stated that they will not be seeking reappointment as the
Company's auditors for the next financial year as a result of the disclaimer
included within their audit report. The Board have initiated the process of
appointing a new audit firm and will update our stakeholders accordingly once
the selection process is complete. The Board would like to thank PKF
Littlejohn for their professional service and support over the past years.
Internal controls/audit
The Directors acknowledge their responsibility for the Groups' system of
internal control and for reviewing their effectiveness. These internal
controls are designed to safeguard the assets of the Group and ensure the
reliability of financial information for both internal use and external
publication. Whilst the Directors are aware no system can provide absolute
assurance against material misstatement or loss, regular review or internal
controls are undertaken to ensure that they are adequate and effective.
The Group does not currently have an internal audit function due to the small
size of the Group and limited resources available. The requirement for an
internal audit function is kept under review.
Whistleblowing
The Group has adopted a formal whistleblowing policy which aims to promote a
very open dialogue with all its employees which gives every opportunity for
employees to raise concerns about possible improprieties in financial
reporting or other matters.
The Bribery Act 2010
The Board is committed to acting ethically, fairly and with integrity in all
its endeavours and compliance of the code is closely monitored.
Market Abuse Regulations
The Group is required to comply with article 18(2) of the Market Abuse
Regulation ("MAR") with reference to insider dealing and unlawful disclosure
of inside information. The FCA requires traded companies to maintain insider
lists as set out in the MAR. The Board has put in place a MAR compliance
process and has established a Compliance Committee. This and the Company's
regulatory announcements are overseen by the Board of Directors.
On Behalf of the Board
Director
DIRECTORS' REMUNERATION REPORT
Introduction
The Company does not currently have a separate Remuneration Committee. The
Committee was in place until the resignation of its Chair in January 2023.
Since this time all of the Board have been involved in reviewing the scale and
structure of the Directors' fees, taking into account the interests of
shareholders and the performance of the Group and Directors. The Company will
look to re-establish a separate Committee in the coming year. For this
report Board and Remuneration Committee represent the same Directors.
The Company's auditors, PKF Littlejohn LLP are required by law to audit
certain disclosures and where disclosures have been audited, they are
indicated as such.
Remuneration Policy (as set prior to January 2023)
The Committee, in forming its policy on remuneration, gives due consideration
to the needs of the Group, the shareholders, and the provisions of the QCA
Code. The ongoing policy of the Committee is to provide competitive
remuneration packages to enable the Group to retain and motivate its key
executives and to cost-effectively incentivise them to deliver long-term
shareholder value. It also applies the broader principle that Caracal Gold's
executive remuneration should be competitive with the remuneration of
directors of comparable companies. The Committee keeps itself informed of
relevant developments and best practice in the field of remuneration and seeks
advice where appropriate from external advisers. It maintains oversight of the
remuneration of staff, which is the responsibility of the Chief Executive
Officer.
Remuneration Committee
The Remuneration Committee currently consists of all Board members (since
January 2023). This Committee's primary function is to review the
performance of executive and non-executive directors and senior employees and
set their remuneration and other terms of employment.
The key activities of the Remuneration Committee are:
• to determine the framework or broad policy for the remuneration
of the Company's chair, chief executive, and such other members of the
executive management as it is designated to consider;
• in determining such policy, take into account all factors which
it deems necessary including relevant legal and regulatory requirements;
• recommend and monitor the level and structure of remuneration for
senior management;
• when setting remuneration policy for directors, review and have
regard to the remuneration trends across the Company, and review the on-going
appropriateness and relevance of the remuneration policy;
• obtain reliable, up-to-date information about remuneration in
other companies;
• approve the design of, and determine targets for, any performance
related pay schemes operated by the Company and approve the total annual
payments made under such schemes;
• ensure that contractual terms on termination, and any payments
made, are fair to the individual, and the Company, that failure is not
rewarded and that the duty to mitigate loss is fully recognised; and
• oversee any major changes in employee benefits structures
throughout the Company.
Directors' remuneration (audited):
12 month period ended 30 June 2023 18 month period ended 30 June 2022 % Change in total Salary/fees from prior year
£'000 £'000
Salary Bonus Termination Fees Total Total
/Fees
£'000 £'000 £'000 £'000 %
Non-Executive Directors (Note a)
Stefan Muller(1) 34 - - 34 - N/A
Rachel Johnston(2) 25 - 6 31 10 N/A
Daniel Muzee(3) 29 - 15 44 4 N/A
Anthony Eastman(4) - - - - 30 N/A
Lord Monson(4) - - - - 30 N/A
Simon Games-Thomas(5) 24 - 23 47 56 N/A
Subtotal 112 - 44 155 130
Executive Directors
Robbie McCrae(6) 180 - - 180 234 (15%)
Simon Grant Rennick(7) 52 85* - 137 - N/A
Gerard Kisbey-Green(8) 143 - 75 218 166 N/A
James Longley(9) - - - - 173 N/A
Charles Tatnall(9) - - - - 163 N/A
Riaan Lombard(10) 157 - 42 199 - N/A
Subtotal 532 85 734 736
Total 644 85 161 889 866
(Note a) - as at 30 June 2023 Director's salaries and fees of £612,000 are
outstanding.
(1) Appointed as a director 18 July 2022
(2) Appointed as a director on 31 January 2022, resigned 19 July 2023
(3) Appointed as a director 7 March 2022, resigned 12 June 2023
(4) Resigned as a director on 31 August 2021
(5) Appointed as a director on 31 August 2021, resigned 9 January 2023
(6) Appointed as a director 31 August 2021
(7) Appointed as a director 26 April 2023
(8) Appointed as a director 31 August 2021, resigned 12 June 2023
(9) Resigned as a director 5 February 2022
(10) Appointed as a director 18 July 2022, resigned 12 June 2023
*this relates to a signing on bonus of 20 million ordinary shares to be issued
on the approval of the Prospectus.
The highest paid Director in the year was paid £218,000 (2022: £173,000).
Although the majority of these fees are still outstanding and will be settled
in shares.
Directors' interests in shares and warrants
At the date of this report the directors and their connected parties held the
following beneficial interest in the ordinary share capital of the Company:
Director Shareholding Percentage of the Company's Ordinary Share Capital Warrants
2023 2022 2023 2022 2023 2022
Simon Grant Rennick - - - - - -
Rachel Johnston - - - - - -
Simon Games-Thomas - - - - - 15,000,000
Gerard Kisbey-Green - 55,300,000 - 2.9% - 30,000,000
Riaan Lombard - - - - - -
Robbie McCrae - 102,500,000 - 5.5% - 30,000,000
Stefan Muller* 3,350,000 - - - - -
Daniel Kazungu - - - - - -
*held indirectly through DGWA, in which he holds 100% of the issued share
capital
The shares belonging to Gerard Kisbey-Green and Robbie McCrae were transferred
as part of the settlement agreement to Mill End Capital Limited. The Company
will issue 98,500,000 ordinary shares to Robert McCrae (or a company nominated
by him) and 55,300,000 ordinary shares to Gerard Kisbey Green on the date of
the Prospectus. See note 20 for further details of this arrangement.
At the date of this Report and Accounts there are no unexercised management
equity incentives. All of the Performance Shares and Warrants granted in the
prior year either expired or were cancelled in the current year.
Remuneration Components
The main components of Director remuneration that are currently considered by
the Board for the remuneration of directors are base salaries, cash bonuses
and share-based payments which were included in the Prospectus as part of the
acquisition.
The following are the agreed Annual Base Salaries:
Position Annual Salary
Simon Grant Rennick* Chairman, Executive £120,000
Robbie McCrae Chief Executive Officer £180,000
Gerard Kisbey-Green** Technical Executive Director £150,000
Riaan Lombard** Chief Operating Officer £168,775 ($204,000)
*This director will also receive a bonus of 20,000,000 shares (fair valued at
£85,000) on date of appointment, subject to the completion of the Prospectus,
which is expected to be completed following the publication of this report and
accounts.
Position Annual Salary
Simon Games-Thomas** Chairman, Non-Executive £45,000
Rachel Johnston** Non-Executive £25,000
Dan Kazungu** Non-Executive £30,000
Stefan Muller Non-Executive £36,000
**These directors are no longer in position at the date of these report and
accounts.
No pension contributions were made by the company on behalf of its directors,
and no excess retirement benefits have been paid out to current or past
directors. The Company has not paid any compensation to past Directors.
Presently, the Company have no set KPIs for the directors although this is set
to be reviewed in the coming accounting year.
Recruitment Policy
Base salary levels will take into account market data for the relevant role,
internal relativities, their individual experience and their current base
salary. Where an individual is recruited at below market norms, they may be
re-aligned over time, subject to performance in the role. Benefits will
generally be in accordance with the approved policy. For external and internal
appointments, the Board may agree that the Company will meet certain
relocation and/or incidental expenses as appropriate.
Payment for loss of Office (audited)
The Committee will honour the Executive Director's contractual entitlements.
Service contracts do not contain liquidated damages clauses. If a contract is
to be terminated, the Committee will determine such mitigation as it considers
fair and reasonable in each case. There is no agreement between the Company
and its Executive Director or employees, providing for compensation for loss
of office or employment that occurs because of a takeover bid.
The Committee reserves the right to make additional payments where such
payments are made in good faith in discharge of an existing legal obligation
(or by way of damages for breach of such an obligation); or by way of
settlement or compromise of any claim arising in connection with the
termination of an Executive Director's office or employment.
Service Agreements and letters of appointment (unaudited)
Executive Directors Date of Service Agreement Term Terminated Notice period
Simon Grant Rennick 26 January 2023 N/A N/A 6 months
Gerard Kisbey-Green* 31 August 2021 N/A 12 June 2023 6 months
Robbie McCrae 31 August 2021 N/A N/A 3 months
Riaan Lombard* 18 July 2022 N/A 12 June 2023 3 months
Non-Executive Directors Date of Service Agreement/Letter of Appointment Term Terminated Notice period
Stefan Muller 18 July 2022 N/A N/A 6 months
Simon Games-Thomas 31 August 2021 N/A* 9 January 2023 6 months
Dan Kazungu* 1 March 2022 N/A* 12 June 2023 3 months
Rachel Johnston* 31 January 2022 N/A* 19 July 2023 3 months
*These directors are no longer in position at the date of these report and
accounts.
The terms of all Directors' appointments are subject to their re-election by
the Company's shareholders at any Annual General Meeting at which all
Directors stand for re-election.
Percentage change tables (unaudited)
The annual salary of any current serving Directors has not changed since prior
year. The percentage increase in overall annualised Directors' remuneration
is 56%. This is in part due to the resignations of several directors and the
payments for their termination periods.
Company performance graph (unaudited)
The Directors have considered the requirement for a UK 10-year performance
graph comparing the Company's Total Shareholder Return with that of a
comparable indicator. The Directors do not currently consider that including
the graph will be meaningful in its position as a mining company during its
second year on the LSE and in light of its current suspension. The Directors
will review the inclusion of this table for future reports.
Relative Importance of spend on pay (audited)
The table below illustrates a comparison between total remuneration to
distributions to
shareholders and loss before tax for the financial period ended 30 June 2023
and 30 June 2022:
Year ended Employee remuneration Distributions to shareholders Operational cash inflow /(outflow)
£ £ £
30 June 2023 2,046,000 - (1,404,000)
30 June 2022 2,068,000 - (7,386,000)
Employee remuneration does not include fees payable to the Directors. Further
details on employee remuneration are provided in note 9.
Operational cash outflow has been shown in the table above as cash flow
monitoring and forecasting in an important consideration for the Board when
determining cash-based remuneration for Directors and employees.
Approval by shareholders
At the next annual general meeting of the company a resolution approving this
report is to be proposed as an ordinary resolution. The Board considers
shareholder feedback received and guidance from shareholder bodies. This
feedback, plus any additional feedback received from time to time, is
considered as part of the Company's annual policy on remuneration.
This report was approved by the board on 17 September 2024.
On Behalf of the Board
Simon Grant Rennick (Committee Member, Group Chairman)
Independent auditor's report to the members of Caracal Gold plc
We were engaged to audit the financial statements of Caracal Gold plc (the
'parent company') and its subsidiaries (the 'group') for the year ended 30
June 2023 which comprise of the Consolidated Statement of Comprehensive
Income, the Consolidated and Parent Company Statements of Financial Position,
the Consolidated and Parent Company Statements of Changes in Equity, the
Consolidated and Parent Company Statements of Cash Flows and notes to the
financial statements, including significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable
law and UK-adopted international accounting standards and as regards the
parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
We do not express an opinion on the accompanying financial statements of the
group and parent company. Because of the significance of the matters described
in the Basis for disclaimer of opinion section of our report, we have not been
able to obtain sufficient appropriate audit evidence to provide a basis for an
audit opinion on these financial statements.
Basis for disclaimer of opinion
In seeking to form an opinion on the financial statements, we considered the
implications of the significant uncertainties disclosed in the financial
statements concerning the following matters:
· We have not been able to obtain an appropriate financial forecast
from management supporting the assessment of the group and parent company's
ability to continue as a going concern.
· Sufficient appropriate audit evidence could not be obtained
regarding the performance and position of the Group post year end as
management accounts have not been prepared.
· As at 30 June 2023, the group reported net current liabilities of
£13,257,000, with significant balances owed to short term creditors. The
group requires funding to repay these balances and / or to obtain agreements
to defer them.
· Failure to obtain additional funding, of which the quantum required
is unknown due to the lack of a financial forecast and management accounts,
may result in the value of the group's and company's assets not being
realised, as their assets' (including Mining assets of x, Evaluation and
Exploration asset of x, Investments of x and Receivables of x) are key for the
Group and Company to generate returns. Although information was provided about
future funding possibilities, the audit team has not been able to verify any
of the information as at the date of the audit report given the lack of an
appropriate financial forecast and management accounts. Whilst the group has
generated cash from gold production in the past, this has been insufficient to
meet the working capital requirements of the group and given the lack of
current year financial information there is no support available as to whether
or not profitable financial performance is being sufficiently achieved and
that the funds raised are sufficient.
· The inability to assess whether the group is a going concern
creates an inherent uncertainty as to when the decommissioning will occur. As
a result there exists insufficient information on which to value the
decommissioning provision.
· Due to the prior year audit fees not being settled in a timely
manner, the audit team were unable to attend the year-end inventory count
until after the prior year audit fees had been settled and we were unable to
perform roll-back procedures. As a result, we have not been able to obtain
sufficient appropriate audit evidence to conclude on the existence of the
inventory balance at year-end.
· A prior year adjustment of £642,000 was posted within the local
Kilimepasa Gold (Pty) Limited financial statements relating to payables
purportedly included within the incorrect financial period. These adjustments
have not been amended at a group level and insufficient information has been
provided to assess the appropriateness of the accounting of these balances.
· We were unable to obtain sufficient and appropriate audit evidence
to support £152,000 of administration expenses within the subsidiary, Tyacks
Limited, and any linked creditors.
· Investor warrants issued have been recognised within the financial
statements a as part of a share-based payment and have been recognised from
the grant date, vesting over a period of time. However, since the investor
warrants fall within the scope of IAS 32 Financial Instruments, it is
considered that they should be recognised at the transaction date when
exercised.
· A prior year adjustment (see note 3b) has been posted relating to
capitalised land leases, which has resulted in the inclusion of right-of-use
assets of £445k (2022: £619k) and corresponding lease liabilities of £544k
(2022: £724k) in the Consolidated Statement of Financial Position. Land
leases related to mineral resources which fall outside of the scope of IFRS 16
Leases and, therefore, should not have been accounted for in accordance with
this accounting standard. The cumulative effect of the incorrect
interpretation of the applicable financial reporting standard was £99k, In
addition the prior year adjustment has not been accounted for in accordance
with IAS 8 (Accounting Policies, changes in estimates and errors) as the
opening balances of assets, liabilities and equity for the earliest prior
period presented (being 1 July 2021) has not been restated since the error
occurred before the earliest period presented.
· As a result of the above, we were unable to determine whether any
adjustments might have been found necessary in respect of the measurement and
presentation of the financial statements and related disclosures.
Due to the cumulative effect of the uncertainties noted above, we are unable
to form an opinion on the financial statements of the group and parent
company.
Our application of materiality
We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and
the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate, on the financial statements
as a whole.
Group financial statements Parent company financial statements
Overall materiality £85,000 (2022: £549,000) £65,500 (2022: £250,600)
Performance materiality £42,500 (2022: £356,800) £32,750 (2022: £163,000)
Basis for determining materiality 1% of Gross Assets (2022: 5% of adjusted losses before tax) 1% of Gross Assets (2022: 5% of losses before tax)
Rationale for the benchmark applied We believe gross assets is appropriate as there is only one company
(Kilimapesa Pty Gold in Kenya) within the group that is in the production
phase and thus the carrying value of the group assets is significant to the
financial statements users. Furthermore, Kilimapesa has not been in production
for the full year and therefore the value of the assets is the main area of
focus for the group. and its stakeholders and thus the basis for calculation
of materiality. The audit team is informed that the production is not near
capacity and the mine has the ability to improve output, making a benchmark
based on profits or losses no longer appropriate.
In 2022, we assessed losses before tax as the appropriate benchmark to
determine group materiality given the significant amounts of revenues and
expenses occurred in Kilimapesa Pty Gold (main trading subsidiary).
Furthermore, the parent company incurred material expenses due to listing in
the prior period, and as such losses before tax was adjusted for this one off
expense.
Performance materiality for the group financial statements was set at 50% of
the respective overall materiality. The performance materiality for the group
and parent company is based on our assessment of the relevant risk factors
such as the control environment, and the level of estimation inherent within
the group and parent company.
We agreed to report to those charged with governance all corrected and
uncorrected misstatements we identified through our audit with a value in
excess of £4,250 (2022: £27,000) for the group and £3,275 (2022: £11,500)
for the parent company. We also agreed to report any other audit misstatements
below that threshold that we believe warranted reporting on qualitative
grounds.
We allocated a component materiality to Kilimapesa Pty Gold of £62,000 and
performance materiality of £31,000. Similar to the group and the parent
company, given the lack of production in the current year, materiality has
been allocated to the component based on its share of the assets within the
group.
Our approach to the audit
The scope of our audit was influenced by our application of materiality.
In designing our audit, we determined materiality, as above, and assessed the
risk of material misstatement in the financial statements. In particular, we
looked at areas involving significant accounting estimates and judgement by
the directors and considered future events that are inherently uncertain. We
also addressed the risk of management override of internal controls, including
evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Of the components of the group, a full scope audit was performed on the
complete financial information of two components, and for the components not
considered significant, we performed an analytical review together with
substantive testing as appropriate on some areas based on group audit risk
applicable to those components
The two components that were subject to a full scope audit were the parent
entity and the subsidiary located in Kenya, Kilimapesa Pty Gold. The component
auditor worked under our direct instruction. The audit of the remaining
components was performed in London, conducted by us using a team with specific
experience of auditing mining and publicly listed entities. The Senior
Statutory Auditor interacted regularly with the component audit team during
all stages of the audit and was responsible for the scope and direction of the
audit process. This, in conjunction with additional procedures performed, gave
us appropriate evidence for our opinion on the group and parent company
financial statements.
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. In addition to the matter
described in the Basis for disclaimer of opinion section we have determined
the matters described below to be the key audit matters to be communicated in
our report.
Key Audit Matter How our scope addressed this matter
Valuation of property, plant and equipment (Group) Our work in this area included:
There is the requirement in terms of IAS 36, Impairment of Assets to ensure · Discussing with management and obtaining an understanding of the
that the carrying value of property, plant and equipment as per note 16 of operating activity and development of the assets undertaken in the year and
£4,974,000 (2022 as restated: £6,230,000) as derived from management future plans;
judgements, are appropriate.
· Examining title documents such as licence agreements and other
As at year end the entity has experienced difficulties in running the supporting documentation to assess the legal and beneficial ownership of the
production activities of their main operational entity in Kenya, Kilimapesa mines;
Pty Gold, effectively, resulting in increased losses.
· Reviewing management's assessment of impairment indicators for the
There is a significant risk that the assets' carrying values are no longer mines against the criteria in IAS 36 in order to determine whether the
supported and therefore the valuation of property, plant and equipment has assessment is complete and appropriate;
been considered to be a key audit matter due to the level of management
estimates and judgement required and uncertainties related to production · Obtaining and reviewing the key inputs and assumptions in the
activities. group's discounted cash flow models and challenging the reasonableness of the
key inputs and assumptions included in the models such as gold prices,
reserves, capital expenditure, interest rates and discount rates;
· Testing the mathematical accuracy of the group's models and
assessing the appropriateness of the models to ascertain whether they are in
line with our expectations;
· Reviewing the reserve reports in relation to the mine and assessing
the competence, capabilities and objectivity of the competent person, as well
as engaging an auditor's expert to perform a review; and
· Reviewing the disclosures made in the financial statements to
ensure that all disclosure requirements have been met.
As noted in the Basis for disclaimer of opinion section of this report, the
audit team has not been able to obtain sufficient appropriate audit evidence
with regards to the group's post year end trading results and budgeting and
future cash flows to support the carrying value of the assets. This has been
considered to have a direct impact on the assessment of impairment indicators
and subsequently, possible impairments on property, plant and equipment.
Valuation and allocation and classification of mining assets (Group) Our work in this area included:
The group's mining assets of £3,074,000 (2022: £2,392,000) as per note 15 · Discussing with management and obtaining an understanding of the
comprise exploration and evaluation assets. There is the requirement in terms operating activity and development of the assets undertaken in the year and
of IFRS 6, Exploration for and Evaluation of Mineral Resources to ensure that future operational plans;
the carrying value of the mining assets, as derived from management estimates
and judgements, are appropriate. · Examining title documents such as licence agreements and other
supporting documentation to assess the legal and beneficial ownership of the
Given the estimation and judgement required by management in making this mines;
assessment, there is a risk that mining assets are materially overstated and
also a risk that any additions in the year may not have been appropriately · Reviewing management's impairment indicators assessment for the
capitalised in accordance with IFRS 6. mines against the criteria in the IAS 36 in order to determine whether their
assessment is complete and appropriate;
As at year end the group has experienced difficulties in running the
production activities of their main operational entity in Kenya, Kilimapesa · Assessing the classification between evaluation and development
Pty Gold, effectively, resulting in increased losses. asset; and
There is a significant risk that the assets' carrying values are no longer · Reviewing the disclosures made in the financial statements to
supported and therefore the valuation and allocation and classification of ensure that all disclosure requirements have been met.
mining assets has been considered to be a key audit matter due to the level of
management estimates and judgement required and uncertainties in relation to As noted in the Basis for disclaimer of opinion section of this report, the
production activities. audit team has not been able to obtain sufficient appropriate audit evidence
with regards to the group's post year end trading results and budgeting and
future cash flows to support the carrying value of the assets. This has been
considered to have a direct impact on the assessment of impairment indicators
and subsequently, possible impairments on property, plant and equipment.
Valuation and allocation, existence and completeness of inventories Our work in this area included:
(Kilimapesa Gold (PTY) Limited)
· Reviewing alternative procedures performed by the component
Inventories held by the group of £466,000 (2022: £712,000) as per note 17 auditors due to the absence of attending the stocktake;
includes mined gold and consumables for use in exploration activities and
materials for operational use at the mine site (processing plants, tailings · Reviewing the valuation testing performed by the component auditors
dams, electrical supply infrastructure etc) and represents a significant of inventories in accordance with IAS 2, Inventories and evaluating whether
amount for the group. inventories are being valued at the lower of cost and net realisable value.
· Reviewing completeness and reasonableness of inventory provisions;
and
There is a risk of material overstatement of inventories balances due to
incorrect valuation or inaccurate reporting of stock quantities held at year · Reviewing the disclosures made in the financial statements to
end. Due to our absence at the inventory stocktake, there is a risk that any ensure that all disclosure requirements have been met.
alternative procedures execute may not provide sufficient appropriate audit
evidence to conclude that the valuation and existence of inventory is not free As noted in the Basis for disclaimer of opinion section of this report, the
from material misstatement and as such this has been deemed to be a key audit audit team has not been able to obtain sufficient appropriate audit evidence
matter. over the existence and subsequently the valuation of the inventory items (as a
result of the Group's cashflow position) and balances at year end and
therefore have not expressed an opinion on the inventories balance.
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(29). Our opinion on the group and parent company 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.
Because of the significance of the matter described in the Basis for
disclaimer of opinion section of our report, we are unable to determine
whether a material misstatement of other information exists.
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.
Because of the significance of the matter described in the Basis of disclaimer
of opinion section of our report, we have been unable to form an opinion,
whether based on the work undertaken in the course of the 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
Notwithstanding our disclaimer of an opinion on the financial statements, 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 performed
subject to the pervasive limitation described above, we have not identified
material misstatements in the strategic report or the directors' report.
Arising from the limitation of our work referred to above:
· we have not received all the information and explanations we
considered necessary for the purpose of our audit; and
· we were unable to determine whether adequate accounting records
have been kept by the parent company. .
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:
· returns adequate for our audit have not been received from branches
not visited by us; or
· the parent 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.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the group and parent company
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 group and parent company 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.
Extent to which the audit was considered capable of detecting irregularities,
including fraud
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 group and parent company and
the sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management,
evaluation of internal control and through our experience in the sector.
· We determined the principal laws and regulations relevant to the
group and parent company in this regard to be those arising from:
- Listing Rules
- Companies Act 2006
- Employment Act 2008
- General Data Protection Regulation
- Local laws and regulations, including tax, in the jurisdictions
where each subsidiary operates
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
or parent company with those laws and regulations. These procedures included,
but were not limited to:
- reviewing legal and professional fees and correspondences to
understand the nature of the costs and the existence of any non-compliance
with laws and regulations;
- discussing with management regarding potential non-compliance; and
- reviewing minutes of meetings of those charged with governance and
announcements made on the Regulatory News Service.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls and revenue recognition, the potential for management bias was
identified in relation to the going concern of the group and parent company
and as noted above. We addressed this by challenging the estimates and
judgements made by management when auditing the significant accounting
estimates.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
· The audit team addressed any matters of non-compliance with laws
and regulations, including fraud at the group and component levels by
communicating with the component auditor and including procedures in the group
instructions to detect non-compliance, including fraud.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
Auditor's responsibilities for the audit of the financial statements
Our responsibility is to conduct an audit of the group and parent company's
financial statements in accordance with ISAs (UK) and to issue an auditor's
report.
However, because of the matters described in the Basis for disclaimer of
opinion section of our report, we were not able to obtain sufficient
appropriate audit evidence to provide a basis for an audit opinion on these
financial statements.
We are independent of the group and parent company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in 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.
Other matters which we are required to address
We were appointed by the board of directors on 4 July 2022 to audit the
financial statements for the period ending 30 June 2022 and subsequent
financial periods. Our total uninterrupted period of engagement is 2 years and
2 months, covering the periods ending 30 June 2022 to 30 June 2023.
The non-audit services prohibited by the FRC's Ethical Standard were not
provided to the group or the parent company and we remain independent of the
group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit
committee.
Use of our report
This report is made solely to the 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.
Joseph Archer (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory
Auditor
London E14 4HD
17 September 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
Note (Restated)
12 months ended 18 months ended
30 June 30 June
2023 2022
£'000 £'000
Continuing operations
Revenue 7 4,233 6,858
Cost of sales (5,508) (9,007)
Gross loss (1,275) (2,149)
Administrative expenses 8 (4,377) (7,185)
Listing costs - (1,146)
Operating loss before finance costs (5,652) (10,480)
Finance costs (net) 11 (1,562) (813)
Other income 10 1,970 2
Foreign exchange 25 (940)
Reverse acquisition expense 5 - (3,298)
Loss before taxation (5,219) (15,529)
Taxation 12 - -
Loss for the period (5,219) (15,529)
Other comprehensive income - items that may be reclassified subsequently to
profit and loss account
Translation of foreign operations (1,381) (65)
Total other comprehensive income (1,381) (65)
Total comprehensive income for the period attributable to the owners of the (6,600) (15,594)
Parent Company
(0.28p) (1.09p)
Earnings per share - basic and diluted (pence)
13
The notes on pages 53 to 90 form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Note 30 June (As restated)
2023 30 June
£'000 2022
£'000
Non-Current Assets
Intangible assets 15 3,074 2,392
Property, plant and equipment 16 4,974 6,230
Total Non-Current Assets 8,048 8,622
Current Assets
Inventories 17 466 712
Trade and other receivables 18 588 826
Cash and cash equivalents 19 63 80
Total Current Assets 1,117 1,618
Total Assets 9,165 10,240
Equity and Liabilities
Share capital 24 2,129 1,879
Share premium 24 14,893 14,306
Translation reserve (937) 444
Reverse acquisition reserve 5 6,481 6,481
Share-based payment reserve 619 148
Retained earnings (30,437) (25,302)
Total Equity (7,252) (2,044)
Non-Current Liabilities
Deferred tax liability 22 552 552
Provisions and contingent liabilities 23 750 1,989
Loans and borrowings - interest bearing 21 741 684
Total Non-Current Liabilities 2,043 3,225
Current Liabilities
Trade and other payables 20 7,609 7,357
Loans and borrowings - interest bearing 21 6,765 1,702
Total Current Liabilities 14,374 9,059
Total Liabilities 16,417 12,284
Total Equity and Liabilities 9,165 10,240
The notes on pages 53 to 90 form part of these financial statements.
Approved by the Board and authorised for issue on 17 September 2024.
Director
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
Company Registration No. 09829720
Note 30 June 30 June
2023 2022
£'000 £'000
Non-Current Assets
Investments 14 7,039 9,537
Property, plant and equipment 16 270 302
Total Non-Current Assets 7,309 9,839
Current Assets
Trade and other receivables 18 505 7,108
Cash and cash equivalents 19 1 26
Total Current Assets 506 7,134
Total Assets 7,815 16,973
Equity and Liabilities
Share capital 24 2,129 1,879
Share premium 24 14,893 14,306
Share-based payment reserve 619 148
Retained earnings (19,973) (7,655)
Total Equity (2,332) 8,678
Non-Current Liabilities
Provisions and contingent liabilities 23 - 619
Total Non-Current Liabilities - 619
Current Liabilities
Trade and other payables 20 3,614 6,019
Loans and borrowings - interest bearing 21 6,533 1,657
Total Current Liabilities 10,147 7,676
Total Liabilities 10,417 8,295
Total Equity and Liabilities 7,815 16,973
The Company has taken advantage of the exemption under section 408 of the
Companies Act 2006 by choosing not to present its individual Statement of
Comprehensive Income and related notes that form part of these approved
financial statements.
The Company's loss for the period from operations is £12,402,000 (2022: loss
of £5,060,000).
The notes on pages 53 to 90 form part of these financial statements.
Approved by the Board and authorised for issue on 17 September 2024.
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2023
12 months ended 18 months ended
30 June 2023 30 June 2022
£'000 £'000
Cash flows from operating activities
Operating loss - continuing operations (5,219) (15,548)
Adjustments for:
Depreciation 668 825
Finance costs (including share based payments) 1,562 744
Share-based payments - incentives - 84
Other income (1,970) (2)
Foreign exchange movement (605) 290
Shares issued in lieu of fees - 856
Reverse acquisition share-based payment expense - 3,298
Operating cash outflows before working capital movements (5,564) (9,453)
Decrease/(increase) in trade and other receivables 238 (19)
Increase in trade and other payables 3,680 2,223
Decrease/(increase) in inventories 246 (137)
Net cash outflows from operating activities (1,400) (7,386)
Net cash flows from investing activities
Cash acquired on acquisition - 82
Expenditure on intangibles (682) (548)
Expenditure of fixed assets (848) (1,094)
Net cash outflows from investing activities (1,530) (1,560)
Net cash flows from financing activities
Repayments on external loans (293) (168)
Proceeds from external loans 3,278 1,207
Payment of lease liabilities (117) -
Finance costs (net) (69) (65)
Proceeds from issue of share capital 201 8,378
Cost of share issues (80) (442)
Net cash inflows from financing activities 2,920 8,910
Net decrease in cash and cash equivalents (10) (36)
Cash and cash equivalents at the beginning of the period 80 121
Effect of exchange rates on cash (7) (5)
Cash and cash equivalents at the end of the period 63 80
Significant non-cash transactions
The only significant non-cash transactions were the issue of shares and
warrants detailed in notes 24 and 25
A debt reconciliation note is included in note 21b.
The notes on pages 53 to 90 form part of these financial statements.
PARENT COMPANY STATEMENT OF CASH FLOWS
FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2023
12 months ended 18 months ended
30 June 2023 30 June 2022
£'000 £'000
Cash flows from operating activities
Operating loss (12,402) (5,060)
Adjustments for:
Depreciation 33 27
Finance costs (including share based payments) 1,394 546
Share-based payment - incentives - 84
Shares issued for services - 856
Other income (1,960)
Impairment of investments 10,300 -
Operating cash outflows before working capital movements (2,635) (3,547)
Increase in trade and other receivables (215) (98)
Increase in trade and other payables 1,258 2,201
Net cash outflows from operating activities (1,592) (1,444)
Net cash flows from investing activities
Purchase of tangible fixed assets - (128)
Purchase of Investments - (548)
Net cash advanced to subsidiaries (1,158) (6,997)
Net cash outflows from investing activities (1,158) (7,673)
Net cash flows from financing activities
Proceeds from external loans 2,850 1,207
Repayment on loans and borrowings (246) -
Proceeds from issue of share capital 201 8,378
Cost of share issues (80) (442)
Net cash inflows from financing activities 2,725 9,143
Net (decrease)/ increase in cash and cash equivalents (25) 26
Cash and cash equivalents at the beginning of the period 26 -
Cash and cash equivalents at the end of the period 1 26
Significant non-cash transactions
The only significant non-cash transactions were the issue of shares and
warrants detailed in notes 24 and 25.
A debt reconciliation note is included in note 21b.
The notes on pages 53 to 90 form part of these financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2023
Share capital Share premium Share-based payment reserve Reverse acquisition reserve Foreign currency reserve Retained earnings Total
£'000 £'000
£'000
£'000 £'000 £'000
£'000
Balance at 31 December 2020 4,430 - - - 509 (9,773) (4,834)
Loss for period - - - - - (15,548) (15,548)
Other comprehensive income - - - - (65) - (65)
Total comprehensive income for the period - - - - (65) (15,548) (15,613)
Transfer to reverse acquisition reserve (4,430) - - 4,430 - - -
Recognition of plc equity at acquisition date 132 602 - 6,443 - - 7,177
Issue of shares for acquisition of subsidiary 462 4,156 - (7,690) - - (3,072)
Issue of shares for placings 946 7,682 - - - - 8,628
Issue of shares to settle debt 159 1,429 - - - - 1,588
Issue of shares in lieu of fees 143 1,285 - - - - 1,428
Warrants exercised 37 - - - - - 37
Share based payment - - 148 3,298 - - 3,446
Cost of share issues - (849) - - - - (849)
Total transactions with owners (2,551) 14,306 148 6,481 - - 18,384
Balance at 30 June 2022 as previously stated 1,879 14,306 148 6,481 444 (25,321) (2,063)
Effect of prior year adjustments - - - - - 19 19
Balance at 30 June 2022 as restated 1,879 14,306 148 6,481 444 (25,302) (2,044)
Loss for period - - - - - (5,219) (5,219)
Other comprehensive income - - - - (1,381) - (1,381)
Total comprehensive income for the period - - - - (1,381) (5,219) (6,600)
Issue of shares 250 667 - - - - 917
Share based payment - - 555 - - - 555
Cost of share issues - (80) - - - - (80)
Expired warrants - - (84) - - 84 -
Total transactions with owners 250 587 471 - - 84 1,392
Balance at 30 June 2023 2,129 14,893 619 6,481 (937) (30,437) (7,252)
The notes on pages 53 to 90 form part of these financial statements.
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
Share capital Share premium Share-based payment reserve Retained earnings Total
£'000
£'000 £'000 £'000
£'000
Balance at 31 December 2020 132 602 - (2,595) (1,861)
Loss for period - - - (5,060) (5,060)
Other comprehensive income - - - - -
Total comprehensive income for the period - - - (5,060) (5,060)
Issue of shares for acquisition of subsidiary 462 4,156 - - 4,618
Issue of shares for placings 946 7,682 - - 8,628
Issue of shares to settle debt 159 1,430 - - 1,589
Issue of shares in lieu of fees 143 1,285 - - 1,428
Warrants exercised 37 - - - 37
Share based payment - - 148 - 148
Cost of share issues - (849) - - (849)
Total transactions with owners 1,747 13,704 148 - 15,599
Balance at 30 June 2022 1,879 14,306 148 (7,655) 8,678
Loss for period - - - (12,402) (12,402)
Total comprehensive income for the period - - - (12,402) (12,402)
Issue of shares 250 667 - - 918
Share based payment - - 555 - 555
Cost of share issues - (80) - - (80)
Warrants expired - - (84) 84 -
Total transactions with owners 250 587 471 84 1,392
Balance at 30 June 2023 2,129 14,893 619 (19,973) (2,332)
The notes on pages 53 to 90 form part of these financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 12 MONTH PERIOD ENDED 30 JUNE 2023
1 General information
Caracal Gold Plc ('the Company' or 'CGP') (formerly Papillon Holdings plc) is
a public limited company with its shares traded on the Main Market of the
London Stock Exchange. The address of the registered office is 27-28
Eastcastle Street, London, W1W 8DN. The Company was incorporated and
registered in England and Wales on 19 October 2015 as a private limited
company and re-registered on 24 June 2016 as a public limited company. It
changed its name on 10 September 2021 to Caracal Gold Plc. The Company's
registered number is 09829720.
The principal activity of the Company and its subsidiaries (the "Group") is
the exploration, development and mining of gold in Kenya and Tanzania, and the
development of further projects to expand its operations within this industry.
On 31 August 2021, the Company acquired the holding company of Mayflower Gold
Investments Limited (MGIL) and thus a 100% indirect interest in Kilimapesa
Gold Pty Ltd (KPGL), whose principal activity is an established gold mine and
gold processing operation in Kenya. This was accounted for as a reverse
acquisition - See note 5 below for further details.
These consolidated financial statements were approved for issue by the Board
of directors on 21 August 2024.
2 Accounting policies
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards and requirements of the
Companies Act 2006. The Financial Statements have also been prepared under the
historical cost convention, as modified by the revaluation of financial assets
at fair value through profit or loss.
The functional currency for each entity in the Group is determined as the
currency of the primary economic environment in which it operates. The
functional currency of the parent company CGP is Pounds Sterling (£) as this
is the currency that finance is raised in. The functional currency of its
subsidiary KPGL is the Kenyan Shilling and the functional currency of its
subsidiary Tyacks is the Tanzanian Shilling. For both subsidiaries these are
the currencies that mainly influence labour, material and other costs of
providing services. The Group has chosen to present its consolidated financial
statements in Pounds Sterling (£), as the Directors believe it is a more
convenient presentational currency for users of the consolidated financial
statements. Foreign operations are included in accordance with the policies
set out below.
During the prior year the Company changed its accounting reference date from
31 December to 30 June to align itself with its newly acquired subsidiary.
Consequently, the prior year covers an 18 month period, whereas the current
year is a 12 month period and so is not entirely comparable year on year.
The preparation of financial statements in conformity with IFRS's requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the financial
information are disclosed in Note 3.
a) Going concern
See the Group's Going Concern statement on page 20.
b) Adoption of new and revised standards
i. New standards, amendments and interpretations adopted by the Group.
There were no new or amended accounting standards that required the Group to
change its accounting policies for the year ended 30 June 2023 and no new
standards, amendments or interpretations were adopted by the Group.
ii. New standards, amendments and interpretations not yet adopted by the
Group.
The standards and interpretations that are relevant to the Group, issued, but
not yet effective, up to the date of the Financial Statements are listed
below. The Group intends to adopt these standards, if applicable, when they
become effective.
Standard Effective date Overview
Amendments to IAS 1 1 January 2024 (early adoption permitted) The standard has been amended to clarify that the classification of
liabilities as current or non-current should be based on rights that exist at
the end of the reporting period.
Classification of Liabilities as Current or Non-current
In order to conclude a liability is non-current, the right to defer settlement
of a liability for at least 12 months after the reporting date must exist as
at the end of the reporting period.
The amendments also clarify that (for the purposes of classification as
current or non-current), settlement is the transfer of cash, the entity's own
equity instruments (except as described below), other assets or services.
Amendments to IAS 1 1 January 2024 (early adoption permitted) The standard confirms that only those covenants with which an entity must
comply on or before the end of the reporting period affect the classification
of a liability as current or non-current.
Non-current Liabilities with Covenants
Amendments to IFRS 16 1 January 2024 (early adoption permitted) The amendments address the accounting that should be applied by a
seller-lessee in a sale and leaseback transaction when the leaseback contains
variable lease payments, such as turnover rentals, that do not depend on an
index or rate.
Lease Liability in a Sale and Leaseback
Specifically, they confirm that the 'lease payments' or the 'revised lease
payments' arising from the leaseback arrangement are measured in such a way
that no gain or loss is recognised on the right of use retained by the
seller-lessee.
Amendments to IAS 7 and IFRS 7 1 January 2024 (early adoption permitted) The amendments require an entity to disclose information about its supplier
finance arrangements to enable users of financial statements to assess the
effects of those arrangements on the entity's liabilities and cash flows and
on the entity's exposure to liquidity risk.
Supplier Finance Arrangements
Amendments to IAS 21 - Lack of Exchangeability 1 January 2025 (early adoption permitted) The amendments have been made to clarify:
- when a currency is exchangeable into another currency; and
- how a company estimates a spot rate when a currency lacks exchangeability.
The Directors have evaluated the impact of transition to the above standards
and do not consider that there will be a material impact of transition on the
financial statements.
2.2 Basis of consolidation
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases. Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised losses are
also eliminated.
The Group applies the acquisition method to account for business combinations.
(There was an exception to this for the acquisition of KPGL as discussed in
note 5 below). The consideration transferred for the acquisition of a
subsidiary is the fair values of the assets transferred, the liabilities
incurred to the former owners of the acquiree and the equity interests issued
by the group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values
at the acquisition date. The group recognises any non-controlling interest in
the acquiree on an acquisition-by-acquisition basis, either at fair value or
at the non-controlling interest's proportionate share of the recognised
amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is recognised at
fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability is
recognised either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not
re-measured, and its subsequent settlement is accounted for within equity.
Please refer to note 5 for information on the consolidation of KPGL and the
application of the reverse acquisition accounting principles.
Asset Acquisitions
Acquisitions of mineral exploration licences through the acquisition of
non-operational corporate structures that do not represent a business, and
therefore do not meet the definition of a business combination, are accounted
for as the acquisition of an asset.
The consideration for the asset is allocated to the assets based on their
relative fair values at the date of acquisition.
2.3 Financial assets and liabilities
The Company classifies its financial assets at fair value through profit or
loss or as loans and receivables and classifies its financial liabilities and
other financial liabilities. Management determines the classification of its
investments at initial recognition, A financial asset or liability is measured
initially at fair value. At inception transaction costs that are directly
attributable to the acquisition or issue, for an item not at fair value
through profit or loss, is added to the fair value of the financial asset and
deducted from the fair value of the financial liabilities.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determined payments that are not quoted on an active market. They arise when
the Company provides money, goods or services directly to a debtor with no
intention of trading the receivable. Loans are recognised when funds are
advanced to the recipient. Loans and receivables are carried at amortised cost
using the effective interest method (see below).
Other financial liabilities
Are non-derivative financial liabilities with fixed or determined payments.
Other financial liabilities are recognised when cash is received from a
depositor. Other financial liabilities are carried at amortised cost using the
effective interest method. The fair value of the other liabilities repayable
on demand is assumed to be the amount payable on demand at the statement of
financial position date.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or where the Company has transferred
substantially all the risks and rewards of ownership. In transactions in which
the Company neither retains nor transfers substantially all the risks and
rewards of ownership of a financial asset and retains control over the asset,
the Company continues to recognise the asset to the extent of its continuing
involvement, determined by the extent to which it is exposed to changes in the
value of the transferred asset. There have not been any instances where assets
have only been partly derecognised. The Company derecognises a financial
liability when its contractual obligations are discharged, cancelled or
expired.
Amortised cost measurement
The amortised cost of a financial asset or financial liability is the amount
at which the financial asset or liability is measured at initial recognition,
minus principal payments, plus or minus the cumulative amortisation using the
effective interest method of any differences between the initial amount
recognised and maturity amount, minus any reduction to impairment.
Fair value measurement
Fair value is the amount for which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm's length transaction
on the measurement date. The fair value of assets and liabilities in active
markets are based on current bid and offer prices respectively. If the market
is not active the Company establishes fair value by using other financial
liabilities appropriate valuation techniques. These include the use of recent
arm's length transactions, reference to other instruments that are
substantially the same for which market observable prices exist, net of
present value and discounted cash flow analysis.
2.4 Cash and cash equivalents
Cash and cash equivalents include cash in hand and on demand and term
deposits, with maturities of three months or less from the date of
acquisition, that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value, net of bank
overdrafts. Currency profile and exchange risk is set out in note 4c.
2.5 Investments and loans in subsidiaries
Subsidiary fixed asset investments are valued at cost less provision for
impairment. The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all
investment and loans in subsidiaries.
2.6 Impairment of non-financial assets
The carrying amounts of the Group's assets, other than inventories, are
reviewed at each balance sheet date to determine whether there is any
indication of impairment. If any such indication exists, the asset's
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or
its cash-generating unit exceeds its recoverable amount. Impairment losses are
recognised in the Statement of Comprehensive Income.
Impairment losses recognised in respect of cash-generating units are allocated
first to reduce the carrying amount of any goodwill allocated to
cash-generating units (group of units) and then, to reduce the carrying amount
of the other assets in the unit (group of units) on a pro-rata basis.
In assessing value in use, the expected future cash flows from the asset are
discounted to their present value using a pre-tax discount rate that reflects
the current market assessments of the time, value of money and the risks
specific to the asset. An impairment loss is recognised whenever the carrying
amount of an asset exceeds its recoverable amount.
For an asset that does not generate cash inflows that are largely independent
of those from other assets the recoverable amount is determined for the
cash-generating unit to which the asset belongs. An impairment loss is
recognised in the income statement whenever the carrying amount of the
cash-generating unit exceeds its recoverable amount.
A previously recognised impairment loss is reversed if the recoverable amount
increases as a result of a change in the estimates used to determine the
recoverable amount, but not to an amount higher than the carrying amount that
would have been determined (net of depreciation) had no impairment loss been
recognised in prior years. For goodwill, a recognised impairment loss is not
reversed.
2.7 Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of a Company after deducting all of its liabilities. Equity instruments
issued are recorded at the proceeds received net of direct issue costs.
Share capital represents the amount subscribed for shares at nominal value.
The share premium account represents premiums received on the initial issuing
of the share capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income tax
benefits. Any bonus issues are also deducted from share premium.
The share-based payments reserve represents equity-settled shared-based
employee remuneration for the fair value of the warrants issued. It also
includes the warrants issued for services rendered accounted for in accordance
with IFRS 2.
(https://www.lawinsider.com/clause/reverse-acquisition-reserve) The reverse
acquisition reserve was recognised during the formation of the Group when the
legal acquiree was considered to be the accounting acquirer under the rules of
IFRS 3. As the accounting acquiree was not a business under IFRS 3, a part of
the transaction was outside the scope of IFRS 3. This resulted in the
recognition of a 'reverse acquisition reserve' on consolidation and is set out
in more detail in note 5 below.
The convertible loan note reserve is used to account for the equity component
of the convertible notes.
The foreign exchange translation reserve policy is set out below in 2.10.
Retained earnings include all current and prior period results as disclosed in
the Statement of Comprehensive Income, less dividends paid to the owners of
the Company.
2.8 Current and deferred income taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
There is no tax payable as the Company has made a taxable loss for the year.
Taxable loss differs from net loss as reported in the statement of
comprehensive income because it excludes items of income and expense that are
taxable or deductible in other years, and it further excludes items that are
never taxable or deductible. The Company's liability for current tax is
calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying
amount of assets and liabilities in the consolidated financial statements and
the corresponding tax bases used in the computation of taxable profit or loss.
Deferred tax liabilities are generally recognised for all taxable temporary
differences.
Deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be
available against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised if the
temporary differences arise from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
associated with investments in subsidiaries, except where the Company is able
to control the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable future. Deferred
tax assets arising from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable that there
will be sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at the end of each
reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply in the period in which the liability is settled or the asset
realised. The measurement of deferred tax assets and liabilities reflects the
tax consequences that would follow from the manner in which the Company
expects, at the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Current or deferred tax for the year is recognised in profit or loss, except
when it relates to items that are recognised in other comprehensive income or
directly in equity, in which case the current and deferred tax is also
recognised in other comprehensive income or directly in equity respectively.
2.9 Rehabilitation and Environmental Provision
The Group recognises a rehabilitation and environmental provision where it has
a legal and constructive obligation as a result of past events, and it is
probable that an outflow of resources will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be
made. The nature of these restoration activities includes dismantling and
removing structures; rehabilitating the mine and tailings dam; dismantling
operating facilities; and restoring, reclaiming and revegetating affected
areas.
On initial recognition, the present value of the estimated costs is
capitalised by increasing the carrying amount of the related mining asset to
the extent that it was incurred as a result of the development or construction
of the mine. Any changes to or additional rehabilitation costs are recognised
as additions or charges to the corresponding asset and rehabilitation
liability when they occur.
Over time, the discounted liability is increased for the change in present
value based on the discount rate that reflects current market assessments and
the risks specific to the liability. The annual unwinding of the discount is
recognised in the statement of comprehensive income as part of finance costs.
The Group does not recognise a deferred tax asset in respect of the temporary
difference on the rehabilitation liability nor the corresponding deferred tax
liability in respect of the temporary difference on the rehabilitation asset.
2.10 Foreign currency translation
In preparing the financial statements of the Group entities, transactions in
currencies other than the entity's functional currency (foreign currencies)
are recognised at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which
they arise except for:
· exchange differences on foreign currency borrowings relating to
assets under construction for future productive use, which are included in the
cost of those assets when they are regarded as an adjustment to interest costs
on those foreign currency borrowings;
· exchange differences on transactions entered into to hedge certain
foreign currency risks (see below under financial instruments/hedge
accounting); and
· exchange differences on monetary items receivable from or payable to
a foreign operation for which settlement is neither planned nor likely to
occur in the foreseeable future (therefore forming part of the net investment
in the foreign operation), which are recognised initially in other
comprehensive income and reclassified from equity to profit or loss on
disposal or partial disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates
at the date of transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve (attributed to non-controlling interests as
appropriate).
2.11 Share-based payments
The Group issued warrants in the period which were accounted for as equity
settled share based payment transactions with employees. The fair value of the
employees services received in exchange for these warrants is recognised as an
expense in the profit and loss account with a corresponding increase in equity
in the Share-based payment reserve. Fair value is determined using
Black-Scholes option pricing models.
The Group has also adopted an incentive plan to issue its management
Performance Shares based on non-market based performance conditions. These are
valued by management using the fair value of the equity instrument expected to
be received and a judgement of the likelihood for these conditions to be met.
At the end of each reporting period, the Group revises its estimate of the
number of shares that are expected to be awarded.
Where equity instruments are granted to persons other than employees, the
statement of comprehensive income is charged with the fair value of the goods
and services received.
2.12 Intangible assets
Exploration and evaluation assets
Intangible assets represent exploration and evaluation assets (IFRS 6 assets),
being the cost of acquisition by the Group of rights, licences and know-how.
Such expenditure requires the immediate write-off of exploration and
development expenditure that the Directors do not consider to be supported by
the existence of commercial reserves.
All costs associated with mineral exploration and investments, are capitalised
on a project-by-project basis, pending determination of the feasibility of the
project. Costs incurred include appropriate technical and administrative
expenses but not general overheads and these assets are not amortised until
technical feasibility and commercial viability is established. If an
exploration project is successful, the related expenditures will be
transferred to "mining assets" and amortised over the estimated life of the
commercial ore reserves on a unit of production basis. Where a licence is
relinquished or a project abandoned, the related costs are written off.
The recoverability of all exploration and development costs is dependent upon
the discovery of economically recoverable reserves, the ability of the Group
to obtain necessary financing to complete the development of reserves and
future profitable production or proceeds from the disposition thereof.
Exploration and evaluation assets shall no longer be classified as such when
the technical feasibility and commercial viability of extracting mineral
resources are demonstrable. When relevant, such assets shall be assessed for
impairment, and any impairment loss recognised, before reclassification to
"Mine development".
2.13 Property, plant and equipment
i) initial recognition
Upon commencement of commercial production, the intangible assets held under
'exploration and evaluation" are first reclassed to mine development as above.
Once mine development is completed and commercial production starts this is
when they are transferred to Mining Assets. Items of property, plant and
equipment and Mining assets are stated at cost less accumulated depreciation
and accumulated impairment losses.
The initial cost of an asset comprises its purchase price or construction
cost, any costs directly attributable to bringing the asset into operation,
the initial estimate of the rehabilitation obligation, and, for qualifying
assets (where relevant), borrowing costs. The purchase price or construction
cost is the aggregate amount paid and the fair value of any other
consideration given to acquire the asset.
Producing mines also consist of the value attributable to mineral reserves and
the portion of mineral resources considered to be probable of economic
extraction at the time of an acquisition. When a mine construction project
moves into the production phase, the capitalisation of certain mine
construction costs ceases, and costs are either regarded as part of the cost
of inventory or expensed, except for costs which qualify for capitalisation
relating to mining asset additions, improvements or new developments,
underground mine development or mineable reserve development.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
ii) Depreciation/amortisation
'Mining assets' are depreciated/amortised on a unit of production (UOP) basis
over the economically recoverable reserves of the mine concerned. The unit of
account used is the recoverable ounces of gold. Rights and concessions are
depleted on the UOP basis over the economically recoverable reserves of the
relevant area. The UOP rate calculation for the depreciation/amortisation of
mine development costs takes into account expenditures incurred to date,
together with sanctioned future development expenditure. Economically
recoverable reserves include indicated reserves only.
Depreciation on other plant and equipment is provided to write off the cost of
an asset, less its estimated residual value, evenly over the expected useful
economic life of that asset. Freehold land, that has been acquired outright is
not depreciated.
- Buildings 20
Years
- Plant and equipment 10 Years
- Motor vehicles 3- 5 Years
- Office equipment 6 Years
The residual value, if significant, is reassessed annually.
Surplus/(deficits) on the disposal of mining assets, plant and equipment are
credited/ (charged) to income. The surplus or deficit is the difference
between the net disposal proceeds and the carrying amount of the asset.
The Group holds some Right-of Use Assets - see policy note 2.15 below.
2.13 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the weighted average cost method. The cost of finished goods
and work in progress comprises raw material, direct labour, other direct
costs, variable production overheads and an allocation of fixed production
overheads based on normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
Raw materials include costs incurred in acquiring the inventories and bringing
them to their existing location and condition.
Broken ore comprises all ores extracted from the mine and stockpiled awaiting
processing. The ores are valued at the cost of mining and transport to its
current position.
Work-in-progress comprises materials in the process of being converted from
raw materials to finished goods.
Precious metals inventories include bullion on hand and gold in process.
Bullion on hand and gold in process represent production on hand after the
smelting process, gold contained in the elution process, gold loaded carbon in
the Carbon in Leach (CIL), Carbon in Pulp (CIP) process, gravity concentrates,
and any form of precious metal in process where the quantum of the contained
metal can be accurately determined. It is valued at the average production
cost for the period, including amortisation and depreciation.
2.14 Revenue
Revenue represents the fair value of consideration received or receivable for
the sale of precious metal. It is recognised in the income statement when the
significant risks and rewards of ownership have been transferred to the buyer.
It is stated net of Value Added Tax, rebates and trade discounts. Cash
discounts are included as part of finance costs. No revenue is recognised if
there are significant uncertainties regarding, the recovery of the
consideration due, associated costs, the possible return of goods or the
continuing management involvement with goods.
2.15 Leases
The Group has entered into leases of land (Saris leases) and field vehicles
(additions in the current year). Lease liabilities are initially measured at
the present value of lease payments unpaid at the commencement date. Lease
payments are discounted using the incremental borrowing rate (being the rate
that the lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with similar terms
and conditions), unless the rate implicit in the lease is available. The Group
currently uses the incremental borrowing rate as the discount rate for all
leases. For the purposes of measuring the lease liability, lease payments
comprise fixed payments and variable lease payments based on an index or rate.
Right-of-use assets are measured at cost, which comprises the initial
measurement of the lease liability, plus any lease payments made prior to
lease commencement, initial direct costs incurred, less any lease incentives
received. These assets are depreciated over the lease term (or useful life, if
shorter). Right-of-use assets are subject to an impairment test if events and
circumstances indicate that the carrying value may exceed the recoverable
amount.
Lease repayments made are allocated to capital repayment and interest so as to
produce a constant periodic rate of interest on the remaining lease liability
balance.
Right-of-use assets are presented within property, plant and equipment. Lease
liabilities are presented as separate line items on the face of the Balance
Sheet. In the Cash Flow Statement, lease repayments (of both the principal and
interest portions) are presented within cash used in financing activities,
except for payments for leases of short-term and low-value assets and variable
lease payments, which are presented within cash flows from operating
activities or cash used in investing activities in accordance with the
relevant Group accounting policy.
2.16 Convertible loan notes
The component parts of convertible loan notes issued by the Group are
classified separately as financial liabilities and equity in accordance with
the substance of the contractual arrangements. A conversion option that will
be settled by the exchange of a fixed amount of cash or another financial
assets for a fixed number of the Company's own equity instruments is an equity
instrument.
At the date of issue, the fair value of the liability component is estimated
using the prevailing market interest rate for a similar non-convertible
instrument. This amount is recorded as a liability on an amortised cost basis
using the effective interest method until extinguished upon conversion or at
the instrument's maturity date.
The conversion option classified as equity is determined by deducting the
amount of the liability component from the fair value of the compound
instrument as a whole. This is recognised and included in equity, net of
income tax effects, and is not subsequently remeasured. In addition, the
conversion option classified as equity will remain in equity until the
conversion option is exercised, in which case, the balance recognised in
equity will be transferred to the convertible loan note reserve. Where the
conversion option remains unexercised at the maturity date of the convertible
loan note, the balance recognised in equity will be transferred to retained
earnings. No gain or loss is recognised in profit or loss upon conversion or
expiration of the conversion option.
Transaction costs that relate to the issue of the convertible loan notes are
allocated to the liability and equity components in proportion to the
allocation of the gross proceeds. Transaction costs relating to the equity
component are recognised directly in equity. Transaction costs relating to the
liability component are included in the carrying amount of the liability
component and are amortised over the lives of the convertible loan notes using
the effective interest method.
2.17 Net financing costs
Net financing costs comprise interest payable on borrowings calculated using
the effective interest rate method, interest receivable funds invested,
foreign exchange gains and losses, and gains and losses on hedging instruments
that are recognised in the income statement.
Interest income is recognised in the income statement as it accrues, using the
effective interest method. The interest expense component of finance lease
payment is recognised in the income statement using the effective interest
rate method.
2.18 Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision makers. The chief operating
decision maker, who are responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
Board of Directors.
3 Critical accounting estimates and judgments
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are discussed below.
Accounting for acquisitions and fair value (see Note 13)
Acquisitions are accounted for at fair value. The assessment of fair value is
subjective and depends on a number of assumptions. These assumptions may
include assessment of estimated resources, cost of bringing these resources to
commercial production levels, discount rates, and the amount and timing of
expected future cash flows from assets and liabilities. In addition, the
selection of specific valuation methods for individual assets and liabilities
requires judgment. The specific valuation methods applied will be driven by
the nature of the asset or liability being assessed. The consideration given
to a seller for the purchase of a business or a company is accounted for at
its fair value. When the consideration given includes elements that are not
cash, such as shares or options to acquire shares, the fair value of the
consideration given is calculated by reference to the specific nature of the
consideration given to the seller.
Impairment of investments (see Note 14)
The Company assess at each reporting date whether there is any objective
evidence that investments in subsidiaries are impaired. To determine whether
there is objective evidence of impairment, a considerable amount of estimation
is required in assessing the ultimate realisation of these investments,
including valuation, creditworthiness and future cashflows which are
calculated from the Life of Mine (LOM) calculations. For the 2023 reporting
period, the recoverable amount of the cash-generating unit (the Kilimapesa
Mine) was determined based on value-in use calculations which require the use
of assumptions. The calculations use cash flow projections based on
financial budgets approved by management covering a 3 year mine plan which
shows a free cashflow of £5.2m from 2024 to 2027. The value of the
investment in KPG has been written down to reflect this value.
The following table sets out the key assumptions that were used in this
impairment:
Assumption Approach used to determining values
Gold price $2,000/oz Gold price at end of 2023 was $2,078/oz
Production volume 12,264 oz average per year Generated from the Mine Plan
Discount rate 8%
Royalty rate 7% Based on % government rate and 2% Moyoi Group
Capital expenditure $7.5m Generated from the Mine Plan
As at the year end the Directors assessed that an impairment charge of £10.3m
should be charged to the company only profit and loss account to align the
carrying value of the investment in KPG to this value-in use calculation based
on the free cashflow generated from the 3 year mine plan.
Sensitivities were run on the LOM calculations and over a 3 year period the
free cashflow fell to $2.6m using a gold price of $1,800 and X using an
increased discount rate of 12%.The directors were of the opinion that these
variables were appropriate when considering the sensitivities.
No growth rates have been used in the LOM for either an increase of operating
costs or an increase in revenue as management are of the opinion that they
would have a negating effect when matched against each other.
Share-based payments (see Note 24)
The Group issues shares and warrants to its employees, directors, investors
and suppliers. These are valued in accordance with IFRS 2 "Share-based
payments". In calculating the related charge on issuing shares and warrants
the Group will use a variety of estimates and judgements in respect of inputs
used including share price volatility, risk free rate, and expected life.
Changes to these inputs may impact the related charge.
Valuation of contingent consideration payable (see Note 5)
The Group recorded a contingent consideration liability of £1.426m as at 30
June 2022 relating to the reverse acquisition of the KPGL. An estimate was
made in the prior year accounts to determine the value of this contingent
consideration to be recognised at that balance sheet date. In current year
there was a change in circumstance as the Board agreed that the expected
performance of the Group had not been met and therefore all Performance shares
and Warrants were cancelled or expired. This resulted in a derecognition of
this amount and a one off credit to other income of £1.426m.
Recoverable value of mining assets (see Note 16)
Costs capitalised in respect of the Group's mining assets are required to be
assessed for impairment under the provisions of IAS 36. Such an estimate
requires the Group to exercise judgement in respect of the indicators of
impairment and also in respect of inputs used in the models which are used to
support the carrying value of the assets. Such inputs include estimates of
gold reserves (see www.caracalgold.com), production profiles, gold price,
capital expenditure, inflation rates, and pre-tax discount rates that reflect
current market assessments of (a) the time value of money; and (b) the risks
specific to the asset for which the future cash flow estimates have not been
adjusted. These assumptions have been set out in the note above and are
consistent with those used for Life of Mine model mentioned above The
Directors concluded that there was no impairment as at 30 June 2023.
Rehabilitation and environmental "decommissioning" provision (see Note 23)
The Group's activities are subject to various laws and regulations governing
the protection of the environment. The Group recognises management's best
estimate of the asset decommissioning costs in the period in which they are
incurred. Such estimates of costs include pre-tax discount rates that reflect
current market assessments of (a) the time value of money; and (b) the risks
specific to the asset for which the future cash flow estimates have not been
adjusted. Actual costs incurred in future periods could differ materially from
the estimates.
Additionally, future changes to environmental laws and regulations, life of
mining assets, estimates and discount rates could affect the carrying amount
of this provision. Further details about the estimates involved are set out in
note 23.
Valuation of inventory (see Note 17)
As at 30 June 2023, inventory has been valued at £466,000. This includes
slow moving inventory but due to its nature and its expected use or sale, the
Directors do not believe that any impairment of this balance is necessary at
year end.
3b. Correction of material error in identification of Right of Use Assets
During the year, it was discovered that the subsidiary had not been
identifying leases correctly as right of use assets under IFRS 16. The error
resulted in a material misstatement of assets and liabilities on the balance
sheet in the prior year. The effects on the profit and loss were also
restated. There was no net changes to cashflows and therefore the cashflow
statement has not been restated. The error has been corrected by restating
each of the affected financial line items for the prior periods as follows:
Balance Sheet (extract) As previously stated Increase/ (Decrease) As restated
30 June 2022 30 June 2022
£'000 £'000 £'000
Recognition of Right of Use Assets in prior years
100 733 833
Recognition of accumulated depreciation of Right of Use Assets in prior years
22 192 214
78 541 619
Recognition of lease liabilities for years prior to 2022
(202) (522) (724)
Net liabilities (2,063) 19 (2,044)
Retained earnings (25,321) 19 (25,302)
Total equity (2,063) 19 (2,044)
Statement of Profit or Loss (extract) As previously stated Increase/ (Decrease) As restated
30 June 2022 30 June 2022
£'000 £'000 £'000
Loss for the period attributable to equity owners
(15,548) 19 (15,529)
Other comprehensive income for the period
(65) - (65)
Total comprehensive loss for the period
(15,613) 19 (15,594)
The correction further affected some of the amounts disclosed in the notes to
the accounts as interest payable on leases was increased by £69,000 and
depreciation was increased by £61,000. Due to materiality this simplified
adjustment was considered sufficient by the Group.
4. Financial risk management
The Group's activities may expose it to certain financial risks. The Group's
overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the Group's
financial performance.
a) Liquidity risk
Liquidity risk arises from the possibility that the Group and its subsidiaries
might encounter difficulty in settling its debts or otherwise meeting its
obligations related to financial liabilities. In addition to equity funding,
additional borrowings have been secured to finance operations. The Group
manages this risk by monitoring its financial resources and carefully plans
its expenditure programmes. Financial liabilities of the Group comprise trade
payables which mature in less than six months, convertible loan notes as
referenced in note 20 and deferred consideration that is payable in shares.
b) Capital risk
The Group's objective when managing capital is to safeguard the entity's
ability to continue as a going concern and develop its gold exploration,
development and production activities to provide returns for shareholders and
benefits for other stakeholders.
The Group's capital structure comprises all the components of equity (all
share capital, share premium, retained earnings when earned and other
reserves). When considering the future capital requirements of the Group and
the potential to fund specific project development via debt, the Directors
consider the risk characteristics of the underlying assets in assessing the
optimal capital structure.
c) Credit risk
Credit risk is the risk that the Group will suffer a financial loss as a
result of another party failing to discharge an obligation and arises from
cash and other liquid investments deposited with banks and financial
institutions. The Group considers the credit ratings of banks and
institutions in which it holds funds to reduce exposure to credit risk. The
Group considers that it is not exposed to major concentrations of credit risk.
The currency profile of the Group's cash and cash equivalents is as follows:
30 June 2023 30 June 2022
Cash and cash equivalents £'000 £'000
GBP - -
Kenyan Shillings 62 23
USD 1 57
On the assumption that all other variables were held constant, and in respect
of the Group's cash position, the potential impact of an increase in the GBP:
USD foreign exchange rate would not have a material impact on the Group's cash
position and as such is not disclosed. See note 19 for details on the credit
ratings of the banks in which this cash and cash equivalents is held.
d) Fair value hierarchy
All the financial assets and financial liabilities recognised in the financial
statements which are short-term in nature are shown at the carrying value
which also approximates the fair values of those financial instruments.
Therefore, no separate disclosure for fair value hierarchy is required.
e) Market risk
Market risk arises from the Group's use of interest bearing and foreign
currency financial instruments. It is the risk that future cash flows of a
financial instrument will fluctuate because of changes in interest rates
(interest rate risk), and foreign exchange rates (currency risk). A portion of
the loans held at year end have a fixed interest rate and are denominated in
US Dollars and therefore a risk exists that repayment may be higher than
provided for if the foreign exchange rate significantly changes. This is
mitigated by the underlying assets which are also denominated in US Dollar
(i.e. the gold reserves).
A 10% movement in the strength of the US Dollar against Pound Sterling would
increase the repayment by £208,000. There would be a reduced repayment of the
same amount if the US Dollar weakened.
f) Price risk
Price risk arises from the exposure to equity securities arising from
investments held by the Group. No such investments are held by the Group and
therefore no risk has been identified.
g) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the Pound
sterling, US Dollar and Kenyan Shilling. Foreign exchange risk arises from
recognised monetary assets and liabilities, where they may be denominated in a
currency that is not the Group's functional currency. One significant risk
in Kenya in prior year is a US Dollar risk as the loans to KPG are
denominated in US Dollars. However, this risk has been reduced in the
current year as the loans have been converted to a capital contribution and
therefore will not be repaid. The Directors consider that, for the time
being, no hedging or other arrangements are necessary to mitigate this risk.
h) Categories of financial instruments
In terms of financial instruments, these solely comprise of those measured at
amortised costs and are as follows:
Group Company
30 June 30 June 30 June 30 June
2022 2022 2022 2022
£'000 £'000 £'000 £'000
Trade and other payables 3,170 549 709 172
Cash and cash equivalents at amortised cost
63 80 1 26
Trade and other receivables 588 826 505 7,108
651 906 506 7,134
5. Reverse acquisition
On 31 August 2021, the Company acquired the entire share capital of MGIL and
thus a 100% indirect interest in Kilimapesa Gold Pty Ltd (KPGL), whose
principal activity is an established gold mine and gold processing operation
in Kenya. This transaction was accounted for as a reverse acquisition.
Details of which can be found in the prior year accounts which are on the
Company's website or can be obtained from Companies House.
6. Segment reporting
For the purpose of IFRS 8, the Chief Operating Decision Maker "CODM" takes the
form of the board of directors. The Directors are of the opinion that the
business of the Group focused on two reportable segments as follows:
· Head office, corporate and administrative, including parent company
activities of raising finance and seeking new investment opportunities, all
based in the UK and;
· Gold mining operations, all based in Kenya and Tanzania.
The geographical information is the same as the operational segmental
information shown below.
12 month period ending 30 June 2023 United Kingdom £'000 Kenya Tanzania
£'000 £'000 £'000
Revenue - 4,233 - 4,233
Cost of sales - (5,508) - (5,508)
Gross Profit - (1,275) - (1,275)
Operating expenses (2,536) (1,689) (152) (4,377)
Operating Loss (2,536) (2,964) (152) (5,652)
Other income 1,960 10 - 1,970
Net finance costs (1,393) (169) (1,562)
Foreign exchange expenses (140) 175 (10) 25
Loss before and after tax (2,109) (2,948) (162) (5,219)
Net Assets
Assets 604 6,166 2,395 9,165
Liabilities (10,440) (5,364) (613) (16,417)
Net assets (liabilities) (9,836) 802 1,782 (7,252)
(Restated) United Kingdom £'000 Kenya Tanzania
18 month period ending 30 June 2022 £'000 £'000 £'000
Revenue - 6,858 - 6,858
Cost of sales - (9,007) - (9,007)
Gross Profit (2,149) - (2,149)
Operating expenses (3,411) (3,689) (1) (7,101)
Operating Loss (3,411) (5,838) (1) (9,250)
Share-based payments (84) - - (84)
Listing costs (1,146) - - (1,146)
Other income (19) (922) 1 (940)
Net finance costs (546) (265) - (811)
Reverse acquisition expenses (3,298) - - (3,298)
Loss before and after tax (8,504) (7,023) (1) (15,529)
Net Assets
Assets 435 7,403 2,402 10,240
Liabilities (8,737) (2,993) (554) (12,284)
Net assets (liabilities) (8,302) 4,410 1,848 (2,044)
Major customers: revenue in the current year is split between customers in
Kenya and Dubai (prior year Kenya only).
7. Revenue
12 months ended 30 June 2023 18 months ended 30 June 2022
£'000 £'000
Sales of precious metals 4,233 6,858
Total revenue 4,233 6,858
8. Expenditure by nature
12 months ended 18 months ended 30 June 2022
30 June 2023
£'000 £'000
Wages and salaries (inc. Directors Fees) 2,999 2,971
Depreciation, depletion and amortisation 849 824
Legal and professional fees 1,621 1,459
Share based payments (non-finance cost) - 84
During the year the Group obtained the following services from their auditors:
12 months ended 30 June 2023 18 months ended 30 June 2022
£'000 £'000
Fees payable to the Group's auditors for the audit of the Company and Group
190 65
Fees payable to the Group's auditors for the overrun of the prior year audit
62 -
Fees payable to the Group's auditors for other services - Reporting Accountant
services in respect to the Reverse Acquisition
- 35
252 100
9. Directors and employees
The average monthly number of persons employed by the Group, including
Executive Directors, was:
12 months ended 18 months ended
30 June 2023 30 June 2022
£'000 £'000
Management 20 13
Operations 329 461
Administration 47 25
396 499
Remuneration in respect of these Directors and Employees was:
12 months ended 18 months ended
30 June 2023 30 June 2022
£'000 £'000
Wages and salaries 2,046 2,068
Pensions (National Social Security Fund) 49 37
Other employment costs 19 -
Directors' remuneration 885 866
2,999 2,971
Wages and salaries include amounts that are capitalised of £239,000 (2022:
figure not available) as development and production assets and the remainder
are included in cost of sales and administration expenses.
Directors' remuneration is disclosed in the Remuneration Report of these
consolidated financial statements.
10. Other income
12 months ended 18 months ended 30 June 2022
30 June 2023 £'000
£'000
Miscellaneous income 10 2
Release of contingent consideration due within one year (see note 20)
1,426 -
Release of contingent consideration due after one year (see note 23)
534 -
1,970 2
11. Finance costs
(Restated)
12 months ended 18 months ended 30 June 2022
30 June 2023 £'000
£'000
Interest on loans 470 609
Interest payable on lease liabilities 66 69
Share-based payments 992 -
Unwinding of discount on provisions (see note 23) 34 135
1,562 813
The share-based payments include warrants issued as part of the financing
received in the year (£555,000 for the warrants - see note 25 and commission
costs of £42,000). It also includes £395,000 which is the cost of the
additional fair value of the shares that were transferred to the owners of the
Mill End loan for the delayed repayment of this loan. (See note 21).
12. Taxation
No charge to taxation arises due to the losses incurred.
GROUP (Restated)
12 months 18 months
ended ended
30 June 30 June
2023 2022
£'000 £'000
Loss on ordinary activities before taxation (5,219) (15,529)
Tax at the applicable rate of 25.4% (2022:24.5%)
(1,279) (3,805)
Disallowed expenses 14,213 2,068
Losses for which no deferred tax is recognised (7,972) 13,463
Total tax charge - -
The weighted average applicable tax rate of 25.4% (2021: 24.5%) used is a
combination of the 19% standard rate of corporation tax in the UK and 30%
Kenyan corporation tax.
The Group has total tax losses of £23m to carry forward against future
profits. There are approximately £7m of UK tax losses brought forward and
£16m Kenyan tax losses brought forward.
No deferred tax asset on losses carried forward has been recognised on the
grounds of uncertainty as to when profits will be generated against which to
relieve said amount.
13. Earnings per share
Basic and diluted loss per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of
ordinary shares outstanding during the period.
(Restated)
12 months ended 18 months ended
30 June 30 June
2023 2022
Loss for the period (£'000) 5,219 15,529
Weighted average number of shares in issue 1,885,837,040 1,423,204,110
Basic and Diluted loss per share (pence) (0.28p) (1.09p)
There is no difference between the diluted loss per share and the basic loss
per share presented. Warrants could potentially dilute basic earnings per
share in the future but were not included in the calculation of diluted
earnings per share as they are anti-dilutive for the period presented due to
the Group being in a loss position.
14. Investment in subsidiaries
COMPANY £'000
Cost and net book value
At 1 January 2020, 2021 -
Additions in the period 9,537
At 30 June 2022 9,537
Movement in the year (2,498)
At 30 June 2023 7,039
£'000
Investment in KPGL
Initial investment 7,690
Loan reclassified to capital contributions (note 18) 7,802
Impairment on investment (10,300)
Investment in KPGL at end of year 5,192
Investment in Tyacks
Initial investment in subsidiary 1,847
Total Investments in subsidiaries at year end 7,039
The loan between the Company and its subsidiary KPG of £7.8m was converted to
a capital contribution at year end resulting in an increase in the cost of
investment in KPG. The impairment charge of £10.3m arose from difference
between the cost of investment and the value-in use calculation of this CGU
(see note 3).
On 23 May 2022, the Company entered into a Sales and Purchase Agreement with
Tyacks Gold Limited, a gold mining and exploration company, to acquire the
entire share capital of said company (66.7% to the Company and 33.3% to
MGIL). As consideration for the transaction, the Purchase price was agreed
to be a total of £1.2m ($1.5m) cash which was agreed to be paid in three
tranches and the seller was also granted a 0.5% net smelter royalty (included
as a contingent consideration of £619,000) in prior year accounts.
On 23 June 2023, the Company entered into a Settlement Agreement with the
prior owners of Tyacks for full and final settlement of the purchase price
which included both the outstanding debt of £482,000 and this net smelter
royalty. This entire liability (outstanding debt and contingent consideration)
was extinguished through the issue of 133,333,334 new ordinary shares with a
fair value of the share price on the day of issue of £0.00425. This
resulted in a gain of £534,000 which has been recognised in the current year
in other income. The purchase price was not affected by this settlement as
the measurement period had expired.
No impairment of the cost of investment in Tyacks was considered necessary as
the value of the underlying assets was higher than this cost of investment
(see note 15).
The details for the acquisition accounting for the purchase of Tyacks can be
found in the prior year Group financial statements.
Information about the composition of the Group at the end of the reporting
period is as follows:
Name Principal activity Place of incorporation and operation % owned subsidiary
Kilimapesa Gold Pty Ltd ("KPGL") Precious metals production Kenya 100*
Tyacks Gold Limited ("Tyacks") Exploration and Mining Tanzania 100**
Caracal Holdings Ltd ("CHL"), formerly Mayflower Gold Investments Ltd ("MGIL") Precious metals production England and Wales 100
Caracal Investments Ltd Holding company Mauritius 100
*held indirectly through Caracal Holdings Ltd
**held 66.7% through the Company and 33.3% to Caracal Holdings Limited
On 31(st) August 2021, the Company acquired the entire share capital of
KPGL. Further details regarding this reverse acquisition and its accounting
can be found in the prior year Group financial statements.
The registered office of KPGL is L.R. No.209/8342/3, First Ngong Avenue, PO
Box 7478, Nairobi, Kenya.
CHL was incorporated on 9(th) December 2020 and its registered office is 165
Fleet Street, London, UK, EC4A 2DY. On 16(th) August 2022, the company
changed its name to Caracal Holdings Limited (CHL). In accordance with section
479A of the Companies Act 2006, CHL is exempt from the audit of its accounts
as its financial information is fully consolidated within the audited accounts
of the parent company. Its registered number is 13072031.
The registered office of Caracal Investments is c/o Dale International Trust
Company Limited, 3(rd) Floor Tower A, 1 Cybercity, Ebene 72201, Mauritius.
The registered office of Tyacks is 10 Chato Street, Regent Estate, PO Box
9020, Dar es Salaam, Tanzania.
15. Intangible assets
GROUP Total
£'000
Cost
Balance as at 31 December 2020 -
Acquisition of Tyacks (see note 14) 2,392
Balance as at 30 June 2022 2,392
Additions 682
Balance as at 30 June 2023 3,074
In accordance with IFRS 6, the Directors undertook an assessment of the
following areas and circumstances which could indicate the existence of
impairment:
• The Group's right to explore in an area has expired or will expire in
the near future without renewal.
• No further exploration or evaluation is planned or budgeted for.
• A decision has been taken by the Board to discontinue exploration and
evaluation in an area due to the absence of a commercial level of reserves.
• Sufficient data exists to indicate that the book value may not be
fully recovered from future development and production.
After careful consideration, the Directors concluded that no impairment was
indicated in the current year.
16. Property, plant and equipment
COMPANY Plant and equipment Total
£'000 £'000
Cost
Balance as at 30 June 2022 330 330
Additions - -
Balance as at 30 June 2023 330 330
Depreciation
Balance as at 30 June 2022 27 27
Charge for the year 33 33
Balance as at 30 June 2023 60 60
Carrying value
Balance as at 30 June 2022 302 302
Balance as at 30 June 2023 270 270
Group
In assessing the carrying amounts of its mining assets (shown below), the
Directors have used an expansion of the mining capacity up to 24,000 oz of
gold per annum in the next year, Gold revenues have been estimated over the
life of mine period at a management estimate of $2,000 per oz. A discount
rate of 8% has been utilised to give a net present value of the existing
mine. No impairment has been indicated.
Details of land
Freehold land to the extent of 11,736 Ha, situated in Lolgorian, Transmara
West, Narok County, held under Title Deed Nr
TRANSMARA/MOYOI/2366, Registry Map Sheet No. 19, in the Transmara District
Land Registry. Purchased on 4 May 2015 for £230,216.
Pledged as security
Field vehicle additions in the prior period were acquired through a bank lease
agreement which is secured on these assets.
Property, plant and equipment (continued)
GROUP Land (Restated)Land Buildings Mining Plant and equipment Field vehicles Production vehicles Office& Lab equipment Total
(leased) assets
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
Balance as at 30 June 2022 (as restated) 243 122 4,070 304 39 9,009
833 3,302 96
Change in Decommissioning asset - - - - - (326)
- (326) -
Additions - - 31 8 136 47 463 163 848
FX effect (46) (158) (28) (581) (728) (25) (123) (31) (1,720)
Balance as at 30 June 2023 197 125 3,478 644 171 7,811
675 2,403 118
Accumulated depreciation
Balance as at 30 June 2022 (as restated) - 46 1,994 287 13 2,779
214 225 -
Depreciation charge - 7 402 150 20 667
65 (5) 28
FX effect - (49) (10) (41) (425) (4) (75) (5) (609)
Balance as at 30 June 2023 - 43 1,971 362 28 2,837
230 179 24
Carrying value
Balance as at 30 June 2022 (as restated) 243 76 2,076 17 26 6,230
619 3,077 96
Balance as at 30 June 2023 197 82 1,507 282 143 4,974
445 2,224 94
Property, plant and equipment (continued)
GROUP Land (Restated) Buildings Mining Plant and equipment Field vehicles Production vehicles Office & Lab equipment Total
Land assets
(leased)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Cost
Balance as at 31 December 2020 (as restated) 236 95 3,246 278 16 6,254
829 1,554 -
Additions - - 24 1,677 700 92 16 22 2,531
FX effect 7 4 3 71 124 4 10 1 224
Balance as at 30 June 2022 (as restated) 243 122 4,070 304 39 9,009
833 3,302 96
Accumulated depreciation
Balance as at 31 December 2020 (as restated) - 38 1,300 246 12 1,894
143 155 -
Depreciation charge - 7 624 32 1 797
70 63 -
FX effect - 1 1 7 70 - 9 - 88
Balance as at 30June 2022 (as restated) - 46 1,994 287 13 2,779
214 225 -
Carrying value
Balance as at 31 December 2020 (as restated) 236 57 1,946 32 4 4,360
686 1,399 -
Balance as at 30 June 2022 (as restated) 243 76 2,076 17 26 6,230
619 3,077 96
5. Inventories
GROUP 30 June 30 June
2023 2022
£'000 £'000
Consumable stores 85 138
Raw materials and broken ore 334 457
Precious metal on hand and in process 47 117
466 712
6. Trade and other receivables
Group Company
30 June 2023 30 June 2022 30 June 2023 30 June 2022
£'000 £'000 £'000 £'000
Trade debtors - - - -
VAT receivables 384 642 171 71
Amounts due from Group undertakings
- - 179 6,997
Other receivables and prepayments 204 184 155 39
588 826 505 7,108
In the opinion of the Directors, the carrying amount of trade and other
receivables approximate their fair value.
£252,000 of the Group's trade and other receivables are denominated in Kenyan
Shilling. And the remainder is in Pounds Sterling. All of the above amounts
are due within one year.
The ageing of the debt is all less than one year. At the date of these
accounts a significant proportion of these amounts have been received,
including £150,000 that was received in relation to shares issued before the
year end and £326,000 of the VAT receivable balance.
A decision was taken by the Board to reclassify the loans due from KPG to the
Company into Investments (capital contributions) due to the underlying nature
of this loan, as the Directors have waived the expectation that this debt will
be repaid in the short term. The Board now view this loan as a long term
investment rather than non-interest bearing loans, repayable on demand. The
subsidiary agree with both the commercial and accounting treatment in relation
to this debt are in the process of issuing preference shares to the Company to
replace the intercompany loan.
19. Cash and cash equivalents
Group Company
30 June 2023 30 June 2022 30 June 2023 30 June 2022
£'000 £'000 £'000 £'000
Cash and cash equivalents 63 80 1 26
63 80 1 26
Cash and cash equivalents consist of balances in "Absa", a South African
registered bank, with a Fitch rating of BB-, and 'Equals Money', an
international, domestic and card payment platform. Equals Group Plc is
AIM-listed on the London Stock Exchange and is regulated and monitored by the
Financial Conduct Authority.
20. Trade and other payables
Group Company
30 June 2023 30 June 2022 30 June 2023 30 June 2022
£'000 £'000 £'000 £'000
Trade creditors 3,145 541 685 164
Other payables and accruals 2,405 3,882 870 2,922
Taxes and social security 24 8 24 8
Amounts due to related parties 535 - 535 -
Deferred consideration 1,500 1,500 1,500 1,500
Contingent consideration due within one year
- 1,426 - 1,426
7,609 7,357 3,614 6,019
In the opinion of the Directors the carrying amounts of trade and other
payables approximate to their fair value.
Other payables in prior year includes an amount of £825,000 due to the prior
owners of Tyacks for the completion of this acquisition (see note 14). This
debt was extinguished in the year through the payment of cash and equity.
Other payables in prior year also includes an amount of £2m in relation to
the ORCA CLN. This has been shown as part of Borrowings balance (see note
21) in the current year to better reflect the underlying transaction which was
finalised as a CLN and not a subscription for shares.
On 12 May 2023, the Company renegotiated the terms of the repayment of the
Mill End facility. Mill End also exercised the pledge, which had been
entered into by the Directors Robbie McCrae and Gerard Kisbey-Green, as part
of this financing transaction, and thus through the Directors, was issued a
total of 153,800,000 Ordinary Shares in the Company. The Company has agreed
to issue the Directors this same number of shares as part of the Prospectus
that is expected to complete after the publication of this report and
accounts. This amount has been recognised as a Finance Cost in the current
year as it is associated with the loan and the liability of £535,000 is
included in other creditors as 'amounts due to related parties'.
These shares were initially measured at the fair value of the equity
instrument issued. On the dates of the pledging of these shares the fair
value is measured at the share price, as there is a Level 1 - observable fair
value for the shares. Any difference between the carrying amount of this
financial liability when it is extinguished and the consideration paid, will
be recognised in profit or loss and separately disclosed.
Number of shares pledged Date of pledge Observable share price Fair value
Robbie McCrae 98,500,000 18 April 2023 £0.00375 £369,375
Gerard Kisbey-Green 55,300,000 3 February 2023 £0.003 £165,900
153,800,000 £535,275
The deferred consideration of £1.5m is due to Mayflower Capital as part of
the consideration due for the acquisition of KPGL. This is due to be paid in
shares on approval of the Prospectus by the FCA and the subsequent ability and
authority of the Company to issue these shares.
The contingent consideration in prior year of £1,426,000 was based on the
management performance shares arising from the Reverse Acquisition and was
also due to be paid in shares. The Board has since reviewed the terms of
these incentive payments, which initially had no clear expiry date for
achievement of the required milestones and have concluded that the milestones
have not been reached within an acceptable timeframe, the management
performance expected has not been achieved and therefore no incentives
payments will be made. As at 30 June 2023, the contingent consideration has
been derecognised and a gain of £1,426,000 was included in other income.
21. Borrowings
Interest Bearing: Group Company
30 June 2023 (Restated)30 June 2022 30 June 2023 30 June 2022
£'000 £'000 £'000 £'000
Non-current liabilities
Bank borrowings 241 - - -
Other - 5 - -
Finance leases 500 679 - -
741 684 - -
Current liabilities
Bank borrowings 188 - - -
Finance leases 44 45 - -
Loan notes 6,533 1,657 6,533 1,657
6,765 1,702 6,533 1,657
Bank Borrowings
The carrying amounts of the bank borrowings are denominated in USD and are
secured by the following:
- Logbooks for the purchased vehicles
- Directors' personal guarantees
- Corporate guarantee for USD 108,016 for related party
Weighted average effective interest rate the year end on bank borrowings was
11%.
The maturity based on the repayment structure of the non-current bank
borrowings is as follows:
£'000
Between 1 and 2 years 80
Between 2 and 5 years 161
241
Finance Leases (see note 3b for details regarding the Prior Year Adjustment
relating to misstatement of Right of use Assets)
Gross lease liabilities - minimum lease payments
(Restated)
30 June 2023 30 June 2022
£'000 £'000
Less than one year 102 125
2-5 years 440 563
Over 5 years 294 448
Gross value of lease liabilities 836 1,136
Future interest expense on lease liabilities (292) (412)
Present value of lease liabilities 544 724
Present value of lease liabilities (Restated)
30 June 2023 30 June 2022
£'000 £'000
Less than one year 50 57
2-5 years 259 313
Over 5 years 235 354
544 724
The company leases land where the mine is located. The leases of land are
typically for a period of 20 years, with options to renew. None of the leases
contains any restrictions or covenants other than the protective rights of the
lessor or carries a residual value guarantee. The weighted average effective
interest rates at the reporting date was 10%.
Loan Notes
Initial borrowing Amount in accounts including interest due Interest rate per annum Repayment date
ORCA CLN £ £2,000,000 £2,208,000 8% None*
Koenig CLN £2,000,000 £2,152,000 8% None*
Orca CLN $ $1,000,000 £860,000 8% None*
Deepad Limited $113,000 £108,000 50% On demand
Mill End Loan $1,523,258 £1,205,000 See below See below
£6,533,000
*These CLN's will convert to shares on the approval of the Prospectus
On 15 March 2022, the Company drew up a Subscription Document with ORCA
Capital GmbH ("ORCA"), a company incorporated and registered in Germany, for
£2 million. During the year, it came to light that the Company would not be
able to issue these shares without the completion of a Prospectus.
Therefore, the documentation was reproduced as a Convertible Loan Note
Instrument ("CLN") with an interest rate of 8% per annum. The conversion price
being agreed as £0.06 per Ordinary share, save that where the price per
ordinary share falls below £0.06, the conversion price shall be 90% of the
10-day VWAP of an ordinary share. 167 million warrants were also issued
to ORCA, at an exercise price of £0.0085 and are exercisable for 2 years
from the date of grant. All outstanding notes together with accrued interest
shall convert automatically into fully paid Ordinary shares at the Conversion
Price on approval of the Prospectus by the FCA and subsequent ability and
authority of the Company to issue shares. The balance of £2m has been
reclassified from 'trade and other payables' in the prior period to 'short
term loan and borrowings - interest bearing' in the current period to reflect
this amended documentation.
On 18 July 2022, the Company entered into a CLN Instrument with Koenig
Vermoegensvermaltungsgesellschaft MBH ("Koenig"), a company incorporated and
registered in Germany, for £2 million at an interest rate of 8% per annum.
The conversion price being agreed as £0.06 per Ordinary share, save that
where the price per ordinary share falls below £0.06, the conversion price
shall be 90% of the 10 day VWAP price of an ordinary share. 167m warrants
were also issued to Koenig, at an exercise price of £0.0085 and are
exercisable for 2 years from the date of grant. All outstanding notes
together with accrued interest shall convert automatically into fully paid
Ordinary shares at the Conversion Price on approval of the Prospectus by the
FCA and subsequent ability and authority of the Company to issue shares.
On 8 February 2023, the Company entered into a further CLN facility with ORCA
for up to $5m. The first tranche of $1m (£836,453) of loan notes was
immediately drawn down with an interest rate of 8% The loan notes are
convertible into ordinary shares at a price of 90% of the 10-day VWAP of an
ordinary share prior to the business day, on which the noteholder serves the
conversion notice on the Company following approval of the Prospectus by the
FCA and subsequent ability and authority of the Company to issue shares. 137
million warrants were also issued to ORCA, at an exercise price of £0.0085
and are exercisable for 2 years from the date of grant.
The Company's obligations in respect of all the Loan Notes held by ORCA have
been secured by a share pledge granted by the Company's subsidiary Caracal
Holdings Ltd over KGPL, the 100%-owned Kenyan operating subsidiary of Caracal
Holdings (the "Security"). The Security will be released upon the approval of
the Prospectus by the FCA.
The above CLN liabilities have not been discounted due to the short timeframe
(i.e. they are all due within one year) and have been presented in the Balance
Sheet at their face value (including interest payable). Fair value is not
considered to be materially different from the carrying value since the
borrowings are of a short term nature.
The Company also entered into a loan with Deepad Limited for $113,000 which
is repayable on demand with an interest rate of 50% per annum.
Mill End Convertible Loan Note
On 21 June 2022, the Company entered into a Loan Note Instrument with Mill End
Capital Limited (the "Noteholder") for a total of £1.25m ($1.5m). This was
draw down in its entirety on 27 June 2022. The total creditor recorded in
the prior year accounts is £1.7m which is made up of £1.25m principal and
£407,000 accrued interest.
On 12 May 2023, the Company renegotiated the terms of the repayment of the
facility and paid down a further $300,000 before year end and $100,000 post
year end. Mill End also exercised the pledge, which had been entered into by
the Directors Robbie McCrae and Gerard Kisbey-Green, as part of this financing
transaction, and thus through the Directors, was issued a total of 153,800,000
Ordinary Shares in the Company. (See note 20)
The Company will repay the remainder of the Mill End financing as follows:
The Company paying US$600,000 by no later than five days after Placing
Shares ("Placing Shares") are admitted to trading on the London Stock Exchange
Main Market pursuant to the prospectus currently being prepared by the Company
being published; and
The Company paying US$823,258 in cash or failing the ability to make the
payment in cash by the issue of Ordinary Shares ("Ordinary Shares") in the
company at the issue price of the lower of: 0.035 pence; the issue price of
the Placing Shares or (if lower) of any other Ordinary Shares issued by the
Company following the date of this announcement, as is equal to US$823,258.
21.b Net debt reconciliation
Group net debt (Restated)
2023 2022
£'000 £'000
Cash and cash equivalents 63 80
Bank overdraft and loans (189) -
Borrowings (6,774) (1,662)
Lease liabilities (543) (724)
Net debt (7,443) (2,306)
Group Borrowings Leases Cash Total
£'000 £'000 £'000 £'000
Net debt at 1 July 2022 (as restated) (1,662) (724) 80 (2,306)
Net financing cashflows (2,985) 117 (17) (2,885)
Reclassification from prior year of loan (2,000) - - (2,000)
Interest expense (471) 66 - (405)
Foreign exchange adjustments 155 (2) 153
Net debt at 30 June 2023 (6,963) (543) 63 (7,443)
Company net debt 2023 2022
£'000 £'000
Cash and cash equivalents 1 26
Borrowings (6,533) (1,657)
Net debt (6,532) (1,631)
Company Borrowings Cash Total
£'000 £'000 £'000
Net debt at 31 December 2020 (450) - (450)
Net financing cashflows (1,207) 26 (1,181)
Net debt at 1 July 2022 (1,657) 26 (1,631)
Net financing cashflows (2,606) (25) (2,631)
Reclassification from prior year of loan (2,000) - (2,000)
Interest expense (402) - (402)
Foreign exchange adjustments 132 132
Net debt at 30 June 2023 (6,533) 1 (6,532)
22. Deferred tax liabilities
Group £'000
Brought forward as at 1 January 2021 -
Deferred tax arising from acquisitions in prior period 552
Carried forward as at 30 June 2022 552
Carried forward as at 30 June 2023 552
The deferred tax liability in prior year has arisen following the acquisition
of Tyacks in the which has been accounted for as asset acquisition. A
deferred tax liability has been recognised on the Fair Value uplift of the
assets acquired (see note 14), which has been calculated at a rate of 30% of
the uplift of asset value being the applicable Tanzanian tax rate.
23. Provisions and contingent liabilities
Group Company
30 June 2023 30 June 2022 30 June 2023 30 June 2022
£'000 £'000 £'000 £'000
Provision for rehabilitation and environmental provision
750 1,370 - -
Contingent consideration - 619 - 619
750 1,989 - 619
Group £'000
Provision for rehabilitation and environmental provision
Brought forward as at 1 July 2022 1,370
Change in estimation of provision (326)
Foreign exchange movement (328)
Unwinding of discount 34
Carried forward as at 30 June 2023 750
The above relates to site restoration for open pit operations at Kilimapesa
Gold (PTY) Limited. The fair value of the above provision is measured based on
expected future cashflows using a discount factor. The yields of Kenyan
sovereign bonds with a maturity profile commensurate with the anticipated
rehabilitation schedules have been used to determine discount factors applied
to anticipated future rehabilitation costs. (In prior year the 10 year US Bond
rate was applied and the average annual US inflation rate*). The provision
represents the net present value of the best 'estimate of the expenditure
required to settle the obligation to rehabilitate environmental 'disturbances
caused by mining operations. The liability is re-estimated yearly.
Rehabilitation and environmental provisions are based on management
estimates of work and the judgement of the directors. By its nature, the
detailed scope of work required, and timing of such work is uncertain. The
provision has been adjusted for in the current year which includes a
significant movement due to the foreign exchange effect on the underlying
liability. In the opinion of the Directors the carrying amounts of the
provision for decommissioning cost approximate their fair value.
The principal assumptions used are as follows:
2023 2022
Discount rate 15.7%* 3.5%*
Inflation rate 7% 5%*
Life of licence (years) 11 12
Abandonment date Year 2032 Year 2032
Licence expiry date Year 2032 Year 2032
*the discount rate of 15.7% is based on a Kenyan 10 year Government Bond to
reflect the local funding costs for the abandonment of the mine. This resulted
in a material change in the provision. The Directors are of the opinion that
the change in the discount rate was appropriate as it better reflects the
economic nature of the underlying liability.
Group and Company £'000
Contingent consideration
Brought forward as at 1 July 2022 619
Contingent consideration extinguished (619)
Carried forward as at 30 June 2023 -
On 23 May 2022, the Company entered into a Sales and Purchase Agreement with
Tyacks. As part of the sale the seller was also granted a 0.5% gross net
smelter return royalty which was included in the prior year accounts at the
present value of £619,000.
On 23 June 2023, the Company entered into a Settlement Agreement with the
prior owners of Tyacks for full and final settlement of the purchase price
which included both the outstanding debt of £482,000 and this net smelter
royalty. This entire liability (outstanding debt and contingent consideration)
was extinguished through the issue of 133,333,334 new ordinary shares with a
fair value of the share price on the day of issue of £0.00425. This
resulted in a gain of £534,000 which has been recognised in the current year
in other income.
24. Share capital and premium
Group Ordinary Shares Share Capital Share Premium
(number) £'000 £'000 Total
£'000
At 31 December 2020 600,000 4,430 - 4,430
Transactions dated 31 August 2021:
Transfer of capital of KPGL to Reverse Acquisition Reserve
(600,000) (4,430) - (4,430)
Issued share capital of CGP at acquisition 132,400,000 132 602 734
Issue of shares for acquisition of subsidiary 428,846,154 429 3,860 4,289
Issue of shares at placing price £0.0075 358,251,275 358 2,329 2,687
Issue of shares at placing price £0.01 280,700,000 281 2,526 2,807
Issue of Equity-for-Debt shares 107,753,803 108 969 1,077
Issue of Convertible Debt shares 51,050,000 51 460 511
Issue of shares in lieu of settlement of fees 89,424,425 89 793 882
1,448,425,657
Issue of additional placing shares £0.01 on 20 September 2021
30,897,834 31 278 309
Issue of shares in lieu of settlement of fees on 20 September 2021
29,450,000 29 275 304
Issue of additional placing shares at £0.0075 on 20 September 2021 19,080,000 19 124 143
Issue of shares for acquisition of subsidiary (to GMRL $450,000)
32,867,800 33 296 329
Issue of shares in lieu of settlement of fees on 4 November 2021
14,608,709 15 136 151
Issue of shares at placing price of £0.0125 on 2 December 2021
40,000,000 40 460 500
Issue of shares at placing price of £0.0125 on 27 December 2021
24,000,000 24 276 300
Issue of shares in lieu of settlement of fees on 27 January 2022 82 91
9,100,000 9
Issue of shares on warrant exercise on 7 February 2022 - 38
37,500,000 38
Issue of shares at placing price of £0.0095 on 14 February 2022 1,505 1,682
177,048,592 177
Issue of shares at placing price of £0.0125 on 17 February 2022 184 200
16,000,000 16
Cost of share issue (849) (849)
As at 30 June 2022 1,878,978,592 1,879 14,306 16,185
(2)
Issue of shares for Tyacks settlement 133,333,334 133 433 567
Issue of shares at placing price of £0.003 on 21 June 2023
117,000,000 117 234 351
Cost of share issue - - (80) (80)
As at 30 June 2023 2,129,311,924 2,129 14,893 17,023
The issued capital of the Group for the period to 31 August 2021 is that of
KPGL which had 600,000 shares in issue of 1,000 Kenyan Shillings (KSH) each.
Upon completion of the acquisition the share capital of KPGL was transferred
to the Reverse Acquisition Reserve (see note 5) and the share capital of CGP
was brought to account. The shares were all of par value £0.001.
Post Balance Sheet date the following shares were issued:
On 26 July 2023, 3,350,000 ordinary shares were issued to a supplier in lieu
of fees of £10,000 and on 26 September 2023, 30,916,667 ordinary shares were
issued at a placing price of £0.003.
On 23 January 2024, the Company issued 46,666,667 new Ordinary Shares of
£0.001 each at a price of £0.003 per Ordinary Share.
On 26 March 2024, the Company issued 260,000,000 new Ordinary Shares of
£0.001 each at a price of £0.003 per Ordinary Share.
25. Warrants and share-based payments
The Group has the following warrants outstanding at year end:
Date of Issue Name/Reason for issue No. of warrants Exercise price pence per share Expiry date
23.06.2022 Mill End Warrants 52,101,062 0.8p 20.06.2025
01.07.2022 Orca Warrants 166,666,667 0.85p 08.03.2024
18.07.2022 Koenig Warrants 166,666,667 0.85p 18.07.2024
21.06.2023 June Placing Warrants 58,500,000 0.6p 31.12.2024
443,934,396
The movement in warrants during the period was as follows:
Number of warrants Exercise price (pence)
As at 1 July 2022 633,296,641 -
Issued in the period 391,833,334
Expired in the period (581,195,579)
Exercised in the period -
As at 30 June 2023 443,934,396
The June Placing warrants have been determined as equity instruments under IAS
32 and as such have been issued at nil cost.
The weighted average exercise price of the warrants outstanding at the
year-end is 0.8p (2022: 2.6p). The weighted average life of the warrants
outstanding at the year-end is 1.0 years (2022: 0.81 years).
In the current year, the Orca and Koenig warrants (Prior year: Mill end
warrants) are valued in accordance with IFRS 2, as equity settled share-based
payment transactions. £555,000 has been recognised as the fair value for
these warrants and has been charged against finance costs as they directly
relate to the services provided by these companies to raise finance.
The fair value was calculated using the Black Scholes model with inputs as
detailed below:
Orca warrants Koenig warrants Mill End warrants
Share price 0.93p 0.83p 0.7p
Exercise price 0.85p 0.85p 0.8p
Expected life 2 years 2 years 3 years
Volatility 66% 66% 31%
Risk-Free Interest rate 1.37% 1.99% 1.24%
Expected dividends - - -
Expected volatility has been based on an evaluation of the historical
volatility of similar Company's share price in the same industry and listed on
the same Exchange. The Company have not used Caracal's historical volatility
due to the two extended periods of suspension from trading on the LSE. The
fair value has been discounted by 50% to account for the early-stage
development of the Company and limited liquidity due to its small capital
nature.
26. Contingent liabilities
The Group does not have any contingent liabilities at the year-end (2022:
none).
27. Capital commitments
The Group has $23,907 in annual rent commitments in relation to maintaining
licenses in Tanzania.
Ground rent at the Kilimapesa mine is 500,000 KES per year (£3,333) and is
due to be paid annually until 2032. The exploration licence at Kilimapesa is
138,284 KES per year (£922) and is due to be paid for a period of two further
years. All Royalty commitments are recorded as they fall due in the same
accounting period as the revenue it relates to.
28. Ultimate controlling party
The Directors do not consider there to be one ultimate controlling party and
the significant shareholders have been disclosed in the Directors' Report.
29. Related party transactions
Transactions with subsidiaries/related parties
30 June 30 June
2023 2022
£'000 £'000
Amounts owed to related parties:
Caracal Investments Limited - 8
Amounts due from related parties:
Kilimapesa Gold 45 6,997
Tyacks Gold 121 -
Caracal Investments Ltd 13 -
179 6,997
In prior year KPGL had been granted loans from its Holding Company, GMRL.
Interest was charged at 1% per annum. No interest has been charged since the
loan was reassigned. The loan is unsecured and has no maturity date and is
denominated in USD. This loan was transferred to CHL as part of the Reverse
Acquisition (see note 5). In current year this loan has been reclassified to
Capital Contributions and preference shares will be issued by KPG to replace
this loan.
Transactions with Key Management Personnel
Directors remuneration is set out in the Remuneration Report and note 9 to
these accounts.
Gerard Kisbey-Green, a non-exec Director of the Company, and the sole owner
of Theseus Enterprises Limited ("Theseus"), acting through Theseus
transferred on 3(rd) February 2023, 55,300,000 Ordinary Shares of 0.1
pence in the Company ("Ordinary Shares"), to Mill End Capital Limited. Mr
McCrae, an executive Director of the Company, and the sole owner of Mansa
Capital ("Mansa"), acting through Mansa also transferred 98,500,000 Ordinary
Shares to Mill End Capital Limited.
The Company has agreed to issue the Directors this same number of shares in
2024 as part of the Prospectus process. This amount has been recognised as a
Finance Cost in the current year as it is associated with the loan and the
liability is included in other creditors as a related party. The liability
as at 30 June 2023 is recorded as £211,475.
The following Directors received consultancy/commission fees through the
following companies:
Directors Company 2023 Fees Paid 2022 Fees Paid
£'000 £'000
Stefan Muller FCM Consulting 41 -
James Longley James Longley Limited - 156
Charles Tatnall Tatbels Limited - 146
In the prior year, on 5 January 2021 as part of a standstill agreement between
Fandango Holdings PLC, Stranger Holdings PLC and Papillon Holdings PLC it
was agreed that no further interest would accrue on any of the borrowings from
the two companies, that the total amount of capital and interest due to
Stranger Holdings PLC would be assigned to Fandango Holdings PLC and that the
revised total amount due to Fandango Holdings PLC of £381,332 comprising
capital and accrued interest would be converted into 38,133,261 new ordinary
shares of 1 pence each in the company. This allotment of new shares took place
on 31 August 2021 as part of the reverse acquisition of KPG.
In the prior year, Medini Rwanda Pty Limited received 98.5 million
consideration shares at £0.01 per share and Mansa Capital Limited received 5
million ordinary shares at £0.01 per share in lieu of cash as part of an
introducers fee in relation to the reverse acquisition of KPG. Robbie McCrae
is a director and has overall control of both companies.
In the prior year, Theseus Enterprises Limited received 55.3 million
consideration shares at £0.01 per share in relation to the reverse
acquisition of KPG. Gerard Kisbey-Green is a director and has overall
control of said company.
In prior year, KPG directors, due to the nature of the reverse acquisition,
were considered to be related parties. These directors, that are not also
directors of Caracal Gold are disclosed below:
Directors 2022
£'000
J Brewer 98
LK Biwott 10
R Shikuko 33
In the prior year, Gathoni Muchani Investments Limited received 15.9 million
ordinary shares at £0.01 per share in lieu of cash as part of an introducers
fee in relation to the reverse acquisition of KPG. Jason Brewer, a director
of KPG is also a significant shareholder of said company.
Management Warrants and Performance Shares
Various awards were made to related parties in prior year with performance
related conditions attached. All management warrants and performance shares
were considered null and void by the Directors as at 30 June 2023 as it was
considered that none of the milestones had been met in the appropriate
timeframe.
30. Events after the reporting period
On 26 July 2023, 3,350,000 ordinary shares were issued to a supplier in lieu
of fees of £10,000 and on 26 September 2023, 30,916,667 ordinary shares were
issued at a placing price of £0.003. The subscribers were also issued a total
of 15,458,333 investor warrants based on a one for two basis, with an exercise
price of £0.006 and expiry date of 31 December 2024.
On 29 September 2023, the Company signed a short term loan from the Director
Robbie McCrae for £33,000 ($40,000) with an annual interest rate of 10%,
repayable on 31 December 2025.
On 6 November 2023, the Company entered into a US $1,400,000 Financing
Agreement with Koening Vermoegensverwal Tungsgesellschaft. The Company shall
make monthly payments and each monthly payment shall be calculated as the
higher of US $50,000 and 50% of free cash flow of the Company. The total
repayment has been agreed as follows: (i) $1,750,000 if settled on or before
30 June 2024; (ii) $2,100,000 if settled on or before 31 December 2024; (iii)
$2,450,000 if settled on or before 30 June 2025; and (iv) $2,800,000 if
settled on or before 31 December 2025.
On 13 November 2023, the Company signed a short term loan from the Director
Robbie McCrae for $150,000 with an annual interest rate of 10% per annum above
the Bank of England's Base Rate, repayable on 31 December 2025.
On 23 January 2024, the Company issued 46,666,667 new Ordinary Shares of
£0.001 each at a price of £0.003 per Ordinary Share (fund raise of
£140,000). The subscribers were also issued a total of 46,666,667 investor
warrants based on a one for one basis, with an exercise price of £0.0042 and
expiry date of 23 January 2026.
On 26 March 2024, the Company issued 260,000,000 new Ordinary Shares of
£0.001 each at a price of £0.003 per Ordinary Share (fund raise of
£780,000). The subscribers were also issued a total of 46,666,667 investor
warrants based on a one for one basis, with an exercise price of £0.0042 and
expiry date of three years from Admission of these shares to trading on the
LSE.
On 21 June 2024, the Company announced it had conditionally secured further
funding through a Strategic Investor of up to $6m. This will be a three
phased investment in both cash and equity. Further details regarding this
proposed investment can be found on the Company's website.
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. END FR FZGMLVRLGDZMRecent news on Caracal Gold
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