REG - Chariot Limited - 2022 Final Results
21/06/2023 07:00
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RNS Number : 3644D Chariot Limited 21 June 2023
21 June 2023
Chariot Limited
("Chariot" or the "Company")
2022 Final Results
Chariot (AIM: CHAR), the Africa focused transitional energy company, today
announces its audited final results for the year ended 31 December 2022.
Adonis Pouroulis, CEO commented:
"As the importance of a successful energy transition builds across the world,
Chariot continues to develop a business that spans key elements of the
spectrum - natural gas, renewables and green hydrogen - each of which is
likely to be a critical energy source of the future. Over the past year we
have delivered on a number of the core objectives we set for ourselves across
our three pillars, bringing new, exciting and value accretive opportunities
into the business. Each of our projects are scalable, focused on delivering
accessible, reliable and sustainable sources of power and each has the
potential to become an important part of the supply chain within the countries
in which we operate. We are proud of our unique position within this sector
and the part we are playing in the global energy revolution."
Key Highlights Throughout 2022 and Post Period End.
Transitional Gas - fast tracking the Anchois development project and unlocking
a new gas province in Morocco
· Significant gas discovery and drilling operations successfully
completed on the Anchois Gas Development ("Anchois") project, located in the
Lixus licence, ("Lixus") offshore Morocco.
· Post-well analysis confirmed excellent, consistent gas, delivered
a material increase in resources totalling 1.4Tcf in total remaining
recoverable resources (2C and 2U) and de-risked a number of high potential
future targets.
· Award of Rissana Offshore licence ("Rissana") located around
Lixus captured basin scale opportunity with 2U prospective resource estimates
of 7Tcf.
· Front end engineering design ("FEED") initiated on Anchois
alongside Subsea Integration Alliance ("SIA") in June 2022 and materially
completed post period end.
· Societe Generale appointed as financial advisor to project - keen
interest received from a number of Moroccan, African and European banks in
providing future project finance.
· Gas sales principles agreed with ONEE for up to 0.6 BCM per year
(c. 60 mmscf per day) on a take or pay basis for a minimum of 10 years -
discussions are ongoing with other offtake parties and negotiations
progressing well.
· Pipeline tie-in agreement for the Maghreb-Europe Gas Pipeline
("GME") signed, underlining strategic proximity of Anchois to domestic and
international market.
· Partnership agreed with Vivo Energy to develop a gas-to-industry
market in Morocco - further commercialises future production.
· Competitive partnering process well advanced on Anchois.
Transitional Power - providing reliable renewable energy solutions across
Africa
· Partnership with Total Eren extended from January 2022 with
Chariot having the right to invest up to 49% into the co-developed mining
projects.
· Over 500 MW added to the mining pipeline over the past year in
partnership with Total Eren:
o Development of a 40 MW photovoltaic solar project at the Tharisa platinum
mine in South Africa,
o Partnership with First Quantum to develop a 430 MW solar and wind project
in Zambia.
o Development of a 30 MW solar plant at Karo Mining's platinum mine in
Zimbabwe.
· Diversification through shareholding in Etana Energy (Pty) Ltd
("Etana") - an active joint venture company ("JV") which holds one of only
three electricity trading licences in South Africa. The JV provides access to
transmit, trade and re-trade energy through national grid and unlocks future
participation in further renewable projects.
· Acquisition of renewable water production business, owned by ENEO
Water PTE Limited ("ENEO"), in response to increasing water scarcity in Africa
and as a complementary fit for both the Transitional Power and Green Hydrogen
pillars; first project in Djibouti has now been commissioned.
Green Hydrogen - developing a critical energy source of the future
· Pre-Feasibility study completed on Project Nour in Mauritania
confirms project's world class potential.
· Total Eren announced as partner to co-develop Nour and progress
offtake and feasibility studies.
· Memorandum of understanding signed with the Port of Rotterdam to
establish early import supply chains into the European market.
· Pilot projects signed in Morocco with Mohammed VI Polytechnic
("UM6P") and Oort Energy to evaluate large scale green hydrogen production in
country.
· Other green hydrogen projects under evaluation with plans to
further expand portfolio in Africa.
Corporate
· Placing and oversubscribed open offer successfully raised $29.5m
in June 2022.
· Cash of $12.1 million as at 31 December 2022 with no debt and
minimal remaining work commitments.
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014, as retained in the UK pursuant to S3 of the European
Union (Withdrawal) Act 2018.
Enquiries
Chariot Limited +44 (0)20 7318 0450
Adonis Pouroulis, CEO
Julian Maurice-Williams, CFO
Cenkos Securities Plc (Nomad and Joint Broker) +44 (0)20 7397 8900
Derrick Lee, Adam Rae
Stifel Nicolaus Europe Limited (Joint Broker) +44 (0) 20 7710 7760
Callum Stewart, Ashton Clanfield
Celicourt Communications (Financial PR) +44 (0)20 8434 2754
Mark Antelme, Jimmy Lea
NOTES FOR EDITORS:
About Chariot
Chariot is an Africa focused transitional energy group with three business
streams, Transitional Gas, Transitional Power and Green Hydrogen.
Chariot Transitional Gas is focused on a high value, low risk gas development
project offshore Morocco in a fast-growing emerging economy with a clear route
to early monetisation, delivery of free cashflow and material exploration
upside.
Chariot Transitional Power is focused on providing competitive, sustainable
and reliable energy and water solutions across the continent through building,
generating and trading renewable power.
Chariot Green Hydrogen is partnering with Total Eren and the Government of
Mauritania on the potential development of a 10GW green hydrogen project,
named Project Nour.
The ordinary shares of Chariot Limited are admitted to trading on the AIM
under the symbol 'CHAR'.
CHAIRMAN'S STATEMENT
In 2023, Chariot continued its journey to becoming a significant energy
provider across sectors and across the African continent. Each day we move
material projects forward towards commercialisation whilst at the same time we
envision and initiate additional new ventures. These projects include natural
gas and large-scale renewable power developments, working to connect these
cleaner energy sources to industrial clients, as well as preparing for the
increasing requirement and growth of green hydrogen into the energy supply
chain.
Our Cleaner Energy Mission
The scale and importance of the transition demands focus and cooperation
across all energy sectors. Access to energy is fundamental to achieve human
growth, comfort and contribution. Globally, it is estimated that 600 million
people are living in energy poverty; Chariot is committed to doing its part to
deliver reliable, affordable energy in all our project areas. With
increasing global volatility, the need for security of energy supply has been
amplified. Our core mission across three corporate pillars is to deliver low
cost cleaner energy options across industries, supply chains, private and
retail sectors. By having business units that span the transitional energy
space, we fit into a great variety of commercial settings and anticipate that
we will introduce additional future opportunities across our African
footprint. We are focused on delivering multiple solutions to multiple
clients with a lower carbon focus. Our primary purpose is to connect the
abundance of the African energy resource with energy hungry urban and
industrial sectors as well as underserved populations. The driving intention
is to always accomplish these goals via the cleanest technologies directed at
projects that make the biggest difference.
Projects with Impact
Chariot continues to focus on large scalable projects where we have clear
advantage via our expertise, technology, timing, or position. The Moroccan
offshore Anchois gas development project is intended to resource local
industry, reduce the carbon intensity of the power sector, and potentially
access and supply export European markets. In South Africa, deregulation
combined with our power trading licence enables the amalgamation of renewable
wind and solar power generation with industrial, commercial, and retail
customers. More remote industrial applications require more specific areal
focus where we work with clients to achieve the optimal, targeted solutions.
This is illustrated by the recent recognition of the Tharisa mine's
Buffelspoort solar project as a 'Strategic Integrated Project' by the South
African Presidential Infrastructure Coordinating Commission. Finally, Project
Nour is already looking to enable multiple economic benefits to Mauritania via
significant local content integration within each of the multiple steps of the
green hydrogen development cycle. This both introduces and enables low
carbon manufacturing processes such as green steel and ammonia production to
the host country economy. In addition, our green hydrogen group is
instrumental in testing new electrolysis and desalination technologies.
Throughout these efforts, our technical teams are busy working with host
countries, ensuring strong partner engagement, application of the best
technologies, and optimisation of project management. At the same time, we are
always looking ahead to the next project and moving forward, step by step.
It is gratifying to see the project pipeline materialise from idea to review,
to feasibility, to materiality with the final focus on taking them through to
execution and cashflow. Our company employees have an ideal mix of integrity,
technical expertise, engagement, and business acumen. I am proud to work with
everyone at Chariot, our partners and host countries to achieve our
mission.
Focus on Sustainability
As our portfolio gains in both size and range, we are increasing our focus on
sustainability and accountability. Our commitment towards best practice is
seen in our initial materiality assessment. Two of the United Nation's
"Sustainable Development Goals" are particularly salient to Chariot's path and
underpin our business execution. Goal 7 strives to ensure access to
affordable, reliable, sustainable, and modern energy for all while Goal 9
seeks to focus on the construction of resilient infrastructure, foster
innovation and promote sustainable industrial growth. Every belief and
resulting activity in all our business units are aligned on this trajectory.
Conclusion
Chariot is proud to be an active participant in the energy transition, a
movement which has enormous importance for the global population. We continue
to target advantaged, scalable growth across the transitional gas, power, and
hydrogen sectors. In conclusion, I want to express our sincere thanks and
appreciation to the people we work with across the table, across industries
and across Africa. We look forward to an exciting, successful, and
action-packed year for all our stakeholders.
George Canjar
Chairman
20 June 2023
CHIEF EXECUTIVE OFFICER'S REVIEW
Building a sustainable energy business
We are building a diversified sustainable energy business in an industry that
is at the forefront of shaping a new energy world. Energy security is critical
to modern day civilization and without it, social and economic stability is
threatened.
As I review our progress since the last report, I am proud to look back on our
achievements in constructing the foundations of our natural gas, renewable
power and green hydrogen pillars - energy sources which all have a critical
role to play in the future.
Our portfolio of projects has continued to evolve as we have expanded our
footprint within the transitional energy space. Over the past year we have
delivered on our core objectives across the three businesses and broadened
into new ventures with the electricity trading licence owned by Etana and
ENEO, bringing complementary dimensions to our asset base. With our current
portfolio and plans for ongoing growth, I believe that Chariot is one of the
most unique, well positioned and exciting players in the transitional energy
sector.
Transitional Gas: Defining and unlocking a basin scale opportunity
In January 2022, we made a significant gas discovery at the Anchois gas
project in Morocco and since then have materially increased our resource base,
completed the FEED phase of its development, agreed key principles for long
term gas sales, whilst progressing other offtake discussions, signed a joint
venture partnership with Vivo Energy, and now are in the final stages of a
farmout partnering process on Anchois and the Lixus and Rissana licences,
which has been a very competitive process. We have also expanded our knowledge
of the wider basin potential within Lixus and Rissana and we believe that
getting Anchois into production will unlock a new natural gas province that
will be an important energy supply for both domestic and European markets.
Transitional Power - Developing some of the largest sustainable power projects
in Africa.
We took our renewable power business from a pipeline base of 15 MW to over 500
MW throughout the year, signing up the 40 MW solar project at the Tharisa
platinum group metals mine in South Africa, 430 MW of solar and wind power at
First Quantum's copper projects in Zambia, and 30 MW of initial solar capacity
at Karo Mining's platinum mine in Zimbabwe in partnership with Total Eren
which is now becoming part of the Total Energies group. We will continue to
build out this side of the power business and will update the market as and
when there are material developments.
Our shareholding in Etana, the electricity trading business in South Africa,
which is already testing the platform, also offers the potential to unlock
further ready-to-build large-scale renewable projects and is an enabler in
securing the award of additional projects. Etana is one of only three
companies that holds an electricity trading licence in South Africa and
through this business we have the ability to generate, transmit, trade and
re-trade energy through the country's national grid. With our broad network
in-country we have the relationships, with our joint venture partners H1
Holdings, Neura Group and Meadows Energy, to secure offtakes across
municipalities, industrial, retail and mining sectors so we can offer an
end-to-end customer solution. We are proud to be the first empowerment
partnership of this kind in South Africa and this business has the potential
to unlock multiple revenue streams in delivering bespoke greener energy
solutions to a wide range of consumers. We are aiming to build a pipeline of
projects that can supply circa 2 GW of power and this platform can also expand
into the wider grid network across southern Africa in years to come.
Green Hydrogen - Critical to achieving carbon reduction targets
A number of major participants entered the green hydrogen market in 2022,
further validating the significant potential and the size of the prize of this
industry. Our project, Project Nour, is one of the largest green hydrogen
opportunities in the world, as confirmed by our pre-feasibility study
completed in June 2022, and with Total Eren signing up to the project as a
partner. This was a significant validation of the high quality of the project
itself. We are delighted to be working with Total Eren as they bring extensive
expertise and knowledge; we are closely aligned with them in our belief that
this will be one of the most critical commodities of the future. We have
ambitious plans as our goal is to be one of the world's leading green hydrogen
producers and we will continue to evaluate other assets with a view to
bringing them into our portfolio.
The Business Opportunity
We believe that the transitional energy space will be one of the most dominant
sectors driving world economic growth for decades to come. As well as finding
the projects that will provide material supply, another fundamental element is
developing the technology to enable the transformation and delivery of this
energy. Innovation is therefore also integral to success and we are at the
leading edge of technological advancements in the industry. For example, Oort
Energy's (with whom we have a strategic partnership) polymer electrolyte
membrane, and the desalination equipment utilised in our water projects are
both breaking ground in this regard - both looking to enable the provision of
energy and water on an economical, accessible basis.
Whilst there are risks involved in these early stages, I believe we are
leading from the front and reading the direction of travel correctly. With
relentless innovation taking place in the energy space currently, the sector
is at an exciting inflection point. I believe the energy industry has the
potential to transform our lives, just as the internet did when gave people
across the world the ability to connect on the world wide web. There are still
many unknowns to be discovered - in the early 1990's we did not know that we
would be able to use mobile phones as we do now for example - and challenges
will arise, but the scale of the potential and the global need to decarbonise
and take on the climate change challenge, in my view, underpins the biggest
business opportunity of our time.
The Chariot ecosystem
The Chariot ecosystem forms the bedrock of the Company. Our portfolio offers a
range of investment opportunities across different geographies, energy sources
and development phases but each pillar has relevance to the other and they
share important synergies. As well as being linked through our corporate
values, across all our projects there are common attributes of the resources
that we look to supply - reliable, affordable, accessible commodities that can
help reduce our carbon footprint and enable diversification of wider
industrial activities and downstream development. Our business has matured
significantly both in breadth and depth as we have also developed the
governance across each pillar which has its own dedicated team and reporting
structure. Our network, shared ideas, shared vision and strategy is
fundamental to our business, and each team brings something very special to
the wider group. We have a long-term vision for this business and we will look
to capitalise on these shared benefits whilst we grow the individual
businesses within the Chariot stable.
Corporate Review
We successfully raised US$29.5m in June 2022 to progress the FEED for the
Anchois project and for further development of our power portfolio, and I
would like to thank the new and existing investors that supported this raise.
The Chariot directors also participated and we remain inherently aligned with
all our shareholders and focused on delivering value for all. The importance
of our projects is also underlined by the backing that we get in each country
in which we work and I would like to thank all the host nations and
Governments for their support and partnership. It is a pleasure to work with
ONHYM in Morocco and the Ministry of Hydrocarbons, Mines and Energy in
Mauritania and I would like to thank our valued partners, Total Eren, H1
Holdings, Neura Group and Meadows Energy for their ongoing collaboration. I
would also like to thank the Chariot family, from the Board to our employees,
partners and consultants for their dedication, commitment and enthusiasm and
of course, to our shareholders for their ongoing support.
Looking forward
To take on the challenge of reaching 2050 targets we need a wide-ranging
transitional energy plan as we develop a new global energy mix. There is a
huge challenge around the financing of these mega projects that are needed to
accelerate the transition and there needs to be a global understanding that if
we are all to succeed, we need something akin to a Marshall Plan to tackle
this epic issue. The transition will not be linear so we will need to continue
to adapt, collaborate and innovate but I firmly believe that when the human
spirit decides to do something, with hard work and perseverance it can be
achieved. I am excited about the future ahead as we have set out a road map
for Chariot which tries to ensure long term growth, relevance, viability and
above all sustainability. We aim to build a company that will last long into
the future.
How we power our future world is one of the most critical issues of our time
and we are proud to be developing some of the projects that will form key
components of the future energy landscape. I look forward to where we go from
here as we move into the next chapter in the Chariot story and continuing to
update you as we move forward on our journey.
Adonis Pouroulis
Chief Executive Officer
20 June 2023
CHIEF FINANCIAL OFFICER'S REVIEW
Funding and Liquidity as at 31 December 2022
The Group remains debt free and had a cash balance of US$12.1 million as at 31
December 2022 (31 December 2021: US$19.4 million).
During 2022, the Group invested c.US$39 million (31 December 2021: c.US$12
million) into the business through its successful appraisal and exploration
drilling campaign in Morocco, business development within the Transitional
Power and Green Hydrogen businesses, and administration activities.
Maintaining a lean cost foundation, without impacting operational capability,
remains a core focus for the Group.
The proceeds of US$5 million raised from the issue of underwriting shares to
Magna Capital LDA in January and March 2022, as well as the equity fundraising
completed in June 2022 of US$29.5 million, allowed the Group to execute, and
in the post-period complete, the FEED of its flagship Anchois gas development
project, as well as progress opportunities within the Transitional Power and
Green Hydrogen businesses across the African continent.
As at 31 December 2022, US$0.75 million of the Group's cash balances were held
as security against Moroccan licence work commitments. The decrease from
US$5.35 million at 31 December 2021 was due to a decrease in Moroccan bank
guarantees.
The appointment of Societe Generale as financial advisor to lead debt
financing of the Anchois project in Morocco demonstrates the project's
bankable economic fundamentals. We are encouraged by the keen interest
received from a range of high calibre Moroccan and international debt finance
providers in potentially participating and look forward to providing further
updates as we reach closer to final investment decision ("FID").
Financial Performance - Year Ended 31 December 2022
The Group's loss after tax for the year to 31 December 2022 was US$14.9
million, an increase of US$7.9 million on the US$7.0 million loss incurred for
the year ended 31 December 2021. This equates to a loss per share of US$(0.02)
compared to a loss per share of US$(0.01) in 2021.
The share-based payments charge of US$4.2 million for the year ended 31
December 2022 was US$3.4 million higher than the US$0.8 million in the
previous year mostly due to the granting of employee and Directors' deferred
share awards in the current year, and the full year impact of awards granted
to employees joining the group as part of the Africa Energy Management
Platform ("AEMP") Transitional Power acquisition in June 2021.
To provide further detail of total operating expenses, Green Hydrogen and
other business development costs have been split out from other administrative
expenses within the consolidated statement of comprehensive income.
Green hydrogen and other business development costs of $1.7 million (31
December 2021: $1.1 million) comprise non-administrative expenses incurred in
the group's business development activities.
Other administrative expenses of US$8.5 million for the year ended 31 December
2022 are higher than the previous year's US$4.5 million due to one-off new
venture costs, employment costs from scaling up the team to progress the
Anchois gas development, as well as the inclusion of administration costs from
the Transitional Power acquisitions.
Finance income of US$0.1 million (31 December 2021: US$NIL) relates to bank
interest received on the increased cash balance over the period, as well as
foreign exchange gains on non-Sterling currencies.
Total finance expenses of US$0.6 million (31 December 2021: US$0.5 million)
include higher foreign exchange losses of US$0.5 million (31 December 2021:
US$0.4 million) resulting from the holding of increased cash balances in
Sterling to meet administrative expenses in the current year, as well as a
US$0.1 million expense (31 December 2021: US$0.1 million expense) of the
unwinding of the discount on the lease liability under IFRS 16.
Exploration and Evaluation Assets as at 31 December 2022
The carrying value of the Group's exploration and evaluation assets in both
2022 and 2021 relates entirely to the Morocco geographic area. During the
year a further US$20.0 million (31 December 2021: US$18.9 million) was
invested in the asset comprising completion of the successful appraisal and
exploration drilling campaign and subsequent progression through engineering,
design and commercialisation work to bring the Anchois development towards
FID, along with other licence costs which were capitalised.
Other Assets and Liabilities as at 31 December 2022
The carrying value of goodwill of US$0.4 million at 31 December 2022 (31
December 2021: US$0.4 million) relates to the acquisition of AEMP in 2021 and
reflects the intellectual property, management team and customer relationships
acquired through that business combination. Three Memoranda of Understandings
were announced for projects in the mining portfolio totalling over 500 MW of
power in the year. These projects are large scale, early stage and are being
progressed in partnership with Total Eren and a black economic empowerment
('BEE') partner on the Tharisa project, with minimal commitments in the near
term. No impairment of the goodwill was identified in the period from
acquisition to 31 December 2022.
The fair value of the Group's investment in power projects relates to the 10%
project equity holding in the Essakane solar project in Burkina Faso as
acquired with AEMP and is valued at US$0.4 million (31 December 2021: US$0.4
million). The project, a joint investment with Total Eren, continues to
generate power under a long-term power purchase agreement with IAMGOLD's
Essakane mine.
During 2022 the Group capitalised costs of $0.3 million within property, plant
and equipment in relation to the construction of a desalination plant for the
proof-of-concept water project in Djibouti, expected to begin commercial
operations in the post-period.
In 2022, wellheads and casing valued at a total of US$1.4 million (31 December
2021: US$1.2 million) were held in inventory relating to the Anchois drilling
campaign in Morocco.
As at 31 December 2022, the Group's net balance of current trade and other
receivables and current trade and other payables shows a net current liability
position of US$5.5 million (31 December 2021: US$14.2 million). The decrease
is primarily due to significant activity on the Moroccan drilling campaign in
December 2021 for which outstanding payables were due as at 31 December 2021.
Under IFRS 16 the Group has recognised a depreciating right of use asset of
US$0.3 million (31 December 2021: US$0.3 million) and a corresponding lease
liability based on discounted cashflows of US$0.4 million (31 December 2021:
US$0.4 million) relating to the UK office. Following the extension of the
lease term by one year in 2022, both the associated right-of-use asset and
lease liability have been modified resulting in no overall net movement of the
balances over 2022.
Outlook
The Company has achieved a significant amount in the 18 months since the
transformational gas discovery at the Anchois-2 well in the Lixus licence in
January 2022. The team has continued to drive this development towards FID and
has been progressing gas sales agreements and debt financing options, in
parallel with running a competitive partnering process. The geotechnical team
has also been working across the wider exploration potential within the Lixus
acreage and the surrounding Rissana licence awarded in February 2022.As a
result, we are progressing towards monetising a hugely valuable basin scale
opportunity with direct access to gas hungry markets in Morocco and Europe.
We are equally enthused by the progress being made in the Transitional Power
and Green Hydrogen businesses with a number of world class projects already in
the development pipeline as well as further opportunities that stem from our
electricity trading platform in South Africa, We remain ambitious, to
continue with this growth and development across our portfolio, but our
priority focus is on getting to cashflow as quickly as possible through the
development of our Moroccan assets.
Julian Maurice-Williams
Chief Financial Officer
20 June 2023
TECHNICAL DIRECTOR'S REVIEW OF OPERATIONS
Developing a strategic asset base
Chariot is working towards establishing a sustainable, scalable, long-term
supply of gas to support the domestic Moroccan energy market combined with the
opportunity to export surplus volumes to Europe. Whilst we remain fully
focused on bringing the Anchois gas discovery, our "jewel in the crown", into
production, and having made significant progress towards FID over the past
year, we are also committed to leveraging our knowledge of the exploration
potential of the area to continue growing and de-risking our wider portfolio.
Augmented by our recently announced partnership with Vivo Energy, we have a
material, diversified portfolio with access to attractive markets and basin
scale upside potential supported by a proven gas play.
Our Projects
Chariot owns a 75% working interest in and is operator of the Lixus Offshore
and Rissana Offshore licences alongside our partner, Office National des
Hydrocarbures et des Mines ("ONHYM"), which owns the remaining 25% working
interest in each licence.
The importance of developing a material national energy resource has
significantly increased in the last year due to volatile commodity prices and
a historical reliance on energy imports. Chariot remains dedicated to building
this portfolio of projects alongside the Kingdom of Morocco to ensure future
energy sustainability and security whilst being a catalyst for growth and
transition.
Chariot in Morocco
Our Transitional Gas pillar has had a transformational year, beginning with
the announcement of the successful Anchois-2 appraisal and exploration well in
January 2022, which confirmed the extension of the previously discovered A
& B gas sands (2009) and further identified new gas-bearing reservoirs in
the lower B, C, M and O sands exploration objectives.
The technical team worked diligently on the post-well analysis to evaluate the
impacts of the discovery, which resulted in a total gas discovery of 150m net
pay across seven stacked reservoirs - an increase of approximately 100m of net
pay above the original discovery. Following this work, an independent
assessment was completed by Netherland Sewell & Associates Inc ("NSAI") in
July 2022, which confirmed the growing discovered resource base, with
increases of 82% in 1C contingent resources from 201 Bcf to 365 Bcf and 76% in
2C contingent resources from 361 Bcf to 637 Bcf. The accurate prediction and
discovery of new, good quality, reservoir gas sands in the O sand interval,
also materially de-risked upside resources in the Anchois field, with the
estimation of a further 754 Bcf of 2U prospective resources in three undrilled
O sand targets with an improvement in the probability of geological success,
now ranging from 49% to 61%.
The success of Anchois-2 allowed Chariot to accelerate its planning of the
development of the gas field, with significant progress being made on the
project in 2022. FEED work commenced in June 2022, through a collaboration
with the Subsea-Integration-Alliance SIA. The award of FEED to an integrated
engineering, procurement, construction, installation, and commissioning
alliance, gave us the opportunity to fast-track and collaboratively fine tune
the development planning phase of the project.
Work continues across the surrounding Lixus and Rissana acreage as we progress
with our exploration in looking to find the next Anchois. We have an extensive
seismic database, the interpretation of which has led us to develop our wider
prospect inventory, of which c.8 Tcf in 2U prospective resource was validated
by NSAI in 2022, and we have recently identified further leads within the
Miocene reservoir fairway which we look to de-risk with further seismic
acquisition in due course.
With the range of assets within our portfolio, strategic position close to
infrastructure, multiple markets and a focus to get to first gas as quickly as
possible, we look forward to unlocking and delivering tangible value from this
basin-scale opportunity.
Anchois ready for development
Since completing the Anchois-2 drilling campaign, which was delivered safely,
on time and on budget, Chariot has been working on the development plan for
the field. The conclusion of pre-FEED stage, which incorporated the results of
the drilling campaign to verify the development concept, was followed by
further definition of the development through FEED work. This activity was
performed in collaboration with SIA and its constituent companies Subsea7 and
Schlumberger Limited ("SLB"), who made excellent progress across the
subsea-to-shore development planning.
The initial development considers three producer wells, including a re-entry
of the Anchois-2 well, with multi zone completions to enable gas recovery
across multiple stacked sands. The producer wells will be completed subsea
with associated SPS ("subsea-production-systems") infrastructure controlling
and collecting the produced hydrocarbons from the wells for delivery to the
onshore facilities via a subsea flowline. The flowline part of the SURF
("Subsea-Umbilicals-Risers-Flowlines") package which also includes the
umbilical used to control the SPS infrastructure and deliver chemicals to the
offshore production facilities.
Importantly, the system has been developed with future expansion capabilities
in mind, to facilitate the tie-back of future additional wells, a key
component in Chariot's vision for future growth for the field. Through the
identification of the O sand reservoir targets at Anchois, this step can
already be contemplated through simple and cost-effective exploration
activities (well deepening and pilot holes) combined with the development
drilling campaign, to evaluate the 754 Bcf of best estimate 2U gas resources
remaining to be found on the field.
Onshore, the central processing facility ("CPF") will process the hydrocarbons
for delivery of treated gas and condensate to market. Following the increase
in field resources, the initial capacity has been increased from 70 mmscfd to
105 mmscfd. FEED studies are complete on this facility and operating and
maintenance proposals for the early years of operations post-first gas have
been provided, allowing a smoother transition from construction to
commissioning to normal operations, prioritising Moroccan nationals as
operating personnel.
From the CPF, an onshore gas pipeline will be constructed to tie-in to the GME
at the M21 valve station. This pipeline directly connects to the anchor gas
offtakers, with a tie-in agreement already in place and negotiations regarding
the gas transportation and ancillary agreements progressing.
Alongside FEED, the environmental, social impact assessment ("ESIA") is
nearing completion and onshore and offshore environmental baseline surveys
have been conducted. Public consultations continued in H1 2023, and the
Company will submit final documentation for consideration and approval by the
authorities shortly. In-line with requirements from potential lending banks,
this ESIA is being performed to fulfil local obligations and also in line with
IFC Performance Standards and the Equator Principles.
Subject to financing, the next technical steps in the development of the
Anchois field will be the contracting of the Engineering, Procurement and
Construction ("EPC") for the various scopes of the project and certain
commercial proposals have already been requested. The application for the
exploitation concession from the Government of Morocco is also in discussion,
which would give the Company rights to commercialise the gas over an initial
25 year period and which is extendable by a further 10 years. This Concession
application is supported by the field development plan ("FDP"), which is in
final stages of discussion within the Lixus Offshore joint venture
partnership.
Gas
Commercialisation
Future commercialisation of the Anchois gas is also key to unlocking the
development of the project. The domestic gas market in Morocco has generally
strengthened since gas sales from Algeria, previously supplied into the
Kingdom via the GME, ceased in October 2021. This coincided with a period of
unprecedented volatility in global gas markets and meant the loss of a
predictable gas supply to Morocco's domestic power plants. An alternative
supply of international gas was required to fuel these plants which led to a
resultant uptick in costly imports from Europe to fill the shortfall.
The importance of the project as a reliable domestic gas supply was underlined
by the Gas Sales Principles signed in December 2022, with the Office National
de l'Electricité et de l'Eau Potable ("ONEE"). This agreement covers an
offtake of up to 60 mmscfd over a 10 year period on a take-or-pay basis and
underpins the development plan and financing. Additionally, Chariot signed a
Pipeline Tie-In Agreement to the major GME in Morocco with our partners,
owners and operators of the pipeline, ONHYM. This agreement secures access to
the GME, which runs from eastern Morocco through to Tangiers in the north and
across to Spain and whilst Anchois field gas volumes could supply expected
domestic demands, the GME pipeline gives a direct conduit for surplus volumes
to be sold into Europe.
ONEE's domestic power stations, which historically have taken gas from the
GME, are those at Ain Beni Mathar and Tahaddart. These plants have a combined
generation capacity of approximately 800 MW and have historically consumed up
to 100 mmscfd, representing approximately 7.5% of Morocco's national power
generation capacity. ONEE has also recently announced plans for the
construction of the Al-Wahda open cycle gas turbine (OCGT) power plant
adjacent to the Maghreb-Europe Gas Pipeline (GME), which is anticipated to
have a final total dual-fuel capacity of 900 MW once in operation.
To bolster and facilitate the supply of gas to industry, a partnership
agreement was signed in May 2023 with Vivo Energy, a leading distributor of
petroleum products in Morocco. This agreement leverages Chariot's project
portfolio and upstream expertise and complements Vivo's existing customer base
and extensive knowledge of the industrial sector in country. The partnership
aims to implement a gas-to-industry business in Morocco through the
development of marketing and commercialisation of natural gas to industrial
customers as well as putting in place a long-term gas sales agreement for a
portion of the future gas production from the Anchois project.
Beyond Morocco, export gas sales opportunities are also being discussed with
multiple offtakers, for the delivery of surplus gas to Europe, where the
desire for a diversity in gas supply following the events in Ukraine has
increased. Specifically, in Spain, the daily demand is approximately 3 bcf/d,
representing a material established market capable of absorbing growth in
production from Chariot's projects.
The Anchois gas development project also benefits from the investment climate
in Morocco, which has world-class fiscal terms, designed to attract investment
into the sector. These terms include a modest 3.5% royalty for offshore gas in
greater than 250m water depth and provides the benefit of a 10 year corporate
tax holiday from the onset of production. Combined with the strengthening gas
markets, this supports an outstanding commercial opportunity for domestic
development.
Partnering
The transformational potential of the Anchois gas development project has been
validated through a number of third party farmout offers.
The partnering process has been competitive; with approximately 40 companies
having accessed a data room and multiple offers were received from
significantly larger E&P companies. This process both technically
validated Chariot's development plan as well as the exploration potential
within Lixus and Rissana and selection of the preferred bidder is now in the
final stages. The offers, should they proceed to completion, anticipate that
Chariot would retain a material stake in the licences and that there would be
an upfront cash consideration. Further, any farmout may provide the financing
of the anticipated development capital expenditure to first gas and updates
will be provided as soon as possible.
Project Financing
In April 2022, Chariot announced the appointment of Societe Generale, a
leading financial services group, to assist with the debt project financing
for Anchois. The project finance process has continued to mature over the past
year, attracting wide interest from a variety of Moroccan and European banks.
Having project finance in place is key as it can allow additional future
financing for further expansion as the project develops.
Maturing offshore exploration - Lixus and Rissana
Chariot has operated exploration blocks offshore northern Morocco since 2013,
equipping the technical team with an unparalleled knowledge of the margin.
Over the past decade, the work we have completed across our licences has
enabled us to compile a vast database of seismic, well and geological data,
allowing us to deploy our unique expertise and insight to mature a large,
low-risk and diverse portfolio.
Lixus
The Lixus Offshore licence covers a current area of 1,794km(2), including the
Anchois discovery. As a result of the successful appraisal and exploration
drilling of Anchois-2 in 2022, prospects adjacent to the immediate Anchois
field and across both Lixus and Rissana licences have been materially
de-risked, in particular through the predictive power of a range of seismic
attributes which have demonstrated an association to gas-bearing reservoir.
Resource upgrades across our Moroccan portfolio, confirmed in the NSAI report
in 2022, demonstrate the multi-Tcf opportunity within the wider basin. Updated
assessments on two key undrilled prospects, Maquereau and Anchois West, had
uplift in both prospective resource potential and probability of geological
success; the Anguille prospect, which was not previously evaluated, was also
validated with significant volumes located in shallow water depths close to
the coast.
These three high-graded prospects form the basis of potential future
development hubs across the Lixus licence, all of which have tie-in
capabilities with the planned Anchois infrastructure. Combined, these
prospects hold 2U prospective resources of 838 Bcf with an estimated
probability of geological success ranging from 30-52% and, with success, will
unlock material additional volumes from surrounding related prospects. The
total remaining recoverable resources (2C plus 2U, comprising audited and
internal Chariot estimates) in the entire Lixus portfolio stands at
approximately 4.6 Tcf, all within this tertiary gas play linked to the Anchois
field.
Rissana
The large 8,489km(2) Rissana Offshore licence was awarded in February 2022 and
fully encompasses the maritime boundaries of the Lixus licence. Rissana comes
with minimal work commitments in the initial period and captures a wide
variety of plays across two legacy 3D seismic surveys and extensive regional
2D data.
Rissana's diverse exploration portfolio consists of extensions of the classic
Anchois Miocene turbidite play, large Mesozoic and Miocene structural plays
and the new Miocene basin floor fan play, recently identified on 2D data. A
total 2U prospective resource of over 7 Tcf, independently assessed by NSAI,
combines the lower risk Anchois tertiary gas play, anchored by the Emissole
prospect on 3D seismic, and multi Tcf prospects in a higher-risk Mesozoic
play, inherited from Chariot's legacy Mohammedia Offshore licence area.
Subject to financing, further prospectivity will be matured by an upcoming 2D
seismic acquisition campaign, which will provide a dense grid of data over
identified areas of interest, focussing on mapping further prospectivity in
the Anchois gas play and also to confirm the anticipated material potential of
the basin-floor fan plan. The campaign aims to better image trapping
geometries of key prospects, improve imaging for attribute evaluation and
fluid analysis and tie the existing 3D seismic and well data for more robust
calibration.
Domestic Gas to Industry Markets
Chariot's acreage sits in a prime position to meet industrial needs, with 67%
of Morocco's GDP originating from the Atlantic coastal areas from Jorf Lasfar
in the south to Tangier in the north. A portion of gas volumes from Chariot's
activities could be deliverable to industry via a variety of potential
solutions, including piped gas, leveraging off of the existing GME pipeline
and existing supply pipelines in the Kenitra area, or via 'virtual pipeline'
solutions using compressed or liquified natural gas (CNG or LNG).
The most proximal market to Chariot's activities, Kenitra, hosts an immediate
market demand of 10-15 mmscfd, where the supply gap is currently swelling due
to dwindling production onshore; supply is decreasing by approximately 40%
each year while demand is projected to increase by 60% by 2027.
The industrial sector in Tangier will also require a supply boost as the port
city is set to expand its industrial zones significantly; an important
offtaker at the tip of the GME.
Competing with imported petroleum products such as LPG, historic prices of gas
sales to industry have commanded consistently high prices of US$11-12 per
mmbtu, which is believed to have recently risen in response to the reduced
supplies. Together, this creates an attractive and scalable market to which
Chariot is preparing to enter, to also benefit the Kingdom through the
delivery of cleaner and cheaper energy to help drive industrial growth,
realise an important expansion of related infrastructure and deliver the
associated economic benefits to all stakeholders.
Duncan Wallace
Technical Director
20 June 2023
TRANSITIONAL POWER
Ongoing Evolution of the Transitional Power Business
Throughout 2022, the Transitional Power business secured the development of a
40 MW solar PV project in South Africa, a 430 MW wind and solar project in
Zambia and a 30 MW solar project in Zimbabwe; all being developed in
partnership with Total Eren.
In January 2022, a three year partnership was put in place, with the option to
extend for a further two thereafter; Chariot has the right to invest between
15-49% in the co-developed projects.
It is a pleasure to continue to work together as we are strongly aligned with
our approach to these developments, and, as evidenced by our collaboration in
green hydrogen, there are ambitions to collaborate on other projects and
transactions in Africa.
We have also continued progress other opportunities that stem from wider needs
and scarcity of resources by expanding into electricity trading with our
shareholding in Etana and the ENEO water acquisition.
Solar and Wind Solutions for Mining Projects in Africa.
With an ever-growing drive to lower carbon emissions, mining companies are
increasingly focused on reducing their footprints, aligning with ESG targets
and also securing a sustainable, reliable and competitive source of energy for
their often remote operations. Our on-site power solutions help our clients
decarbonise their operations, while simultaneously reducing their operating
costs and securing a diversified source of energy supply. This allows them to
meet their sustainability requirements without compromising on reliability and
can mitigate exposure to market fluctuations.
Project Overviews:
Essakane: Burkina Faso: Solar Power Production
Chariot's first renewable project supplies 15 MW of solar power as part of a
hybrid solar-thermal power solution to IAMGOLD's Essakane gold mine in Burkina
Faso. On commissioning, the project was the largest hybrid photovoltaic
(PV)-heavy fuel oil (HFO) power plant in the world and one of the largest
solar facilities in sub-Saharan Africa with 130,000 solar panels.
Chariot holds 10% equity in this award-winning project, with Total Eren
holding the remaining 90%. Chariot's team has been involved in the project
from the outset and has operated successfully since its completion in 2018.
100% of permanent Essakane project staff are nationals, while 1% of project
revenues are dedicated to community investment, such as tree planting
campaigns and the distribution of solar kits to schools. Carbon credits are
also registered with the UN to raise funds for community developments.
Tharisa: South Africa: Solar Power Generation
In February 2022, Chariot signed a memorandum of understanding with Tharisa
plc, the platinum group metals and chrome producer, to develop a solar PV
project for the supply of electricity to the Tharisa mine, in the North West
Province, South Africa.
The solar PV project is initially scoped to be 40 MW with demand expected to
increase over the life of the Tharisa Mine. Working alongside a BEE partner,
this memorandum is the first step towards the implementation of the project
and signing of a long-term power purchase agreement for the supply of
electricity on a 'take-or-pay' basis. Project development and permitting is
progressing well and environmental approval has been received.
First Quantum Minerals: Zambia: Wind and Solar Power Project
We have also established a partnership with First Quantum Minerals ("FQM"), a
global mining and metals company, in March 2022, to advance the development of
a 430 MW solar and wind power project for its mining operations in Zambia.
This flagship project has the potential to complement and expand Zambia's
existing renewable energy capacity and would provide FQM with competitive and
sustainable power for its copper operations.
While initial development and permitting workstreams continue to progress, the
project has received high profile endorsement from His Excellency, President
Hakainde Hichilema, who publicly stated that "Independent power producers are
key to unlocking the sector by increasing Zambia's capacity and grid
stability" during a presentation earlier this year.
Karo Mining: Zimbabwe: Solar Power Project
In Zimbabwe, we are also working on the development, financing, construction,
and operation of a solar PV project that will provide competitive electricity
for the Karo Platinum Project.
The project is expected to have an initial installed capacity of 30 MWp with a
potential extension of up to 300 MWp and is being built as part of the Karo
mine's construction.
Electricity Trading Licence
Chariot has broadened both its exposure and approach to the renewable energy
sector within South Africa, in acquiring an interest in Etana which holds an
electricity trading licence and which is already testing the platform.
Etana's objective is to deliver unique renewable energy mix solutions at
competitive prices to help address the significant power requirements across
South Africa with the licence opening up access to a range of high-volume
off-takers including municipal, industrial and retail customers. Etana is
owned indirectly by Chariot (25%), the Neura Group ("Neura") (49%), H1
Holdings (21%) and Meadows Energy (5%) H1 Holdings and Meadows Energy have a
proven track record in developing and investing in large renewable projects in
Africa, whilst Neura has developed a unique hardware and software-based
technology specifically designed for trading in the South African environment.
The Market Opportunity
South Africa, the largest electricity market on the sub-Saharan Africa, is
currently facing a severe power crisis with daily load shedding. The country
is under pressure to meet growing power demand with cleaner resources, while
simultaneously addressing its overreliance on a system that remains largely
fueled by coal and is failing to generate sufficient supply. To tackle the
crisis, the government is rapidly deregulating the market to allow private
generation and there is an increasing shift towards renewable power and
greener energy solutions that can capitalise on the country's world-class
solar and wind resources. Chariot, alongside potential partners, is looking to
bring into production a number of "shovel ready" opportunities that will add
new clean power capacity to the grid.
Renewable Water Production Business
Post period, we also announced the acquisition of the business and assets of
an independent water producer, ENEO, which is complementary to both our
Transitional Power and Green Hydrogen businesses. The business is focused on
delivering clean water solutions using renewable energy and our intention is
to originate, invest in and own decentralized water supply projects that can
provide affordable water access for private offtakers and municipalities
through long term agreements. Utilising a modular, scalable, reverse osmosis
technology that can be powered 100% by solar energy to produce desalinated
water, a proof-of-concept project at the largest windfarm in Djibouti has now
been commissioned. This project will provide 50 m(3) potable water per day to
local communities for the next 20 years and the team is looking to build out
this offering into further jurisdictions on the continent.
We continue to look at strategic partnering opportunities at the subsidiary
level to provide equity finance for these projects. In parallel, we are
actively pursuing other renewable energy projects across the continent
alongside our partner Total Eren.
GREEN HYDROGEN
World class project with world class resources
Chariot's green hydrogen project, "Project Nour" spans two onshore areas,
totalling approximately 5,000km(2) across northern Mauritania. With up to 10
GW of electrolysis to be installed, it could become, once implemented at
scale, one of the most significant green hydrogen projects in Africa and one
of the largest global projects of its kind by 2030.
The Market Opportunity
Green hydrogen, produced by splitting water through electrolysis using
renewable energy, currently makes up 2-4% of total global hydrogen production,
approximately 115 Mt per annum. The International Renewable Energy Agency
(IRENA) projects that the combined value of hydrogen and its derivatives will
be larger than the fossil fuel market by 2050 and estimates that global demand
will reach up to 800 million tonnes by that decade, with green hydrogen
potentially meeting up to 100% of this demand. As demand rises and green
hydrogen is increasingly adopted as a reliable, sustainable energy source,
Deloitte predicts that the market is expected to be greater than the value of
liquid natural gas trade by 2030 and further grow to reach US1.4 trillion per
year by 2050.
Project Nour has the ability to generate 1.2 Mt of green hydrogen per year so
meeting global demand would require over 600 similar sized projects. This
demonstrates the enormous growth potential of the hydrogen industry and the
need for giga-scale projects like Nour. This scale of green hydrogen
production will require massive amounts of dedicated renewable energy
generation and infrastructure but will be an essential component for
decarbonizing hard-to-abate sectors such as heavy industry, shipping and
transport.
Project Overview
Mauritania has unique and complementary solar and wind resources, and as
confirmed by the Pre-Feasibility Studies completed in May 2022, Project Nour
has the potential to produce some of the most competitive green hydrogen in
the world. Due to its scale, Project Nour has the size and the potential to
move the needle of Mauritania's GDP and its society at large, contributing to
a range of sustainable economic benefits including providing baseload power to
the national grid, diversifying industrial activities such as enabling green
steel and green ammonia production, promoting job creation and developing
local infrastructure. It could also provide a cost effective, transportable
energy solution to replace CO(2) emitting fuels for export to the European
market and the MoU signed with the Port of Rotterdam in April 2022 was a first
step towards establishing these supply chains.
Chariot was delighted to bring in Total Eren as a 50:50 partner to co-develop
the project last September. Total Eren, which counts TotalEnergies, the
multi-energy company as a strategic shareholder, brings access to the wider
group's specialist 'One Tech' engineering team which has wide ranging
expertise and experience in developing solar, wind and green hydrogen projects
globally. Chariot is co-leading on project development, permitting and
stakeholder engagement and the partnership is currently progressing with the
in-depth feasibility studies and pursuing offtake options.
Local Content
Socio-economic benefits of hydrogen projects have become a focal area and
Chariot is currently developing a dedicated programme in line with the
Government's recently published local content strategy. The partnership has
teamed up with a consultancy to find areas of opportunity for local businesses
and assess the training needed to maximise local labour with the aim of
ensuring as much in-country participation as possible. Seventeen focus areas
have been identified, based upon the additional skills, certifications and
capital required. This analysis has been shared with the business community
and selected donor organisations to look to target specific investments needed
to make successful bids and incentive mechanisms are being devised to ensure
local content is actively promoted during the tendering process.
The Chariot-Total Eren partnership is proud to be working alongside the
Government of Mauritania to support its ambition to become a leading producer
and exporter of green hydrogen, while ensuring that Nour delivers in-country
value in line with broader economic development.
Developing projects of this scale:
Great progress has been made across this sector over the past two years.
However, green hydrogen remains a nascent industry that will require
innovative and collaborative solutions to ensure the ongoing development of
these giga-scale projects. The cost of capital remains one of the key drivers
to achieve project economics and there is notable momentum from the Government
of Mauritania to champion efforts in this regard. It is developing a
supportive regulatory and business environment while providing a platform for
collaboration. Chariot and Total Eren representatives recently attended the
'Accelerating Finance Conference' in Nouakchott, one of the first events to
bring such a range of critical stakeholders including the World Bank, the
European Investment Bank, development finance institutions and bilateral
partners together to discuss this critical issue. Partnerships across the
industry will be key to delivering these projects and it was encouraging to
see such collective alignment to look to cooperate and unlock the
transformative potential of green hydrogen.
Project Nour will be built in multiple phases to spread the financing
requirements and reduce the risk over time whilst also responding to the
increasing shift in demand for green hydrogen products. Taking a phased
approach will both allow revenue generation early in the project and optimise
the cost of the capital.
Proof-of-Concept projects
An important part of Chariot's green hydrogen story is our collaboration with
Oort Energy. Together we are developing proof-of-concept projects, including
with Mohammed VI Polytechnic ("UM6P") in Morocco to test Oort's proprietary
polymer electrolyte membrane electrolyser system. Access to electrolysers will
be critical to getting green hydrogen projects off the ground, and as the
sector develops, demand for these will see exponential growth. It is
fascinating to work with Oort to see their ongoing progress within the
electrolyser space, their ethos is aligned with ours in that they are focused
on making green hydrogen economical and having access to their technology will
be an important part of our project supply chain in the future. It is also
great to be working on pilot projects and to be building education and
capacity around green hydrogen and ammonia production in Morocco alongside
UM6P. These pilots are being carried out with a view to develop large scale
projects in various jurisdictions including Morocco, as well as looking to
achieve the lowest cost of hydrogen possible.
Desalinated water is also an essential component of green hydrogen production,
so the capacity to implement competitive desalination solutions powered by
renewable energy, a focus for Chariot's water business, will also be a
critical part of the feasibility for both Project Nour and other green
hydrogen projects.
Our aim is to become one of the world's leading green hydrogen producers so we
will continue to seek out these opportunities to both expand and develop our
footprint in this sector.
ESG - OUR COMMITMENT TO SUSTAINABLE OPERATIONS
Robust management of environmental, social and governance (ESG) concerns are
at the core of what we do and how we work. Chariot seeks to embed a
responsible approach to ESG management throughout the business. This statement
provides an outline of the policies in place that guide the Group and its
employees across its business pillars.
Chariot adopts industry best practice through using the IFC Performance
Standards, Equator Principles, and the United Nations' Sustainable Development
Goals as benchmarks and guiding principles. Chariot also complies with
applicable environmental laws, regulations and standards of the countries in
which we are present.
Operating responsibly with a focus on continuous improvement
We acknowledge the potential ESG impacts that our activities may have as we
develop our projects. Our team is committed to proactively identifying and
assessing issues that are important to our business and to our stakeholders.
We manage these and their associated risks and seek to minimise the impacts of
our activities as far as possible by putting robust frameworks and policies in
place.
In addition, we are continue to build our ESG capacity throughout the
organisation, from site level environmental and social specialists to
experienced ESG managers, as well as the engagement of expert consultants to
provide further advice and support.
Over the past year and in recognition of the importance of stakeholders,
external impacts, and risks Chariot has undertaken to update and review our
Materiality Assessment in line with the Global Reporting Initiative ("GRI")
framework. Greenhouse gas emissions and climate adaptation, resilience and
transition emerge as the two most material issues for the company followed
closely by safety and security considerations, land access and community
benefits. These issues have been linked to the Sustainable Development Goals
which will guide project development and implementation in the future.
Focus on Reducing Emissions
Due to the transitional nature of Chariot's energy projects, each offers the
opportunity to reduce carbon emissions as a result of their implementation:
· Morocco's energy needs are heavily dependent on coal (which
currently makes up 70% of the country's requirements) and gas imports. The
domestic gas from Chariot's Anchois project has the potential to directly
supply into the national grid and become an important contributor in
rebalancing the country's energy mix and reducing emissions going forward.
· Chariot's renewable power projects are bespoke solutions for
mining companies, often sited in locations well away from power grids.
Accessing wind and solar power for use directly on the mine sites removes the
dependence on and need for transportation of carbon heavy fuel and provides a
renewable, long term energy supply. Wheeling renewable power through the South
African national grid through Etana will also notably reduce the reliance on
coal fired power stations opening up a wider customer base including
municipalities, industrial and retail sectors.
· Green hydrogen also has the potential to supplement and replace
traditional fossil fuels in both power generation and manufacturing processes,
leading to a significant reduction in associated emissions of greenhouse
gases. It also has the potential to stimulate the development of greener
primary industry (such as green ammonia and green steel production) and could
lead to significant, positive long term impacts for Mauritania as well as the
entire global energy transition.
Two of the UN SDGs are particularly relevant to across our each of our
business pillars and underpin our strategy and our values:
Goal 7:
Ensure access to affordable, reliable, sustainable modern energy for all -
specifically around increasing the share of renewable energy in the global
energy mix, improving energy efficiency and advanced and cleaner fossil-fuel
technology…expansion of infrastructure and upgrade technology for supplying
modern and sustainable energy services for developing countries
Goal 9:
Build resilient infrastructure, promote inclusive and sustainable
industrialisation and foster innovation - … raise industry's share of
employment and gross domestic product, in line with national
circumstances…upgrade infrastructure and retrofit industries to make them
sustainable with increased resource-use efficiency and greater adoption of
clean and environmentally sound technologies and industry.
Alignment to the Sustainable Development Goals
Based on the updated Materiality Assessment and key goals, Chariot's alignment
to the UN SDG's have been reviewed accordingly, with key targets for each one
selected. This will also guide the reporting framework going forward.
Chariot Limited
Consolidated Statement of Comprehensive Income for the Year Ended 31 December
2022
Year ended 31 December 2022 Year ended 31 December 2021
Notes US$000 US$000
Share based payments 26 (4,168) (760)
Hydrogen and other business development costs (1,704) (1,139)
Other administrative expenses (8,478) (4,549)
Total operating expenses (14,350) (6,448)
Loss from operations 4 (14,350) (6,448)
Finance income 6 74 -
Finance expense 6 (608) (512)
Loss for the year before taxation (14,884) (6,960)
Tax expense 8 - -
Loss for the year (14,884) (6,960)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss -
Exchange differences on translating foreign operations (3) -
Other comprehensive income for the year, net of tax (3) -
Total comprehensive loss for the year (14,887) (6,960)
Loss for the year attributable to:
Owners of the parent (14,882) (6,960)
Non-controlling interest (2) -
(14,884) (6,960)
Total comprehensive loss attributable to:
Owners of the parent (14,885) (6,960)
Non-controlling interest (2) -
(14,887) (6,960)
Loss per Ordinary share attributable to the equity holders of the parent - 9 US$(0.02) US$(0.01)
basic and diluted
All amounts relate to continuing activities.
The notes form part of these final results.
Chariot Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2022
For the year ended 31 December 2021 Other components of equity
Share capital Share premium Share based payment reserve Retained deficit Total attributable to equity holders of the parent Non-controlling interest Total equity
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
As at 1 January 2021 6,549 359,609 1,447 796 (352,239) 16,162 - 16,162
Loss for the year - - - - (6,960) (6,960) - (6,960)
Other comprehensive income - - - - - - - -
Loss and total comprehensive loss for the year - - - - (6,960) (6,960) - (6,960)
Issue of capital 5,147 25,585 - - - 30,732 - 30,732
Issue costs - (1,876) - - - (1,876) - (1,876)
Share based payments - - 760 - - 760 - 760
Share based deferred consideration - - - 142 - 142 - 142
As at 31 December 2021 11,696 383,318 2,207 938 (359,199) 38,960 - 38,960
Chariot Limited
Consolidated Statement of Changes in Equity for the Year Ended 31 December
2022 (continued)
For the year ended 31 December 2022
Share based payment reserve Other components of equity
Share capital Share premium Retained deficit Total attributable to equity holders of the parent Non-controlling interest
Total equity
US$000 US$000 US$000 US$000 US$000 US$000 US$000 US$000
As at 1 January 2022 11,696 383,318 2,207 938 (359,199) 38,960 - 38,960
Loss for the year - - - - (14,882) (14,882) (2) (14,884)
Other comprehensive income - - - (3) - (3) - (3)
Loss and total comprehensive loss for the year - - - (3) (14,882) (14,885) (2) (14,887)
Issue of capital 2,567 32,143 (276) - - 34,434 - 34,434
Issue costs - (1,618) - - - (1,618) - (1,618)
Share based payments - - 4,168 - - 4,168 - 4,168
As at 31 December 2022 14,263 413,843 6,099 935 (374,081) 61,059 (2) 61,057
The notes form part of these final results.
Chariot Limited
Consolidated Statement of Financial Position as at 31 December 2022
31 December 2022 31 December 2021
Notes US$000 US$000
Non-current assets
Exploration and evaluation assets 10 51,795 31,750
Goodwill 11 380 380
Investment in power projects 12 448 450
Property, plant and equipment 15 428 84
Right of use asset 19 332 328
Total non-current assets 53,383 32,992
Current assets
Trade and other receivables 16 755 1,167
Inventory 17 1,424 1,183
Cash and cash equivalents 18 12,052 19,406
Total current assets 14,231 21,756
Total assets 67,614 54,748
Current liabilities
Trade and other payables 20 6,198 15,358
Lease liability: office lease 19 359 430
Total current liabilities 6,557 15,788
Total liabilities 6,557 15,788
Net assets 61,057 38,960
Capital and reserves attributable to equity holders of the parent
Share capital 21 14,263 11,696
Share premium 413,843 383,318
Share based payment reserve 6,099 2,207
Other components of equity 22 935 938
Retained deficit (374,081) (359,199)
Capital and reserves attributable to equity holders of the parent 61,059 38,960
Non-controlling interest 13 (2) -
Total equity 61,057 38,960
The notes form part of these final results.
The financial statements were approved by the Board of Directors and
authorised for issue on 20 June 2023.
George Canjar
Chairman
Chariot Limited
Consolidated Cash Flow Statement for the Year Ended 31 December 2022
Year ended 31 December 2022 Year ended 31 December 2021
US$000 US$000
Operating activities
Loss for the year before taxation (14,884) (6,960)
Adjustments for:
Finance income (74) -
Finance expense 608 512
Depreciation 472 358
Share based payments 4,168 760
Net cash outflow from operating activities before changes in working capital (9,710) (5,330)
Decrease/ (Increase) in trade and other receivables 210 (116)
(Decrease)/ Increase in trade and other payables (132) 445
Increase in inventories - (1,183)
Cash outflow from operating activities (9,632) (6,184)
Net cash outflow from operating activities (9,632) (6,184)
Investing activities
Finance income 62 -
Payments in respect of property, plant and equipment (256) (72)
Payments in respect of exploration assets (29,243) (5,301)
Net cash consideration on acquisition - (21)
Net cash outflow used in investing activities (29,437) (5,394)
Financing activities
Issue of ordinary share capital net of fees 32,816 28,175
Payments of lease liabilities (501) (419)
Finance expense on lease (27) (46)
Net cash from financing activities 32,288 27,710
Net (decrease)/ increase in cash and cash equivalents in the year (6,781) 16,132
Cash and cash equivalents at start of the year 19,406 3,740
Effect of foreign exchange rate changes on cash and cash equivalents (573) (466)
Cash and cash equivalents at end of the year 12,052 19,406
The notes form part of these final results.
Chariot Limited
Notes forming part of the financial statements for the year ended 31 December
2022
1 General information
Chariot Limited is a company incorporated in Guernsey with registration number
47532. The address of the registered office is Oak House, Hirzel Street, St
Peter Port, Guernsey, GY1 2NP. The nature of the Company's operations and its
principal activities are set out in the Report of the Directors and in the
Technical Director's Review of Operations.
2 Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with UK Adopted
International Accounting Standards.
In accordance with the provisions of section 244 of the Companies (Guernsey)
Law, 2008, the Group has chosen to only report the Group's consolidated
position, hence separate Company only financial statements are not presented.
The financial statements are prepared under the historical cost accounting
convention on a going concern basis.
In the consolidated statement of comprehensive income Other Administrative
expenses has been split out to provide further detail of total operating
expenses. The comparative figures for 31 December 2021 have been re-presented
to reflect this additional disclosure. There is no change to the total
operating expenses or loss from operations for those periods.
Going concern
As at 31 December 2022 the Group had cash of US$12.1 million, no debt and
minimal licence commitments.
The Group operates as a transitional energy group focused on developing
large-scale gas, renewable power, and hydrogen projects in Africa. To date, it
has not earned any revenues and so is reliant on various options, including
asset partnering, project finance debt, and equity placements to finance the
Group's overheads and progress its projects to first revenues.
The Board have reviewed a range of potential cash flow forecasts for the
period to 31 December 2024, including reasonable possible downside scenarios.
This has included the following assumptions:
Anchois Gas Development:
On the Group's Anchois gas development, offshore Morocco, significant progress
has been made since the successful drilling at the start of 2022, with the
completion of the engineering and design for the development, ongoing detailed
negotiations with Moroccan and other gas offtakers and a consortium of
Moroccan and international banks indicating their strong support to provide
project debt finance.
On the Anchois asset partnering process, there has been strong industry
interest, with 40 companies participating and multiple offers received, and as
such management is confident, based on the advanced stage of negotiations,
that the partnering process will complete shortly. Based on current
negotiations, the Group anticipates that an agreement would see Chariot
receive both an upfront cash recovery payment and the financing of the Group's
share of the Anchois development costs so the progression towards achieving
first gas and delivering cashflows to investors can happen as quickly as
possible.
Management's possible downside scenario includes a delay or a failure to
complete a partnering transaction. Management is confident that alternate
financing options are available, including project finance debt and further
investments in the Group to enable progress on the Anchois project to first
revenues and to fund ongoing overheads.
Power and Hydrogen Projects:
The renewable and hydrogen projects are at an earlier stage of development and
the Group is evaluating project finance and investment at subsidiary levels
ahead of any significant capital requirement.
Management's possible downside scenario includes a delay or failure to secure
investment at the subsidiary levels to fund its share of future capital
expenditure on projects and related overheads. Management is confident that
alternate financing options are available ahead of any making any significant
capital commitments.
Conclusion
The Directors have reviewed the Group's cash flow forecasts for the next
18-month period to December 2024. The Group's forecasts and projections
indicate that the Group's ability to meet its obligations as and when they
fall due is dependent on a variety of factors, including the completion of a
partnering agreement in respect of the Anchois project. Based on the offers
received and the significant historic and ongoing investment on the Anchois
project, it is anticipated that the Group will recover a significant portion
of past cash expenditure in the second half of 2023. If partnering fails to
complete, management is confident that alternate financing options are
available to fund ongoing project work and overheads. In the event that
neither a partnering agreement or alternative financing is concluded, the
Group has sufficient cash to meet its corporate overhead until Q4 2023.
Based on feedback from ongoing financing and partnering discussions, the
Directors have made a judgement that the necessary funds to adequately finance
the Group's obligations will be secured and that the Group will continue to
realise its assets and discharge its liabilities in the normal course of
business. Accordingly, the Directors have adopted the going concern basis in
preparing the consolidated financial statements, however, the need for
additional financing indicates the existence of a material uncertainty, which
may cast significant doubt about the Group's ability to continue as a going
concern, and, its ability to realise its assets and discharge its liabilities
in the normal course of business. These financial statements do not include
adjustments that would be required if the Group was unable to continue as a
going concern.
New Accounting Standards
The following new standards and amendments to standards are mandatory for the
first time for the Group for the financial year beginning 1 January 2022. The
implementation of these standards and amendments to standards has had no
material effect on the Group's accounting policies.
Standard Effective year commencing on or after
Annual Improvements to IFRS: 2018-2020 Cycle 1 January 2022
Conceptual Framework for Financial Reporting (Amendments to IFRS 3) 1 January 2022
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendment - 1 January 2022
Onerous Contracts - Cost of Fulfilling a Contract)
IAS 16 Property, Plant and Equipment (Amendment - Proceeds before Intended 1 January 2022
Use)
Certain new standards and amendments to standards have been published that are
mandatory for the Group's accounting periods beginning after 1 January 2023 or
later years to which the Group has decided not to adopt early when early
adoption is available.
The implementation of these standards and amendments is expected to have no
material effect on the Group's accounting policies. These are:
Standard Effective year commencing on or after
IFRS 17 Insurance Contracts 1 January 2023
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 1 January 2023
(Amendment - Disclosure of Accounting Policies)
IAS 8 Accounting policies, Changes in Accounting Estimates and Errors 1 January 2023
(Amendment - Definition of Accounting Estimates)
IAS 12 Income Taxes (Amendment - Deferred Tax related to Assets and 1 January 2023
Liabilities arising from a Single Transaction)
IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback) 1 January 2024
IAS 1 Presentation of Financial Statements (Amendment - Classification of 1 January 2024
Liabilities as Current or Non-Current)
IAS 1 Presentation of Financial Statements (Amendment - Non-current 1 January 2024
Liabilities with Covenants)
IFRS 16 - Leases
Under IFRS 16 lease liabilities are initially measured at the present value of
the remaining lease payments and discounted using an incremental borrowing
rate at the date of recognition. Associated right-of-use assets are measured
at an amount equal to the lease liability adjusted for any prepaid or accrued
lease payments.
Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use asset is depreciated over the shorter of the
asset's useful life and the lease term on a straight-line basis.
The Group has elected not to recognise right-of-use assets and liabilities for
leases where the total lease term is less than or equal to 12 months, or for
leases of low-value assets. Low-value assets comprise IT equipment and small
items of office furniture. Payments associated with short-term leases and
leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss.
Further details on the lease liability can be found in note 19.
Exploration and evaluation assets
The Group accounts for exploration and evaluation costs in accordance with the
requirements of IFRS 6 Exploration for and Evaluation of Mineral Resources.
Any costs incurred prior to obtaining the legal rights to explore an area are
expensed immediately to the Income Statement. All expenditures relating to the
acquisition, exploration and appraisal of oil and gas interests, including an
appropriate share of directly attributable overheads, are recognised as
exploration and evaluation assets and initially capitalised by reference to
appropriate geographic areas. Costs recognised as exploration and evaluation
assets are transferred to property, plant and equipment and classified as oil
and gas assets when technical feasibility and commercial viability of
extracting hydrocarbons is demonstrable.
Costs recognised as exploration and evaluation assets are tested for
impairment whenever facts and circumstances suggest that they may be impaired.
Where exploration wells have been drilled, consideration of the drilling
results is made for the purposes of impairment of the specific well costs. If
the results sufficiently enhance the understanding of the reservoir and its
characteristics it may be carried forward when there is an intention to
continue exploration and drill further wells on that target.
Where farm-in transactions occur which include elements of cash consideration
for, amongst other things, the reimbursement of past costs, this cash
consideration is credited to the relevant accounts within the geographic area
where the farm-in assets were located. Any amounts of farm-in cash
consideration in excess of the value of the historic costs in the geographic
area are treated as a credit to the Consolidated Statement of Comprehensive
Income.
Investment in power projects
The Group, through its subsidiary Chariot Transitional Power France , holds a
10% investment in the Essakane solar project, Burkina Faso. This investment is
recognised at fair value through profit and loss with any movement in fair
value subsequently recognised in the Consolidated Statement of Comprehensive
Income.
The investment is not held under a 'hold to collect' or 'hold to collect and
sell' business model and is therefore categorised as fair value through profit
and loss.
Further details on the investment in power projects can be found in note 12.
Inventories
The Group's share of any material and equipment inventories is accounted for
at the lower of cost and net realisable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred
in bringing the inventories to their present location and condition.
Taxation
Income tax expense represents the sum of the current tax and deferred tax
charge for the year.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax
bases, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date
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 is calculated at the tax rates that have been enacted or
substantively enacted and are expected to apply in the year when the liability
is settled or the asset realised. Deferred tax is charged or credited to the
Consolidated Statement of Comprehensive Income, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
Foreign currencies
Transactions in foreign currencies are translated into US Dollars at the
exchange rate ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated into US Dollars
at the closing rates at the reporting date and the exchange differences are
included in the Consolidated Statement of Comprehensive Income.
The functional currency of the Company and its subsidiaries is the US dollar,
except for Chariot Transitional Power France, Chariot Transitional Power
Africa and Chariot Transitional Power South Africa Pty Limited which have the
European Euro as their functional currency.
Translation gains or losses resulting from the translation of the financial
statements from the functional currency to the presentation currency are
recorded as a foreign currency translation reserve in the Statement of Changes
in Equity.
Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost or fair value on acquisition
less depreciation and impairment. As well as the purchase price, cost includes
directly attributable costs and the estimated present value of any future
unavoidable costs of dismantling, decommissioning and removing items. The
corresponding liability is recognised within provisions. Depreciation is
provided on a straight line basis at rates calculated to write off the cost
less the estimated residual value of each asset over its expected useful
economic life. The residual value is the estimated amount that would currently
be obtained from disposal of the asset if the asset were already of the age
and in the condition expected at the end of its useful life.
Assets in the course of construction are carried at cost, less any recognised
impairment loss. Depreciation of these assets, on the same basis as other
assets, commences when the assets are complete and ready for their intended
use.
Fixtures, fittings and office equipment are depreciated using the straight
line method over their estimated useful lives over a range of 3 - 5 years.
Energy plant and equipment is depreciated using the straight line method over
their estimated useful lives over a range of 5 - 20 years.
The carrying value of property, plant and equipment is assessed annually and
any impairment charge is charged to the Consolidated Statement of
Comprehensive Income.
Goodwill
Goodwill represents the excess of the cost of a business combination over the
Group's interest in the fair value of identifiable assets, liabilities and
contingent liabilities acquired.
Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less accumulated impairment losses.
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
Share based payments
Where equity settled share awards are awarded to employees or Directors, the
fair value of the awards at the date of grant is charged to the Consolidated
Statement of Comprehensive Income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity
instruments expected to vest at each balance sheet date so that, ultimately,
the cumulative amount recognised over the vesting period is based on the
number of awards that eventually vest. Market vesting conditions are factored
into the fair value of the awards granted. As long as all other vesting
conditions are satisfied, a charge is made irrespective of whether the market
vesting conditions are satisfied. The cumulative expense is not adjusted for
failure to achieve a market vesting condition.
Where the terms and conditions of awards are modified before they vest, the
increase in the fair value of the awards, measured immediately before and
after the modification, is also charged to the Consolidated Statement of
Comprehensive Income over the remaining vesting period.
Where shares already in existence have been given to employees by
shareholders, the fair value of the shares transferred is charged to the
Consolidated Statement of Comprehensive Income and recognised in reserves as
Contributed Equity.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if it has power over the investee
and it is exposed to variable returns from the investee and it has the ability
to use its power to affect those variable returns. Control is reassessed
whenever facts and circumstances indicate that there may be a change in any of
these elements of control. The consolidated financial statements present the
results of the Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between the Group
companies are therefore eliminated in full.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity. Non-controlling interests
consist of the non-controlling shareholder's share of changes in equity. The
non-controlling interests' share of losses, where applicable, are attributed
to the non-controlling interests irrespective of whether the non-controlling
shareholders have a binding obligation and are able to make an additional
investment to cover the loss.
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The
consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of assets
transferred by the Group, liabilities incurred by the Group to the former
owners of the acquiree and the equity interest issued by the Group in exchange
for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
Trade and other receivables
Trade and other receivables are stated initially at fair value and
subsequently at amortised cost.
Financial instruments
The Group's financial assets consist of a bank current account or short-term
deposits at variable interest rates and other receivables. Any interest earned
is accrued and classified as finance income.
The Group's financial liabilities consist of trade and other payables. The
trade and other payables are stated initially at fair value and subsequently
at amortised cost.
Joint arrangements
The group is a party to a joint arrangement when there is a contractual
arrangement that confers joint control over the relevant activities of the
arrangement to the group and at least one other party. Joint control is
assessed under the same principles as control over subsidiaries.
The group classifies its interests in joint arrangements as either:
- Joint ventures: where the group has rights to only the net assets of the
joint arrangement;
- Joint operations: where the group has both the rights to assets and
obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group
considers:
- The structure of the joint arrangement
- The legal form of joint arrangements structured through a separate vehicle
- The contractual terms of the joint arrangement agreement
- Any other facts and circumstances (including any other contractual
arrangements).
Joint operations are those in which the Group has certain contractual
agreements with other participants to engage in joint activities that do not
create an entity carrying on a trade or business on its own. The Group
includes its share of assets, liabilities and cash flows in joint
arrangements, measured in accordance with the terms of each arrangement, which
is usually pro rata to the Group's interest in the joint operations. The Group
conducts some of its gas exploration, development and production activities
jointly with other companies in this way.
Joint ventures are initially recognised in the consolidated statement of
financial position at cost as investments in joint ventures. Subsequently,
joint ventures are accounted for using the equity method, where the Group's
share of post-acquisition profits and losses and other comprehensive income is
recognised in the consolidated statement of profit and loss and other
comprehensive income (except for losses in excess of the Group's investment in
the joint venture unless there is an obligation to make good those losses).
Where there is objective evidence that the investment in a joint venture has
been impaired the carrying amount of the investment is tested for impairment
in the same way as other non-financial assets. The Group conducts some of its
transitional power and green hydrogen activities jointly with other companies
in this way.
Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experiences and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
deviate from these estimates and assumptions. If these estimates and
assumptions are significantly over or under stated, this could cause a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year. The areas where this could impact the Group are:
a) Areas of judgement
i. Recoverability of exploration and evaluation assets
Expenditure is capitalised as an intangible asset by reference to appropriate
geographic area and is assessed for impairment against the criteria set out in
IFRS 6 when management assesses that circumstances suggest that the carrying
amount may exceed its recoverable value.
The making of this assessment involves judgement concerning the Group's future
plans and current technical and legal assessments. In considering whether
exploration and evaluation assets are impaired, the Group considers various
impairment indicators and whether any of these indicates existence of an
impairment. If those indicators are met, a full impairment test is performed.
At 31 December 2022 the Group considers that no formal indicators of
impairment exist under the framework of IFRS 6.
b) Estimates and assumptions
i. Impairment of goodwill
The assessment the carrying value of goodwill includes a number of judgements
and estimates exercised by management including assessment of future
discounted cash flows or fair value less costs to sell.
When value in use calculations are undertaken, the Group estimates the
expected future cash flows from the asset and chooses a suitable discount rate
to calculate the present value of those cash flows. In undertaking these value
in use calculations, the Group is required to make use of estimates and
assumptions concerning the Group's future plans.
When fair value less costs to sell calculations are undertaken, the Group uses
earnings multiples derived from observable market data from recent
transactions within the relevant sector.
At 31 December 2022 the Group has not identified an impairment of goodwill.
ii. Fair value of investments in power projects
The assessment of the fair value of the investment in the Essakane power
project includes a number of judgements and estimates exercised by management
including assessment of future discounted cash flows.
The Group estimates the expected future cash flows from the asset and chooses
a suitable discount rate to calculate the present value of those cash flows.
In undertaking this value in use calculation, the Group is required to make
use of estimates and assumptions concerning the Essakane power project's
future production and cash flow.
3 Segmental analysis
The Group has three reportable segments being transitional gas, transitional
power and corporate costs. The operating results of each of these segments are
regularly reviewed by the Board of Directors in order to make decisions about
the allocation of resources and assess their performance.
31 December 2022 Transitional Gas Transitional Power Corporate Total
US$000 US$000 US$000 US$000
Share based payments - (15) (4,153) (4,168)
Hydrogen and other - - (1,704) (1,704)
business development costs
Administrative expenses (516) (2,521) (5,441) (8,478)
Finance income 12 - 62 74
Finance expense - (70) (538) (608)
Loss after taxation (504) (2,606) (11,774) (14,884)
Additions to non-current assets 20,290 366 21 20,677
Total assets 54,158 1,474 11,982 67,614
Total liabilities (5,227) (203) (1,129) (6,559)
Net assets 48,931 1,271 10,853 61,055
31 December 2021 Transitional Gas Transitional Power Corporate Total
US$000 US$000 US$000 US$000
Share based payments - (85) (675) (760)
Hydrogen and other - - (1,139) (1,139)
business development costs
Administrative expenses (553) (212) (3,784) (4,549)
Finance expense (31) (9) (472) (512)
Loss after taxation (584) (306) (6,070) (6,960)
Additions to non-current assets 18,928 - 72 19,000
Total assets 34,687 973 19,088 54,748
Total liabilities (14,384) (158) (1,246) (15,788)
Net assets 20,303 815 17,842 38,960
4 Loss from operations
31 December 2022 31 December 2021
US$000 US$000
Loss from operations is stated after charging:
Depreciation of property, plant and equipment 45 31
Depreciation of Right of Use asset 427 327
Share based payments - Long Term Incentive Scheme 3,661 533
Share based payments - Restricted Share Unit Scheme 492 142
Share based payments - deferred consideration 15 85
Share of post-tax losses of joint venture 14 -
Auditors' remuneration:
Fees payable to the Company's Auditors for the audit of the Company's annual 108 84
accounts
Audit of the Company's subsidiaries pursuant to legislation 17 17
Total payable 125 101
5 Employment costs
Employees 31 December 2022 31 December 2021
US$000 US$000
Wages and salaries 3,863 1,095
Pension costs 413 62
Share based payments 2,141 170
Sub-total 6,417 1,327
Capitalised to exploration costs (2,189) (656)
Total 4,228 671
Key management personnel 31 December 2022 31 December 2021
US$000 US$000
Wages, salaries and fees 2,481 1,574
Social security costs 304 199
Pension costs 52 46
Benefits 9 6
Share based payments 2,027 505
Sub-total 4,873 2,330
Capitalised to exploration costs (827) (365)
Total 4,046 1,965
The Directors are the key management personnel of the Group. Details of the
Directors' emoluments and interest in shares are shown in the Directors'
Remuneration Report.
6 Finance income and expense
Finance income 31 December 2022 31 December 2021
US$000 US$000
Foreign exchange gain 9 -
Bank interest receivable 65 -
Total 74 -
Finance expense 31 December 2022 31 December 2021
US$000 US$000
Foreign exchange loss 581 466
Finance expense on lease 27 46
Total 608 512
7 Investments
The Company's principal subsidiary undertakings at 31 December 2022 and 31
December 2021, excluding dormant entities, were:
Subsidiary undertaking Principal activity Country of incorporation Proportion of ownership at 31 December Non-controlling interest ownership at 31 December
2022 2021 2022 2021
Chariot Oil & Gas Investments (Namibia) Limited Holding company Guernsey 100% 100% - -
Chariot Oil & Gas Investments (Morocco) Limited Oil and gas exploration Guernsey 100% 100% - -
Chariot Oil and Gas Statistics Limited Service company UK 100% 100% - -
Enigma Oil & Gas Exploration (Proprietary) Limited(1) Oil and gas exploration Namibia 100% 100% - -
Chariot Oil & Gas Investments (Brazil) Limited Holding company Guernsey 100% 100% - -
Chariot Brasil Petroleo e Gas Ltda Oil and gas exploration Brazil 100% 100% - -
Chariot Oil & Gas Finance (Brazil) Limited(1) Service company Guernsey 100% 100% - -
Chariot Oil & Gas Holdings (Morocco) Limited Oil and gas exploration UK 100% 100% - -
Chariot Rissana Limited Oil and gas exploration UK 100% 100% - -
Chariot Transitional Power Limited Holding company and renewable energy solutions UK 100% 100% - -
Chariot Transitional Power Holdings Limited (1,2) Holding company UK 100% 100% - -
Chariot Transitional Power France (formerly AEMP Essakane Solar SAS)(1) Holding company France 100% 100% - -
Chariot Transitional Power Africa (formerly Africa Energy Management Renewable energy solutions Mauritius 100% 100% - -
Platform)(1,)
Chariot Transitional Power South Africa (Pty) Ltd (1) Renewable energy solutions South Africa 100% 50% - -
Oasis Water Limited (1,2) Renewable energy solutions Mauritius 70% n/a 30% -
Quantum Solar Limited (1,2) Holding company UK 100% 100% - -
( )
( 1)Indirect shareholding of the Company.
( 2) Incorporated in 2022.
( )
8 Taxation
The Company is tax resident in the UK, however no tax charge arises due to
taxable losses for the year (31 December 2021: US$Nil).
No taxation charge arises in Morocco or the group subsidiaries as they have
recorded taxable losses for the year.
There was no deferred tax charge or credit in either period presented.
Factors affecting the tax charge for the current year
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the UK applied to losses for the year
are as follows:
31 December 2022 31 December 2021
US$000 US$000
Tax reconciliation
Loss on ordinary activities for the year before tax (14,884) (6,960)
Loss on ordinary activities at the standard rate of corporation tax in the UK (2,828) (1,322)
of 19% (31 December 2021: 19%)
Non-deductible expenses 881 212
Deferred tax effect not recognised 1,947 1,110
Total taxation charge - -
The Company had tax losses carried forward on which no deferred tax asset is
recognised. Deferred tax not recognised in respect of losses carried forward
total US$10.6 million (31 December 2021: US$8.7 million). Deferred tax assets
were not recognised as there is uncertainty regarding the timing of future
profits against which these assets could be utilised.
9 Loss per share
The calculation of basic loss per Ordinary share attributable to the equity
holders of the parent is based on a loss of US$14,882,000 (31 December 2021:
loss of US$6,960,000) and on 891,215,431 Ordinary shares (31 December 2021:
519,854,783) being the weighted average number of Ordinary shares in issue
during the year. Potentially dilutive share awards are detailed in note 26,
however these do not have any dilutive impact as the Group reported a loss for
the year, consequently a separate diluted loss per share has not been
presented.
10 Exploration and evaluation assets
31 December 2022 31 December 2021
US$000 US$000
Net book value brought forward 31,750 12,822
Additions 20,286 18,928
Transferred to inventory (241) -
Net book value carried forward 51,795 31,750
During the year certain wellheads and casing items previously capitalised
within exploration and evaluation assets were transferred to inventory as
their condition allows them to be reused in future drilling campaigns.
As at 31 December 2022 the net book value of the Moroccan geographic area is
US$51.8 million (31 December 2021: US$31.8 million).
11 Goodwill
Goodwill
US$000
Gross carrying amount at 31 Dec 2020 -
Acquired through business combination 380
Balance at 31 Dec 2021 380
Balance at 31 Dec 2022 380
The goodwill solely relates to the acquisition of Africa Energy Management
Platform in 2021 and reflects the intellectual property, management team and
customer relationships acquired through the business combination now contained
in the Transitional Power segment.
The Group tests cash-generating units with goodwill annually for impairment,
or more frequently if there is an indication that a cash-generating unit to
which goodwill has been allocated may be impaired. The recoverable amount of a
cash generating unit is the higher of the cash-generating unit's fair value
less cost of disposal and its value-in-use.
Fair value less cost of disposal has been used to assess the recoverable
amount of the Group's goodwill. Fair value less cost of disposal is determined
using earnings multiples derived from observable market data from recent
transactions within the solar and wind sector. The fair value measurement is
categorised as a level 2 fair value based on the inputs in the valuation
techniques used.
12 Investment in power projects
31 December 2022 31 December 2021
US$000 US$000
-
Essakane power project 448 450
The Group's investment in power projects represents its 10% project equity
holding in the Essakane power project. The investment is fair valued at each
reporting date and has been classified within level 3 of the hierarchy (as
defined in IFRS 13) as the investment is not traded and contains unobservable
inputs. Due to the nature of the investment, it is always expected to be
classified as level 3. There have been no transfers between levels during the
year ended 31 December 2022.
Valuations are derived using a discounted cash flow methodology and reflect
the annual forecast shareholder distributions resulting from net available
cash of the Essakane power project, and a risk adjusted discount rate.
Significant unobservable input Sensitivity of the fair value measurement to input
Discount rate An increase in the discount rate would decrease the fair value and a decrease
in the discount rate would increase the fair value of the asset.
Shareholder distributions An increase in the forecast shareholder distributions would increase the fair
value and a decrease in the forecast shareholder distributions would decrease
the fair value of the asset.
The sensitivities above are assumed to be independent of each other. There
were no changes to valuation techniques in the period.
13 Non-controlling interests
Oasis Water Limited, a 70% owned subsidiary of the Group, has immaterial
non-controlling interests (NCI). Summarised financial information in relation
to Oasis Water Limited, before intra-group eliminations, is presented below
together with amounts attributable to NCI:
For the period ended 31 December 31 December 2022
US$000
Administrative expenses (6)
Loss before and after tax (6)
Loss allocated to NCI (2)
Other comprehensive income allocated to NCI -
Total comprehensive income allocated to NCI (2)
Cash inflows from operating activities 216
Cash outflows from investing activities (215)
Net cash inflows 1
As at 31 December
Assets
Property plant and equipment 348
Trade and other receivables 1
Cash and cash equivalents 1
Liabilities
Trade and other payables (355)
Accumulated non-controlling interests (5)
14 Joint Ventures
The Group has a 24.99% interest in, Etana Energy (Pty) Limited, which is a
separate structured vehicle incorporated and operating in South Africa. The
primary activity of Etana Energy (Pty) Limited is to hold an electricity
trading licence. The contractual arrangement provides the group with only the
rights to the net assets of the joint arrangement, with the rights to the
assets and obligation for liabilities of the joint arrangement resting
primarily with Etana Energy (Pty) Limited. Under IFRS 11 this joint
arrangement is classified as a joint venture and has been included in the
consolidated financial statements using the equity method.
Summarised financial information
Period ended 31 December 2022
US$000
Loss from continuing operations (57)
Other comprehensive income -
Total comprehensive income (100%) (57)
Group's share of comprehensive income (24.99%) (14)
Investments in equity-accounted joint ventures
Opening balance -
Shareholder loan to Etana in the year 19
Group's share of comprehensive income for the year (included in administrative (14)
expenses)
Closing balance 5
15 Property, plant and equipment
Fixtures, fittings and equipment Assets in the course of construction Total
US$000 US$000 US$000
Cost
At 1 January 2021 1,356 - 1,356
Additions 72 - 72
At 31 December 2021 1,428 - 1,428
At 1 January 2022 1,428 - 1,428
Additions 40 349 389
At 31 December 2022 1,468 349 1,817
Depreciation
At 1 January 2021 1,313 - 1,313
Charge 31 - 31
At 31 December 2021 1,344 - 1,344
At 1 January 2022 1,344 - 1,344
Charge 45 - 45
At 31 December 2022 1,389 - 1,389
Net book value 1 January 2021 43 - 43
Net book value 31 December 2021 84 - 84
Net book value 31 December 2022 79 349 428
The net book value of assets under construction relates to the construction of
a desalination plant in Djibouti by a subsidiary of the group, Oasis Water
Limited whose results are reported within the Transitional Power segment. The
cost of the plant will be depreciated once the construction is complete and
available for use. The estimated cost to completion of the plant to which the
Group is contractually committed, is US$246,000.
16 Trade and other receivables
31 December 2022 31 December 2021
US$000 US$000
Other receivables and prepayments 755 1,167
The fair value of trade and other receivables is equal to their book value.
17 Inventory
31 December 2022 31 December 2021
US$000 US$000
Wellheads and casing 1,424 1,183
Inventory is held and retained for use in future
drilling campaigns.
18 Cash and cash equivalents
31 December 2022 31 December 2021
Analysis by currency US$000 US$000
US Dollar 5,475 15,567
Euro 209 135
Sterling 6,254 3,130
Moroccan Dirham 51 538
Other 63 36
12,052 19,406
As at 31 December 2022 and 31 December 2021 the US Dollar and Sterling cash is
held in UK and Guernsey bank accounts. All other cash balances are held in the
relevant country of operation.
As at 31 December 2022, the cash balance of US$12.1 million (31 December 2021:
US$19.4 million) contains the following cash deposits that are secured against
bank guarantees given in respect of exploration work to be carried out:
31 December 2022 31 December 2021
US$000 US$000
Moroccan licences 750 5,350
750 5,350
The funds are freely transferable but alternative collateral would need to be
put in place to replace the cash security.
19 Leases
The lease relates to the UK office. The group renegotiated the contractual
terms of the lease during the year which increased the lease term by one year.
The lease liability was remeasured using the discount rate applicable on the
modification date, with the right-of-use asset being adjusted by the same
amount.
Right-of-use asset:
31 December 2022 31 December 2021
US$000 US$000
Brought forward 328 655
Effect of modification to lease terms 431 -
Depreciation (427) (327)
Carried forward 332 328
Lease liability:
31 December 2022 31 December 2021
US$000 US$000
Current 359 430
Non-current - -
Total lease liability 359 430
The interest expense on lease liabilities during the year to 31 December 2022
was US$27,000 (2021: US$46,000) and the total cash outflow was US$501,000
(2021: US$419,000).
The maturity analysis of the lease liability at 31 December 2022 is as
follows:
31 December 2022 31 December 2021
US$000 US$000
Maturity analysis - contractual undiscounted cash flows
Less than one year 372 453
Total undiscounted lease liabilities 372 453
Effect of interest (13) (23)
Total lease liability 359 430
20 Trade and other payables
31 December 2022 31 December 2021
US$000 US$000
Trade payables 2,264 9,470
Accruals 3,934 5,888
6,198 15,358
The fair value of trade and other payables is equal to their book value.
21 Share capital
Allotted, called up and fully paid
31 December 2022 31 December 2022 31 December 2021 31 December 2021
Number US$000 Number US$000
Ordinary shares of 1p each(1) 959,841,091 14,263 759,587,023 11,696
1. The authorised and initially allotted and issued share capital on
admission (19 May 2008) has been translated at the historic rate of US$GBP of
1.995. The shares issued since admission have been translated at the date of
issue, or, in the case of share awards, the date of grant and not subsequently
retranslated.
Details of the Ordinary shares issued are in the table below:
Date Description Price US$ No. of shares
31 December 2020 388,367,946
25 June 2021 Issue of initial consideration shares for acquisition of AEMP 0.07 9,196,926
25 June 2021 Issue of shares at £0.055 in Placing, Subscription, Open Offer and fees 0.08 238,512,856
19 July 2021 Issue of shares at £0.055 in Placing, Subscription, Open Offer and fees 0.08 645,351
15 December 2021 Issue of shares at £0.07 in Placing, Subscription and fees 0.09 101,639,842
22 December 2021 Issue of shares at £0.07 in Open Offer 0.09 21,224,102
31 December 2021 759,587,023
31 January 2022 Issue of shares at £0.055 relating to underwriting commitment 0.07 33,742,396
3 March 2022 Issue of shares at £0.055 relating to underwriting commitment 0.07 33,742,396
13 June 2022 Issue of shares at £0.18 in Placing, Subscription, Open Offer and fees 0.22 130,930,606
10 August 2022 Issue of share award 0.08 833,333
10 August 2022 Issue of share award 0.30 18,533
10 August 2022 Issue of share award 0.30 212,000
10 August 2022 Issue of share award 0.10 72,463
10 August 2022 Issue of share award 0.16 109,795
15 September 2022 Issue of share award 0.50 70,098
15 September 2022 Issue of share award 0.12 76,313
15 September 2022 Issue of share award 0.20 76,313
15 September 2022 Issue of share award 0.05 119,438
15 September 2022 Issue of share award 0.23 137,050
21 October 2022 Issue of share award 0.12 13,750
21 October 2022 Issue of share award 0.20 11,250
21 October 2022 Issue of share award 0.19 9,343
12 December 2022 Issue of share award 0.20 16,250
12 December 2022 Issue of share award 0.05 43,750
12 December 2022 Issue of share award 0.21 18,991
31 December 2022 959,841,091
22 Other components of equity
The details of other components of equity are as follows:
Shares to be issued reserve Foreign exchange reserve
Contributed equity
Total
US$000 US$000 US$000 US$000
As at 1 January 2022 796 142 - 938
Loss for the year - - - -
Other comprehensive income - - (3) (3)
Loss and total comprehensive loss for the year - - (3) (3)
As at 31 December 2022 796 142 (3) 935
Shares to be issued reserve Foreign exchange reserve
Contributed equity
Total
US$000 US$000 US$000 US$000
As at 1 January 2021 796 - - 796
Loss for the year - - - -
Other comprehensive income - - - -
Loss and total comprehensive loss for the year - - - -
Share based deferred consideration - 142 - 142
As at 31 December 2021 796 142 - 938
23
Reserves
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium Amount subscribed for share capital in excess of nominal value.
Share based payments reserve Amount representing the cumulative charge recognised under IFRS2 in respect of
share option, LTIP and RSU schemes.
Contributed equity Amount representing equity contributed by the shareholders
Shares to be issued reserve Deferred consideration on acquisition recognised in equity
Foreign exchange reserve Foreign exchange differences arising on translating into the reporting
currency
Retained deficit Cumulative net gains and losses recognised in the financial statements.
24 Related party transactions
Key management personnel comprises the Directors and details of their
remuneration and shareholding reflecting participation in recent equity
placements are set out in note 5 and the Directors' Remuneration Report.
Magna Capital LDA (of which Adonis Pouroulis, CEO, has a substantial
interest), underwrote the June 2021 equity fundraising to ensure the total
fundraising equated to approximately US$23 million. Accordingly, 33,742,396
new Ordinary shares were admitted on 31 January 2022 and 33,742,396 new
Ordinary shares were admitted on 3 March 2022 and the Company received
proceeds totalling US$5 million. The underwriting commitment constitutes a
related party transaction.
Kinsella Consulting Limited, a company of which Adonis Pouroulis is a
Director, incurred costs on behalf of Chariot Limited for which it was
reimbursed during the year of US$18,452 (31 December 2021: US$8,813). The
amount outstanding as at 31 December 2022 was US$Nil (31 December 2021:
US$Nil).
Together with Total Eren, the Group entered into a Memorandum of Understanding
with Karo Holdings Limited to work together on the development, financing,
construction, and operation of a solar photovoltaic project for the Karo
Platinum Project, in Zimbabwe. Adonis Pouroulis, CEO, has a substantial
interest in the total voting rights in Karo Mining Holdings Limited. No
transactions have occurred between Karo Holdings Limited and the Group during
the period.
Together with Total Eren, the Group entered into a Memorandum of Understanding
with Tharisa plc to work together on the development, financing, construction,
and operation of a solar photovoltaic project for the Tharisa mine, in South
Africa. Adonis Pouroulis, CEO, has a substantial interest in the total voting
rights in Tharisa plc. No transactions have occurred between Tharisa plc and
the Group during the period.
25 Financial instruments
The Board of Directors determine, as required, the degree to which it is
appropriate to use financial instruments or other hedging contracts or
techniques to mitigate risk. Throughout the year ending 31 December 2022, no
trading in financial instruments was undertaken (31 December 2021: US$Nil).
There is no material difference between the book value and fair value of the
Group cash balances, short-term receivables and payables.
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). Throughout
the year, the Group has held surplus funds on deposit, principally with its
main relationship bank Barclays, on fixed short-term deposits. The credit
ratings of the main relationship bank the Group holds cash with do not fall
below A or equivalent. The Group does not undertake any form of speculation on
long term interest rates or currency movements, therefore it manages market
risk by maintaining a short-term investment horizon and placing funds on
deposit to optimise short term yields where possible but, moreover, to ensure
that it always has sufficient cash resources to meet payables and other
working capital requirements when necessary. As such, market risk is not
viewed as a significant risk to the Group. The Directors have not disclosed
the impact of interest rate sensitivity analysis on the Group's financial
assets and liabilities at the year-end as the risk is not deemed to be
material.
This transactional risk is managed by the Group holding the majority of its
funds in US Dollars to recognise that US Dollars is the trading currency of
the industry, with an appropriate balance maintained in Sterling, Euro and
Moroccan Dirham to meet other non-US Dollar industry costs and ongoing
corporate and overhead commitments.
At the year end, the Group had cash balances of US$12.1 million (31 December
2021: US$19.4 million) as detailed in note 18.
Other than the non-US Dollar cash balances described in note 18, no other
material financial instrument is denominated in a currency other than US
Dollars. A 10% adverse movement in exchange rates would lead to a foreign
exchange loss of US$658,000 and a 10% favourable movement in exchange rates
would lead to a corresponding gain; the effect on net assets would be the same
as the effect on profits (31 December 2021: US$380,000).
Capital
In managing its capital, the Group's primary objective is to maintain a
sufficient funding base to enable it to meet its working capital and strategic
investment needs. For further details of the Group's position, please refer to
the going concern paragraph in note 2 of these accounts.
Liquidity risk
The Group's practice is to regularly review cash needs and to place excess
funds on fixed term deposits. This process enables the Group to optimise the
yield on its cash resources whilst ensuring that it always has sufficient
liquidity to meet payables and other working capital requirements when these
become due.
For further details of the Group's position, please refer to the going concern
paragraph in note 2 of these accounts.
Credit risk
The Group's policy is to perform appropriate due diligence on any party with
whom it intends to enter into a contractual arrangement. Where this involves
credit risk, the Group will put in place measures that it has assessed as
prudent to mitigate the risk of default by the other party. This could consist
of instruments such as bank guarantees and parent company guarantees.
As such, the Group has not put in place any particular credit risk measures in
this instance as the Directors view the risk of default on any payments due
from the joint venture partner as being very low.
26 Share based payments
Long Term Incentive Scheme ("LTIP")
The plan provides for the awarding of shares to employees and Directors for
nil consideration. The award will lapse if an employee or Director leaves
employment.
Shares granted when an individual is an employee will vest in equal
instalments over a three year period from the grant date and shares granted
when an individual is a Director or otherwise specified will vest three years
from the end of the year or period the period to which the award relates.
The Group recognised a charge under the plan for the year to 31 December 2022
of US$3,661,000 (31 December 2021: US$533,000).
The following table sets out details of all outstanding share awards under the
LTIP:
31 December 2022 31 December 2021
Number of awards Number of awards
Outstanding at beginning of the year 28,242,865 7,401,780
Granted during the year 40,888,091 20,841,085
Shares issued for no consideration during the year (592,546) -
Outstanding at the end of the year 68,538,410 28,242,865
Exercisable at the end of the year 14,754,985 7,379,562
Non-Executive Directors' Restricted Share Unit Scheme ("RSU")
The plan provides for the awarding of shares to Non-Executive Directors for
nil consideration. An award can be Standalone or Matching.
Standalone share awards are one-off awards to Non-Executive Directors which
will vest in equal instalments over a three year period and will lapse if not
exercised within a fixed period on stepping down from the Board.
Matching share awards will be granted equal to the number of existing Chariot
shares purchased by the Non-Executive Director in each calendar year capped at
the value of their gross annual fees for that year. The shares will vest in
equal instalments over a three year period and will lapse if not exercised
prior to stepping down from the Board or if the original purchased shares are
sold prior to the vesting of the relevant Matching award. Any potential
Matching awards not granted in a calendar year shall be forfeited and shall
not roll over to subsequent years.
The Group recognised a charge under the plan for the year to 31 December 2022
of US$492,000 (31 December 2021: US$142,000).
The following table sets out details of all outstanding share awards under the
RSU:
31 December 2022 31 December 2021
Number of awards Number of awards
Outstanding at beginning of the year 8,755,156 2,839,875
Granted during the year 3,528,248 5,915,281
Shares issued for no consideration during the year (1,246,124)
Outstanding at the end of the year 11,037,280 8,755,156
Exercisable at the end of the year 4,251,485 2,623,568
Post-acquisition share-based payment charge
As at 31 December 2022 contingent payments representing a maximum of 3,964,192
new ordinary shares are payable to key members of the Chariot Transitional
Power Africa team regarding the acquisition of the business of Africa Energy
Management Platform in June 2021. These payments are dependent on the
retention of the key team members and certain project pipeline targets being
met and have been recognised as share based payments in the Consolidated
Statement of Comprehensive Income over the retention period. The Group
recognised a charge of US$15,000 in the year to 31 December 2022 (31 December
2021: $85,000). On 17 April 2023 a portion of the contingent consideration was
paid which was settled through the issue of 1,585,678 new ordinary shares.
27 Contingent liabilities
From 30 December 2011 the Namibian tax authorities introduced a withholding
tax of 25% on all services provided by non-Namibian entities which are
received and paid for by Namibian residents. From 30 December 2015 the
withholding tax was reduced to 10%. As at 31 December 2022, based upon
independent legal and tax opinions, the Group has no withholding tax liability
(31 December 2021: US$Nil). Any subsequent exposure to Namibian withholding
tax will be determined by how the relevant legislation evolves in the future
and the contracting strategy of the Group.
28 Events after the balance sheet date
The Directors consider these events to be non-adjusting post balance sheet
events.
Acquisition of Renewable Water Production Business
On 27 January 2023 Chariot Limited entered into a sales agreement for the
acquisition of the business and assets of an independent water producer, ENEO
Water PTE Limited, an African company focused on delivering clean water
solutions using renewable energy.
Consideration for the acquisition shall be payable in Chariot Ordinary Shares
with an initial US$0.5 million paid on completion of the sales agreement
(representing 2,267,694 shares issued on 24 February 2023) and a further
deferred consideration of up to US$0.5 million payable (representing a maximum
of 2,267,694 shares) on the achievement of financial close on further
projects.
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