REG - Contango HoldingsPLC - Interim Results for the six months to 30 Nov 2023
28/02/2024 16:15
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RNS Number : 8432E Contango Holdings PLC 28 February 2024
Contango Holdings Plc / Index: LSE / Epic: CGO / Sector: Natural Resources
28 February 2024
Contango Holdings Plc
('Contango' or the 'Company')
Unaudited Interim Results for the six months to 30 November 2023
Contango Holdings Plc, the London listed natural resource development
company, announces its results for the six-month period ended 30 November
2023.
Highlights
· Finalised construction at Muchesu including infrastructure upgrades
and washplant
· Muchesu formally opened in August 2023
· Company now in discussion with groups regarding sale of Muchesu coals
· Raised £1.305m through non-secured and non-convertible loan from
existing shareholders
· Entered into further offtake discussions with other groups
Post Period Highlights
· Received payment of US$116K for a 1,000-tonne bulk sample
· Extracted Run Of Mine to generate 1,332 tonnes of washed coking coal
· Raised additional £370K through non-secured and non-convertible loan
from existing shareholders
· Evaluation and marketing of industrial coal products at Muchesu
For further information, please visit www.contango-holdings-plc.co.uk or
contact:
Contango Holdings plc E: contango@stbridespartners.co.uk
Chief Executive Officer
Carl Esprey
Tavira Financial Limited T: +44 (0)20 7100 5100
Financial Adviser & Broker
Jonathan Evans
St Brides Partners Ltd T: +44 (0)20 7236 1177
Financial PR & Investor Relations
Susie Geliher
Chairman's Statement
This has been a particularly busy period where the Company finalised key
phases of construction and installation of plant and machinery to commence the
production of washed coking coal. In August, the mine was formally opened by
his Excellency Dr Emmerson Mnangagwa, the President of Zimbabwe. We would like
to thank the operational team at Muchesu and stakeholders, whom we look
forward to continuing to work with, in partnership with the people of the
Binga region, in order to ensure the responsible development of Muchesu. We
are focused on unlocking the value of this asset for the benefit of the entire
community for years to come.
Our current focus at Muchesu is the first phase development of Block 2 via an
open pit, where extensive work has been undertaken to define the specific
properties of the coal. Block 2 contains an estimated 96MT of coking coal,
forming a small part of the broader 1.3 billion tonnes, identified under NI
43-101 standard, at Muchesu. During the period, site works and equipment
installation were undertaken and completed. This included infrastructure
upgrades, as well as installation of screens, washplant, settling ponds,
laboratories, weighbridge and pads for coal stockpiles, amongst others. We
also opened up the coking coal seam in our open pit following the clearing of
the overburden. Despite some delays, which are typical when setting up a new
mining operation and building a new mine in an emerging market, with export
permits belatedly received in late Q3 2023 the Company is now ready to mine,
wash and sell coal to end users.
During the period, the Company also successfully completed the construction of
housing and relocation of the villagers in the immediate vicinity of the
Muchesu mine. This has been welcomed with resounding positive responses, most
importantly from those relocated individuals and the wider community.
Since formally opening Muchesu, the Company received a non-binding proposal
for the potential acquisition of its assets which may result in the sale of
its assets at the subsidiary level. Discussions and due diligence remain
open and further updates will be made to shareholders as appropriate.
In the immediate term, the focus of the Company is to reach a stable state of
revenue generation from the sale of Muchesu coal products. The mine
development and sales strategy has taken longer than expected but we have
built an operation that is now capable of transforming the Company into a
sizeable coal producer.
Financial Review
During the 6-month period to 31 November 2023, the Company spent £912,354 on
the exploration and fixed assets, which relate to the development of the site
and operations at Muchesu.
The Company raised £1,305,000 during the period from existing stakeholders
through unsecured and non-convertible bridging loans. The funds raised
supported capital expenditure and working capital due to the delay of sales
under existing offtake arrangements.
Revenue
During the 6-month period to 31 November 2023, the Company reported revenue of
£2,730 from a bulk sample. The Company is now engaging with a number of
groups regarding offtake contracts and will update the market in due course.
Administrative Costs
Administrative costs incurred by the Company as it developed the Muchesu Mine
during the period are broken down in Note 3.
Finance Costs
Finance costs relate to the loans advanced to the Company during the period.
Liquidity, cash and cash equivalents
As of 30 November 2023, the Company held £90,150 (2022: £3,314,359). Post
period the Company has raised a further £370,000 through non-convertible and
non-secured stakeholder loans.
Outlook
Our primary focus remains on securing suitable long-term offtake partners for
our coking coal and, potentially, industrial coal. Whilst we await a final
decision from the Multi-National Company referred to in previous RNS
announcements we continue to market our product to additional potential
customers, having mined and washed significant quantities of additional coking
coal for future samples and testing.
The longer-term aim of the Company is for Muchesu to become an integrated coke
operation and capitalise on the additional margins from the sale of coke
product in comparison to washed coking coal. Also, the sale of coke products
would access the global markets.
I would like to take this opportunity to thank our shareholders for their
support in 2023 whilst we navigate the transition to becoming a coal producer.
The team at Muchesu have worked hard to deliver the mine and we look forward
to seeing the sales strategy being delivered.
Roy Pitchford
28 February 2024
CEO REPORT
Contango's primary objective during the period was to begin producing washed
coking coal at Muchesu and deliver the business plan of selling coking coal.
The Muchesu Coal Mine in Zimbabwe
Contango has a 70% interest in Muchesu, with the remaining 30% held by local
partners.
Since acquisition in 2020, the Contango team have implemented a rapid
development plan with the objective of delivering first coking coal in as
short a timeframe as practicable. Initial trial mining operations commenced
at in 2022 and coal was stockpiled in anticipation of the arrival and assembly
of the wash plant. Washed coking coal was produced around the start of the
period in May 2023, and the Company's key objectives during the period focused
on the further assessment of washed coal production to ensure optimisation,
together with the advancement of long-term off-take negotiations and achieving
first coal sales.
Following the formal opening of the Muchesu Mine on 1 August 2023, the
weighbridge was installed and commissioned, which enabled trucks to collect
coal from Muchesu and meet the necessary standards for the sale and
transportation of bulk commodities in Zimbabwe and beyond, as well as
confirming the tonnages and subsequent sales totals.
In late August 2023, Contango was issued with the final approvals relating to
the export of coal from Muchesu from the Minerals Marketing Corporation of
Zimbabwe allowing the Company to complete its inaugural sale to TransOre
International FZE ("TransOre"), pursuant to the offtake arrangement announced
in June 2023, which was subsequently exported to TransOre's international
clients from the ports of Maputo and Beira.
The Contango team is fully focused on the successful ramp up of production
alongside the development of additional offtake negotiations. As referred to
above, in June 2023 the Company entered into an agreement with TransOre
whereby TransOre agreed to acquire up to 20,000 tonnes of washed coal per
month from Muchesu. As previously reported, unfortunately the Company did not
receive regular orders from TransOre under the offtake arrangement as
envisaged. Accordingly, towards the end of the period and beyond the Company
has looked to expand its network and deliver additional long-term offtakes.
In October 2023, the Company announced that, following a 12-month period of
detailed due diligence, a global multi-national company ("MNC") had entered
into an agreement to acquire 1,000 tonnes of washed coking coal for a formal
industrial trial. The MNC commenced collection of this coal in December
2023, collecting from mine gate ahead of delivery to its facilities in South
Africa for final tests in its own coke batteries. The Company is expecting to
receive a final decision in the near term. Whilst undertaking the bulk sample
for the MNC, the Company also extracted and washed additional tonnes above the
1,000-tonne bulk sample. Some of these tonnes have already been supplied to
additional potential customers following requests for product for their own
due diligence purposes, as part of the Company's broader marketing. There
remains a stockpile at site which can now be used in further offtake
discussions. Lack of deliverable washed product to supply for testing had
previously hindered the Company's efforts to broaden its customer base.
Offtake discussions are also underway for industrial coal. Industrial coal
seams sit both above and below the coking coal seam and accordingly whilst the
sales price is likely to be lower than the coking coal price, the extraction
cost would be considerably lower given Muchesu's existing coking coal
operations. Depending on the usage of the industrial coal, which would also be
collected at mine gate, there is the potential that washing would not be
required, thereby increasing production capacity and decreasing operating
costs, without requiring additional capital investment.
Carl Esprey
28 February 2024
Chairman's Statement
This has been a particularly busy period where the Company finalised key
phases of construction and installation of plant and machinery to commence the
production of washed coking coal. In August, the mine was formally opened by
his Excellency Dr Emmerson Mnangagwa, the President of Zimbabwe. We would like
to thank the operational team at Muchesu and stakeholders, whom we look
forward to continuing to work with, in partnership with the people of the
Binga region, in order to ensure the responsible development of Muchesu. We
are focused on unlocking the value of this asset for the benefit of the entire
community for years to come.
Our current focus at Muchesu is the first phase development of Block 2 via an
open pit, where extensive work has been undertaken to define the specific
properties of the coal. Block 2 contains an estimated 96MT of coking coal,
forming a small part of the broader 1.3 billion tonnes, identified under NI
43-101 standard, at Muchesu. During the period, site works and equipment
installation were undertaken and completed. This included infrastructure
upgrades, as well as installation of screens, washplant, settling ponds,
laboratories, weighbridge and pads for coal stockpiles, amongst others. We
also opened up the coking coal seam in our open pit following the clearing of
the overburden. Despite some delays, which are typical when setting up a new
mining operation and building a new mine in an emerging market, with export
permits belatedly received in late Q3 2023 the Company is now ready to mine,
wash and sell coal to end users.
During the period, the Company also successfully completed the construction of
housing and relocation of the villagers in the immediate vicinity of the
Muchesu mine. This has been welcomed with resounding positive responses, most
importantly from those relocated individuals and the wider community.
Since formally opening Muchesu, the Company received a non-binding proposal
for the potential acquisition of its assets which may result in the sale of
its assets at the subsidiary level. Discussions and due diligence remain
open and further updates will be made to shareholders as appropriate.
In the immediate term, the focus of the Company is to reach a stable state of
revenue generation from the sale of Muchesu coal products. The mine
development and sales strategy has taken longer than expected but we have
built an operation that is now capable of transforming the Company into a
sizeable coal producer.
Financial Review
During the 6-month period to 31 November 2023, the Company spent £912,354 on
the exploration and fixed assets, which relate to the development of the site
and operations at Muchesu.
The Company raised £1,305,000 during the period from existing stakeholders
through unsecured and non-convertible bridging loans. The funds raised
supported capital expenditure and working capital due to the delay of sales
under existing offtake arrangements.
Revenue
During the 6-month period to 31 November 2023, the Company reported revenue of
£2,730 from a bulk sample. The Company is now engaging with a number of
groups regarding offtake contracts and will update the market in due course.
Administrative Costs
Administrative costs incurred by the Company as it developed the Muchesu Mine
during the period are broken down in Note 3.
Finance Costs
Finance costs relate to the loans advanced to the Company during the period.
Liquidity, cash and cash equivalents
As of 30 November 2023, the Company held £90,150 (2022: £3,314,359). Post
period the Company has raised a further £370,000 through non-convertible and
non-secured stakeholder loans.
Outlook
Our primary focus remains on securing suitable long-term offtake partners for
our coking coal and, potentially, industrial coal. Whilst we await a final
decision from the Multi-National Company referred to in previous RNS
announcements we continue to market our product to additional potential
customers, having mined and washed significant quantities of additional coking
coal for future samples and testing.
The longer-term aim of the Company is for Muchesu to become an integrated coke
operation and capitalise on the additional margins from the sale of coke
product in comparison to washed coking coal. Also, the sale of coke products
would access the global markets.
I would like to take this opportunity to thank our shareholders for their
support in 2023 whilst we navigate the transition to becoming a coal producer.
The team at Muchesu have worked hard to deliver the mine and we look forward
to seeing the sales strategy being delivered.
Roy Pitchford
28 February 2024
CEO REPORT
Contango's primary objective during the period was to begin producing washed
coking coal at Muchesu and deliver the business plan of selling coking coal.
The Muchesu Coal Mine in Zimbabwe
Contango has a 70% interest in Muchesu, with the remaining 30% held by local
partners.
Since acquisition in 2020, the Contango team have implemented a rapid
development plan with the objective of delivering first coking coal in as
short a timeframe as practicable. Initial trial mining operations commenced
at in 2022 and coal was stockpiled in anticipation of the arrival and assembly
of the wash plant. Washed coking coal was produced around the start of the
period in May 2023, and the Company's key objectives during the period focused
on the further assessment of washed coal production to ensure optimisation,
together with the advancement of long-term off-take negotiations and achieving
first coal sales.
Following the formal opening of the Muchesu Mine on 1 August 2023, the
weighbridge was installed and commissioned, which enabled trucks to collect
coal from Muchesu and meet the necessary standards for the sale and
transportation of bulk commodities in Zimbabwe and beyond, as well as
confirming the tonnages and subsequent sales totals.
In late August 2023, Contango was issued with the final approvals relating to
the export of coal from Muchesu from the Minerals Marketing Corporation of
Zimbabwe allowing the Company to complete its inaugural sale to TransOre
International FZE ("TransOre"), pursuant to the offtake arrangement announced
in June 2023, which was subsequently exported to TransOre's international
clients from the ports of Maputo and Beira.
The Contango team is fully focused on the successful ramp up of production
alongside the development of additional offtake negotiations. As referred to
above, in June 2023 the Company entered into an agreement with TransOre
whereby TransOre agreed to acquire up to 20,000 tonnes of washed coal per
month from Muchesu. As previously reported, unfortunately the Company did not
receive regular orders from TransOre under the offtake arrangement as
envisaged. Accordingly, towards the end of the period and beyond the Company
has looked to expand its network and deliver additional long-term offtakes.
In October 2023, the Company announced that, following a 12-month period of
detailed due diligence, a global multi-national company ("MNC") had entered
into an agreement to acquire 1,000 tonnes of washed coking coal for a formal
industrial trial. The MNC commenced collection of this coal in December
2023, collecting from mine gate ahead of delivery to its facilities in South
Africa for final tests in its own coke batteries. The Company is expecting to
receive a final decision in the near term. Whilst undertaking the bulk sample
for the MNC, the Company also extracted and washed additional tonnes above the
1,000-tonne bulk sample. Some of these tonnes have already been supplied to
additional potential customers following requests for product for their own
due diligence purposes, as part of the Company's broader marketing. There
remains a stockpile at site which can now be used in further offtake
discussions. Lack of deliverable washed product to supply for testing had
previously hindered the Company's efforts to broaden its customer base.
Offtake discussions are also underway for industrial coal. Industrial coal
seams sit both above and below the coking coal seam and accordingly whilst the
sales price is likely to be lower than the coking coal price, the extraction
cost would be considerably lower given Muchesu's existing coking coal
operations. Depending on the usage of the industrial coal, which would also be
collected at mine gate, there is the potential that washing would not be
required, thereby increasing production capacity and decreasing operating
costs, without requiring additional capital investment.
Carl Esprey
28 February 2024
Condensed Consolidated Statements of Comprehensive Income
For the six months ended 30 November 2023
Audited Year to
Unaudited Six Months ended Unaudited Six Months ended 31 May 2023
30 November 2023 30 November 2022
Notes £ £ £
Administrative fees and other expenses 3 (879,951) (1,273,947) (5,592,118)
Operating loss (879,951) (1,273,947) (5,592,118)
Finance expense (496,383) (513,000) (523,701)
Loss before tax (1,376,334) (1,786,947) (6,115,819)
Income tax - - -
Loss for the period (1,376,334) (1,786,947) (6,115,819)
Loss attributable to owners of the parent company (1,257,498) (1,632,379) (6,709,569)
Loss attributable to non-controlling interests (118,836) (154,568) 593,750
(1,376,334) (1,786,947) (6,115,819)
Basic and diluted loss per Ordinary Share 4 (0.27) (0.55) (1.65)
Other comprehensive income (24,296) 319,624 199,403
Total comprehensive loss for the period (1,400,630) (1,467,323) (5,916,416)
Total comprehensive loss attributable to owners of Contango Holdings PLC (1,269,069) (1,403,389) (6,562,214)
Total comprehensive loss attributable to non-controlling interests (131,561) (63,934) 645,798
Total comprehensive loss for the period (1,400,630) (1,467,323) (5,916,416)
Condensed Consolidated Statements of Financial Position
For the six months ended 30 November 2023
Notes Unaudited as at Unaudited as at Audited as at
30 November 2023 30 November 2022 31 May 2023
£ £ £
Non-current assets
Intangible assets 5 14,213,896 13,416,214 13,301,480
Investments 40,071 46,474 40,071
Property, plant and equipment 2,947,166 1,095,911 2,872,182
Total non-current assets 17,201,133 14,558,599 16,213,733
Current assets
Other receivables 6 184,105 576,713 216,900
Cash and cash equivalents 90,150 3,314,359 75,692
Total current assets 274,255 3,891,072 292,592
Total assets 17,475,388 18,449,671 16,506,325
Current liabilities
Trade and other payables 7 (1,312,574) (310,148) (1,286,381)
Investor loans (3,395,706) (1,052,206)
Total current liabilities (4,708,280) (310,148) (2,338,587)
Net assets/(liabilities) 12,767,108 18,139,523 14,167,738
Equity
Share capital 8 4,580,245 4,580,245 4,580,245
Share premium 8 17,479,175 18,130,552 17,479,175
Shares to be issued - 400,000 -
Warrant reserve 2,101,664 2,059,584 2,101,664
Option reserve - - -
Foreign exchange reserve 207,477 300,683 219,048
Retained earnings (13,438,972) (8,590,889) (12,181,474)
Total equity attributable to owners of the parent company 10,929,589 16,880,175 12,198,658
Non-controlling interests 1,837,519 1,259,348 1,969,080
Total equity 12,767,108 18,139,523 14,167,738
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 November 2023
Share capital Share premium Shares to be issued Warrant Option reserve Translation reserve Retained earnings Total Equity of Owners Non-controlling interests Total
reserve
£ £ £ £ £ £ £ £ £ £
Balance at 31 May 2022 2,949,679 11,047,218 400,000 1,013,815 1,700,505 71,693 (6,958,510) 10,224,400 1,323,282 11,547,682
Loss for the year - - - - - - (6,709,569) (6,709,569) 593,750 (6,115,819)
Other comprehensive income
Translation differences - - - - - 147,355 - 147,355 52,048 199,403
Total comprehensive income for the year - - - - - 147,355 (6,709,569) (6,562,214) 645,798 (5,916,416)
Transactions with owners 1,416,666 6,431,957 - - - - - 7,848,623 - 7,848,623
Share issues - cash received net
Options exercised 213,900 - - - (1,700,505) - 1,486,605 - - -
Warrants issued - - - 1,087,849 - - - 1,087,849 - 1,087,849
Impairment of Mali Assets - - (400,000) - - - - (400,000) - (400,000)
Total transactions with owners 1,630,566 6,431,957 (400,000) 1,087,849 (1,700,505) - 1,486,605 8,536,472 - 8,536,472
Balance at 31 May 2023 4,580,245 17,479,175 - 2,101,664 - 219,048 (12,181,474) 12,198,658 1,969,080 14,167,738
Loss for the period - - - - - - (1,257,498) (1,257,498) (118,836) (1,376,334)
Other comprehensive income
Translation differences - - - - - (11,571) - (11,571) (12,725) (24,296)
Total comprehensive income for the period - - - - - (11,571) (1,257,498) (1,269,069) (131,561) (1,400,630)
Transactions with owners - - - - - - - - - -
Share issues - cash received net
Total transactions with owners - - - - - - - - - -
Balance at 30 Nov 2023 4,580,245 17,479,175 - 2,101,664 - 207,477 (13,438,972) 10,929,589 1,837,519 12,767,108
Condensed Consolidated Statements of Cash Flows
For the six months ended 30 November 2023
Notes Unaudited Six Months Unaudited Six Months Audited Year
ended ended ended
30 November 2023 30 November 2022 31 May 2023
£ £ £
Operating activities
Loss after tax (1,376,334) (1,786,947) (6,115,819)
Adjustment for:
Depreciation 11,407 104,825 389,492
Share based transactions - (108,480) 1,087,849
Loan facility fees 488,525 - 493,701
Impairment of listed investment - - 6,403
Impairment of exploration licences - - 2,101,921
Writing off of debtor balance - - 5,130
Changes in working capital
(Increase) in trade and other receivables (32,779) (524,503) (164,688)
Increase in trade and other payables 26,193 (193,584) 503,105
(Decrease) in Net cash from operating activities (882,988) (2,508,689) (1,692,906)
Investing activities
Spending on exploration licences (912,354) (1,551,836) (3,443,086)
Purchase of fixed assets (144,457) (538,768) (1,885,763)
Purchase of investment - - -
(Decrease) in Net cash from investing activities (1,056,811) (2,090,604) (5,328,849)
Financing activities
Ordinary Shares issued (net of issue costs) 5 - 4,717,196 4,190,819
Proceeds from convertible debt - - -
Conversion of convertible debt - 1,331,750 -
Proceeds from investor loans 1,855,000 1,349,493 2,378,534
Net cash flows from financing activities 1,855,000 7,398,439 6,569,353
Increase/(decrease) in cash and short-term deposits (84,799) 2,799,146 500,211
Cash and short-term deposits as at the start of period 75,692 22,143 610,546
Effect of foreign exchange changes 99,257 (95,333) (82,452)
Cash at the end of the period 90,150 3,314,359 75,692
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 November 2023
1 General information
The Company was incorporated in England under the Laws of England and Wales
with registered number 10186111 on 18 May 2016. All of the Company's
Ordinary Shares were admitted to the London Stock Exchange's Main Market and
commenced trading on 1 November 2017. The company was re-registered as a
public company under Companies Act 2006 on 1 June 2017, by the name Contango
Holdings plc.
The Company is listed on the Standard Market of London Stock Exchange plc.
The unaudited interim consolidated financial statements for the six months
ended 30 November 2023 were approved for issue by the board on 28 February
2024.
The figures for the six months ended 30 November 2023 and 30 November 2022 are
unaudited and do not constitute full accounts. The comparative figures for the
period ended 31 May 2023 are extracts from the annual report and do not
constitute statutory accounts.
2 Basis of Preparation and Risk Factors
The Company Financial Information has been prepared in accordance with and
comply with IFRS as adopted by the European Union, International Financial
Reporting Interpretations Committee interpretations and the Companies Act
2006. The financial statements have been prepared under the historical cost
convention as modified for financial assets carried at fair value.
The financial information of the company is presented in British Pound
Sterling ("£").
The accounting policies and methods of calculation adopted are consistent with
those of the financial statements for the year ended 31 May 2023.
The business and operations of the Company are subject to a number of risk
factors which may be sub-divided into the following categories:
Exploration and development risks, including but not limited to:
· Mineral exploration is speculative and uncertain
· Verification of historical washability analysis
· Independent verification of internal resource estimation at
Garalo
· Mining is inherently dangerous and subject to conditions or
events beyond the Company's control, which could have a material adverse
effect on the Company's business
· The volume and quality of coal recovered may not conform to
current expectations
· The extend and grade of gold mineralisation at Garalo may not
conform to current expectations
Permitting and title risks, including but not limited to:
· Licence and permits
· The Company will be subject to a variety of risks associated with
current and any potential future joint ventures, which could result in a
material adverse effect on its future growth, results of operations and
financial position
Political risks, including but not limited to:
· Political stability
· Enforcement of foreign judgements
· Potential legal proceedings or disputes may have a material
adverse effect on the Company's financial performance, cash flow and results
of operations
Financial risks, including but not limited to:
· Foreign exchange effects.
· Valuation of intangible assets.
· The Company may not be able to obtain additional external
financing on commercially acceptable terms, or at all, to fund the development
of its projects.
· The Company will be subject to taxation in several different
jurisdictions, and adverse changes to the taxation laws of such jurisdictions
could have a material adverse effect on its profitability.
· The Company's insurance may not cover all potential losses,
liabilities and damage related to its business and certain risks are uninsured
and uninsurable.
Commodity prices, including but not limited to:
· The price of coal may affect the economic viability of ultimate
production at Muchesu.
· The revenues and financial performance are dependent on the price
of coal.
· The price of gold may affect the economic viability of ultimate
production at Garalo.
Operational risks, including but not limited to:
· Availability of local facilities.
· Adverse seasonal weather.
· The Company's operational performance will depend on key
management and qualified operating personnel which the Company may not be able
to attract and retain in the future.
· The Company's directors may have interests that conflict with its
interests.
· Risk relating to Controlling Shareholders.
The Company's comments and mitigating actions against the above risk
categories are as follows:
Exploration and development risks
There can be no assurance that the Company's development activities will be
successful however significant exploratory work has been conducted to date at
Lubu and Garalo which supports the Board's confidence that a profitable mining
operation can be developed.
Additionally, the phased development route which will be employed at Lubu
seeks to mitigate risks along the development life cycle of the project.
Permitting and title risks
The Company complies with existing laws and regulations and ensures that
regulatory reporting and compliance in respect of each permit is achieved.
Applications for the award of a permit may be unsuccessful. Applications for
the renewal or extension of any permit may not result in the renewal or
extension taking effect prior to the expiry of the previous permit. There can
be no assurance as to the nature of the terms of any award, renewal or
extension of any permit.
The Company regularly monitors the good standing of its permits.
Political risks
The Company maintains an active focus on all regulatory developments
applicable to the Company, in particular in relation to the local mining
codes.
In recent years the political and security situations in Zimbabwe and Mali
have been particularly volatile.
Financial risks
The board regularly reviews expenditures on projects. This includes updating
working capital models, reviewing actual costs against budgeted costs, and
assessing potential impacts on future funding requirements and performance
targets.
Commodity prices
As projects move towards commercial mining the Company will increasingly
review changes in commodity prices so as to ensure projects remain both
technically and economically viable.
Operational risks
Continual and careful planning, both long-term and short-term, at all stages
of activity is vital so as to ensure that work programmes and costings remain
both realistic and achievable.
3 Loss before taxation
Loss before income tax is stated Audited Year Ended 31 May 2023
after charging: Unaudited Six Months Ended 30 November 2023 Unaudited Six Months Ended 30 November 2022
£ £ £
Directors' remuneration (60,000) (43,500) (104,000)
Ongoing listing costs (82,948) (117,585) (297,941)
Finance costs (496,383) (513,000) (523,701)
Share-based finance costs - (457,356) -
Salaries (498,677) (421,697) (934,242)
Consultancy fees (7,643) (500) (19,868)
Legal and accountancy fees (36,145) (33,775) (79,584)
Travel (94,567) (298,345) (378,276)
Investor relations (3,204) (119,630)
Office costs (63,213) (147,620) (259,253)
Share performance options - 1,486,605 -
Net warrant issue costs - (1,045,769) (1,087,849)
Impairment of exploration licence - (2,101,921)
Impairment of listed investment - - (6,403)
Writing off historic debtor balance - (5,130)
Depreciation (11,407) (104,825) (389,492)
Other (25,351) (86,376) -
Group audit fee - - (49,000)
Fee payable to the Company's auditor in respect of all other non-audit
services
- -
Fees paid to auditors for non-audit work services - - -
4 Loss per Ordinary Share
The calculation of the basic and diluted loss per Ordinary Share is based on
the following data:
Unaudited Six Months to Unaudited Six Months to Audited Year
30 November 30 November to
2023 2022 31 May
2023
£ £ £
Earnings
Loss from continuing operations for the period attributable to the equity (1,257,498) (1,632,379) (6,709,569)
holders of the Company
Number of Ordinary Shares
Weighted average number of Ordinary Shares for the purpose of basic and
diluted earnings per Ordinary Share (number)
472,724,023 296,565,032 407,081,986
Basic and diluted loss per Ordinary Share (pence) (0.27) (0.55) (1.65)
There are no potentially dilutive Ordinary Shares in issue.
5. Intangible Asset
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2023 2022 2023
£ £ £
At start of period 13,301,480 10,118,098 11,936,206
Additions - during year 912,354 397,843 4,058,078
Reclassification as PME &Equipment (614,992)
Foreign exchange movements 62 - 24,109
Impairment of Mali licences (2,101,921)
Amortisation - - -
Total 14,213,896 10,515,941 13,301,480
Mining rights Zimbabwe 14,213,896 8,495,807 13,301,480
Mining rights Mali (Garalo) - 1,273,617 -
Mining rights Mali (Nthiela) - 746,517 -
14,213,896 10,515,941 13,301,480
The intangible asset represents the mining rights and technical information
acquired when the Group acquired its 70% shareholding in Monaf Investments
(Pvt) Ltd on 18 June 2020.
The decision was made by Management to fully impair the Garalo and Ntiela
licences in Mali due to the expiry of the Garalo licence in April 2023;
uncertainty surrounding possible changes to the Mali Mining Code; and the
belief that the best use of all available financial resources going forwards
is the continued development of the Muchesu coal mine in Zimbabwe.
Consequently an impairment charge of £1,701,921 was posted during the prior
year to the Income Statement and £400,000 against the Shares to be Issued
Reserve.
6. Other receivables
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2023 2022 2023
£ £ £
Prepayments 29,859 17,970 29,849
Other debtors 154,246 558,744 187,051
184,105 576,714 216,900
7. Trade and other payables
Unaudited As at Unaudited As at Audited As at
30 November 30 November 31 May
2023 2022 2023
£ £ £
Trade payables (1,135,621) (245,481) (1,142,510)
Accruals and other payables (176,953) (64,667) (143,871)
Investor loans (3,395,706) - (1,052,206)
(4,708,280) (310,148) (2,338,587)
Investor loans
Subsequent to the period end a further £370,000 has been loaned to the
Company by investors.
8 Share capital
Number of Ordinary Shares issued and fully paid Share Capital Share Premium Total Share Capital
£ £ £
As at 01 June 2023 472,724,023 4,580,245 17,479,175 22,059,420
Shares issued - - - -
As at 30 November 2023 472,724,023 4,580,245 17,479,175 22,059,420
The Ordinary Shares issued by the Parent Company have par value of 1p each and
each Ordinary Share carries one vote on a poll vote. The directors of the
Parent Company have authority to issue £6,927,240 in ordinary shares at
£0.01 per share resulting in 692,724,023 ordinary shares.
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