REG - Emmerson PLC - 2022 Financial Results and Q1 Update
13/04/2023 07:00
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RNS Number : 0260W Emmerson PLC 13 April 2023
Emmerson PLC / Ticker: EML / Index: AIM / Sector: Mining
13 April 2023
Emmerson PLC ("Emmerson" or the "Company")
2022 Financial Results and Q1 Update
Emmerson, the Moroccan-focused potash development company, is pleased to
announce its 2022 audited results as well as an update for Q1 2023, as it
moves towards construction at the Khemisset Potash Project ("Khemisset" or the
"Project").
Highlights:
· Environmental permit for Khemisset - continued positive discussions
to establish optimum water management routes ahead of final approval. Enhanced
designs incorporated in 2022 include:
o Sourcing water from Khemisset waste water treatment plant rather than
reservoirs; and
o Selection of dry stacking for tailings, a more environmentally robust
solution
· Significant progress during 2022 and Q1 2023 on pre-construction
technical workstreams including basic engineering, which are now largely
complete
· Syndicate of leading international and Moroccan banks appointed during
Q1 2023 as initial mandated lead arrangers to co-ordinate and fund debt
financing facilities for the development of Khemisset
· Potash prices remain well above long term averages and long-term
outlook remains attractive
Graham Clarke, CEO, commented:
"A significant amount of work was completed during 2022 and in the first
quarter of 2023, and we move closer to obtaining the environmental approval
for our project.
Our efforts to finalise the remaining outstanding items with the relevant
authorities in Morocco ahead of the granting of our Environmental Impact
Assessment continue to be rewarded with constructive meetings and
encouragement from the various agencies involved. I had hoped to be in
position to provide a definitive update on this process however the finer
technical details of the water management proposals, in particular our use of
recycled water from the Khemisset waste water treatment plant, and our brines
and dry tailings solutions, are awaiting final approvals from the
environmental and water agencies.
It remains our absolute priority to finalise this as quickly as possible in
conjunction with the Moroccan authorities with the objective of moving into
construction this year.
The Company achieved a key milestone during the period in the form of the
appointment of a syndicate of international and Moroccan banks to act as
mandated lead arrangers, to co-ordinate and fund debt financing facilities for
Khemisset. This is a huge step for Emmerson, and one that provides a clear
and tangible route for us to deliver on the requisite financing for this large
and strategically important asset.
Securing quality and experienced institutions including ING Bank, Banque
Centrale Populaire and Bank of Africa (Groupe BMCE), together with UK Export
Finance, which will lead an Export Credit Agency tranche of US$230 million, is
a significant endorsement of the Project and its future earnings potential.
I believe that this is also a clear signal to the market and our various
stakeholders in Morocco, that ours is a project with the commercial clout and
operational robustness to merit being fast-tracked into production."
**ENDS**
For further information, please visit www.emmersonplc.com
(http://www.emmersonplc.com/) , follow us on Twitter (@emmerson_plc), or
contact:
Emmerson PLC +44 (0) 20 7236 1177
Graham Clarke / Jim Wynn / Charles Vaughan
Liberum Capital Limited (Nominated Advisor and Joint Broker) +44 (0)20 3100 2000
Scott Mathieson / Kane Collings / William King
Shard Capital LLP (Joint Broker) +44 (0)20 7186 9927
Damon Heath / Isabella Pierre
St Brides Partners (Financial PR/IR) +44 (0)20 7236 1177
Susie Geliher / Isabelle Morris
Notes to Editors
Emmerson is focused on advancing the Khemisset project ("Khemisset" or the
"Project") in Morocco into a low cost, high margin supplier of potash, and the
first primary producer on the African continent. With an initial 19-year life
of mine, the development of Khemisset is expected to deliver long-term
investment and financial contributions to Morocco including the creation of
permanent employment, taxation, and a plethora of ancillary benefits. As a
UK-Moroccan partnership, the Company is committed to bringing in significant
international investment over the life of the mine.
Morocco is widely recognised as one of the leading phosphate producers
globally, ranking second in the world in terms of tonnes produced annually,
and the development of this mine is set to consolidate its position as the
most important fertiliser producer in Africa. The Project has a large JORC
Resource Estimate (2012) of 537Mt @ 9.24% K2O, with significant exploration
potential, and is perfectly located to support the expected growth of African
fertiliser consumption whilst also being located on the doorstep of European
markets. The need to feed the world's rapidly increasing population is driving
demand for potash and Khemisset is well placed to benefit from the
opportunities this presents. The Feasibility Study released in June 2020
indicated the Project has the potential to be among the lowest capital cost
development stage potash projects in the world and also, as a result of its
location, one of the highest margin projects. This delivered outstanding
economics, including a post-tax NPV8 of approximately US$1.4 billion using
industry expert Argus' price forecasts, and the spot price for granular MOP
fertiliser has since risen, further enhancing the valuations.
CHAIRMAN'S STATEMENT
It gives me great pleasure to present the 2022 Annual Report for Emmerson PLC
("Emmerson" or "the Company") as we continue towards construction at our
Khemisset Potash Project in Morocco. Our activities during the period have
laid the foundations, both from an operational and corporate perspective, to
move this long-life and low capex potash mine into construction in the near
term.
It is hard to overstate the importance of potash in the context of the global
food security crisis. Potash is primarily used as a fertiliser, improving
yields and enhancing the resilience of crops to drought. Used in combination
with phosphates and nitrogen, fertiliser increases crop yields, enabling food
production to keep up with a constantly rising population on diminishing
available farmland.
In 2022, amongst its many other negative consequences, the war in Ukraine
brought about significant disruption to the supply of potash, as nearly 40% of
the world's production comes from Russia and Belarus.
As a result, the price of potash jumped almost fourfold, and fertilisers
became unaffordable for many farmers. Many took the decision to sit out
planting cycles, or reduce fertiliser usage rates, in order to avoid potential
losses. The inevitable consequence of this is that basic foodstuffs like
cereals and rice have become less plentiful and more expensive. During the
rest of the year prices did fall back from their peaks as natural demand
waned, ending the year at more acceptable levels for farmers, albeit still
much higher than historic averages.
But this volatility in such an important basic commodity highlights the need
to develop new potash basins that diversify the supply into politically safer
and geographically convenient locations.
Our Khemisset project benefits from a number of advantages. Located just 181km
from the port of Casablanca, it is far closer to the markets of South America,
Europe, and above all Africa, than many of the large established potash
production markets, such as Canada. Morocco itself is politically stable, with
an established legal and commercial system. Moreover, under the vision of King
Mohammed VI, Morocco recently introduced a new investment charter, intended to
promote foreign investment in strategic projects with substantial incentives
schemes. The Kingdom has good road and rail infrastructure, abundant renewable
energy and excellent ports.
Morocco is also a major fertiliser hub already. It is the second largest
phosphate producer in the world, built on its possession of 70% of the global
reserves. It also uses its phosphates to make NPK fertilisers, by blending
with imported nitrogen and potash. Developing an in-country source of potash
would further enhance its efficiency and self-reliance significantly.
The food security crisis is essentially about the availability and
affordability of basic nutrition. If the cost of weekly shopping has already
become problematic for low-income families in Europe and North America, the
consequences in the developing world are far more serious still, where higher
food prices can lead to malnutrition and social unrest. These are major
challenges that the world needs to take very seriously.
For many years, potash was seen by investors as an unglamorous commodity,
compared with, for example precious metals, and, more recently, those minerals
deemed necessary for energy transition or green technology (lithium, cobalt,
copper etc). As a result, the sector suffered from underinvestment, with few
new sources brought online in the last 10 years.
Even before the recent supply chain issues, this was short sighted. With a
growing population, whose dietary preferences are moving towards
land-intensive foods such as meat, and increasing pressure on land
availability for cultivation, demand for potash and fertilisers will continue
to grow steadily year-on-year.
As transportation prices have also risen, the location of sources of potash
production has become more important. The Canadian potash region of
Saskatchewan is ideally placed to serve the US and Canadian markets, but the
cost of shipping makes it expensive for South America or Africa. Russia and
Belarus will find buyers among their allies and neutral countries, mainly in
Asia, and China will prioritise its own users.
Developing a project of such strategic importance will bring a wide range of
benefits to the Kingdom. At the national level, as well as enhancing the
country's status and influence as a fertiliser producer, the project will
bring in significant export revenues and taxation payments. Thousands of new
jobs (direct and indirect) will be created In the Khemisset region, which has
relatively high unemployment, particularly among the growing youth population.
Local suppliers and contractors will continue to be selected wherever
possible, building on the core team in country and the appointment in January
2022 of Reminex, the engineering arm of the Moroccan mining company, Managem
Group. A further indication of our commitment to maximising Moroccan
participation and suppliers was the appointment of two large Moroccan banks to
the syndicate for the project finance debt.
As a company, our primary objective is simple: to bring the Khemisset project
into production as swiftly and efficiently as possible. As we have noted
before, it is a large project and nationally strategic for Morocco. Its mine
life will likely span into several decades, underpinning the economic benefits
to the Kingdom and cementing Morocco's place as a premier producer of
fertiliser products.
The entire Emmerson team, both in Morocco and the UK, is passionate about the
project. We are determined to make Khemisset the first African potash mine
since the 1970s and to unlock the inherent value of the project for the
citizens of Khemisset, the Kingdom of Morocco, and our shareholders.
James Kelly
Chairman
12 April 2023
CHIEF EXECUTIVE OFFICER'S STATEMENT
Against a backdrop of considerable upheaval in potash markets, as well as the
capital markets more recently, the Khemisset potash project in Morocco
represents a compelling investment opportunity, which will bring benefits both
locally and nationally within Morocco, developing an important new source of
potash at a time when food security is a global concern.
All of our activities during 2022 were focused on bringing Khemisset into
production as quickly and efficiently as possible. This is a simple objective
but there are many steps to take on the way, and hurdles to cross. These
include the finalisation of the basic engineering and design work, obtaining
the environmental and other approvals, the raising of finance, working with
potential offtake partners, and putting together the necessary teams to
execute construction.
Environmental approvals
Obtaining the environmental approval is clearly on the critical path for the
Company, and it would be impossible to deny that it has already taken longer
than had been hoped, or expected.
A considerable amount of work has gone into our submissions and interactions
with the Moroccan authorities on this issue, starting in 2020 when the first
Environmental and Social Impact Study ("ESIA") was submitted. Over the course
of the next two years, a further two revised versions of the ESIA have been
completed, incorporating important improvements, some in response to queries
and feedback from the authorities, others the result of initiative from our
own team and consultants.
An example of the innovative work we have undertaken is the switching of the
source of water from the Ouljet Essoltane Dam to the Khemisset waste water
treatment plant, which will save ~2,000,000m(3) per annum of fresh water draw.
The collective impact of these changes is a substantially improved, more
robust process with an even more limited environmental and social footprint.
In January 2023, we reported that the environmental discussions were now
focused on water issues. Morocco has suffered from periods of drought in
recent years, and so ensuring sources of water remain free of contamination is
a key concern. In our recent reports, which incorporate the improvements we
have made, and in numerous discussions, we have sought to demonstrate the
robustness of our proposals, supported by evidence and explanations which the
Company believes should address the concerns of the authorities.
The Moroccan authorities fully appreciate the importance of the project to the
Kingdom and are working through these proposals with us to achieve solutions
acceptable to all parties, whilst protecting the water supply. We continue to
work with the relevant technical departments to ensure all risks are
understood and properly mitigated.
Technical work at Khemisset in 2022
At the start of 2022, we appointed two engineering firms, Barr Engineering of
the US, and Reminex SA of Morocco, to lead basic engineering workstreams for
the processing plant, and the balance of the Khemisset potash project scope,
respectively. This work is nearing its completion with only the final reports
and designs outstanding, and has covered all key aspects of the project in
relation to the process facility, surface infrastructure and mine access.
In addition to adding a much higher level of detail to the design, the basic
engineering has enabled some outstanding optimisations, in particular with
regard to the potential environmental impact, which have resulted in a
significant reduction of risk to fresh water supplies.
An options study was completed with regard to the relative merits of wet
slurry versus dry stacking of salt tailings. After due analysis, the dry
stacking method was selected, primarily due to its environmental robustness,
as it essentially removes any realistic risk of saline fluid outflow in the
event of an extreme rainfall event. This dry stacking development route is
fully supported by our technical team and consultants, as it raises the
environmental standard of the tailings storage solution with minimal cost
impact to the overall operation.
Furthermore, following its experience executing a similar project in southern
Morocco, our basic engineering partner Reminex developed an operational water
supply solution that utilises water from the local Khemisset waste water
treatment plant, rather than the previous solution of drawing water from
upstream of the Ouljet Essoltane Dam. This solution offers Capex and Opex
benefits, as well as significant operational, environment and social benefits
which are strongly supported by the relevant Moroccan administrations.
In addition, a review of the layout of the surface infrastructure and the
alignment of the declines has resulted in a smaller surface footprint
requiring less land and an adjustment of the exact location of the surface
facilities to simplify access and ensure a more socially responsible use of
available land parcels.
Other essential work that has been completed since the start of 2022 includes
a traffic study by the Moroccan engineering firm Novec S.A. to select the
location and design of the new highway intersection. The same consultant was
engaged to work on a logistics model for ultimate transportation of final
products to clients.
A drilling campaign was undertaken in the year to provide geotechnical input
to help select the optimal locations for the declines and process plant. This
will be supplemented by a further campaign in 2023 to provide the detailed
data for the optimised location of the decline and surface infrastructure, as
well as providing information for the deep well injection proposals, all as
input to detailed engineering before construction.
A substantial modelling exercise has been undertaken by a global ventilation
expert to facilitate the definition and development of the mine ventilation
strategy and this has also fed into the finalisation of mine access design
along with the data from the drilling program. Cutting trials using core
samples have been completed by a global mining organisation enabling
finalisation of capable mining equipment selection.
The Company also signed agreements with L'Office National de l'Electricité et
de l'Eau Potable ("ONEE") to approve the design of powerlines and secure
capacity in the grid for the project.
Subject to the approval of the environmental proposals, the next phase with
regard to the technical work will be to update the 2020 Feasibility Study to
reflect all design changes, including an updated mine plan and set of
financial estimates, which will also incorporate some of the cost inflation
that has been seen in the intervening period. An updated Bankable Feasibility
Study ("BFS") will then be completed, which will be reviewed by the technical
and due diligence teams of the banks and other financiers of the project,
ahead of the conclusion of the fundraise for construction ("Financial Close").
The timing of Financial Close will clearly depend above all on the
environmental approval, and on that basis is unlikely to be sooner than Q4
2023.
Financing
In spite of difficult conditions in the capital markets, we have had positive
discussions with a number of potential investors in the Khemisset project, who
recognise the economic robustness of the financials, as well as the strategic
arguments for potash as a long-term investment.
Most investors wish to await the award of the environmental approval before
committing resources, and some also wish to see the updated BFS.
In the meantime, we have been able to rely on the continued support of our
strategic investor, Global Sustainable Minerals Ltd ("GSM"), who in September
2022 together with their partners Gold Quay Capital ("GQC") renewed their
commitment to invest up to US$40 million in the project, subject to
appropriate shareholder and regulatory approvals. Having already invested
US$5.8 million in 2021, GSM invested a further US$6.0 million in new equity as
part of these renewals, underlining their commitment to the project.
In February 2023, we were delighted to announce the appointment of a syndicate
of leading international and Moroccan banks as initial mandated lead arrangers
("MLAs") to co-ordinate and fund dual-tranche debt financing facilities. The
four MLAs selected were ING Bank, Banque Centrale Populaire, Bank of Africa
(Groupe BMCE) and one further international European bank.
Based on current discussions, the facility proposed would be a US$310 million
dual-tranche project financing split between an Export Credit Agency ("ECA")
covered tranche led by UK Export Finance US$230 million, and a commercial
tranche of US$80 million.
This facility is subject to the normal project finance due diligence process
(incorporating financial, legal and technical aspects) which will be
undertaken following receipt of the environmental approval. However, it
clearly demonstrates the attractiveness of the project to a group of
significant international and Moroccan banks.
In November 2022, we also announced that we had signed Memoranda of
Understanding ("MoUs") for potash and salt with Keytrade AG (for 250k potash)
and Hexagon AG (for 250k potash and 500k salt pa) being approximately two
thirds of the project's potash production.
These MoUs, although non-binding, set out the key terms for subsequent formal
bankable offtake agreements, and include the understanding that the offtake
terms will be "take-or-pay", a key element of the process to reach financial
close
Corporate
In February 2022, I was pleased to announce the appointment of Jim Wynn as the
Group's first CFO. We are delighted to have someone of Jim's experience to
help us build our team and work to pull together the financing packages for
the project.
In January 2023, we were also pleased to announce the appointment of Liberum
Capital as Nominated Advisor to the Group, having been broker since February
2022. Liberum is a well-respected mid-tier stockbroker with a strong mining
franchise, and we consider it to be an excellent fit, particularly as it
matches our ambition for the project.
Graham Clarke
Chief Executive Officer
12 April 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Note US$'000 US$'000
Continuing Operations
Administrative expenses 3 (2,581) (2,349)
Share-based payment expense 12 (256) (33)
Net foreign exchange loss (356) (388)
Operating loss (3,193) (2,770)
Finance cost - (7)
Loss before tax (3,193) (2,777)
Income tax 5 (5) -
Loss for the year attributable to equity owners (3,198) (2,777)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange loss on translating foreign operations (45) (693)
Total comprehensive loss attributable to equity owners (3,243) (3,470)
Earnings per share (cents)
Basic and diluted 6 (0.34) (0.33)
The notes that follow are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT
31 DECEMBER 2022
2022 2021
Note US$'000 US$'000
Non-current assets
Intangible assets 7 18,607 13,555
Property, plant and equipment 43 41
Total non-current assets 18,650 13,596
Current assets
Trade and other receivables 8 1,181 771
Cash and cash equivalents 6,670 10,032
Total current assets 7,851 10,803
Total assets 26,501 24,399
Current liabilities
Trade and other payables 9 (1,032) (1,835)
Total current liabilities (1,032) (1,835)
Net assets 25,469 22,564
Shareholders equity attributable to equity owners
Share capital 11 34,733 28,774
Share-based payment reserve 12 2,470 2,048
Reverse acquisition reserve 2,234 2,198
Retained earnings (13,636) (10,278)
Translation reserve (332) (178)
Total equity 25,469 22,564
These financial statements were approved by the Board on 12 April 2023 and
signed on their behalf by
Graham Clarke
Director
The notes that follow are an integral part of these consolidated financial
statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022
US$'000 Share Capital Share-based payment reserve Reverse Acquisition reserve Retained earnings Translation reserve Total equity
Balance at 1 January 2021 15,755 1,499 2,198 (7,508) 515 12,459
Loss for the year - - - (2,777) - (2,777)
Other comprehensive income:
FX loss translating foreign operations - - - - (693) (693)
Total comprehensive loss - - - (2,777) (693) (3,470)
Issue of share options 90 (104) - - - (14)
Transfer - (7) - 7 - -
Issue of shares and warrants 14,345 660 - - - 15,005
Share issue costs (1,416) - - - - (1,416)
Balance at 31 December 2021 28,774 2,048 2,198 (10,278) (178) 22,564
Change in functional currency 219 65 36 (211) (109) -
Balance at 1 January 2022 28,993 2,113 2,234 (10,489) (287) 22,564
Loss for the year - - - (3,198) - (3,198)
Other comprehensive income:
FX loss translating foreign operations - - - - (45) (45)
Total comprehensive loss - - - (3,198) (45) (3,243)
Fair value of share options - 256 - - - 256
Shares issued to settle obligations 25 - - - - 25
Shares issued for cash 6,106 - - - - 6,106
Cost of issuing shares - cash (267) - - - - (267)
Cost of issuing shares - warrants (283) 283 - - - -
Options/warrants exercised for cash 28 - - - - 28
Options exercised cashless 131 (131) - - - -
Transfer for options expired in 2021 - (51) - 51 - -
Balance at 31 December 2022 34,733 2,470 2,234 (13,636) (332) 25,469
The notes that follow are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
Notes 2022 2021
US$'000 US$'000
Cash flows from operating activities
Loss before tax (3,193) (2,777)
Adjustments
Foreign exchange (205) (448)
Taxation 5 (5) -
Share-based payment - fair value of options 12 256 33
Directors' remuneration settled in shares 12 25 -
Depreciation (2) 5
Changes in working capital
Increase in trade and other receivables (410) (351)
(Decrease)/increase in trade and other payables (803) 1,182
Net cash flows used in operating activities (4,337) (2,356)
Cash flows from investing activities
Exploration expenditure 7 (5,052) (2,671)
Purchase of property, plant and equipment - (30)
Net cash flow used in investing activities (5,052) (2,701)
Cash flows from financing activities
Proceeds from issuing shares 11 6,106 14,958
Cost of issuing shares 11 (267) (1,416)
Proceeds from exercise of share options and warrants 12 28 -
Net cash flow generated from financing activities 5,867 13,542
(Decrease)/increase in cash and cash equivalents (3,522) 8,485
Cash and cash equivalents at beginning of year 10,032 1,563
Foreign exchange on cash and cash equivalents 160 (16)
Cash and cash equivalents at end of year 6,670 10,032
Significant non-cash transactions in respect of share issues are disclosed
within note 11.
The notes that follow are an integral part of these consolidated financial
statements.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2022
1. General information
Emmerson PLC (the "Company") is a company incorporated and domiciled in the
Isle of Man, whose shares were admitted to the Standard Listing segment of the
Main market of the London Stock Exchange on 15 February 2017. On 27 April
2021, the Ordinary Shares of the Company were admitted to trading on AIM and
the listing of the Company's ordinary shares on the Official List and their
trading on the Main Market were cancelled.
The principal activity of the Group is the exploration, development and
exploitation of the Khemisset potash project in Morocco.
2. Basis of preparation
2.1. General
These financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the United Kingdom (UK)
in force at the reporting date, and their interpretations issued by the
International Accounting Standards Board ("IASB"). The financial statements
have been prepared under the historical cost convention except for the
revaluation of certain financial instruments that are measured at fair value.
2.2. Functional and presentational currency
The financial information of the Group is presented in US dollars. The
functional currency of the Company Emmerson PLC changed on 1 January 2022 from
GBP to US$ reflecting the stage in development of activities whereby the cost
base of the Group changed from GBP to US$. The effect of a change in
functional currency is accounted for prospectively. All items were translated
into the new functional currency using the exchange rate at the date of the
change.
The individual financial statements of each of the Company's wholly-owned
subsidiaries are prepared in the currency of the primary economic environment
in which they operate (functional currency).
2.3. Change in Presentation Currency
The Group presented its results in US dollars for the first time for the year
to 31 December 2021 having previously reported in GBP. This change should help
to provide a clearer understanding of the Group's financial position as the
future corporate development activity is likely to be US focused.
In order to satisfy the requirements of IAS 21 with respect to a change in
presentation currency, the statutory financial information as previously
reported in the Group's Annual Reports have been restated from UK Sterling
into US Dollars using the procedures outlined below:
· Assets and liabilities were translated to US Dollars at the
closing rates of exchange at each respective balance sheet date.
· Share capital, share premium and other reserves were translated
at the historic rates prevailing at the dates of transactions.
· Income and expenses were translated to US Dollars at an average
rate at each of the respective reporting years. This has been deemed to be a
reasonable approximation.
· Differences resulting from the retranslation were taken to
reserves.
· All exchange rates used were extracted from the Group's
underlying financial records.
2.4. Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company, Moroccan Salts Limited and Moroccan Salts Limited's subsidiaries (the
"MSL Group") following the business combination which took place on 4 June
2018.
Subsidiaries are fully consolidated from the date of acquisition, being the
date on which the Group obtains control. Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over
the investee.
Generally, there is a presumption that a majority of voting rights result in
control. To support this presumption and when the Group has less than a
majority of the voting or similar rights of an investee, the Group considers
all relevant facts and circumstances in assessing whether it has power over an
investee, including:
· The contractual arrangement with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until the date the
Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and profits and
losses resulting from intra-group transactions that are recognised in assets,
are eliminated in full.
All the Group's companies have 31 December as their year-end. Consolidated
financial statements are prepared using uniform accounting policies for like
transactions.
2.5. Going concern
The financial statements have been prepared on a going concern basis. The
Group has not yet earned revenues and is in the pre-construction phase of its
business. The operations of the Group are currently financed from funds raised
from shareholders and strategic investors. In common with many pre-production
entities, the Group will need to raise further funds in order to progress the
Group from the feasibility phase into construction and eventually into
production of revenues.
The Group had cash and cash equivalents of US$5.0 million at 31 March 2023 and
the Directors are of the view this is sufficient to fund the Group's
non-discretionary expenditure and maintain good title to the exploration
licences over the next 12 months from the date of approval of these financial
statements. The Company will continue to work on advancing the Khemisset
project and to commence construction as soon as practicable, however the
timing of these activities will be dependent on availability of funds.
The Directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable future.
Thus, they continue to adopt the going concern basis of accounting in
preparing the financial statements.
2.6. Changes in accounting policies
Standards, interpretations and amendments to published standards effective
from 1 January 2022
There were no new standards or interpretations effective and adopted for the
first time for the year beginning on or after 1 January 2022 that had a
significant effect on the Group's or Company's financial statements. These
include:
· Amendments to IAS 16: Property, Plant and Equipment
· Amendments to IFRS 3: Business Combinations - Reference to the
Conceptual Framework
· Amendments to IAS 37: Provisions, Contingent Liabilities and
Contingent Assets
· Annual Improvements to IFRS Standards 2018-2020 Cycle
Standards, interpretations and amendments to published standards not yet
effective
The Group has not early applied the following new and amendments to IFRSs that
have been issued but are not yet effective:
· IFRS 17 Insurance Contracts - effective 1 January 2023
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2) - effective 1 January 2023
· Definition of Accounting Estimate (Amendments to IAS 8) effective 1
January 2023
· Deferred Tax Related to Assets and Liabilities Arising from a Single
Transaction - Amendments to IAS 12 Income Taxes - effective 1 January 2023
· Initial Application of IFRS 17 and IFRS 9 - Comparative Information
(Amendments to IFRS 17) - effective 1 January 2023
· Classification of liabilities as current or non-current (Amendments
to IAS 1) - effective 1 January 2024
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) -
effective 1 January 2024
· Non-current Liabilities with Covenants (Amendments to IAS 1) -
effective 1 January 2024
The Directors anticipate that the application of all new and amendments to
IFRSs will have no material impact on the future results of the Group or
Company in the foreseeable future.
2.7. Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that
are subject to risks and returns that are different from those of segments
operating in other economic environments.
The Directors are of the opinion that the Group is engaged in a single segment
of business being the exploration and development of potash in one
geographical area, being Morocco.
2.8. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and subsequently
measured at amortised cost, fair value through other comprehensive income
("OCI"), or fair value through profit and loss.
The classification of financial assets at initial recognition that are debt
instruments depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them. The Group
initially measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at amortised cost
or fair value through OCI, it needs to give rise to cash flows that are
'solely payments of principal and interest ("SPPI")' on the principal amount
outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
The Group's business model for managing financial assets refers to how it
manages its financial assets in order to generate cash flows. The business
model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in
four categories:
· Financial assets at amortised cost (debt instruments)
· Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
· Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
· Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group measures financial
assets at amortised cost if both of the following conditions are met:
· The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual cash flows;
and
· The contractual terms of the financial asset give rise on specified
dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the
effective interest rate ("EIR") method and are subject to impairment. Interest
received is recognised as part of finance income in the statement of profit or
loss and other comprehensive income. Gains and losses are recognised in profit
or loss when the asset is derecognised, modified or impaired. The Group's
financial assets at amortised cost include trade receivables (not subject to
provisional pricing) and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part
of a group of similar financial assets) is primarily derecognised (i.e.,
removed from the Group's consolidated statement of financial position) when:
· The rights to receive cash flows from the asset have expired; or
· The Group has transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full
without material delay to a third party under a 'pass-through' arrangement;
and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred
control of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses ("ECLs") for all
debt instruments not held at fair value through the profit and loss. For trade
receivables (not subject to provisional pricing) and other receivables due in
less than 12 months, the Group applies the simplified approach in calculating
ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in
credit risk, but instead, recognises a loss allowance based on the financial
asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the
Group.
A financial asset is written off when there is no reasonable expectation of
recovering the contractual cash flows and usually occurs when past due for
more than one year and not subject to enforcement activity. At each reporting
date, the Group assesses whether financial assets carried at amortised cost
are credit-impaired. A financial asset is credit-impaired when one or more
events that have a detrimental impact on the estimated future cash flows of
the financial asset have occurred.
(b) Financial liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. All financial liabilities are recognised initially at
fair value and, in the case of loans and borrowings and payables, net of
directly attributable transaction costs. The Group's financial liabilities
include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as
described below:
· Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative
financial instruments entered into by the Group that are not designated as
hedging instruments in hedge relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on liabilities
held for trading are recognised in the statement of profit or loss and other
comprehensive income.
· Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings and trade and
other payables are subsequently measured at amortised cost using the EIR
method. Gains and losses are recognised in the statement of profit or loss and
other comprehensive income when the liabilities are derecognised, as well as
through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss
and other comprehensive income. This category generally applies to trade and
other payables.
Derecognition
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss and other comprehensive income.
(c) Financial liabilities
Liabilities within the scope of IFRS 9 are classified as financial liabilities
at fair value through profit and loss or other liabilities, as appropriate.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised
initially at fair value and subsequently at amortised cost.
2.9. Taxation
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantively enacted by the balance sheet date.
Deferred tax is recognised on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial
statements, determined using tax rates that are expected to apply when the
related deferred tax asset or liability is realised or settled. Deferred tax
assets are recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary differences can
be utilised.
2.10. Intangible assets - exploration and evaluation expenditure
Exploration expenditure comprises all costs which are directly attributable to
the exploration of a project area.
When it has been established that a mineral deposit has development potential,
all costs (direct and applicable overheads) incurred in connection with the
exploration and development of the mineral deposits are capitalised until
either production commences, or the project is not considered economically
viable.
In the event of production commencing, capitalised costs in respect of the
asset are transferred into Tangible Fixed Assets, and are depreciated over the
expected life of the mineral reserves on a unit of production basis. Other
pre-trading expenses are written off as incurred. For the purposes of
impairment testing, intangible assets are allocated to specific projects with
each licence reviewed annually. Where a project is abandoned or is considered
to be of no further interest, the related costs are written off.
Intangible assets are not subject to amortisation and are tested annually for
impairment. The recoverability of all exploration costs, licenses and mineral
resources is dependent on the ability of the Group to obtain necessary
financing to complete the development of reserves and future profitable
production, or proceeds from the disposition thereof.
2.11. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash
equivalents includes cash on hand and deposits held at call with financial
institutions.
2.12. Foreign currencies
Assets and liabilities in foreign currencies are translated into US$ at the
rates of exchange ruling at the Statement of Financial Position date.
Transactions in foreign currencies are translated into sterling at the rate of
exchange ruling at the date of the transaction. Exchange differences are
taken into account in arriving at the operating result.
On consolidation of a foreign operation, assets and liabilities are translated
at the closing rate at the date of the Statement of Financial Position, with
the exception of Intangible Assets, which have been translated at cost using
the average exchange rate. Income and expenses for each Statement of
Comprehensive Income presented are translated at average exchange rates. All
resulting exchange differences are recognised in other comprehensive income
and accumulated in equity.
2.13. Share-based payment arrangements
The Group operates equity-settled, share-based compensation plans, under which
the entity receives services from employees as consideration for equity
instruments (options) of the Group. The fair value of employee services
received in exchange for the grant of share options are recognised as an
expense. The total expense to be apportioned over the vesting period is
determined by reference to the fair value of the options granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions; and
· including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in assumptions
about the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting
period the Group revises its estimate of the number of options that are
expected to vest.
The Group recognises the impact of the revision of original estimates, if any,
in profit or loss, with a corresponding adjustment to equity.
When options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
The fair value of goods or services received in exchange for shares is
recognised as an expense and included within administrative expenses.
2.14. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
a) Recoverability of intangible assets
The Group tests annually for impairment or more frequently if there are
indications that the intangible assets might be impaired.
Determining whether the intangible assets are impaired requires an estimation
of the value in use of the cash generating units to which the intangible
assets belong. Where impairment indicators are present, the Group is
required to evaluate the future cash flows expected to arise from the
cash-generating unit and the suitable discount rate in order to calculate the
present value.
The carrying value of Group's exploration and evaluation intangible assets at
31 December 2022 was US$18.6 million (2021: US$13.6 million), which relates to
the Khemisset project.
The Directors therefore undertook an assessment of the following areas and
circumstances that could indicate the existence of impairment:
· The Group's right to explore in an area has expired, or will expire
in the near future without renewal;
· No further exploration or evaluation is planned or budgeted for;
· A decision has been taken by the Board to discontinue exploration and
evaluation in an area due to the absence of a commercial level of reserves; or
· Sufficient data exists to indicate that the book value will not be
fully recovered from future development and production.
The Board has reviewed the project for indicators of impairment, and is
satisfied that the prospects of deriving economic value are likely to be
considerably in excess of the carrying value of the asset in the accounts.
In arriving at this conclusion, the Directors considered the ongoing
commitment to the project, the economic metrics of the project as set out in
the 2020 Feasibility Study, and the increase in potash prices over the last 12
months.
Following their assessment, the Directors concluded that no impairment charge
was necessary for the year ended 31 December 2022.
b) Share-based payments
The Group has made awards of options on its unissued share capital to certain
Directors and employees as part of their remuneration package.
The valuation of these options involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates. These assumptions are described in more detail
in note 12.
There was a charge to the Statement of Comprehensive Income during the year in
relation to share based payments of US$256k (2021: US$33k).
c) Valuation of warrants
The Group issued 50 million warrants to investors in the year. The fair value
assigned to the warrants involved making a number of critical estimates
relating to price volatility, future dividend yields and interest rates. The
valuation of the warrants was US$283k. These assumptions are described in more
detail in note 12.
d) Going concern
In their assessment of going concern, the Directors have prepared cash flow
forecast showing the Group's non-discretionary expenditure obligations, as
well as discretionary activities. The discretionary activities relate largely
to the project work at Khemisset, which are either uncommitted in nature, or
are the subject of contracts which include clauses allowing the Company to
suspend activities without penalty.
The Group has sufficient cash reserves to cover non-discretionary expenditure
beyond the Going Concern horizon of at least 12 months from the date of this
report, and accordingly the Board believe the Going Concern basis to be
appropriate for the preparation of the 2022 Financial Statements.
3. Expenses by nature
2022 2021
US$'000 US$'000
Project costs - 7
Directors' fees (note 4) 601 635
Travel and accommodation 99 59
Auditor's remuneration 48 25
Employment costs 627 455
Professional and consultancy fees 715 414
Other costs 491 754
Administrative expenses 2,581 2,349
4. Directors' remuneration
Details of Directors' remuneration during the year are as follows:
2022 2021
US$'000 US$'000
Graham Clarke 348 401
James Kelly (appointed 22 March 2021) 117 65
Rupert Joy (appointed 12 July 2021) 55 19
Hayden Locke 35 33
Robert Wrixon 46 50
Edward McDermott (resigned 12 July 2021) - 51
Mark Connelly (resigned 12 July 2021) - 16
Total 601 635
Graham Clarke, Hayden Locke and Robert Wrixon also received fees for
consultancy services which are disclosed within note 14. In addition,
certain Directors received share options and shares as part of their
remuneration (see note 12).
5. Income tax
2022 2021
US$'000 US$'000
Current tax:
Tax (5) -
Total taxation charge (5) -
Reconciliation of income
tax
2022 2021
US$'000 US$'000
Loss before tax (3,193) (2,777)
Loss before tax multiplied by domestic tax rates applicable to losses in the (531) (464)
respective countries
Effects of:
IFRS consolidation adjustments (195) -
Disallowed expenditures 21 -
Tax losses used up (28) -
Foreign tax attributes - (33)
Minimum tax charges (5) -
Losses on which no deferred tax is recognised 733 497
Total taxation charge (5) -
The weighted average applicable tax rate was 16.6% (2021: 16.7%). Emmerson PLC
is registered for taxation in the United Kingdom, where the corporation tax
rate was 19%. Morocco has a 20% tax rate applicable to mining companies,
including Emmerson's Moroccan subsidiaries, while the British Virgin Islands
have a tax rate of 0%.
A deferred tax asset has not been recognised in respect of deductible
temporary differences relating to certain losses carried forward at the year
end, as there is insufficient evidence that taxable profits will be available
in the foreseeable future against which the deductible temporary difference
can be utilised.
The unrecognised deferred tax asset for the Group was approximately US$1,806k
(2021: US$1,456k). The unrecognised deferred tax asset relating to Moroccan
tax losses amounted to approximately US$109k (2021: US$144k).
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
2022 2021
Loss from continuing operations for the year attributable to the equity (3,198) (2,777)
holders of the Company (US$'000)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and 939,716,598 822,875,086
diluted earnings per share
Basic and diluted loss per share 0.34 cents 0.33 cents
The potential number of shares which could be issued following the exercise of
options and warrants currently outstanding amounts to 230,804,714 (see note
12). Dilutive earnings per share equals basic earnings per share as, due to
the losses incurred, there is no dilutive effect from the existing share
options and warrants.
7. Intangible assets
The intangible assets consist of capitalised exploration and evaluation
expenditure in respect of the Company's potash interests in Morocco (the
Khemisset project).
2022 2021
US$'000 US$'000
Cost:
At the beginning of the year 13,555 11,132
Additions 5,052 2,671
Effects of changes in foreign exchange rates - (248)
Total 18,607 13,555
Intangible assets are reviewed at each reporting date to determine whether
there is objective evidence of impairment. See note 2.14 detailing the
Company's judgement in this area.
8. Trade and other receivables
2022 2021
US$'000 US$'000
Other receivables 1,097 551
Prepayments 84 220
Total 1,181 771
Other receivables include recoverable VAT and other taxes.
9. Trade and other payables
2022 2021
US$'000 US$'000
Other payables 635 934
Accruals 397 901
Total 1,032 1,835
Trade and other payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business. Accounts payable are
classified as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised initially
at fair value, and subsequently measured at amortised cost using the effective
interest method. Other payables consist of supplier invoices for
administration expenses. Included within Accruals are engineering costs of
US$65k and bonus accruals of US$43k.
10. Financial instruments
Categories of financial instruments
2022 2021
US$'000 US$'000
Financial assets measured at amortised cost
Other receivables 1,097 551
Cash and cash equivalents 6,670 10,032
7,767 10,583
Financial liabilities measured at amortised cost
Other payables 635 934
Financial risk management objectives and policies
The Company is exposed through its operations to credit risk and liquidity
risk. In common with all other businesses, the Company is exposed to risks
that arise from its use of financial instruments. This note describes the
Company's objectives, policies and processes for managing those risks and the
methods used to measure them. Further quantitative information in respect of
these risks is presented throughout this financial information.
General objectives, policies and processes
The Directors have overall responsibility for the determination of the
Company's risk management objectives and policies. Further details regarding
these policies are set out below:
Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The capital structure of the Group consists of issued capital, reserves and
retained earnings. The Directors reviews the capital structure on a
semi-annual basis. As a part of this review, the Directors consider the cost
of capital, the risks associated with each class of capital and overall
capital structure risk management through the new share issues and share
buy-backs as well as the issue of new debt or the redemption of existing debt.
The management's strategy remained unchanged from 2021.
Market price risk
The development and success of any project of the Group will be primarily
dependent on the future price of potash. Potash prices are subject to
significant fluctuation and are affected by a number of factors which are
beyond the control of the Company. Future production from the Khemisset
Project is dependent on potash prices that are adequate to make the project
economic. Potash prices were volatile during 2022, although by 2023 had
returned closer to longer term expected levels at US$400-500 per tonne MOP.
Credit risk
The Company's credit risk arises from cash and cash equivalents with banks and
financial institutions. For banks and financial institutions, only
independently rated parties with minimum rating "A" are accepted.
Liquidity risk
Liquidity risk arises from the Directors' management of working capital. It is
the risk that the Company will encounter difficulty in meeting its financial
obligations as they fall due.
The Directors' policy is to ensure that the Company will always have
sufficient cash to allow it to meet its liabilities when they become due. To
achieve this aim, the Directors seek to maintain a cash balance sufficient to
meet expected requirements.
The Directors have prepared cash flow projections on a monthly basis through
to 31 December 2024. At the end of the period under review, these projections
indicated that the Group is expected to have sufficient liquid resources to
continue in operational existence and meet its obligations under all
reasonably expected circumstances.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures. Foreign exchange risk arises from
future commercial transactions, recognised monetary assets and liabilities and
net investments in foreign operations. The consolidated accounts use US$ as a
presentational currency, and from 1 January 2022, Emmerson PLC (the parent
company) determined that US$ was the appropriate functional. The Group's
Moroccan entities use MAD as their functional currency.
Net current assets denominated in MAD at the year-end amounted to US$1.1
million and net liability of US$0.44 million respectively.
At 31 December 2022, had the exchange rate between the US$ and MAD increased
or decreased by 5% with all other variables held constant, the increase or
decrease respectively in net assets would amount to approximately US$0.03k.
The Group does not hedge against foreign exchange movements.
11. Share capital
The Ordinary Shares issued by the Company have no par value and are fully
paid. Each Ordinary Share carries one vote on a poll vote. The Company does
not have a limited amount of authorised capital.
Number of shares US$'000
As at 31 December 2021 915,062,661 28,774
Adjustment for change in functional currency 1 Jan 2022 - 219
Shares issued for cash 90,902,780 6,106
Less cash cost of share issue - (267)
Less warrants issued as cost of equity - (283)
Shares issued part of Directors' remuneration (note 12) 284,777 25
Share options exercised in year for cash 400,000 16
Share options exercised in year cashless 7,509,673 131
Warrants exercised in year for cash 333,333 12
As at 31 December 2022 1,014,493,224 34,733
12. Share-based payments
The following is a summary of the share options and warrants outstanding as at
31 December 2022:
Date of grant Expiry date Vesting date Exercise Price No of Options Share price at grant Risk Free rate Volatility Option Value
04-Jun-18 04-Jun-23 04-Jun-18 £0.0300 4,250,000 £0.0225 1.30% 34% £0.0098
04-Jun-18 04-Jun-23 04-Dec-18 £0.0300 4,250,000 £0.0225 1.30% 34% £0.0098
04-Jun-18 04-Jun-23 04-Jun-19 £0.0300 12,250,000 £0.0225 1.30% 34% £0.0098
04-Jun-18 04-Jun-23 04-Dec-19 £0.0300 4,250,000 £0.0225 1.30% 34% £0.0098
26-Mar-19 24-Mar-24 26-Mar-20 £0.0350 6,900,000 £0.0400 2.10% 68% £0.0242
07-Aug-19 05-Aug-24 07-Aug-19 £0.0500 1,500,000 £0.0375 2.10% 58% £0.0192
01-Aug-20 31-Jul-25 01-Aug-20 £0.0010 18,750,000 £0.0435 1.10% 71% £0.0070
01-Aug-20 31-Jul-25 01-Aug-21 £0.0010 20,583,333 £0.0435 1.10% 71% £0.0219
01-Aug-20 31-Jul-25 01-Aug-22 £0.0010 7,333,333 £0.0435 1.10% 71% £0.0219
01-Aug-20 31-Jul-25 01-Aug-23 £0.0010 3,333,334 £0.0435 1.10% 71% £0.0219
21-Jul-22 20-Jul-27 02-Jul-24 £0.0700 1,500,000 £0.0700 2.05% 55% £0.0342
21-Jul-22 20-Jul-32 02-Jul-24 £0.0700 4,513,000 £0.0700 2.05% 55% £0.0457
21-Jul-22 20-Jul-32 15-Mar-23 £0.0700 1,000,000 £0.0700 2.05% 55% £0.0457
21-Jul-22 20-Jul-32 15-Mar-23 £0.1000 1,500,000 £0.0700 2.05% 55% £0.0410
21-Jul-22 20-Jul-32 15-Mar-23 £0.1500 1,333,333 £0.0700 2.05% 55% £0.0352
21-Jul-22 20-Jul-32 15-Mar-24 £0.0700 1,000,000 £0.0700 2.05% 55% £0.0457
21-Jul-22 20-Jul-32 15-Mar-24 £0.1000 1,500,000 £0.0700 2.05% 55% £0.0410
21-Jul-22 20-Jul-32 15-Mar-24 £0.1500 1,333,333 £0.0700 2.05% 55% £0.0352
21-Jul-22 20-Jul-32 15-Mar-25 £0.1500 1,333,334 £0.0700 2.05% 55% £0.0352
98,413,000
Date of grant Expiry date Vesting date Exercise Price No of Warrants Share price at grant Risk Free rate Volatility Warrant Value
9-Nov-21 9-Nov-22 9-Nov-21 £0.0830 82,391,714 £0.0565 0.8% 57% £0.0058
26-Sep-22 26-Sep-23 26-Sep-23 £0.0820 50,000,000 £0.0550 1.3% 34% £0.0053
132,391,714
Total outstanding at 31 December 2022 230,804,714
The weighted average remaining contractual life of the options and warrants at
year-end was 1.73 years.
Share options Warrants Total
At 1 January 2021 101,900,000 10,666,666 112,566,666
Issued in year - 82,391,714 82,391,714
Exercised in year - (10,000,000) (10,000,000)
Expired/cancelled in year (5,000,000) (333,333) (5,333,333)
At 31 December 2021 96,900,000 82,725,047 179,625,047
Issued in year 15,013,000 50,000,000 65,013,000
Exercised in year (13,500,000) (333,333) (13,833,333)
Expired/cancelled in year - - -
At 31 December 2022 98,413,000 132,391,714 230,804,714
The options and warrants issued were valued using the Black-Scholes valuation
method and the assumptions used are detailed above. The expected future
volatility has been determined by reference to the historical volatility.
The Group operates equity-settled, share-based compensation plans, under which
the entity receives services from Directors and employees as consideration for
equity instruments (options) of the Group.
During 2022, James Kelly and Rupert Joy received 218,406 and 66,371 shares
respectively at a VWAP of 7.1 pence (total value US$25k) as part of their
contractual remuneration.
The total share-based payment recognised in the Statement of Changes in Equity
during the year was a US$256k (2021: US$33k), in respect of the fair value of
employee share options. The 2021 figure included credits of US$14k in respect
of cancelled and unvested share options in the year.
There were 53,763,000 (2021: 65,763,000) options at the year-end held by
current Directors and employees at year end. Vesting of the options is
subject to the option holder providing continuous service during the vesting
period and there are no other performance conditions attached to the options.
Share options Number issued Expiry
Graham Clarke (Director) 19,321,000 2 to 9 years
Hayden Locke (Director) 10,000,000 2 years
Robert Wrixon (Director) 11,000,000 1 to 2 years
Jim Wynn (PDMR) 9,000,000 9 years
Other employees 4,442,000 2 to 9 years
Total 53,763,000
13. Future rental payments
The commitments arising from operating leases are largely rental payments for
buildings. The future minimum lease payments (payables) under non-cancellable
operating leases are:
2022 2021
US$'000 US$'000
Within one year 23 20
More than one year - -
As at end of year 23 20
14. Related party transactions
Directors' consultancy fees
Hayden Locke is a Director of the Company and is a Director of Benson Capital
Limited, which provides consulting services to the Company. During the year,
Benson Capital Limited received total fees of US$95k (2021: US$244k). The
amount outstanding as at the year-end is US$9K (2021: US$ nil).
Robert Wrixon is a Director of the Company and also provides consulting
services to the Company. During the year, Robert Wrixon received fees of
US$71K (2021: US$116k). The amount outstanding as at the year-end is US$ nil
(2021: US$ nil).
Graham Clarke is a Director of the Company and is a Director of GCUK
Consulting Limited, which provided consulting services to the Company to the
value of US$99k during 2021.
Details of Directors' remuneration during the year are given in note 4.
There are no other related party transactions.
15. Ultimate controlling party
The Directors consider that there is no controlling or ultimate controlling
party of the Company.
16. Events after the reporting date
There were no material events that took place after the reporting date.
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