REG - Firering Strategic - 2022 Final Results and AGM
30/06/2023 07:00
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RNS Number : 4595E Firering Strategic Minerals PLC 30 June 2023
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Firering Strategic Minerals plc / EPIC: FRG / Market: AIM / Sector: Mining
30 June 2023
Firering Strategic Minerals plc
("Firering" or "the Company")
2022 Final Results and AGM
Firering Strategic Minerals plc, an exploration company focusing on critical
minerals, is pleased to announce its Final Results for the year ended 31
December 2022. The Company also gives notice that its Annual General
Meeting ('AGM') will be held at Hill Dickinson LLP, The Broadgate Tower, 20
Primrose Street, London EC2A 2EW on 27 July 2023 at 10.30am BST. The Notice of
AGM will be sent to shareholders and the Notice of AGM and Accounts will be
made available to download later today from the Company's website
www.fireringplc.com (http://www.fireringplc.com) .
Operational Highlights
· Completion of Phase I Diamond drilling ('DD') campaign of 3,027m
drilled over 19 holes:
o Pegmatite intersected in all 19 drill holes.
o Visual identification of lithium mineralisation in 18 of the 19 drill
holes
· Assay Results from DD campaign included stand out drilling intercepts
of:
o 64m at 1.24% Li(2)O from 76m in hole TVDD0004, including:
§ 27m at 2.13% Li(2)O from 76m
§ 4.06% Li(2)O, the highest individual sample assay grade.
o 15m at 0.59% Li(2)O from 37m in hole TVDD0003, including:
§ 4m at 1.95% Li(2)O from 45m.
o 25m at 1.39% Li2O from 77m in hole TVDD0018, including:
§ 18m at 1.85% Li2O from 80m.
o 7m at 1.33% Li2O from 60m in hole TVDD0019.
o 21m at 0.73% Li2O from 72m in hole TVDD0019, including:
§ 7m at 1.65% Li2O from 73m.
Corporate Highlights
· Secured up to US$18.6 million investment from Ricca Resources Ltd
("Ricca") to fund the advancement of the Atex Project and adjacent Alliance
licence in Côte d'Ivoire.
o Upfront US$1m cash consideration received from Ricca
o US$0.6m of Ricca shares to be provided to Firering on Ricca IPO on ASX
planned for H2 2023
o Ricca to complete a four stage earn-in of up to 50% of the Project through
the funding of up to US$17m with the aim of achieving a Definitive Feasibility
Study ("DFS") on Atex.
Post period Highlights
· Agreement between Firering and Atex dated 31 March 2023: Firering
acquired 13% of the issued share capital of Atex for €258,484 increasing
its stake from 77% to 90%
· Phase II exploration work together with Ricca commenced with a
large-scale soil sampling programme completed in June 2023:
o A total of 14,116 soil samples completed and six high-priority soil
anomalies identified
o Several lithium in soil anomalies occurred adjacent to and along similar
orientations to the Spodumene Hill lithium occurrence where previous drilling
returned significant intersections, including 64m at 1.24% Li(2)O and 25m at
1.39% Li(2)O
· Based on the successful outcomes of the large-scale soil sampling
campaign we will shortly commence a planned c.11,000m Auger drilling programme
which we expect will be followed by Reverse Circulation ("RC") drilling
campaign in H2 2023
Commenting on the results Yuval Cohen, CEO of Firering said:
"There have been several operational highlights during the year, including the
completion of the Phase I diamond drilling campaign where we successfully
drilled 19 drill holes with pegmatites intersected in all 19 holes drilled and
visible lithium mineralisation present in 18 out of the 19 holes. This was
followed by some stand out drilling intercepts 64m at 1.24% Li2O which greatly
increased our understanding of the scale and potential of the Atex project.
"In November 2022, we were delighted to announce our partnership with Ricca
Resources and their US$18.6 million investment, which will allow us to
accelerate the project to DFS stage at a time when continued demand for
lithium, driven by the EV revolution and transition to net zero, remains
buoyant.
"Post period, the Company announced the start of Phase II of our large-scale
exploration programme which commenced with a comprehensive soil sampling
programme at Atex, in partnership with Ricca and we look forward to updating
the market on our planned 11,000m auger drilling to commence imminently."
** ENDS **
For further information, visit www.fireringplc.com
(http://www.fireringplc.com) or contact the following:
Firering Strategic Minerals Tel: +44 20 7236 1177
Yuval Cohen
SPARK Advisory Partners Limited Tel: +44 20 3368 3550
Nominated Adviser
Neil Baldwin / James Keeshan / Adam Dawes
Optiva Securities Limited Tel: +44 20 3137 1903
Broker
Christian Dennis / Daniel Ingram
St Brides Partners Limited T: +44 20 7236 1177
Financial PR E: firering (mailto:firering@stbridespartners.co.uk) @stbridespartners.co.uk
(mailto:firering@stbridespartners.co.uk)
Ana Ribeiro / Susie Geliher /Isabelle Morris
Chairman's Statement
I am pleased to present the Annual Report of Firering Strategic Minerals plc
for the year ended 31 December 2022.
2022 has been an excellent year for Firering as it continued to advance its
exploration programme at its flagship project - the Atex project in Côte
d'Ivoire - with a view of establishing a maiden Lithium resource and
progressing our plan to commence pilot scale production of ethical tantalum
and niobium.
To this end, and in an announcement that validates our own belief in the
potential of the Atex Lithium-Tantalum project to become a leading supplier of
lithium, we were thrilled to secure an investment of up to US$18.6 million
from Ricca , an Australian diversified minerals company which was formerly
part of AIM and ASX-quoted Atlantic Lithium Limited to advance the Atex
project and adjacent Alliance exploration license in Côte d'Ivoire.
This agreement will enable the exploration of the project and secure funding
for its development pathway, including a maiden Mineral Resource Estimate
("MRE") and feasibility studies, in partnership with Ricca. The aim is to
achieve a Definitive Feasibility Study ("DFS") on the Project, with Ricca
completing a four-stage earn-in of up to 50% of the Project through the
funding of up to US$17m, with the potential for an additional US$2m to be
funded if the JORC inferred Mineral Resource Estimate surpasses 20Mt @ 1.0%
Li2O. Any additional expenditure beyond the earn-in funding amounts to be
spent on the Project will be funded equally between Ricca and Firering.
Firering's partnership with Ricca will help to realize the potential of the
Atex Lithium-Tantalum Project as Côte d'Ivoire's first lithium mine. With our
combined expertise and Ricca's investment, we can accelerate the exploration
pathway, reduce funding risk through studies, and bring the project towards
production while lowering capital costs. Ricca's management team, with their
extensive experience in West Africa and lithium, will provide valuable
support. This agreement is a great outcome for Firering and Ricca shareholders
and stakeholders in Côte d'Ivoire, and we look forward to working together to
fast-track the Project amid surging demand for lithium. In November 2022 we
announced that we had received the upfront consideration payment of US$1
million from Ricca Resources Limited.
It is worth noting that the agreement with Ricca would not have taken place
had it not been for the excellent work of our Board, management team and
technical team on the ground who have worked tirelessly to increase the
understanding of the mineralisation of the project whilst entering into key
strategic agreements.
Looking back to the first half of 2022, and in line with our strategy to focus
on critical metals, on 15 March 2022 we announced the acquisition of the Toura
nickel-cobalt licence application situated in western Côte d'Ivoire.
Nonetheless, our primary exploration focus for the rest of the year remained
on progressing the Atex project. The year commenced positively, with the
receipt of all assay results from our auger drilling campaign in the Atex
licence region by early April 2022. These outcomes confirmed the presence of
the identified lithium pegmatites as per the regional mapping exercise, which
was a critical milestone in our decision to accelerate our exploration
activities. Subsequently, we engaged FOREMI as our diamond drilling contractor
to carry out our diamond drilling programme. The first half of the year was a
pivotal period for Firering, as it endeavoured to deliver our strategic and
operational objectives while maximizing the value of our flagship Atex dual
Lithium-Tantalum Project.
This momentum continued through into the second half of the reporting period,
in July 2022, we commenced Phase I Diamond Drilling ("DD") campaign,
successfully completing 19 DD holes targeting potential Li-bearing pegmatites
for a total of 3,039m of drilling at the Atex licence area. Pegmatites were
intersected in all 19 holes drilled to that date, with visible lithium
mineralisation present in 18 out of the 19 holes. Additionally, a potential
new pegmatite field was identified in the NNW of the Atex licence area.
Firering demonstrated its commitment to the local community by funding the
drilling of an additional water borehole at Touvré, a local village with
limited access to clean water. Furthermore, the Company increased its stake in
the Atex Lithium-Tantalum Project from 51% to 77% in line with its strategy to
develop Atex to supply the increasing demand for ethically sourced critical
minerals required for Net Zero transition.
Throughout 2022, we achieved several significant milestones with respect to
our operational advancements and drilling initiatives. Notably, the conclusive
assay results obtained from the maiden scout diamond drill programme at Atex
confirmed the existence of lithium within our pegmatite system and provided
valuable insights into the broader Atex licence region.
As mentioned above, we announced the final set of assay results from our
maiden scout diamond drill programme at the Atex Lithium-Tantalum Project in
Côte d'Ivoire which show significant intercepts of lithium. Among the
significant intercepts of Phase I scout drilling is one exceptional intercept
of 64m at 1.24% Li2O in hole TVDD0004, which was among the world's top five
drill hits in October. The final assay results have revealed additional
significant intercepts, such as 25m grading 1.39% Li2O. These results
confirmed the existence of lithium-bearing pegmatites beneath the visible
surface, and laboratory assays confirmed visible spodumene interceptions in
several drill holes, demonstrating the potential for Atex to become a
significant lithium resource in West Africa.
Post period, the Company announced the start of Phase II of our large-scale
exploration programme which commenced with a comprehensive soil sampling
programme at Atex, in partnership with Ricca. A total of 14,116 soil samples
completed and six high-priority soil anomalies identified. Several lithium
in soil anomalies occur adjacent to and along similar orientations to the
Spodumene Hill lithium occurrence where previous drilling returned significant
intersections, including 64m at 1.24% Li(2)O and 25m at 1.39% Li(2)O. The very
promising outcomes from the soil programme have greatly assisted in
determining new targets for a c.11,000m Auger drilling programme which will
commence imminently and we expect this will be followed by Reverse Circulation
("RC") drilling campaign in H2 2023.
Later in Q1 2023, we announced that the Company increased its stake in the
Atex Lithium Tantalum Project in Côte d'Ivoire to 90%. This acquisition comes
as a result of an existing option shares agreement between the Company and
Atex, in which Firering acquired 13% of the issued share capital of Atex,
increasing our stake from 77% to 90%. The consideration for the acquisition
was split between Firering and Ricca. This transaction is aligned with our
strategy to focus on critical minerals and to develop Atex to meet the rising
demand for ethically sourced minerals needed for the Net Zero transition.
I am thrilled to witness the positive progress made by the Company, the
success of the past year is undoubtedly the result of a highly experienced and
committed team that deserves commendation. It is their tireless efforts that
have led to such remarkable achievements, and I am confident that this
momentum will continue through 2023 and beyond as we advance our flagship Atex
project.
With several ongoing field programmes, I am optimistic that the team will make
even more strides in 2023. The Company's commitment to excellence and its
relentless pursuit of critical minerals are a testament to its unwavering
mission to provide ethically sourced minerals to meet the demand of lithium as
the world transitions to Net Zero by 2050.
Youval Rasin
Non-Executive Chairman
Extracts of the 2022 Consolidated Financial Statements are set out below.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2022 2021
Note Euros in thousands
CURRENT ASSETS
Cash and cash equivalents 1,184 3,384
Other receivables - 32 30
Total current assets 1,216 3,414
NON-CURRENT ASSETS
Other receivables 19 637 -
Investment in joint venture 19 2,073 -
Intangible assets 7 1,276 2,073
Property, plant and equipment 8 166 305
Total non-current assets 4,152 2,378
Total assets 5,368 5,792
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
31 December
2022 2021
Note Euros in thousands
CURRENT LIABILITIES
Trade payables 61 150
Other payables 20 451 102
Capital note 17 214 214
Total current liabilities 726 466
NON-CURRENT LIABILITIES
Accrued severance pay, net 8 8
Capital notes 10 565 514
Loan from non-controlling interest in subsidiary 11 103 92
Liability to non-controlling interest in subsidiary 6 - 130
Total non-current liabilities 676 744
Total liabilities 1,402 1,210
12
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital 87 87
Share premium 6,967 6,878
Warrants 20 20
Accumulated deficit (3,057) (2,973)
Capital reserve (51) 327
3,966 4,339
Non-controlling interests - 243
Total equity 3,966 4,582
Total liabilities and equity 5,368 5,792
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
Note 2022 2021
Euros in thousands (except per share amounts)
Gain on earn-in arrangement 19 1,614 -
General and administrative expenses 13 (1,504) (929)
Operating profit (loss) 110 (929)
Financial expenses 14 (290) (1,373)
Loss before taxes on income (180) (2,302)
Taxes on income 15 - -
Net loss (180) (2,302)
Other comprehensive loss - -
Total comprehensive loss (180) (2,302)
Net loss attributable to:
Equity holders of the Company (84) (2,276)
Non-controlling interests (96) (26)
(180) (2,302)
Total comprehensive loss attributable to:
Equity holders of the Company (84) (2,276)
Non-controlling interests (96) (26)
(180) (2,302)
Loss per share (euro) - basic and diluted 16 (0.00) (0.06)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company Non
Share Share Premium Warrants Shares to be issued Reserves (*) Accumulated deficit Total -controlling interests Total Equity
capital
Euros in thousands
As of 1 January 2021 1 - - 50 (697) (646) 90 (556)
Loss for the period - - - - - (2,276) (2,276) (26) (2,302)
Issuance of shares (Note 12) 71 3,962 20 (50) - - 4,003 - 4,003
Conversion to equity of convertible loan notes (Note 10) 15 2,216 - - - - 2,231 - 2,231
Share-based compensation (Note 12) - 700 - - - 700 - 700
Contribution to equity (Note 11) - - - - 327 327 31 358
Non-controlling interests arising from initially consolidated subsidiary (Note - - - - - - - 148 148
6)
As of 31 December 2021 87 6,878 20 - 327 (2,973) 4,339 243 4,582
Profit (Loss) for the period )84) (84) (96) (180)
Acquisition of non-controlling interests (Note 12) - 89 - - (378) - (289) (31) (320)
Change in Non-controlling interests arising from deconsolidation (Note 6) - - - - - - - (116) (116)
As of 31 December 2022 87 6,967 20 - (51) (3,057) 3,966 - 3,966
(*) See Note 12d for details of reserves.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
2022 2021
Euros in thousands
Cash flows from operating activities:
Net loss (180) (2,302)
Adjustments to the profit or loss items:
Gain on earn-in arrangement (977) -
Depreciation 47 151
Share-based compensation - 700
Accrued interest on convertible loan notes - 111
Change in fair value of conversion option of convertible loan notes - 669
Accrued interest on capital note and on loan from non-controlling interest 75 17
Increase in other receivables (147) (29)
Increase in non- current other receivables (637) -
Increase (decrease) in trade payables (89) 145
Increase (decrease) in other payables 369 (156)
Increase in severance pay - 8
(1,359) 1,616
Net cash used in operating activities (1,539) (686)
Cash flows from investing activities:
Net cash outflow from acquisition of subsidiaries - (289)
Proceeds from sale of control rights in subsidiaries 977 -
Decrease in cash upon deconsolidation of subsidiaries, (33) -
net
Additions to property, plant and equipment (20) (142)
Additions to intangible assets (1,265) (863)
Net cash used in investing activities (341) (1,294)
Cash flows from financing activities:
Cash paid for acquisition of non-controlling interest (320) -
Issuance of shares - 4,004
Proceed of loans from shareholders - 254
Proceeds from the issue of convertible loans - 726
Net cash provided by (used in) financing activities (320) 4,984
Net change in cash and cash equivalents (2,200) 3,004
Cash and cash equivalents at beginning of year 3,384 380
Cash and cash equivalents at end of year 1,184 3,384
Supplemental disclosure of non-cash activities:
Non-current receivable in respect of earn-in arrangement 637 -
Non-current receivable in respect of earn-in arrangement 637 2,231
Issuance of shares in consideration for conversion of convertible loan notes
Discount on loans from shareholders and non-controlling interests accounted - 358
for as contributions to equity
Issue of shares to non-controlling interests as part of share swap 89
(see Note 6)
NOTE 1:- GENERAL INFORMATION
Firering Strategic Minerals PLC ("The Company") is a holding company for a
group of exploration and development companies set up to focus on developing
assets towards the ethical production of critical metals. The Company was
incorporated on 8 May 2019 in Cyprus. The address of its registered office is
Ioanni Stylianou 6, 2(nd) Floor, Office 202, 2003, Nicosia, Cyprus.
The Company owns 75% of the issued share capital of Bri Coltan SARL ("Bri
Coltan") a company incorporated in Cote d'Ivoire. The principal activity of
the subsidiary is the exploration and development of mineral projects (in
particular, columbite- tantalite).
On 1 March 2021, the Company purchased 51% of the issued share capital of Atex
Mining Resources SARL ("Atex") a company incorporated in Cote d'Ivoire. The
principal activity of Atex is the exploration and development of mineral
projects (in particular, lithium and columbite-tantalite). Details of the
acquisition are set out in Note 6.
On 22 November 2021, the Company purchased 80% of the issued share capital of
Alliance Minerals Corporation SARL ("Alliance"), a company incorporated in
Cote d'Ivoire. Alliance holds an exploration license request at an area
bordering Atex. Details of the acquisition are set out in Note 6.
On 12 November 2021, the Company completed its Initial Public Offering ("IPO")
and admission to trading on the AIM, a market operated by the London Stock
Exchange ("the AIM"), by issuing 30,769,230 Ordinary shares at a price of £
0.13 per share for a total cash consideration of € 4.68 million (£ 4
million). The net proceeds after expenses were €4.25 million (£ 3.63
million).
On 2 November 2022 the Company signed an earn-in agreement with Ricca
Resources Pty Limited ("Ricca"), an Australian diversified minerals company to
advance the Atex Lithium-Tantalum Project ("Atex") and the adjacent Alliance
exploration licence (once granted).
According to the agreement, Ricca will have the exclusive right to undertake
and fund at Ricca's sole cost the exploration of the Atex Project and adjacent
Alliance licence.
In order to undertake exploration of the Atex and Alliance Tenements, the
Company shall transfer its entire shareholdings in the Atex agreement and the
Alliance agreement to a new entity (joint venture) in which Ricca and the
Company will have joint control.
Accordingly, the Company ceased to consolidate the financial statements of
Atex and Alliance and the investment in the joint venture is accounted for
using equity method.
See Notes 6 and 19 for further details.
Going concern
The Group's operations are at an early stage of development and the continuing
success of the Group will depend on the Group's ability to manage its mineral
projects. Presently, the Group has no projects producing positive cash flow
and the Group is likely to remain cash flow negative in the near future. The
Group's ultimate success will depend on its ability to generate positive cash
flow from active mining operations in the future and its ability to secure
external funding for its development requirements. However, there is no
assurance that the Group will achieve profitability or positive cash flow from
its operating activities,
The Board of Directors and Group management have assessed the ability of the
Group to continue as a going concern. In respect of its mineral projects,
funding has been obtained as follows:
Atex and Alliance
As described in Note 19, in 2022 the Company signed an earn-in agreement with
an Australian diversified minerals company which has agreed to fund at its
sole cost these two exploration projects for a period that may extend to 4-5
years from the reporting date.
Bri Colton
As described in Note 7, in 2022 the Company has been provided with a long-term
credit facility of up to € 7.16 million which is intended be used to develop
this project, with the objective of obtaining further funding.
In respect of its ongoing general activities, based on a review of the Group's
budget and forecast cash flows, there is a reasonable expectation that the
Group will have adequate resources to continue its daily operations and meet
its obligations as they become due for at least a period of twelve months from
the date of approval of the financial statements. Thus, the going concern
basis of accounting has continued to be applied in preparing these financial
statements.
Definitions:
The Company - Firering Strategic Minerals PLC
Subsidiaries - Companies that are controlled by the Company - Bri Coltan SARL; Atex Mining -
Resources SARL & Alliance Minerals Corporation SARL
The Group - The Company and its subsidiaries
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the
financial statements for all periods presented, unless otherwise stated.
a. Basis of preparation of the financial statements
These financial statements of the Company have been prepared in accordance
with International Financial Reporting Standards as adopted by the European
Union ("IFRS").
The financial statements have been prepared on a cost basis.
The Group has elected to present the profit or loss items using the function
of expense method.
b. Consolidated financial statements:
Subsidiaries are all entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and can affect those returns
through its power over the entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The financial statements of the Company and of the subsidiaries are prepared
as of the same dates and periods. The consolidated financial statements are
prepared using uniform accounting policies by all companies in the Group.
Significant intragroup balances and transactions and gains or losses resulting
from intragroup transactions are eliminated in full in the consolidated
financial statements.
Non-controlling interests in subsidiaries represent the equity in subsidiaries
not attributable, directly or indirectly, to a parent. Non-controlling
interests are presented in equity separately from the equity attributable to
the equity holders of the Company. Profit or loss and components of other
comprehensive income are attributed to the Company and to non-controlling
interests. Losses are attributed to non-controlling interests even if they
result in a negative balance of non-controlling interests in the consolidated
statement of financial position.
A change in the ownership interest of a subsidiary, without a change of
control, is accounted for as a change in equity by adjusting the carrying
amount of the non-controlling interests with a corresponding adjustment of the
equity attributable to equity holders of the Company less / plus the
consideration paid or received.
Upon the disposal of a subsidiary resulting in loss of control, the Company
derecognizes
the subsidiary's assets (including goodwill) and liabilities, derecognizes the
carrying amount of non-controlling interests, recognizes the fair value of the
consideration received, and recognizes any resulting difference (surplus or
deficit) as gain or loss.
c. Business combinations:
The Group applies the acquisition method to account for business combinations.
The consideration transferred for the acquisition of a subsidiary is the fair
values of the assets transferred, the liabilities incurred to the former
owners of the acquiree, and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition
date. The Group recognizes any non-controlling interest in the acquire on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognized amounts of
acquiree's identifiable net assets.
Direct acquisition costs are recorded in profit or loss as incurred.
d. Investment in joint arrangements:
Joint arrangements are arrangements in which the Company has joint control.
Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities
require the unanimous consent of the parties sharing control. In joint
ventures the parties that have joint control of the arrangement have rights to
the net assets of the arrangement. A joint venture is accounted for at equity.
e. Investments accounted for using the equity method:
The Group's investments in associates and joint ventures are accounted for
using the equity method.
Under the equity method, the investment in the associate or in the joint
venture is presented at cost with the addition of post-acquisition changes in
the Group's share of net assets, including other comprehensive income of the
associate or the joint venture. Gains and losses resulting from transactions
between the Group and the associate or the joint venture are eliminated to the
extent of the interest in the associate or in the joint venture. The cost of
the investment includes transaction costs.
Gains and losses from upstream or downstream transactions with an associate or
joint venture are recognized in the Group's financial statements up to the
unrelated investors' share of the associate or joint venture. The Group's
share of the profits or losses of the associate or joint venture from these
transactions is eliminated.
Goodwill relating to the acquisition of an associate or a joint venture is
presented as part of the investment in the associate or the joint venture,
measured at cost and not systematically amortized. Goodwill is evaluated for
impairment as part of the investment in the associate or in the joint venture
as a whole.
The financial statements of the Company and of the associate or joint venture
are prepared as of the same dates and periods. The accounting policies applied
in the financial statements of the associate or the joint venture are uniform
and consistent with the policies applied in the financial statements of the
Group.
Losses of an associate in amounts which exceed its equity are
recognized by the Company to the extent of its investment in the associate
plus any losses that the Company may incur as a result of a guarantee or other
financial support provided in respect of the associate. For this purpose, the
investment includes long-term receivables (such as loans granted) for which
settlement is neither planned nor likely to occur in the foreseeable future.
The equity method is applied until the loss of significant influence in the
associate or loss of joint control in the joint venture or classification as
investment held for sale.
f. Functional currency, presentation currency and foreign
currency:
1. Functional and presentation currency
The local currency used in Cote d'Ivoire is the West African CFA Franc
("FCFA"), which has a fixed exchange rate with the Euro (Euro 1 = FCFA
655.957). A substantial portion of the Group's expenses and expenditures for
acquisitions is incurred in or linked to the FCFA or the Euro. The Group
obtains certain debt financing in FCFA, or Euro and the funds of the Group are
held in FCFA. Therefore, the Company's management has determined that the Euro
is the currency of the primary economic environment of the Company and its
subsidiaries, and thus its functional currency. The presentation currency is
Euro.
2. Transactions, assets and liabilities in foreign currency
Transactions denominated in foreign currency are recorded upon initial
recognition at the exchange rate at the date of the transaction. After initial
recognition, monetary assets and liabilities denominated in foreign currency
are translated at each reporting date into the functional currency at the
exchange rate at that date. Exchange rate
differences, other than those capitalized to qualifying assets or accounted
for as hedging transactions in equity, are recognized in profit or loss.
Non-monetary assets and liabilities denominated in foreign currency and
measured at cost are translated at the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign
currency and measured at fair value are translated into the functional
currency using the exchange rate prevailing at the date when the fair value
was determined.
g. Cash equivalents:
Cash equivalents are considered as highly liquid investments, including
unrestricted short-term bank deposits with an original maturity of three
months or less from the date of investment or with a maturity of more than
three months, but which are redeemable on demand without penalty and which
form part of the Group's cash management.
h. Property, plant and equipment
Property, plant and equipment are measured at cost, including directly
attributable costs, less accumulated depreciation, accumulated impairment
losses and any related investment grants and excluding day-to-day servicing
expenses. Cost includes spare parts and auxiliary equipment that are used in
connection with plant and equipment.
The cost of an item of property, plant and equipment comprises the initial
estimate of the costs of dismantling and removing the item and restoring the
site on which the item is located.
Depreciation is calculated on a straight-line basis over the useful life of
the assets at annual rates as follows:
%
Computers 33%
Plant and equipment 18%
Motor vehicles 33%
The useful life, depreciation method and residual value of an asset are
reviewed at least each year-end and any changes are accounted for
prospectively as a change in accounting estimate. Depreciation of assets is
discontinued the earlier of the date on which the asset is classified as held
for sale, or the date on which the asset is derecognized.
i. Impairment of non-financial assets:
The Group evaluates the need to record an impairment of non-financial assets
whenever events or changes in circumstances indicate that the carrying amount
is not recoverable.
If the carrying amount of non-financial assets exceeds their recoverable
amount, the assets are reduced to their recoverable amount. The recoverable
amount is the higher of fair value less costs of sale and value in use. In
measuring value in use, the expected future cash flows are discounted using a
pre-tax discount rate that reflects the risks specific to the asset. The
recoverable amount of an asset that does not generate independent cash flows
is determined for the cash-generating unit to which the asset belongs.
Impairment losses are recognized in profit or loss.
An impairment loss of an asset, other than goodwill, is reversed only if there
have been changes in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognized. Reversal of an
impairment loss, as above, shall not be increased above the lower of the
carrying amount that would have been determined (net of depreciation or
amortization) had no impairment loss been recognized for the asset in prior
years and its recoverable amount. The reversal of impairment loss of an asset
presented at cost is recognized in profit or loss.
j. Intangible assets
The Group has adopted the provisions of IFRS 6 Exploration for and Evaluation
of Mineral Resources.
The Group capitalizes expenditures incurred in exploration and evaluation
activities as project costs, categorized as intangible assets (exploration and
evaluation assets), when those costs are associated with finding specific
mineral resources. The Group has a policy to expense to profit or loss all
short term (i.e., less than 12 months) rental of tools and other equipment, in
the same period in which the relevant equipment is used. Expenditure included
in the initial measurement of project costs, and which are classified as
intangible assets relate to the acquisition of rights to explore.
Capitalization of pre-production expenditure ceases when the mining property
is capable of commercial production. Project costs are recorded and held at
cost and no amortization is recorded prior to commencement of production.
An annual review is undertaken of each area of interest to determine the
appropriateness of continuing to capitalize and carry forward project costs in
relation to that area of interest, in accordance with the indicators of
impairment as set out in IFRS 6. Accumulated capitalized project costs in
relation to (i) an expired permit (with no expectation of renewal), (ii) an
abandoned area of interest and / or (iii) a joint venture over an area of
interest which is now ceased, will be written off in full as an impairment to
profit or loss in the year in which (i) the permit expired, (ii) the area of
interest was abandoned and / or (iii) the joint venture ceased.
Other intangible assets that have an indefinite useful life or intangible
assets not ready to use are not subject to amortization and are tested
annually for impairment. Assets that are subject to amortization are reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). Prior impairments of
non-financial assets (other than goodwill) are reviewed for possible reversal
at each reporting date.
k. Financial instruments:
1. Financial assets:
Financial assets are measured upon initial recognition at fair value plus
transaction costs that are directly attributable to the acquisition of the
financial assets, except for financial assets measured at fair value through
profit or loss in respect of which transaction costs are recorded in profit or
loss.
The Group classifies and measures debt instruments in the financial statements
based on the following criteria:
- The Group's business model for managing financial
assets; and
- The contractual cash flow terms of the financial asset.
Debt instruments are measured at amortized cost when:
The Group's business model is to hold the financial assets in order to collect
their contractual cash flows, and the contractual terms of the financial
assets give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding. After initial
recognition, the instruments in this category are measured according to their
terms at amortized cost using the effective interest rate method, less any
provision for impairment.
On the date of initial recognition, the Group may irrevocably designate a debt
instrument as measured at fair value through profit or loss if doing so
eliminates or significantly reduces a measurement or recognition
inconsistency, such as when a related financial liability is also measured at
fair value through profit or loss.
2. Impairment of financial assets:
The Group evaluates at the end of each reporting period the loss allowance for
financial debt instruments which are not measured at fair value through profit
or loss.
The Group has short-term financial assets such as trade receivables in respect
of which the Group applies a simplified approach and measures the
loss allowance in an amount equal to the lifetime expected credit losses. An
impairment loss on debt instruments measured at amortized cost is recognized
in profit or loss with a corresponding loss allowance that is offset from the
carrying amount of the financial asset.
3. Financial liabilities:
a) Financial liabilities measured at amortized cost:
Financial liabilities are initially recognized at fair value less transaction
costs that are directly attributable to the issue of the financial liability.
After initial recognition, the Group measures all financial liabilities at
amortized cost using the effective interest rate method, except for financial
liabilities measured at fair value through profit or loss.
4. Derecognition of financial instruments:
a) Financial assets:
A financial asset is derecognized when the contractual rights to the cash
flows from the financial asset expire.
b) Financial liabilities:
A financial liability is derecognized when it is extinguished, that is when
the obligation is discharged or cancelled or expires.
l. Borrowing costs:
The capitalization of borrowing costs commences when expenditures for the
asset are incurred, the activities to prepare the asset are in progress and
borrowing costs are incurred and ceases when substantially all the activities
to prepare the qualifying asset for its intended use or sale are complete. The
amount of borrowing costs capitalized in a reporting period includes specific
borrowing costs and general borrowing costs based on a weighted capitalization
rate.
Exploration and evaluation assets can be qualifying assets. However, they
generally do not meet the "probable economic benefits" test. Therefore, any
related borrowing costs are generally recognized in profit or loss in the
period incurred.
m. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
n. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
Fair value measurement is based on the assumption that the transaction will
take place in the asset's or the liability's principal market, or in the
absence of a principal market, in the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
Fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximizing
the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities measured at fair value or for which fair value is
disclosed are categorized into levels within the fair value hierarchy based on
the lowest level input that is significant to the entire fair value
measurement:
Level 1 - quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 - inputs other than quoted prices included within Level 1 that are observable
either directly or indirectly.
Level 3 - inputs that are not based on observable market data (valuation techniques
which use inputs that are not based on observable market data).
o. Provisions
The Group provides for the costs of restoring a site where a legal or
constructive obligation exists. The estimated future costs for known
restoration requirements are determined on a site-by-site basis and are
calculated based on the present value of estimated future costs. All
provisions are discounted to their present value.
p. Taxes on income
Current or deferred taxes are recognized in profit or loss, except to the
extent that they relate to items which are recognized in other comprehensive
income or equity.
1. Current taxes:
The current tax liability is measured using the tax rates and tax laws that
have been enacted or substantively enacted by the end of reporting period as
well as adjustments required in connection with the tax liability in respect
of previous years.
2. Deferred taxes
Deferred taxes are computed in respect of temporary differences between the
carrying amounts in the financial statements and the amounts attributed for
tax purposes.
Deferred taxes are measured at the tax rate that is expected to apply when the
asset is realized or the liability is settled, based on tax laws that have
been enacted or substantively enacted by the reporting date.
Deferred tax assets are reviewed at each reporting date and reduced to the
extent that it is not probable that they will be utilized. Temporary
differences for which deferred tax assets had not been recognized are reviewed
at each reporting date and a respective deferred tax asset is recognized to
the extent that their utilization is probable.
Taxes that would apply in the event of the disposal of investments in
investees have not been taken into account in computing deferred taxes, as
long as the disposal of the investments in investees is not probable in the
foreseeable future.
Also, deferred taxes that would apply in the event of distribution of earnings
by investees as dividends have not been taken into account in computing
deferred taxes, since the distribution of dividends does not involve an
additional tax liability or since it is the Company's policy not to initiate
distribution of dividends from a subsidiary that would trigger an additional
tax liability.
q. Revenue recognition
The Group had no sales or revenue during the years ended 31 December 2022 and
2021.
r. Share-based payment transactions:
The Company's employees and other service providers are entitled to
remuneration in the form of equity-settled share-based payment transactions
and certain employees and other service providers are entitled to remuneration
in the form of cash-settled share-based payment transactions that are measured
based on the increase in the Company's share price.
Equity-settled transaction
The cost of equity-settled transactions with employees is measured at the fair
value of the equity instruments granted at grant date. The fair value is
determined using an acceptable option pricing model.
As for other service providers, the cost of the transactions is measured at
the fair value of the goods or services received as consideration for equity
instruments granted.
The cost of equity-settled transactions is recognized in profit or loss
together with a corresponding increase in equity during the period which the
performance and/or service conditions are to be satisfied ending on the date
on which the relevant employees become entitled to the award ("the vesting
period"). The cumulative expense recognized for equity-settled transactions at
the end of each reporting period until the vesting date reflects the extent to
which the vesting period has expired and the Group's best estimate of the
number of equity instruments that will ultimately vest.
No expense is recognized for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether the market condition is satisfied, provided
that all other vesting conditions (service and/or performance) are satisfied.
If the Company modifies the conditions on which equity-instruments were
granted, an additional expense is recognized for any modification that
increases the total fair value of the share-based payment arrangement or is
otherwise beneficial to the employee/other service provider at the
modification date.
If a grant of an equity instrument is canceled, it is accounted for as if it
had vested on the cancelation date and any expense not yet recognized for the
grant is recognized immediately. However, if a new grant replaces the canceled
grant and is identified as a
replacement grant on the grant date, the canceled and new grants are accounted
for as a modification of the original grant, as described above.
s. Earnings (loss) per share:
Earnings per share are calculated by dividing the net income attributable to
equity holders of the Company by the weighted number of Ordinary shares
outstanding during the period.
Potential Ordinary shares are included in the computation of diluted earnings
per share when their conversion decreases earnings per share from continuing
operations. Potential Ordinary shares that are converted during the period are
included in diluted earnings per share only until the conversion date and from
that date in basic earnings per share. The Company's share of earnings of
investees is included based on its share of earnings per share of the
investees multiplied by the number of shares held by the Company.
t. Changes in accounting policies - initial application of new
financial reporting and accounting standards and amendments to existing
financial reporting and accounting standards:
1. Amendment to IAS 16, "Property, Plant and Equipment":
In May 2020, the IASB issued an amendment to IAS 16, "Property, Plant and
Equipment" ("the Amendment"). The Amendment prohibits a company from deducting
from the cost of property, plant and equipment ("PP&E") consideration
received from the sales of items produced while the company is preparing the
asset for its intended use. Instead, the company should recognize such
consideration and related costs in profit or loss.
The Amendment is effective for annual reporting periods beginning on or after
January 1, 2022. The Amendment is applied retrospectively, but only to items
of PP&E made available for use on or after the beginning of the earliest
period presented in the financial statements in which the company first
applies the Amendment.
The cumulative effect of initially applying the Amendment is recognized as an
adjustment to the opening balance of retained earnings (or other component of
equity, as applicable) at the beginning of the earliest period presented.
The application of the Amendment did not have a material impact on the
Company's financial statements.
2. Amendment to IAS 37, "Provisions, Contingent Liabilities
and Contingent Assets":
In May 2020, the IASB issued an amendment to IAS 37, regarding which costs a
company should include when assessing whether a contract is onerous ("the
Amendment").
According to the Amendment, costs of fulfilling a contract include both the
incremental costs (for example, raw materials and direct labor) and an
allocation of other costs that relate directly to fulfilling a contract (for
example, depreciation of an item of property, plant and equipment used in
fulfilling the contract).
The Amendment is effective for annual periods beginning on or after January 1,
2022 and applies to contracts for which all obligations in respect thereof
have not yet been fulfilled as of January 1, 2022. The application of the
Amendment does not require of property, plant and equipment the restatement of
comparative data. Instead, the opening balance of retained earnings on the
date of initial application date is adjusted for the cumulative effect of the
Amendment.
The application of the Amendment did not have a material impact on the
Company's financial statements.
NOTE 3:- FINANCIAL RISK MANAGEMENT
a. Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
and credit risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse
effects on the Group's financial performance.
Risk management is carried out by the management team under policies approved
by the Board of Directors.
1. Market risk
The Group is exposed to market risk, primarily relating to interest rate and
foreign exchange. The Company does not hedge against market risks as
the exposure is not deemed sufficient to enter into forward contracts. The
Company has not sensitized the figures for fluctuations in interest rates and
foreign exchange as the Directors are of the opinion that these fluctuations
would not have a significant impact on the consolidated financial statements
of the Company at the present time. The Directors will continue to assess the
effect of movements in market risks on the Group's financial operations and
initiate suitable risk management measures where necessary.
2. Credit risk
Credit risk arises from cash and cash equivalents as well as outstanding
receivables. To manage this risk, The Company periodically assesses the
financial reliability of customers and counterparties.
The amount of exposure to any individual counterparty is subject to a limit,
which is assessed by the Board of Directors.
The Company considers the credit ratings of banks in which it holds funds in
order to reduce exposure to credit risk.
b. Capital risk management
The Company's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern, in order to enable the Company to
continue its material development activities, and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust
the issue of shares or sell assets to reduce debts.
The Company defines capital based on the total equity of the Company. The
Company monitors its level of cash resources available against future planned
operational activities and may issue new shares in order to raise further
funds from time to time.
NOTE 4:- SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND
ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS
a. Judgments:
In the process of applying the significant accounting policies, the Group has
made the following judgments which have a significant effect on the amounts
recognized in the financial statements:
Determining the fair value of share-based payment transactions:
The fair value of share-based payment transactions is determined upon initial
recognition by an acceptable option pricing model. The inputs to the model
include share price, exercise price and assumptions regarding expected
volatility, expected life of share option and expected dividend yield.
b. Estimates and assumptions:
The preparation of the financial statements requires management to make
estimates and assumptions that have an effect on the application of the
accounting policies and on the reported amounts of assets, liabilities,
revenues and expenses. Changes in accounting estimates are reported in the
period of the change in estimate.
Significant items subject to such estimates and assumptions are as follows:
Intangible assets - exploration and evaluation assets
An annual review is undertaken of each area of interest to determine the
appropriateness of continuing to capitalize and carry forward project costs in
relation to that area of interest in accordance with the indicators of
impairment as set out in IFRS 6. The annual review includes an assessment of
budgeted and planned expenditures and indications of whether sufficient data
exist to determine recovery of accumulated capitalized project costs.
NOTE 5:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION
a. Amendment to IAS 1, "Presentation of Financial Statements":
In January 2020, the IASB issued an amendment to IAS 1, "Presentation of
Financial Statements" regarding the criteria for determining the
classification of liabilities as current or non-current ("the Original
Amendment"). In October 2022, the IASB issued a subsequent amendment ("the
Subsequent Amendment").
According to the Subsequent Amendment:
· Only covenants with which an entity must comply on or before
the reporting date will affect a liability's classification as current or
non-current.
· An entity should provide disclosure when a liability arising
from a loan agreement is classified as non-current and the entity's right to
defer settlement is contingent on compliance with future covenants within
twelve months from the reporting date. This disclosure is required to include
information about the covenants and the related liabilities. The disclosures
must include information about the nature of the future covenants and when
compliance is applicable, as well as the carrying amount of the related
liabilities. The purpose of this information is to allow users to understand
the nature of the future covenants and to assess the risk that a liability
classified as non-current could become repayable within twelve months.
Furthermore, if facts and circumstances indicate that an entity may have
difficulty in complying with such covenants, those facts and circumstances
should be disclosed.
According to the Original Amendment, the conversion option of a liability
affects the classification of the entire liability as current or non-current
unless the conversion component is an equity instrument.
The Original Amendment and Subsequent Amendment are both effective for annual
periods beginning on or after January 1, 2024 and must be applied
retrospectively. Early application is permitted.
The Company is evaluating the possible impact of the Amendment on its current
loan agreements.
b. Amendment to IAS 8, "Accounting Policies, Changes to
Accounting Estimates and Errors":
In February 2021, the IASB issued an amendment to IAS 8, "Accounting Policies,
Changes to Accounting Estimates and Errors" ("the Amendment"), in which it
introduces a new definition of "accounting estimates".
Accounting estimates are defined as "monetary amounts in financial statements
that are subject to measurement uncertainty". The Amendment clarifies the
distinction between changes in accounting estimates and changes in accounting
policies and the correction of errors.
The Amendment is to be applied prospectively for annual reporting periods
beginning on or after January 1, 2023 and is applicable to changes in
accounting policies and changes in accounting estimates that occur on or after
the start of that period. Early application is permitted.
The Company is evaluating the effects of the Amendment on its financial
statements.
c. Amendment to IAS 12, "Income Taxes":
In May 2021, the IASB issued an amendment to IAS 12, "Income Taxes" ("IAS
12"), which narrows the scope of the initial recognition exception under IAS
12.15 and IAS 12.24 ("the Amendment").
According to the recognition guidelines of deferred tax assets and
liabilities, IAS 12 excludes recognition of deferred tax assets and
liabilities in respect of certain temporary differences arising from the
initial recognition of certain transactions. This exception is referred to as
the "initial recognition exception". The Amendment narrows the scope of the
initial recognition exception and clarifies that it does not apply to the
recognition of deferred tax assets and liabilities arising from transactions
that are not a business combination and that give rise to equal taxable and
deductible temporary differences, even if they meet the other criteria of the
initial recognition exception.
The Amendment applies for annual reporting periods beginning on or after
January 1, 2023, with earlier application permitted. In relation to leases and
decommissioning obligations, the Amendment is to be applied commencing from
the earliest reporting period presented in the financial statements in which
the Amendment is initially applied. The cumulative effect of the initial
application of the Amendment should be recognized as an adjustment to the
opening balance of retained earnings (or another component of equity, as
appropriate) at that date.
The Company estimates that the initial application of the Amendment is not
expected to have a material impact on its financial statements.
d. Amendment to IAS 1 - Disclosure of Accounting Policies:
In February 2021, the IASB issued an amendment to IAS 1, "Presentation of
Financial Statements" ("the Amendment"), which replaces the requirement to
disclose 'significant' accounting policies with a requirement to disclose
'material' accounting policies. One of the main reasons for the Amendment is
the absence of a definition of the term 'significant' in IFRS whereas the term
'material' is defined in several standards and particularly in IAS 1.
The Amendment is applicable for annual periods beginning on or after January
1, 2023. Early application is permitted.
The Company is evaluating the effects of the Amendment on its financial
statements.
NOTE 6: - ACQUISITION OF SUBSIDIARIES
a. Acquisition of Atex Mining Resources SARL
On 1 March 2021, the Company purchased 51% of the issued share capital of Atex
Mining Resources SARL ("ATEX") for a total consideration of 40m FCFA
(€61 thousands). Atex holds a license that covers exploration rights for
lithium in a certain area in Cote d'Ivoire. The license which was granted in
2017 was renewed in 2021 for a period ending in 2024.
In addition, the Company was granted an option to acquire a further total
39% of the issued share capital of Atex in two stages. The first stage is an
option to acquire a further 16% during the 12 months following the acquisition
for a total consideration of 210m FCFA (€320 thousand). The second stage is
an additional option to acquire a further 23% during the 24 months following
the acquisition for a total consideration of 300m FCFA (€450 thousand).
Pursuant to the agreement, it has been agreed that the Company will procure
that the Seller is paid a net smelter royalty equal to 0.5% of net smelter
returns, such royalty to be paid each trimester.
These royalties will be recorded when production commences, and the project
generates net smelter returns.
At the date of acquisition, the exploration license and related capitalized
exploration costs are the sole asset of Atex. Atex had no employees.
Accordingly, the purchase transaction is accounted for as an acquisition of an
intangible asset.
The Company has determined that as of the acquisition date the fair value of
the options to acquire an additional 39% interest in Atex is immaterial and
accordingly no portion of the consideration paid has been attributed to these
options.
Pursuant to IFRS 3, the Company records the intangible asset and liability at
their fair value on date of acquisition. Details of the net assets acquired,
and the non-controlling interests are as follows (Euros in thousands):
Intangible asset 120
Liabilities acquired (1)
Net assets acquired 119
Non-controlling interest (49%) (58)
Total purchase cost and cash 61
paid
On 4th July 2022 the Company purchased an additional 26% of the issued shares
in Atex. 10% of the issued shares in Atex were purchased in exchange for
1,158,200 Ordinary shares of the Company (with a value of £76,441 at the
closing share price on 4 July 2022 of 6.6p per share; €88,672 based on £1 =
€1.16). The additional 16% of the issued shares in Atex were purchased by
way of exercising the first option under the agreement between Firering and
Atex dated 31 March 2021 for a total consideration of c.€320,000. Subsequent
to this acquisition, the Company holds a 77% interest in Atex - see Note 20
for details of the purchase of an additional 13% interest in March 2023.
As these acquisitions resulted in a change of ownership interests in a
subsidiary that was already under the control of the Company, they were
accounted for as a change in the equity of the Company. The difference between
the total consideration and the carrying amount of the non-controlling
interest attributed to the interest acquired, in the amount of € 378 was
charged to the Reserve for Transactions with Non-Controlling Interests in
equity.
See Note 6c below regarding deconsolidation of Atex.
b. Acquisition of Alliance Minerals Corporation SARL
On 22 November 2021, the Company purchased 51% of the issued share capital of
Alliance Minerals Corporation SARL ("Alliance") for a total consideration of
€228,000, executing the first stage of the purchase agreement with Alliance
Minerals Corporation SARL ("Alliance") and setting out the Company's
commitment to purchase a total of 80% of the entire issued share capital of
Alliance. The payments for the acquisition of shares will take place in four
stages as follows:
· 51% of the entire issued share capital of Alliance for a
total consideration of 150 million FCFA (€228 thousand) to be paid within 10
days of Admission. As mentioned above, this stage was executed on 22 November
2021.
· 7.25% of the issued share capital of Alliance for 100 million
FCFA (€152,000) following the analysis at least 1,000 tons of coltan,
calculated based on the Auger drilling program.
· 7.25% of the issued share capital of Alliance for 100 million
FCFA (€152,000) following the analysis at least 1,000 tons of coltan,
calculated based on the RC drilling program.
· 14.5% of the issued share capital of Alliance for 200 million
FCFA (€304,000) following a commercial reserve.
Pursuant to the agreement, it has been agreed that the Company will procure
that the Seller is paid a net smelter royalty equal to 0.5% of net smelter
returns, such royalty to be paid each trimester.
These royalties will be recorded when production commences, and the project
generates net smelter returns.
Alliance has applied for an exploration license adjacent to the Atex project.
At the date of acquisition, the license application is the sole asset of
Alliance. Alliance has no employees. Accordingly, the purchase transaction is
accounted for as an acquisition of an intangible asset. As of 31 December
2022, the application is still pending.
The Company is accounting for the commitment to purchase the additional 29%
interest in Alliance as a forward purchase contract, and effectively for
accounting purposes the Company has an 80% interest in Alliance.
Accordingly, a liability in the amount of €130,000 has been recorded at the
acquisition date based on the estimated timing of the future payments
discounted at a rate of 24% (level 3 of the fair value hierarchy). The
interest (unwinding of the discount) in 2022 in the amount of €31,000 was
recorded as financial expense.
Pursuant to IFRS 3, the Company records the intangible asset at its fair value
on date of acquisition as follows:
Intangible asset 448
Non-controlling interests (20%) (90)
Total purchase 358
cost
Comprised of:
Cash 228
consideration
Liability for forward 130
purchase
Total 358
See Note 6c below regarding deconsolidation of Alliance.
c. Deconsolidation of Atex and Alliance
As described in Notes 1 and 19, in accordance with the earn-in agreement
signed with Ricca in November 2022, the Company is to transfer its entire
shareholdings in Atex and Alliance to a new entity (joint venture) in which
Ricca and the Company will have joint control. Due to the loss of control, the
Company ceased to consolidate the accounts of Alex and Alliance and will
record its investment in these companies held by the joint venture based on
the equity method.
As of the date of loss of control, following are the assets, liabilities and
non-controlling interests that have been deconsolidated (Euros in thousands):
Cash 33
Other current assets 144
Property, plant and equipment 112
Intangible assets 2,062
Liability to non-controlling interest in subsidiary )161(
NCI (116)
Net - investment in joint venture (see Note 19) 2,073
NOTE 7: - INTANGIBLE ASSETS
Intangible assets relate to project costs capitalized as of 31 December 2022
and 2021.
31 December
2022 2021
Euros in thousands
As of 1 January 2,073 642
Acquired through business combinations (Note 6) - 568
Deconsolidation (Note 6) (2,062) -
Additions 1,265 863
As of 31 December 1,276 2,073
During 2022 the Company invested €15 thousand in purchasing a Nickel Cobalt
concession in the west of Cote d'Ivoire. The concession status is at the stage
of a request for exploration which still needs to be granted by the
authorities. According to the purchase agreement the seller is entitled to
receive royalties from future potential connection revenues as follows:
· If the Nickel LME price is less than US $12,000 no royalties will
be paid
· If the Nickel LME price is between US $12,000 to US$18,000 the
royalties shall be 0.5% of the concession revenues
· If the Nickel LME price is higher than US$18,000 the royalties shall
be 1% of the concession reveniews.
The remaining balance of intangible assets at the end of 2022 totalling to
€1,261 thousand relates to Bri coltan concessions. During 2022 the Company
signed a loan agreement for future funding of a potential columbite-tantalite
extraction plant. The loan amount is up to €7.2 million and is for 7 years
with two years grace period over principal payments. The loan will bear
interest at the rate of 8.5% per annum. The Company is required to meet
certain conditions prior to first withdrawal.
The loan may be utilized only when and if the Company decides to start
exploring for columbite-tantalite.
NOTE 8: - PROPERTY, PLANT AND EQUIPMENT
Plant and equipment Motor vehicles Computers, peripheral equipment & furniture Total
Cost
As of 1 January 2021 392 21 - 413
Additions 17 100 25 142
As of 31 December 2021 409 121 25 555
Addition 2 49 17 68
Deconsolidation (Note 6) (2) (141) (19) (162)
As of 31 December 2022 409 29 23 461
Depreciation
As of 1 January 2021 78 21 - 99
Charge for the year 145 2 4 151
As of 31 December 2021 223 23 4 250
Charge for the year 41 47 7 95
Deconsolidation (Note 6) (47) (3) (50)
As of 31 December 2022 264 23 8 295
Net carrying amount
As of 31 December 2022 145 6 15 166
As of 31 December 2021 186 98 21 305
NOTE 9: - CONVERTIBLE LOAN NOTES
On 2 November 2020 the Company executed a convertible loan note instrument
pursuant to which the Company was authorized to issue up to £1,000,000
unsecured loan notes for general working capital purposes and to advance the
Company's proposed IPO. The Company also executed a supplement loan note
instrument on 4 February 2021 constituting a further £300,000 of convertible
loan notes on the same terms (together the "Loan Note Instruments"). Interest
accrues in respect of the Loan Notes at the rate of 10% per annum, compounded
on a daily basis.
As of the date of the IPO and admission to trading the Company had issued
€1,441 thousands (£1,231 thousands) pursuant to the Loan Note Instruments.
The Loan Notes shall be converted into fully paid New Ordinary Shares on
Admission at an issue price equal to the Placing Price less 30%.
On admission date, the Loan Notes and accumulated interest totaling to
€1,562 thousand (£1,334 thousand) were converted to 14,660,746 Ordinary
shares of the Company with a market value of € 2,231 thousand based on
preferred conversion price of £0.091 per share that represents 30% discount
to the share price on admission. The fair value of the conversion option
equivalent to €699 thousand (£572 thousands) was recorded as financial
expense in 2021.
NOTE 10: - CAPITAL NOTES
The capital notes are comprised of two notes in the face amounts of €393
thousand and €350 thousand, which do not bear interest and for which the
repayment terms commencing from November 2021 are as follows:
Capital note of €393 thousand - (i) no repayment shall take place within two
years of Admission (ii) repayment can only be made after the Company has
achieved a market capitalization of £50 million (iii) the Company must have
minimum cash on hand of 5x the outstanding debt, with sufficient funds for the
Company to operate for a two-year period and (iv) any repayment will be
subject to final approval of the Directors of the Company.
Capital note to shareholders and officers for services during the period from
1 June 2019 until 30 June 2021 totaling to €350 thousand (i) no repayment
shall take place within two years of Admission (ii) the Company must have
minimum cash on hand of 5x the outstanding debt, with sufficient funds for the
Company to operate for a two-year period and (iii) any repayment will be
subject to final approval of the Directors of the Company.
The combined carrying amount of the capital notes as of November 2021 is
€507 thousand which amount reflects the estimated timing of the future
repayments discounted at a rate of 10% (level 3 of the fair value hierarchy).
The difference in the amount of €236 thousand between the face amount of the
capital notes and the carrying amount as of November 2021 has been recorded as
a contribution to equity. The balance of the capital notes at 31 December
2022 is €565 thousand (2021 - €514 thousand). In 2022 interest expense on
the loan (unwinding of discount) amounted to €51 thousand (2021 - €7
thousand).
NOTE 11: - LOAN FROM NON-CONTROLLLING INTERESTS
Loan in the face amount of € 205 thousand from the minority interests of Bri
Coltan upon acquisition of Bri Coltan. It was agreed that the loan will be
repaid from up to 5% of the yearly net earnings of Bri Coltan following
publication of its annual financial report. As of 31 December 2021, the
carrying amount of the loan is €92 thousand which amount reflects the
estimated timing of future repayments discounted at a rate of 12% (level 3 of
the fair value hierarchy). The difference in the amount of €122 thousand
between the face amount of the loan and the carrying amount on 1 January 2021
has been recorded as a contribution to equity. In 2022 interest expense on
the loan (unwinding of discount) amounted to €11 thousand.
NOTE 12: - EQUITY
a. Composition of share capital:
31 December 31 December
2022 2021 2022 2021
Authorized Issued and outstanding
Number of shares
Ordinary shares of € 0.001 par value each 100,000,000 100,000,000 88,043,560 86,885,360
Prior to admission in 2021, the Company issued 6,822,000 Ordinary shares to
its funders to represent their holdings at incorporation, increased its share
capital and performed a share split such that the authorized share capital
increased to 100 million Ordinary shares of €0.001 par value each. Share and
per share amounts in these financial statements have been adjusted
retroactively to reflect the share split.
In 2021, the Company issued 3,377,000 Ordinary shares to certain investors in
convertible loan notes for no additional consideration. The fair value of
these shares on date of issuance amounted to € 514 thousand and was recorded
as finance expense.
In 2021, the Company issued 827,000 Ordinary shares to certain consultants for
their services. The fair value of these shares on date of issuance amounted to
€ 126 thousand and was recorded as share-based compensation in Contractors
& service providers expenses.
On 12 November 2021, the Company completed its Initial Public Offering ("IPO")
on the AIM, a market operated by the London Stock Exchange ("the AIM"), by
issuing 30,769,230 Ordinary shares at a price of £ 0.13 per share for a total
consideration of € 4.68 million (£ 4 million). Net proceeds of €4.25
million (£ 3.63 million).
In 2021 the Company issued 115,384 Ordinary shares to certain brokers in
consideration for services provided. The fair value of the shares issued
amounting to €18 thousand was recorded in general and administrative
expenses.
Issuance in 2021 of 14,660,746 Ordinary shares upon conversion of convertible
loan notes - see Note 9.
On 4th July 2022 the Company purchased an additional 26% of the issued shares
in Atex. 10% of the issued shares in Atex in exchange for 1,158,200 shares in
the Company (with a value of £76,441 at the closing share price on 1 July
2022 of 6.6p per share; €88,672 based on £1 = €1.16). the additional 16%
of the issued shares in Atex were purchased by way of exercising the first
option under the agreement between Firering and Atex dated 31 March 2021 for a
total cash consideration of c.€320,000.
b. Share option plan:
On admission, 12 November 2021, the Company adopted a share option plan under
which it granted a total of 6,950,832 options to directors, employees and
consultants of the Company.
Each option is exercisable to one Ordinary share at an exercise price of £
0.13. The options vested immediately upon grant. The options expire 5 years
after date of grant. As of 31 December 2022, all of the options are
outstanding.
The fair value of the options granted calculated based on Black-Scholes option
pricing model was approximately €61 thousand.
The following table lists the inputs used in the measurement of the fair value
of options, in accordance with the Black and Scholes option pricing model,
with respect to the above grants:
Risk-free interest rate (%) 0.58%
Dividend yield (%) 0%
Expected volatility (%) 70%
Expected term (in years) 5
c. Warrants
On admission, 12 November 2021, the Company granted a total of 2,599,622
warrants to some service providers of the Company as part of their
compensation for the services provided in the initial public offering process.
Each warrant is exercisable to one Ordinary share at an exercise price of £
0.13.
868,854 warrants expire 5 years after date of grant, and 1,538,461 warrants
expire 3 years after date of grant.
The remaining 192,307 warrants expire 3 years after date of grant with 50%
vesting once the 5 day volume-weighted average price ("VWAP") of the Company's
shares has traded at a 100% premium to the Placing Price (£ 0.13) and 50%
vesting once the 5 day VWAP of the Company's shares has traded at a 200%
premium to the Placing Price. None of these warrants have vested as of 31
December 2022.
The fair value of the Warrants granted calculated based on Black-Scholes
option pricing model was approximately €20 thousand.
The following table lists the inputs used in the measurement of the fair value
of the warrants, in accordance with the Black and Scholes pricing model:
Warrants for 5 years Warrants for 3 years
Risk-free interest rate (%) 0.58% 0.50%
Dividend yield (%) 0% 0%
Expected volatility (%) 70% 70%
Expected term (in years) 5 3
The fair value of the warrants was recorded as part of the IPO fund-raising
costs and deducted from share premium in equity.
d. Capital reserves
Capital reserves are comprised of the following:
31 December
2022 2021
Euros in thousands
Reserve for transactions with non-controlling interests (Note 11) 91 91
Reserve for transactions with principal shareholders (Note 10) 236 236
Reserve for transactions with non-controlling
interests (Note
6) (378) -
(51) 327
(378)
-
(51)
327
NOTE 13:- GENERAL AND ADMINISTRATIVE EXPENSES
Year ended 31 December
2022 2021
Euros in thousands
Salaries & employee related expenses 663 414
Contractors & service providers 333 210
Travel & transportation 12 63
Legal and professional 206 124
Office expenses 66 -
Nomad & broker fees 54 23
Public relations 45 24
Insurance 27 3
Share based compensation - 61
Depreciation 47 -
Exploration costs 25 -
Overhead costs 26 7
Total 1,504 929
NOTE 14:- FINANCIAL EXPENSES
Year ended 31 December
2022 2021
Euros in thousands
Interest on convertible loan notes - 111
Interest on capital notes and loan from non-controlling interest 63 17
Interest on liability to non-controlling interest 31 -
Change in fair value of conversion option of convertible loan notes - 669
Financial expenses settled by share based compensation - 514
Bank fees 196 62
290 1,373
NOTE 15:- TAXES ON INCOME
a. Tax rates applicable to the income of the Company and its subsidiaries:
The Company and its subsidiaries, Firering Strategic Minerals PLC was
incorporated in Cyprus and are taxed according to Cyprus tax laws. The
statutory tax rate is 12.5%.
The carryforward losses of the Company are approximately €12 thousands. No
other subsidiary has carryforward losses.
The subsidiary, FH Colton CI-II, was incorporated in Cote d'Ivoire and is
taxed according to Cote d'Ivoire tax laws. The statutory tax rate is 25%.
The subsidiary, Bri Coltan SARL, was incorporated in Cote d'Ivoire and is
taxed according to Cote d'Ivoire tax laws. The statutory tax rate is 25%.
The subsidiary, Atex Mining Resources SARL, was incorporated in Cote d'Ivoire
and is taxed according to Cote d'Ivoire tax laws. The statutory tax rate is
25%.
The subsidiary Alliance Minerals Corporation SARL Ltd was incorporated in Cote
d'Ivoire and is taxed according to Cote d'Ivoire tax laws. The statutory tax
rate is 25%.
b. Tax assessments:
As of 31 December 2022, the Company and all its other subsidiaries had not yet
received final tax assessments.
NOTE 16: - EARNINGS PER SHARE
The calculation of the basic and fully diluted loss per share attributable to
the equity shareholders is based on the following data:
Year ended 31 December
2022 2021
Euros in thousands
Net loss attributable to equity shareholders (84) (2,276)
Average number of shares for the purpose of basic and diluted earnings per 87,457,527 38,320,172
share
Share options and warrants are excluded from the calculation of diluted loss
per share as their effect is antidilutive.
NOTE 17:- RELATED PARTIES
Year ended
31 December
2022 2021
Euros in thousands
a. Balances:
Current liabilities: 54 -
Other payables
Capital note (*) 214 214
Non- current liabilities:
Capital note 266 242
(*) The capital note bears no interest and is payable on demand.
b. Compensation of key management personnel of the Company:
Short-term employee benefits 535 443
Share-based compensation - 61
a.
c. Interest on capital note (see also Note 10) 24 3
A Director and the CEO of the Company was entitled to salary of €84
thousands which increased, with effect from Admission, to €120 thousands per
annum and shall be entitled to certain bonuses upon the Company achieving
certain milestones.
In addition, the CEO is entitled to additional benefits including medical
insurance, school fees for his family (capped at €84 thousands per annum),
accommodation in Cote d'Ivoire (capped at €1.2 thousands per month) as well
as travel costs for himself and his family to have home leave.
NOTE 18:- FINANCIAL INSTRUMENTS
Foreign exchange risk:
The Company is exposed to foreign exchange risk resulting from the exposure to
different currencies, mainly, USD and GBP. Since the FCFA is fixed to the
Euro, the Group is not exposed to foreign exchange risk in respect of the
FCFA. As of 31 December 2021, the foreign exchange risk is immaterial.
Liquidity risk:
The table below summarizes the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments (including interest
payments):
31 December 2022
Less than one year 1 to 2 years 2 to 3 3 to 4 years 4 to 5 years > 5 years Total
years
Euros in thousands
Trade payables 61 - - - - - 61
Other payables 451 - - - - - 451
Capital note 214 - 743 - - - 957
Loan from non-controlling interest in subsidiary - - - - - 205 205
726 - 743 - - 205 1,674
31 December 2021
Less than one year 1 to 2 years 2 to 3 3 to 4 years 4 to 5 years > 5 years Total
years
Euros in thousands
Trade payables 150 - - - - - 150
Other payables 102 - - - - - 102
Capital note 214 - - 743 957
Loan from non-controlling interest in subsidiary - - - - - 205 205
Liability to non-controlling interest in subsidiary - - - - - 608 608
466 - - 743 - 813 2,022
NOTE 19:- INVESTMENT IN JOINT VENTURE
On 2 November 2022 the Company signed an earn-in agreement (the Agreement")
with Ricca Resources Pty Limited ("Ricca"), an Australian diversified minerals
company to advance the Atex Lithium-Tantalum Project ("Atex") and the adjacent
Alliance exploration licence (once granted).
According to the Agreement, Ricca will have the exclusive right to undertake
and fund at Ricca's sole cost the exploration of the Atex Project and adjacent
Alliance licence for up to US$18.6 million (€ 17.4 million). The total
amount of US$18.6 million to be paid by Ricca pursuant to the Agreement
includes:
· US$1million (€977 thousand) cash consideration (received in November
2022); and
· issue of ordinary shares of Ricca to the value of AUD $1million (€ 637
thousand) upon the earlier of: its planned IPO on the Australian Securities
Exchange (ASX), or by 31 January 2024. The shares shall be issued at the
completion price of the IPO or at a price per share equal to the latest price
used in a fund raising carried out by Ricca prior to that date, by 31 January
2024
· Funding and completing four stage earn-in of up to 50% equity interest in
the Project through the funding of up to US$14.7million (€13.8 million),
with the aim of achieving a Definitive Feasibility Study ("DFS") on the
Project. Beyond the US$17 million expenditure to be spent to advance the
Project, Ricca has agreed to fund a further US$2 million (€1.9 million) (to
take total expenditure to US$19 million (€17.8 million) if the JORC inferred
Mineral Resource Estimate ("MRE") surpasses 20m tones at the concentration of
1.0% of Li2O.
In order to undertake exploration of the Atex and Alliance Tenements, the
Company has an SPV (FH Coltan CI-III SARL which changed its name to Marvella
SA, hereafter "Marvella") to which the Company shall transfer its entire
shareholdings in the Atex agreement and the Alliance agreement, including the
forward purchase obligation (see Note 6).
As of the date of the financial statements the Company is in the process of
implementing the above transfers.
The Company holds 100% of the equity interest of Marvella as of the date of
the financial statements and will continue to hold the majority of the equity
interest until the completion of stage 4 of the earn-in period. However,
according to the shareholders' agreement signed with Ricca as of the date of
the Agreement, the Company cannot unilaterally make decisions on the
significant relevant activities of Marvella, as they are driven by the Board
and the Joint operating committee of Marvella which consists of equal
representation (joint control) of both the Company and Ricca.
Accordingly, the Company ceased to consolidate the financial statements of
Atex and Alliance (which are being transferred to Marvella) as of the date of
the Agreement - see Note 6.
The investment in Marvella is considered a joint venture. Accordingly,
commencing from the date of the Agreement, the investment in the joint venture
is accounted for using the equity method in accordance with IAS 28.
As described above, the consideration to which the Company is entitled upon
signing the Agreement is comprised of €977 thousand in cash (received in
November 2022) and shares of Ricca with a fair value of €637 thousand (to be
received by 31 January 2024 and presented as non-current receivable in the
statement of financial position as of 31 December 2022). Accordingly, the
total initial consideration of €1614 thousand has been recorded as a gain on
the earn-in arrangement in the statement of comprehensive
income.
Summarized financial data of the joint venture.
Year ended 31 December
2022 2021
Euros in thousands
Statement of financial position of joint venture at reporting date:
Current assets 178 -
Property, plant and equipment 112 -
Intangible assets 2,314 -
Current liabilities )1( -
Liability to non-controlling interest in subsidiary (161) -
Loan from Firering (2,073) -
Total equity -NCI (369) -
Investment in joint venture 2,073 -
During the period from establishment of the joint venture in November 2022
through 31 December 2022, the joint venture had no revenues and no expenses.
For the period ending at 31 December 2022, Ricca funded exploration
expenditures of the joint venture in the amount of US$ 267 thousand (€253
thousand). Subsequent to 31 December 2022 and up to close to the date of
approval of the financial statements, Ricca funded additional exploration
expenditures of the joint venture in the amount of US$ 562 thousand (€533
thousand).
NOTE 20:- OTHER PAYABLES
31 December
2022 2021
Euros in thousands
Accrued expenses 262 82
Employees and payroll accruals 152 -
Other accounts payable 37 20
451 102
NOTE 21:- EVENTS AFTER THE REPORTING DATE
On 9 March 2023 Marvella exercised the remaining existing option originally
between Firering and Atex's shareholder (see Note 6a) and purchased an
additional 13% of the issued shares in Atex and reached a total holding of 90%
in Atex for a total consideration of €259 thousand. According to the
agreement with Ricca Resources, Ricca will pay €200 thousand out of the
€259 thousand. (See also Note 19)
- - - -- - - - - - - - - - - - - - - - -
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