REG - Firering Strategic - Final Results
27/06/2024 07:00
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RNS Number : 0208U Firering Strategic Minerals PLC 27 June 2024
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Firering Strategic Minerals plc / EPIC: FRG / Market: AIM / Sector: Mining
27 June 2024
Firering Strategic Minerals plc
("Firering" or "the Company")
Final Results
Firering Strategic Minerals plc, a development company focusing on critical
minerals, is pleased to announce its Final Results for the year ended 31
December 2023. A copy of the Annual Report will shortly be available on the
Company's website : www.fireringplc.com (http://www.fireringplc.com) .
OVERVIEW
· Successful alignment of near-term revenue objectives with evolving
commodity markets through the acquisition of an initial 20.5% of Limeco
Resources Limited ("Limeco") post period end:
o Limeco owns an ex-Glencore limestone project with historical spend of over
US$100m in Zambia which demonstrates immediate growth potential and
significant cash flow prospects
o Quicklime is an essential component in various industries including copper
production, steel manufacturing, construction, and environmental management
o c£2 million raised post period end to commence funding the acquisition of
an initial 20.5% of Limeco, as well as finance the recommissioning of the lime
plant and ramp up of its operations
o The project is debt free with an estimated resource of 73.7Mt @ 95.3%
CaCO(3) and an estimated limestone stockpile of 190,000 tonnes, which will be
used to start production
o Fully permitted with the first kiln due to be operational by the end of
2024
o Potential for multiple revenue streams from the sale of quicklime,
aggregate, and ancillary products such as ash to the concrete industry
o Aggregate sales began in October 2023 contributing to early cash flow,
with ongoing discussions with offtake partners
· Further progress in the advancement of the Atex Project in north-west
Côte d'Ivoire during and post year-end:
o Successful expansion of the known lithium mineralisation by 122% following
Firering's first reverse circulation campaign in March 2024
Commenting on the results Yuval Cohen, CEO of Firering said: "As an emerging
multi-project company we can adapt to shifting market conditions. Accordingly,
we are currently prioritising our resources on our quicklime asset, which has
the potential to generate significant cash flow due to its alignment with the
robust copper market. With this background, post period end, we were
delighted to acquire a 20.5% stake in Limeco, which we can increase to 45%.
"Limeco has benefited from over $100 million in historical investment,
creating a near-complete operation comprising a limestone quarry, a two-stage
crushing circuit, and a lime plant. We are currently renovating the lime plant
by changing the fuel system from Heavy Fuel Oil to coal gasification and are
on track to recommission the first kiln in Q4 2024. The remaining seven
kilns will be commissioned in stages thereafter. When fully commissioned,
Limeco will be the largest quicklime operation in Zambia, able to support the
Copperbelt's rapidly expanding copper production needs.
"We look forward to updating shareholders as we achieve important milestones
during the second half of the year."
For further information on the Company, please visit www.fireringplc.com
(http://www.fireringplc.com) or contact:
Firering Strategic Minerals T: +44 207 236 1177
Yuval Cohen
SPARK Advisory Partners Limited (Nominated Adviser) T: +44 203 368 3550
Neil Baldwin / James Keeshan / Adam Dawes
Optiva Securities Limited (Joint Broker) T: +44 203 137 1903
Christian Dennis / Daniel Ingram
Shard Capital Partners LLP (Joint Broker) T: +44 207 186 9950
Damon Heath / Erik Woolgar
St Brides Partners Limited (Financial PR) E: firering (mailto:firering) @stbridespartners.co.uk
(mailto:firering@stbridespartners.co.uk)
Isabel de Salis / Susie Geliher / Isabelle Morris
CHAIRMAN'S STATEMENT
Over the past year, we made a pivotal decision to shift to prioritise Limeco
Resources Limited ("Limeco"), a quicklime opportunity in Zambia that offered
an immediate growth potential with significant cash flow prospects.
Accordingly, post period end, we raised gross proceeds of £2.089 million via
a Placing, Subscription and WRAP Retail Offer to principally fund the
acquisition of an initial 20.5% of Limeco as well as finance the
recommissioning of the lime plant and ramp up of its operations. We also have
an option to acquire an additional 24.5% of Limeco to be exercisable in five
tranches between July 2025 and July 2026.
With a historical investment of more than US$100 million, Limeco's assets
comprise a limestone quarry; a two-stage crushing circuit with an installed
capacity of 300 tonnes per hour (tph); and a lime plant capable of producing
600-800 tonnes of quicklime per day. To put the latter into perspective,
during the past two years quicklime has been trading between US$160-US$218 per
tonne.
While the Project was in an advanced stage when we invested, our
investigations revealed that more work to optimise production would be needed
before recommissioning, including updating the crushing circuit to ensure
production of the optimal limestone size fraction to be fed to the kilns and
to generate aggregate from the waste stream, and transitioning the fuel source
from heavy fuel oil ('HFO') to coal gasification to provide more
cost-effective heating energy for the kilns.
These workstreams have been progressing well with phased recommissioning of
the eight kilns scheduled to commence in Q4 2024 with planned completion in Q3
2025. Key to this is a 150,000-tonne limestone stockpile that we can initially
use to ensure a structured and efficient start to operations. This is in
addition to a ~250,000 tonnes waste stockpile ready for the immediate
production of aggregate.
The quarry has a current Mineral Resource ("MR") of 73.7 million tonnes ("Mt")
at 95.3% CaCO(3) (Golder Associates, 2017). Independent consultants Earthlab
Exploration and Mining Consulting (Pty) Ltd, recently reconfirmed tonnages and
grades used to produce the initial MR in 2017 as well as a potential
exploration target of 95Mt. Limeco has applied for this exploration licence,
which is pending approval.
The Company has day to day operational control of the Project under the
leadership of our CEO, Yuval Cohen, who is supported by a tier 1 team engaged
to refurbish the lime plant, including consultants with firsthand knowledge of
Limeco's plant. Additionally, Firering's significant shareholder Rina Group,
via Rompartner Ltd, which is a major shareholder in one of the largest
quicklime plants in Israel, is providing additional operational support.
Our strategy is focused on creating multiple revenue streams at Limeco from
the sale of quicklime, aggregate, and ancillary products such as ash to the
concrete industry. In line with this, aggregate sales began in October 2023
contributing to early cash flow, with future offtake agreements anticipated
once renovations to the crushing plant are completed in Q3 2024. Meanwhile,
quicklime offtake discussions are ongoing including negotiations with a major
copper producer. We are also finalising an agreement with a third party to
lease our HFO tanks for diesel storage, which will provide further cash flow
to support our operations.
In particular, we aim to capitalise on our unique position as the largest
known quicklime operation in Zambia capable of supporting the increased copper
production activities in the Zambia Copperbelt. Currently, copper producers
are importing quicklime from South Africa, which incurs additional costs, time
delays, and results in increased CO(2) emissions.
As background, quicklime is an essential component in various industries
including copper production, steel manufacturing, construction, and
environmental management. In the extraction and refining of copper, quicklime
is used primarily for pH control, aiding in the flotation process that
separates valuable copper minerals from waste rock. It is also vital in the
neutralisation of acidic waste streams and tailings, ensuring that these
by-products meet environmental regulations before being safely discharged or
repurposed.
While Limeco is now the Company's key focus, we continue to develop the Atex
Project in north-west Côte d'Ivoire, in which we hold a 90% interest.
Covering both lithium and tantalum-niobium potential, our licence is situated
within the Baoulé-Moss domain of the West African Craton, which features
extensive arcuate belts stretching hundreds of kilometres, known for hosting
multiple deposits of gold, base metals, and pegmatite-hosted columbo-tantalite
and lithium.
Following a scout drilling campaign in 2022, we completed our first reverse
circulation ('RC') drilling campaign at Atex in March 2024, with 3,753 metres
drilled over 23 holes, significantly expanding known lithium mineralisation by
122%, extending the strike length to 800 metres.
Our next stage is to focus on expanding drilling exploration efforts in an
easterly and northerly direction and delineating a maiden resource.
We remain committed to sustainable practices and minimising our environmental
impact. Accordingly, the Company has implemented a comprehensive strategy to
foster positive community relations and support local development. These
efforts are complemented by a commitment to minimising our environmental
impact, with all our operations adhering to stringent environmental standards.
With our strategic shift towards quicklime production well underway,
significant milestones achieved and more on the horizon, we are excited about
Firering's future and ability to deliver sustained value to shareholders
through diversified revenue streams, robust resource management, and strategic
market engagement.
I would like to thank shareholders for their support and look forward to
updating the market regularly as our path to production gains momentum.
Youval Rasin
Non-Executive Chairman
Extracts of the 2023 Consolidated Financial Statements are set out below.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 31 December
2023 2022
Note Euros in thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 297 1,184
Other receivables 43 32
Total current assets 340 1,216
NON-CURRENT ASSETS:
Other receivables 19 637 637
Investment in joint venture 19 2,142 2,073
Intangible assets 7 - 1,276
Property, plant and equipment 8 118 166
Total non-current assets 2,897 4,152
Total assets 3,237 5,368
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 31 December
2023 2022
Note Euros in thousands
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Trade payables 166 61
Other payables 20 320 451
Capital note 17 174 214
Total current liabilities 660 726
NON-CURRENT LIABILITIES:
Accrued severance pay, net 8 8
Capital notes 10 622 565
Loan from non-controlling interest in subsidiary 11 - 103
Total non-current liabilities 630 676
Total liabilities 1,290 1,402
EQUITY: 12
Share capital 100 87
Share premium 7,801 6,967
Warrants 39 20
Accumulated deficit (5,699) (3,057)
Capital reserves (294) (51)
Equity attributable to equity holders of the parent 1,947 3,966
Non-controlling interests - -
Total Equity 1,947 3,966
Total liabilities and equity 3,237 5,368
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year ended
31 December
2023 2022
Note Euros in thousands
(except per share amounts)
Gain on earn-in arrangement 19 - 1,614
Impairment of intangible assets 7 (1,276) -
General and administrative expenses 13 (1,357) (1,504)
Operating profit (loss) 2,633 110
Financial expenses 14 86 (290)
Loss before taxes on income (2,719) (180)
Share of loss of joint venture 39 -
Taxes on income 15 - -
Net loss (2,758) (180)
Other comprehensive loss - -
Total comprehensive loss (2,758) (180)
Net loss attributable to:
Equity holders of the Company (2,413) (84)
Non-controlling interests (345) (96)
(2,758) (180)
Total comprehensive loss attributable to:
Equity holders of the Company (2,413) (84)
Non-controlling interests (345) (96)
(2,758) (180)
Loss per share (euro) - basic and diluted 16 (0.03) (0.00)
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Attributable to equity holders of the Company
Share Share premium Warrants Reserves Accumulated deficit Total Non-controlling interests Total
capital (*) equity
Balance as of 1 January 2022 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)
Balance as of 31 December 2022 87 6,967 20 (51) (3,057) 3,966 - 3,966
-
Profit (loss) for the period - - - - (2,413) (2,413) (345) (2,758)
Issue of shares 11 726 19 - - 756 - 756
Share based compensation 2 108 - - - 110 - 110
Reallocation of non-controlling interests - - - - (229) (229) 345 116
Capital reserve (transaction with minority in joint venture) - - - (243) - (243) - (243)
Balance as of 31 December 2023 100 7,801 39 (294) (5,699) 1,947 - 1,947
*) See Note 12d for details of reserves.
Year ended
31 December
CONSOLIDATED STATEMENTS OF CASH FLOWS
2023 2022
Euros in thousands
Cash flows from operating activities:
Net loss (2,758) (180)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to the profit or loss items:
Gain on earn-in arrangement - (977)
Depreciation 48 47
Impairment of intangible assets 1,276 -
Accrued interest on capital note and on loan from non-controlling interest 70 75
Share based payment 20 -
Share of loss of joint venture 39 -
Changes in asset and liability items:
Increase in other receivables (11) (147)
Increase in non- current other receivables - (637)
Increase (decrease) in trade payables 105 (89)
Increase (decrease) in other payables and Capital note (81) 369
Net cash used in operating activities (1,292) (1,539)
Cash flows from investing activities:
Proceeds from sale of control rights in subsidiaries - 977
Decrease in cash upon deconsolidation of subsidiaries, net - (33)
Investment in joint venture (351) -
Additions to property, plant and equipment - (20)
Additions to intangible assets - (1,265)
Net cash used in investing activities (351) (341)
Cash flows from financing activities:
Cash paid for acquisition of non-controlling interest - (320)
Issue of shares 756 -
Net cash provided by (used in) financing activities 756 (320)
Net change in cash and cash equivalents (887) (2,200)
Cash and cash equivalents at beginning of year 1,184 3,384
Cash and cash equivalents at end of year 297 1,184
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 issuance of shares in - 637
consideration for conversion of convertible loan notes
Issue of shares to non-controlling interests as part of share swap (see - 89
Note 6)
Issue of shares in payment of liability to employees and service 90 -
providers
Derecognition of liability to non-controlling interests upon impairment of 116 -
project
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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, in 2022 the Company ceased to consolidate the financial
statements of Atex and Alliance and the investment in the joint venture is
subsequently accounted for using the equity method.
See Notes 6 and 19 for further details.
In August 2023, the Company together with Clearglass Investments Limited
("Clearglass"), a related party, signed an option agreement to acquire up to
33.33% of Limeco Resources Ltd ("Limeco"), the owner of a limestone project
located in Zambia. The Company will have the option to acquire up to 28.33% of
Limeco across two tranches for an aggregate amount of US5.1 million.
Clearglass is to pay a non-refundable US$500 thousand fee in exchange for the
option to acquire up to 5% of Limeco upon exercise of the option by the
Company. This amount is to be made available to Limeco as a loan by the
Vendors of Limeco to bring the project into operation.
Limeco was initially established by another company which invested
approximately US$100 million in establishing the limestone quarry and
constructing the current lime plant. This investment was made via a
shareholder's loan to Limeco, and this loan remains outstanding to the Vendors
of Limeco.
See note 21 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 current and future
mineral projects, the funding status is 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, Ricca, which 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.
In 2023 Ricca did not complete a planned IPO and was
unable to raise significant funds from other sources. This affected the
liquidity position of Ricca such that Ricca was unable to fund these projects
as planned. The Company is currently in discussions with Ricca as to the
resolution of this issue. In any case, the Company continues to view these
projects as viable and is evaluating various alternatives as to further
financing for these projects.
Limestone:
As described above in Note 1 and in Note 21, the Company has entered into an
agreement to acquire up to a 45% interest in a limestone quarry and production
plant in Zambia. The acquisition is to be made through exercise of options in
instalments over a period ending in 2026. As further described in Note 21,
in June 2024 the Company completed a placing of shares on the AIM for net
consideration of approximately €2.3 million, a portion of which is intended
to fund the initial acquisition option instalment.
In respect of its ongoing general activities, based on a review of the Group's
budget and forecast cash flows, including funds raised in June 2024 as
described in Note 21, 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.
NOTE 2:- 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.
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. 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.
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.
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.
d. 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 (€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.
e. 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.
f. 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.
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
g. 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.
h. 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.
i. 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:
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.
j. 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.
k. 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. Share-based payment transactions:
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.
p. 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 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 applied prospectively for annual reporting periods beginning
on 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.
The application of the Amendment did not have a material impact on the
Company's consolidated financial statements.
2. 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 January 1, 2023.
The application of the above Amendment had an effect on the disclosures of the
Company's accounting policies, but did not affect the measurement, recognition
or presentation of any items in the Company's consolidated 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 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 disclosed a
quantitative sensitivity analysis for fluctuations in foreign exchange rates
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. 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 1 January 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. IFRS 18, "Presentation and Disclosure in Financial
Statements":
In April 2024, the International Accounting Standards Board ("the IASB")
issued IFRS 18, "Presentation and Disclosure in Financial Statements" ("IFRS
18") which replaces IAS 1, "Presentation of Financial Statements".
IFRS 18 is aimed at improving comparability and transparency of communication
in financial statements.
IFRS 18 retains certain existing requirements of IAS 1 and introduces new
requirements on presentation within the statement of profit or loss, including
specified totals and subtotals. It also requires disclosure of
management-defined performance measures and includes new requirements for
aggregation and disaggregation of financial information.
IFRS 18 does not modify the recognition and measurement provisions of items in
the
financial statements. However, since items within the statement of profit or
loss must be classified into one of five categories (operating, investing,
financing, taxes on income and discontinued operations), it may change the
entity's operating profit. Moreover, the publication of IFRS 18 resulted in
consequential narrow scope amendments to other accounting standards, including
IAS 7, "Statement of Cash Flows", and IAS 34, "Interim Financial Reporting".
IFRS 18 is effective for annual reporting periods beginning on or after
January 1, 2027, and is to be applied retrospectively. Early adoption is
permitted but will need to be disclosed.
The Company is evaluating the effects of IFRS 18, including the effects of the
consequential amendments to other accounting standards, on its consolidated
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
thousand). 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 were the sole asset of Atex. Atex had no employees.
Accordingly, the purchase transaction was accounted for as an acquisition of
an intangible asset.
The Company determined that as of the acquisition date the fair value of the
options to acquire an additional 39% interest in Atex was immaterial and
accordingly no portion of the consideration paid was 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:
Euro
in thousands
Intangible asset 120
Liabilities acquired (1)
Net assets acquired 119
Non-controlling interest (49%) (58)
Total purchase cost and cash paid 61
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 held a 77% interest in Atex - see Note 19 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 was 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
2023, 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 balance of the liability to
the non-controlling interest in Alliance at 31 December 2023 is €200
thousand (2022 - €161 thousand). Subsequent to deconsolidation in 2022 (see
below) this liability is included in the accounts of the joint venture -see
Note 19. The interest (unwinding of the discount) in 2023 in the amount of
€39 thousand was recorded as financial expense by the joint venture (2022 -
€31,000 recorded as financial expense by the Company).
Pursuant to IFRS 3, the Company recorded the intangible asset at its fair
value on date of acquisition as follows:
Euro
in thousands
Intangible asset 448
Non-controlling interests (20%) (90)
Total purchase cost 358
Comprised of:
Cash consideration 228
Liability for forward purchase 130
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, in
2022 the Company ceased to consolidate the accounts of Alex and Alliance and
commenced recording 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:
Euro
in thousands
Cash 33
Other current assets 143
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 2023
and 2022:
2023 2022
Euros in thousands
As of 1 January 1,276 2,073
Deconsolidation (Note 6) - (2,062)
Additions - 1,265
Impairment (*) (1,276)
As of 31 December - 1,276
(*) The opening balance as of 1 January 2023 relates mainly to the Bri Coltan
concession. Since the Company currently has no plans or budget for further
exploration, an impairment loss for the entire balance was recorded.
NOTE 8:- PROPERTY, PLANT AND EQUIPMENT
Plant and equipment Motor vehicles Computers, peripheral equipment and furniture Total
Euros in thousands
Cost:
As of 1 January 2022 409 121 25 555
Addition 2 49 17 68
Deconsolidation (Note 6) (2) (141) (19) (162)
As of 31 December 2022 and 2023 409 29 23 461
Accumulated depreciation:
As of 1 January 2022 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
Charge for the year 41 3 4 48
As of 31 December 2023 305 26 12 343
Net carrying amount:
As of 31 December 2023 104 3 11 118
As of 31 December 2022 145 6 15 166
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 totalling 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 2023
is €622 thousand (2022 - €565 thousand). In 2023 interest expense on the
loan (unwinding of discount) amounted to €57 thousand (2022 - €51
thousand).
NOTE 11:- LOAN FROM NON-CONTROLLING 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. The balance of the loan (before
derecognition - see below) at 31 December 2023 was €116 thousand (2022 -
€103 thousand. In 2023 interest expense on the loan (unwinding of discount)
amounted to €13 thousand (2022 - €11 thousand).
As described in Note 7, it was decided as of 31 December 2023 to record an
impairment loss for the entire balance of the Bri Coltan concession.
Accordingly, the liability to the non-controlling interests in the amount of
€116 thousand was derecognized against the negative balance of
non-controlling interests in equity.
NOTE 12:- EQUITY
a. Composition of share capital:
Authorized Issued and outstanding
31 December 31 December
2023 2022 2023 2022
Number of shares
Ordinary shares of €0.001 par value each 100,000,000 100,000,000 99,913,262 88,043,560
On 4 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.
In 2023, the Company issued 1,085,088 Ordinary shares to certain employees,
consultants, and service providers for their services. The fair value of these
shares on date of issuance amounted to €110 thousand, of which €20 was
recorded in 2023 as share-based compensation in employee-related costs,
contractors & service providers expenses, and €90 was recorded as a
payment of liability from 2022 to employees and service providers.
In September 2023, the Company completed a placing on the AIM, a market
operated by the London Stock Exchange ("the AIM"), by issuing 10,784,614
Ordinary shares at a price of £0.065 per share for a total consideration of
c€812,000 (c.£701,000), net proceeds of €756,000 (c.£654,000).
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 2023, 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.
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 2023.
The fair value of the Warrants granted calculated based on Black-Scholes
option pricing model was approximately €20 thousand.
The fair value of the warrants was recorded as part of the IPO fund-raising
costs and deducted from share premium in equity.
On 21 September 2023, the Company granted a total of 581,538 warrants to some
service providers of the Company as part of their compensation for the
services provided in the fund-raising process. Each warrant is exercisable to
one Ordinary share at an exercise price of £0.065. the warrants will expire 3
years after date of grant.
The fair value of the Warrants granted calculated based on Black-Scholes
option pricing model was approximately €19 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 3 years
Risk-free interest rate (%) 4.42%
Dividend yield (%) 0%
Expected volatility (%) 58%
Expected term (in years) 3
The fair value of the warrants was recorded as part of the fund-raising costs
and deducted from share premium in equity.
d. Capital reserves:
Capital reserves are comprised of the following:
31 December
2023 2022
Euros in thousands
As of the beginning of the year (51) -
Reserve for transactions with non-controlling interests (Note 11) - 91
Reserve for transactions with principal shareholders (Note 10) - 236
Reserve for transactions with non-controlling interests (2023 - Note 19; 2022 (243) (378)
- Note 6)
As of the end of the year (294) (51)
NOTE 13:- GENERAL AND ADMINISTRATIVE EXPENSES
Year ended
31 December
2023 2022
Euros in thousands
Salaries and employee related expenses 483 663
Contractors and service providers 196 333
Travel and transportation 46 12
Legal and professional 220 206
Office expenses 70 66
Nomad and broker fees 123 54
Public relations 52 45
Insurance 39 27
Depreciation 48 47
Exploration costs 60 25
Other costs 20 26
Total 1,357 1,504
NOTE 14:- FINANCIAL EXPENSES
Year ended
31 December
2023 2022
Euros in thousands
Interest on capital notes and loan from non-controlling interest 57 64
Interest on liability to non-controlling interest - 31
Bank fees 29 196
86 290
NOTE 15:- TAXES ON INCOME
a. Tax rates applicable to the income of the Company and its
subsidiaries:
The Company and its subsidiary Firering Strategic Minerals PLC were
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 €20 thousand. 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%.
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%.
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 2023, 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
2023 2022
Euros in thousands
Net loss attributable to equity shareholders (2,413) (84)
Average number of shares for the purpose of basic and diluted earnings per 91,876,311 87,457,527
share
Share options and warrants are excluded from the calculation of diluted loss
per share as their effect is antidilutive.
NOTE 17:- RELATED PARTIES
a. Balances:
Year ended
31 December
2023 2022
Euros in thousands
Current liabilities:
Other payables 79 54
Capital note (*) 174 214
Non-current liabilities:
Capital note (Note 10) 293 266
*) The capital note bears no interest and is payable on demand.
b. Compensation of key management personnel of the Company:
Year ended
31 December
2023 2022
Euros in thousands
Short-term employee benefits 309 535
A Director and the CEO of the Company is entitled to salary of €120 thousand
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 €15 thousand per annum),
accommodation (capped at €1.2 thousand per month) as well as travel costs
for himself and his family to have home leave.
c. Interest on capital note (see also Note 10) 27 24
NOTE 18:- FINANCIAL INSTRUMENTS
a. 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 2023, the foreign exchange risk is immaterial.
b. 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 2023
Less than one year 1 to 2 years 2 to 3 3 to 4 years 4 to 5 years > 5 Total
years years
Euros in thousands
Trade payables 166 - - - - - 166
Other payables 320 - - - - - 320
Capital note 174 - 743 - - - 957
Loan from non-controlling interest in subsidiary - - - - - 205 205
660 - 743 - - 205 1,608
31 December 2022
Less than one year 1 to 2 years 2 to 3 3 to 4 years 4 to 5 years > 5 Total
years 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
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. See also note 21.
· 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 -see Note 21) and presented as non-current
receivable in the statement of financial position as of 31 December 2023 and
2022. Accordingly, the total initial consideration of €1614 thousand was
recorded as a gain on the earn-in arrangement in the statement of
comprehensive income for 2022.
Summarized financial data of the joint venture:
Year ended
31 December
2023 2022
Euros in thousands
Statement of financial position of joint venture at reporting date:
Current assets 203 178
Property, plant and equipment 82 112
Intangible assets 3,103 2,314
Current liabilities (23) )1(
Liability to non-controlling interest in subsidiary (200) (161)
Loan from Firering (2,424) (2,073)
Net Assets 741 369
Equity
Non-controlling interests 1,023 369
Equity attributable to equity holders of the joint venture (1) (243) -
Accumulated deficit (39) -
Total equity 741 369
Investment in joint venture 2,142 2,073
(1) In March 2023 Marvella exercised the remaining existing option
originally between Firering and Atex's shareholder 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 paid €200 thousand and the balance of €59 thousand
was funded by the Company. Marvella recorded the difference between the total
consideration and the carrying amount of the non-controlling interest in the
amount of € 243 as a charge to capital reserve in equity.
In 2023, the joint venture had no revenues and incurred financial expenses of
€39 thousand in respect of the liability to non-controlling interest in
subsidiary (see Note 6b). 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 year ending on 31 December 2023, Ricca funded exploration expenditures
of the joint venture in the amount of US$740 thousand (€681 thousand). (2022
- €253 thousand).
NOTE 20:- OTHER PAYABLES
31 December
2023 2022
Euros in thousands
Accrued expenses 177 262
Employees and payroll accruals 96 152
Other accounts payable 47 37
320 451
NOTE 21:- EVENTS AFTER THE REPORTING DATE
1. In March 2024, the Company received 20,000,000 shares in
Ricca Resources Limited ("Ricca") at an issue price of AUD$0.05 with a value
of AUD$1.0 million. The Shares have been issued pursuant to the Agreement
following Ricca not having completed an IPO on the ASX by 31 December 2023 and
in settlement of the non-current receivable in the amount of €637 thousand.
The Ricca Shares were issued at a Ricca pre money valuation of c.AUD$7.96
million, representing its value at its most recent funding round in May 2023.
Following the settlement Firering holds 20,00,000 shares in Ricca which
represents c.11.2% of Ricca's issued share capital.
2. In May 2024 the Company entered into a Share Purchase
Agreement ("SPA") together with Clearglass, a related party, with the Vendor
(Kai Group Ltd). The SPA replaces the option agreement entered into by the
Company and Clearglass in respect of Limeco on 16 August 2023 - see Note 1.
Pursuant to the SPA, the Company will acquire a 20.5% interest in Limeco for
US$3,550,000. The consideration shall be payable to the Vendor in 3
instalments over the next 12 months as follows:
1. US$1,500,000 being payable no later than 30 June 2024 to acquire an initial
10% interest;
2. US$1,016,667 payable no later than 31 December 2024 to acquire a further
6.7% interest; and
3. US$1,033,333 payable no later than 30 April 2025 to acquire an additional
3.9% interest.
Clearglass will receive 2.5% of the issued shares of Limeco upon completion of
the final payment due under the SPA as a result of the previous non-refundable
US$500 thousand fee paid under the prior option agreement.
The SPA includes the terms of the New Option, pursuant to which the Company
will be granted an option to acquire up to 24.5% of Limeco for an aggregate
consideration of US$4,650,000 shall be exercisable in 5 tranches between July
2025 and July 2026 as follows:
- an option to acquire a 6.4% interest no later than 31 July 2025 for a
consideration of US$1,033,333;
- an option to acquire a 3.8% interest no later than 30 October 2025 for a
consideration of US$620,000;
- an option to acquire a 5.5% interest no later than 30 January 2026 for a
consideration of US$981,667;
- an option to acquire a 5.5% interest no later than 30 April 2026 for a
consideration of US$981,667; and
- an option to acquire a 3.3% interest no later than 31 July 2026 for a
consideration of US$1,033,333.
Clearglass will receive 2.5% of the issued shares of Limeco upon completion of
the final payment due under the New Option as a result of the previous
non-refundable US$500 thousand fee paid under the prior option agreement.
The New Option shall not be exercisable prior to the date falling 12 months
after the date of the SPA.
The Company shall be entitled to accelerate any payment/acquisition under the
SPA and New Option, in which circumstance the applicable payment shall be
reduced by reference to a discount rate of 10% per annum, calculated daily, up
to a maximum discount equal to what would be applied if a payment is made 4
months early.
In the event that the Company does not complete any payment due under the SPA,
or otherwise fails to exercise any tranche of the New Option, Clearglass has
agreed that it shall be responsible for making the relevant payment due to the
Vendor, or, if applicable, exercise the New Option, and acquire the applicable
Limeco shares in respect of that payment.
The Vendor will make up to US$4 million of the consideration paid to it under
the SPA and New Option available to Limeco as a shareholder loan to renovate
the kilns at the Project.
Upon completion of the SPA and New Option and assuming the Company settles all
the consideration under the SPA and the New Option, the Company will hold a
45% interest in Limeco, Clearglass will hold a 5% interest and the Vendor will
hold a 50% interest. However, if any payment is not paid when due under the
SPA (or under the terms of the New Option for the latest date by which the
various tranches are exercisable), there shall be a 21-day cure period to
remedy the missed payment, or the Vendor shall be entitled to terminate the
SPA and the New Option. Additionally, in such circumstances the Vendor shall
have the option to buy Limeco shares from Clearglass, up to a limit of a 5%
interest in Limeco (to the extent that such Limeco shares are held by
Clearglass). Additionally, in the event of a change of control of both the
Company and Clearglass, Clearglass will transfer 1 of the issued shares of the
Company to the Vendor such that upon completion of the SPA and New Option, the
Vendor holds a majority interest in Limeco.
3. On 19 June 2024 the Company completed a placing on the AIM,
a market operated by the London Stock Exchange ("the AIM"), by issuing
72,037,449 Ordinary shares at a price of £0.029 per share for a total
consideration of €2,465 thousands (£2,089 thousands), net proceeds of
approximately €2,295 thousands (£1,945 thousands).
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