Consolidated Annual Financial Results 31 Dec 2022
09/06/2023 07:00
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RNS Number : 1643C Katoro Gold PLC 09 June 2023
Katoro Gold Plc
(Incorporated in England and Wales)
(Registration Number: 9306219)
Share code on the AIM: KAT
ISIN: GB00BSNBL022
('Katoro' or 'the Company')
Condensed Consolidated Annual Financial Results for the year ended 31 December
2022
Dated: 9 June 2023
Katoro Gold PLC ("Katoro" or the "Company") (AIM: KAT), the gold and nickel
exploration and development company is pleased to release its audited results
for the year ended 31 December 2022. A condensed set of financial statements
accompanies this announcement below, while the Company's full Annual Report
and Financial results can be found on the Company's website www.katorogold.com
(http://www.katorogold.com) . The Company's Annual Report is in the process of
being prepared for dispatch to shareholders. Details of the date and venue for
this year's AGM, will be announced on posting of the Annual Financial results.
Overview
· The diamond drilling programme at Haneti, executed by an excellent
drill contractor in a blistering 17 days, eventually completed 900.04 metres
across three drill holes as planned and with depths of 430.24m, 245.78m and
224.02m respectively, by the first week in February 2022. The results could
enable us to focus on specific target areas in future endeavours.
· The Company entered into a Joint Venture Agreement with Lake Victoria
Gold ('LVG') for the development of the Company's Imweru Gold Project
('Project'). Under the Agreement, LVG will earn up to 80% in the Project, with
the balance of 20% being held by Katoro as a carried interest, with the JV
reimbursing Katoro for previous expenditures in the amount of €792,000 on or
before 31 December 2023 (see Note 8 of the Accounts for full details).
· During the latter part of the year the Company evaluated several new
projects with the aim of diversifying its portfolio geographically.
· Post period end:
o The Company announced the successful conclusion of a next fundraise
through which an amount of £150,000 (gross) was raised at 0.1 pence per share
which will be utilized for ongoing working capital and to conclude the project
assessment process.
o The Company proceeded to appoint Beaumont Cornish Limited as its new
NOMAD. This appointment was made in accordance with Rule 1 of the AIM Rules
for Companies.
This announcement contains inside information as stipulated under the Market
Abuse Regulations (EU) no. 596/2014.
For further information please visit www.katorogold.com
(http://www.katorogold.com) or contact:
Louis Coetzee louisc@katorogold.com (mailto:louisc@katorogold.com) Katoro Gold plc Executive Chairman
James Biddle +44 207 628 3396 Beaumont Cornish Ltd Nominated Advisor
Roland Cornish
Nick Emmerson +44 (0) 1483 413 500 SI Capital Ltd Broker
Sam Lomanto
Zainab Slemang van Rijmenant zainab@lifacommunications.com (mailto:zainab@lifacommunications.com) Lifa Communications Investor and Media Relations Consultant
Chairman's Report
I am pleased to present Katoro Gold's Annual Financial Statements for the
financial year ending on 31 December 2022. This past year has been dedicated
to consolidating our efforts at Katoro as we pursue the development of
strategic projects in the precious minerals' exploration arena.
Simultaneously, we have remained agile, adjusting our strategies to meet the
evolving demands of the industry and associated markets.
Exploration and Development
Throughout 2022, we continued to advance our exploration and development
activities in Tanzania given prevailing funding constraints. On the Haneti
Project, we successfully completed our diamond drill program into host rock
and analysed geophysical fresh rock data from drill samples gathered at depth
as announced in a Company RNS dated 31 May 2022. This allowed us to refine our
approach by enhancement of the geological modelling and focus on specific
target areas for future endeavours. As the Haneti Project holds substantial
promise in terms of its size and scope and with the completion of the first
Haneti program, we can now resume discussions with potential project partners
to delve into the findings in greater depth, although noting that due to this
funding uncertainty as at 31 December 2022, management has applied a provision
for impairment against the carrying value of the intangible asset to the value
of £209,500.
Furthermore, we have forged a Joint Venture Agreement (JVA) in collaboration
with Lake Victoria Gold (LVG) to advance the Imweru Gold Project. Under the
Agreement, Lake Victoria Gold Limited became the 80% shareholder of Kibo Gold
Limited, Cypriot subsidiary of Katoro Gold plc, on the date of the Agreement
with Katoro Gold plc owning the remaining 20%. Prior to the implementation of
the above "Joint Venture Agreement", Katoro Gold plc held 200 ordinary shares
in the equity of Kibo Gold Limited, constituting 100% of the issued share
capital in the company. LVG is actively progressing the adjacent Imwelo Gold
Project, which is in an advanced stage of development. The strategic
integration of these two projects is expected to enhance their overall
fundability, accelerating their joint progress and maximizing the potential
for successful exploitation of the combined gold mining venture.
During the latter part of the year, Katoro Gold conducted a thorough
evaluation of several new projects with the aim of diversifying its portfolio
geographically. Our objective was twofold: to mitigate country-specific risks
and enhance our existing portfolio. We sought to achieve this by investigating
the strategic acquisition of opportunities that offer significant value and
align with our overarching goal of establishing ourselves as a prominent
African-focused company specializing in strategic exploration and development
of precious minerals.
Corporate and Post Year-End Developments
The Company successfully secured supplementary funding during the first
quarter of 2023 to drive our strategic objectives and fulfil general working
capital requirements.
Following the termination of the Nominated Advisor (NOMAD) agreement with RFC
Ambrian Ltd, as stated in the 22 December 2022 RNS, the Company proceeded to
appoint Beaumont Cornish Limited as its new NOMAD. This appointment was made
in accordance with Rule 1 of the AIM Rules for Companies, as announced in a
Company RNS on 10 January 2023.
On 3 April 2023, the Company announced the successful conclusion of a next
fundraise through which an amount of £150,000 (gross) was raised at 0.1 pence
per share, through a placing by SI Capital. The placing comprised of £130,000
raised by SI Capital and the directors subscribed for a further £20,000.
Proceeds from said placing will be utilized for ongoing working capital and to
conclude the project assessment process and consolidation referred to earlier
in this report.
Future Outlook
Looking ahead, I have great confidence in the future prospects of Katoro Gold,
as do the Board of Directors. We firmly believe that our current efforts to
consolidate and enhance the Katoro exploration portfolio will unlock
significant value for shareholders, and we look forward to revealing more in
this regard in the immediate future.
Finally, I would like to express my gratitude to our shareholders, employees,
and stakeholders for their continued support and dedication to Katoro Gold
through what can only be described as a very difficult and challenging year,
during which progress was not always up to expectation. We are however
well-positioned for 2023 and confident that it will be a year in which there
will be significant progress and value creation.
This report was approved on 8 June 2023 by:
Louis Coetzee
Executive Chairman
Strategic Report
The Board of Directors present their strategic report together with the
audited annual financial statements for the year ended 31 December 2022 of
Katoro Gold PLC (the "Company") and its subsidiaries (collectively the
"Group").
Principal activities
The principal activity of the Group is gold and nickel focussed exploration
activities in Tanzania and South Africa.
Review of business in the year
The Group is in its early stage of development and details of the operational
activities of the Group are included in the Chairman's report.
Financial activities
Description 31 December 2022 31 December 2021
£ £
Administrative expenses (664,682) (689,396)
Share based payment transactions - (195,241)
Foreign exchange (losses)/gains (407) 15,471
Impairments (224,966) -
Loss on disposal of subsidiary (75,922)
Share in loss in associate (4,408)
Exploration expenditure (285,374) (284,463)
Other income - 1,029
Finance income 5,260 10,121
Taxation (61) -
Loss for the period (1,250,560) (1,142,479)
The marginal increase in the loss year-on-year, as disclosed in the table
above and in the statement of comprehensive income, is mainly owing to the
following causes:
• Decrease in administrative expenses due to decrease in operational
activities during the current period;
• The decrease in administrative expenses should however be read
together with the increase in "Share of loss in associate" since the Kibo Gold
expenditure was accounted for as a subsidiary in 2021, but from March 2022
Kibo Gold is accounted for as an associate.
• No share-based payment transactions took place in the current
financial year.
• There was an impairment of the Haneti assets, mainly because the
next phase of the Haneti drill programme is not formalised, and the related
funding has not been raised.
No shares were issued during the year ending December 2022. Therefore, the
marginal decrease in loss per share is due to the reasons stated above in the
analysis of the year-on-year loss for the period.
Key performance indicators
Management does not consider there to be any key financial KPI's at this
stage, other than the loss per share for the period, which is included in the
statement of comprehensive income. As and when operational activities increase
management will reconsider the key financial KPI's and update the necessary
disclosures accordingly. Non-financial KPI's comprise the measure of
advancement with respect to the various key exploration projects over the
medium to long term.
Principal Risks and Uncertainties
The realisation of exploration and evaluation assets is dependent on the
discovery and successful development of economic mineral reserves and is
subject to a number of significant potential risks summarised as follows, and
described further below:
• financial instrument & foreign exchange risk;
• strategic risk;
• funding risk;
• commercial risk;
• operational risk;
• speculative nature of mineral exploration and development;
• political stability; and
• foreign investment risks including increases in taxes, royalties
and renegotiation of contracts..
Financial instrument and foreign exchange risk
The Company and Group are exposed to risks arising from financial instruments
held and foreign exchange transactions entered into throughout the period.
These are discussed in Note 19 to the Annual Financial Statements.
Strategic risk
Significant and increasing competition exists for mineral acquisition
opportunities throughout the world. As a result of this competition, the Group
may be unable to acquire rights to exploit additional attractive mining
properties on terms it considers acceptable. Accordingly, there can be no
assurance that the Group will acquire any interest in additional operations
that would yield reserves or result in commercial mining operations. The
Company expects to undertake sufficient due diligence where warranted to help
ensure opportunities are subjected to proper evaluation.
Funding risk
In the past the Group has raised funds via equity contributions from new and
existing shareholders, thereby ensuring the Group remains a going concern
until such time that revenues are earned through the sale or development and
mining of a mineral deposit. There can be no assurance that such funds will
continue to be available on reasonable terms, or at all in future. The
Directors regularly review cash flow requirements to ensure the Group can meet
financial obligations as and when they fall due.
For further related disclosure refer to the going concern evaluation in the
Directors' report. It includes the evaluation of the going concern assumption
due to the funding risk. The section discloses the information that has been
taken into account, how the risks were evaluated and mitigated.
Commercial risk
The mining industry is competitive and there is no assurance that, even if
commercial quantities of minerals are discovered, a profitable market will
exist for the sale of such minerals. There can be no assurance that the
quality of the minerals will be such that the Group properties can be mined at
a profit. Factors beyond the control of the Group may affect the marketability
of any minerals discovered. Mineral prices are subject to volatile price
changes from a variety of factors including international economic and
political trends, expectations of inflation, global and regional demand,
currency exchange fluctuations, interest rates and global or regional
consumption patterns, speculative activities and increased production due to
improved mining and production methods. Ultimately, the Group expects that
prior to a development decision, a project would be the subject of a
feasibility analysis to ensure there exists an appropriate level of confidence
in its economic viability.
Operational risk
Mining operations are subject to hazards normally encountered in exploration,
development and production. These include unexpected geological formations,
rock falls, flooding, dam wall failure and other incidents or conditions which
could result in damage to plant or equipment or the environment and which
could impact any future production throughout. Although it is intended to take
adequate precautions to minimise risk, there is a possibility of a material
adverse impact on the Group's operations and its financial results. The
Company will develop and maintain policies appropriate to the stage of
development of its various projects.
Staffing and Key Personnel Risks
Recruiting and retaining qualified personnel is critical to the Group's
success. The number of persons skilled in the acquisition, exploration and
development of mining properties is limited and competition for such persons
is intense. While the Company has good relations with its employees, these
relations may be impacted by changes in the scheme of labour relations which
may be introduced by the relevant governmental authorities. Adverse changes in
such legislation may have a material adverse effect on the Group's business,
results of operations and financial condition. Staff are encouraged to discuss
with management matters of interest to the employees and subjects affecting
day-to-day operations of the Group.
Speculative Nature of Mineral Exploration and Development
In addition to the above there can be no assurance that the current
exploration programmes will result in profitable mining operations.
The recoverability of the carrying value of exploration and evaluation assets
is dependent on the successful discovery of economically recoverable reserves,
the achievement of profitable operations, and the ability of the Group to
raise additional financing, if necessary, or alternatively upon the Company's
ability to dispose of its interests on an advantageous basis. Changes in
market conditions could require material write downs of the carrying value of
the Group's assets.
Development of the Group's mineral exploration properties is, amongst others,
contingent upon obtaining satisfactory exploration results and securing
additional adequate funding. Mineral exploration and development involves
substantial expenses and a high degree of risk, which even a combination of
experience, knowledge and careful evaluation may not be able to adequately
mitigate. The degree of risk reduces substantially when a Group's properties
move from the exploration phase to the development phase.
The discovery of mineral deposits is dependent upon a number of factors
including the technical skill of the exploration personnel involved. The
commercial viability of a mineral deposit, once discovered, is also dependent
upon a number of factors, including the size, grade and proximity to
infrastructure, metal prices and government regulations, including regulations
relating to royalties, allowable production, importing and exporting of
minerals, and environmental protection. In addition, several years can elapse
from the initial phase of drilling until commercial operations are commenced.
Political Stability
The Company is conducting its activities in Tanzania and South Africa. The
Directors believe that the Governments of Tanzania and South Africa support
the development of natural resources by foreign investors and the Directors
actively monitor the situation on an ongoing basis. However, there is no
assurance that future political and economic conditions in Tanzania and South
Africa will not result in the respective governments adopting different
policies regarding foreign development and ownership of mineral resources. Any
changes in policy affecting ownership of assets, taxation, rates of exchange,
environmental protection, labour relations, repatriation of income and return
of capital, may affect the Company's ability to develop the projects.
Uninsurable Risks
The Group may become subject to liability for accidents, pollution and other
hazards against which it cannot insure or against which it may elect not to
insure because of prohibitive premium costs or for other reasons, such as
amounts which exceed policy limits.
Foreign investment risks including increases in taxes, royalties and
renegotiation of contracts
The Group is subject to risk arising from the ever-changing economic
environment in which its subsidiaries operate, mainly driven by the changing
regulatory environment governing corporate taxation, transfer pricing and
other investment related operational activities. The Group continues to
re-assess its investment decisions in order to limit exposure to the
ever-changing regulatory environment in which it operates.
Section 172 Report
Section 172(1)(a) to (f) of the Companies Act 2006 requires each director to
act in the way he or she considers would be most likely to promote the success
of the Company for the benefit of its members as a whole, with regard to the
following matters:
a. The likely consequences of any decision in the long-term
Katoro is a mining exploration and development Company. By their natures
mining exploration and development projects are complex, capital intensive,
last many years and involve a varied group of stakeholders. As such it is
extremely important that the board considers all decisions made by the Company
in the context of their long-term impact on the Company. Consequences of such
decisions include (but are not limited to) the impact on all stakeholders
(with particular care towards local communities), impact on environmental
issues in and around project areas and the financial impact on the Company and
its ability to function effectively. Katoro Gold is meticulous in its
planning, as is required for permitting processes in the mining exploration
and development sector. As such, the Company prepares detailed planning
documents before initiating any major work programme. Such planning
documents assess a variety of factors from community and environmental issues
to technical geological and project funding matters. Where appropriate the
Company provides copies of these reports on its website (www.katorogold.com
(http://www.katorogold.com) ) or releases excerpts via the London Stock
Exchange's Regulatory News Service.
b. The interests of the company's employees
The health and safety of Katoro Gold's employees is of paramount concern to
the board. It is imperative that Katoro Gold provides a safe and secure
working environment for all staff. The Company conducts regular Health &
Safety reviews and ensures that any operational plans are subject to rigorous
scrutiny in their creation and constant monitoring during their
implementation.
The Company is a responsible employer in respect to the approach it takes
towards employee and contractor pay, benefits and other terms of engagement as
it develops. These are constantly reviewed.
While the Board is all male at the date of this report, it is committed to
fair and equal gender opportunity and fostering diversity, subject to ensuring
appointees are appropriately qualified and experienced for their roles. The
Group acknowledges that as it expands its operations, it will be to its
benefit to align the composition of its Boards and profile of its management
and staff to reflect balance in the ethnicity and gender of its personnel.
Analyses of gender of Group personnel during reporting period:
Male Female Other
Board 5 0 0
Management 1 4 0
Employees No direct employees No direct employees No direct employees
c. The need to foster the company's business relationships with
suppliers, customers and others
Mining exploration and development projects involve a diverse and varied group
of stakeholders. These include (but is not limited to) the Company's
employees, government officials, local communities, financial backers,
shareholders and other suppliers. The Company adopts a transparent and open
stance in its dealings with all stakeholders to help build trust. Mining
exploration and development projects can only succeed with the full support of
all involved.
The board has oversight of the procurement and contract management processes
in place and receives regular updates on any matters of significance, as well
as approving the awarding of large contracts. The board ensures the Company
fully adheres to the Bribery Act 2010 2010 by means of Anti-Corruption &
Bribery and Whistle-Blowing policies that is implemented.
d. The impact of the company's operations on the community and
environment
Mining exploration and development projects can have a significant impact on
local communities and the environment. The board constantly reviews the impact
of its operations on local communities and the environments. Where required,
the Company completes detailed surveying work (such as Environmental Impact
Assessments) and, where necessary, applies for relevant permits. Such
processes require diligence and concentrated effort.
The board ensures it maintains positive relations with local communities, by
engaging in local programmes and providing secure employment opportunities.
e. The desirability of the company maintaining a reputation for high
standards of business conduct
As a listed company, Katoro Gold's reputation for the high standards of its
business conduct is paramount. The board makes every effort to ensure it
maintains these.
The Company is subject to the disclosure requirements of the AIM Rules for
Companies and Financial Conduct Authority's Disclosure Transparency Rules.
These comprehensive set of rules enforce a strict discipline upon the Company
in terms of the manner, timeliness, subjectivity and content of its public
disclosures.
Katoro Gold is also required to complete an annual audit. This is a rigorous
analysis of the Company's operations and review of the Company's policies. The
results of this are published each year in the Company's Annual Report.
Katoro Gold also publishes on its website an "AIM 26 Disclosure"
(https://katorogold.com/investors/aim-rule-26
(https://katorogold.com/?page_id=19) ), which details much of the manner in
which the Company is run.
Katoro Gold is committed to corporate governance and adheres to the QCA
Corporate Governance Code. The Company's corporate governance statement can be
found herehttps://katorogold.com/wp-content/uploads/2018/10/QCA-Statement.pdf
(https://katorogold.com/wp-content/uploads/2018/10/QCA-Statement.pdf) .
f. The need to act fairly as between members of the company
As a listed Company, Katoro Gold is committed to treating its shareholders
fairly and delivering shareholder value.
Katoro Gold is registered in England and Wales and is subject to the Companies
Act 2006. The Company is also subject to the UK City Code on Takeovers and
Mergers. The Company's articles of association, which help define some of the
actions between the Company and its shareholders, can be found here
https://katorogold.com/investors/corporate-documents
(https://katorogold.com/?page_id=17)
This report was approved by the Board on 25 May 2022 and signed on its behalf
by:
Louis Coetzee
Executive Chairman
Condensed Consolidated Financial Results for the year ended 31 December 2022
Condensed Consolidated Statement of Comprehensive Income
31 December 2022 31 December 2021
Audited Audited
Note £ £
Administrative expenses (664,682) (689,396)
Share based payment transactions - (195,241)
Foreign exchange (losses) / gains (407) 15,471
Impairments 5 & 8 (224,966) -
Share of loss in associate (4,408)
Loss on disposal of subsidiary 7 (75,922)
Exploration expenditure (285,374) (284,463)
Operating loss (1,255,759) (1,153,629)
Other income - 1,029
Finance income 5,260 10,121
Loss on ordinary activities before tax (1,250,499) (1,142,479)
Taxation (61) -
Loss for the period (1,250,560) (1,142,479)
Other comprehensive loss:
Items that may be classified subsequently to profit or loss:
Exchange differences on translation of foreign operations 97,226 (2,162)
Other comprehensive loss for the period net of tax 97,226 (2,162)
Total comprehensive loss for the period (1,153,334) (1,144,641)
Loss for the period (1,250,560) (1,142,479)
Attributable to the owners of the parent (1,054,079) (1,062,598)
Attributable to non-controlling interest (196,481) (79,881)
Total comprehensive loss for the period (1,153,334) (1,144,641)
Attributable to the owners of the parent (994,101) (1,080,669)
Attributable to non-controlling interest (159,233) (63,972)
Loss per Share
Basic loss per share (pence) 4 (0.23) (0.27)
Diluted loss per share (pence) 4 (0.23) (0.27)
Condensed Consolidated Statement of Financial Position
31 December 31 December
2022 2021
Audited Audited
£ £
Assets
Non-Current Assets
Exploration and evaluation assets 5 - 209,500
Total Non-Current Assets - 209,500
Current Assets
Other receivables 16,340 48,702
Cash and cash equivalents 49,596 827,956
Total Current Assets 65,936 876,658
Total Assets 65,936 1,086,158
Equity and Liabilities
Equity
Called up share capital 9 4,604,125 4,604,125
Share premium account 9 2,962,582 2,962,582
Merger Reserve 9 1,271,715 1,271,715
Capital Contribution 9 10,528 10,528
Warrant and share based payment reserve 9 828,223 946,153
Translation Reserve (296,937) (356,915)
Retained earnings reserve (9,318,504) (8,382,355)
Equity attributable to owners of the parent 61,732 1,055,833
Non-controlling interest (292,640) (133,407)
Total Equity (230,908) 922,426
Liabilities `
Current Liabilities
Trade and other payables 106,615 88,452
Other financial liabilities 190,229 75,280
Total Current Liabilities 296,844 163,732
Total Equity and Liabilities 65,936 1,086,158
Condensed Consolidated Statement of Changes in Equity
Share capital Share Merger Capital contribution Warrant and share based payment reserve Foreign currency translation reserve Retained deficit Non-controlling interest Total equity
premium reserve
£ £ £ £ £ £ £ £
Balance as at 1 January 2022 4,604,125 2,962,582 1,271,715 10,528 946,153 (356,915) (8,382,355) (133,407) 922,426
Loss for the year - - - - - -, (1,054,079) (196,481) (1,250,560)
Other comprehensive loss - - - - - 59,978 - 37,248 97,226
Expiry of share warrants and options - - - - (117,930) - 117,930 - -
Balance as at 31 December 2022 4,604,125 2,962,582 1,271,715 10,528 828,223 (296,937) (9,318,504) (292,640) (230,908)
Balance as at 1 January 2021 3,286,982 2,472,725 1,271,715 10,528 750,912 (338,844) (7,262,707) (69,435) 121,876
Loss for the year - - - - - - (1,062,598) (79,881) (1,142,479)
Other comprehensive loss - - - - - (18,071) - 15,909 (2,162)
Issue of share capital 1,317,143 489,857 - - - - - - 1,807,000
Costs relating to share issue - - - - - - (57,050) - (57,050)
Issue of share warrants and options - - - - 195,241 - - - 195,241
Balance as at 31 December 2021 4,604,125 2,962,582 1,271,715 10,528 946,153 (356,915) (8,382,355) (133,407) 922,426
Note
Condensed Consolidated Statement of Cash Flow
31 December 31 December
2022 2021
Audited Audited
Notes £ £
Cash flows from operating activities
Loss for the period before taxation (1,250,499) (1,142,479)
Adjustments for:
Foreign exchange loss / (gain) 407 (23,253)
Share based payment transactions - 195,241
Share of loss in associate 8 4,408 -
Impairments of intangible assets 5 209,500 -
Impairment of associates 8 15,466 -
Loss on disposal of subsidiary 7 75,922
Impairments of other financial assets - 142,106
Other non-cash items 961 -
Decrease/(Increase) in other receivables 32,362 (2,297)
(Decrease)/Increase in trade and other payables 18,163 (85,198)
Net cash flows from operating activities (893,310) (915,880)
Cash flows from investing activities
Advances to other financial assets - (125,866)
Net cash proceeds from investing activities - (125,866)
Cash flows from financing activities
Issue of shares (net of share issue cost) - 1,732,950
Proceeds from other financial liabilities 114,950 38,975
Net cash proceeds from financing activities 114,950 1,771,925
Net (decrease) / increase in cash (778,360) 730,179
Cash and cash equivalents at the start of the financial period 827,956 97,777
Cash and cash equivalents at the end of the financial period 49,596 827,956
During the financial year the group recognised an investment in an associate
Kibo Gold Limited at its retained equity value upon dilution of its interest
from 100% to the remaining 20% pursuant an agreement with Lake Victoria Gold
following the cancellation of the Reef Miner Limited disposal in a previous
reporting period. The investment was impaired to £Nil on the same day to
reflect the value of the Kibo Gold investment previously held. The retained
interest and impairment value was £180,301. Refer note 7 and 8.
The shares in LVG originally received as part payment for the Reef Miner
disposal were cancelled at its fair value previously held of £Nil. Refer note
6.
Condensed Consolidated financial results for the year ended 31 December 2022
Note 1 General Information
Katoro Gold PLC ("Katoro" or the "Company") is a Company incorporated in
England & Wales as a public limited Company. The Group financial
statements consolidate those of the Company and its subsidiaries (together
referred to as the "Group"). The Company's registered office is located at 60
Gracechurch Street, London EC3V 0HR.
The principal activities of the Group are related to the evaluation and
exploration studies within a licenced portfolio area with a view to generating
commercially viable mineral resources.
The individual financial statements of the Company ("Company financial
statements") have been prepared in accordance with the Companies Act 2006
which permits a Company that publishes its Company and Group financial
statements together, to take advantage of the exemption in Section 408 of the
Companies Act 2006, from presenting to its members its Company Income
Statement and related notes that form part of the approved Company financial
statements.
Note 2 Going Concern
In the past the Group has raised funds via equity contributions from new and
existing shareholders, thereby ensuring the Group remains a going concern
until such time that revenues are earned through the sale or development and
mining of a mineral deposit. There can be no assurance that such funds will
continue to be available on reasonable terms, or at all in future. The
Directors regularly review cash flow requirements to ensure the Group can meet
financial obligations as and when they fall due.
In performing the going concern assessment, the Board considered various
factors, including the availability of cash and cash equivalents, data
relating to working capital requirements for the foreseeable future, available
information about the future, possible outcomes of planned events, and the
responses to such events and conditions that would be available to the Board.
The Group currently generates no revenue and had a net liability position of
£230,908 as at 31 December 2022 (31 December 2021: net assets of £922,426).
As at year end, the Group had liquid assets in the form of cash and cash
equivalent and other financial asset balances receivable of £49,596 (2021:
£827,956 and £48,702).
The Directors have evaluated the Group's liquidity risk and liquidity
requirements to confirm whether the Group has adequate cash resources to
continue as a going concern for the foreseeable future. Considering the net
current liability position, the Directors have reviewed the cash flow
forecasts, based on the existing budget and evaluated to prior year actuals.
The forecast includes estimates and assumptions regarding future costs and the
timing of these. The financial forecast does not include non-committed
expenditure.
The cash flow forecast indicates a cash shortfall will arise on the short
term. The Group has limited funds available post year end following from the
continued exploration activities undertaken throughout the Group, therefore
further capital raising will be required to advance the underlying projects of
the Group beyond the foreseeable future and continue operations.
The Directors though continue to review the Group's options to secure
additional funding for its general working capital requirements, alongside its
ongoing review of potential acquisition targets and corporate development
needs.
The Group and Company will require additional finance in order to progress
work on its current assets and bring them to commercial development and cash
generation. Such development is dependent on successful explorations and
technical reports and then on securing further funding. The Directors are
confident in this light that such funding will be available, although there is
no guarantee as to the terms of such funding or that such funding will be
available. As a result, the Directors continue to monitor and manage the
Company's cash and overheads carefully in the best interests of its
shareholders.
Various sources of funding will be considered, most notably:
· Capital Placings
· Credit Loan Notes
· Exercise of outstanding Warrants
· A letter of support can be obtained from Kibo Energy Plc
Furthermore, Katoro has a strong proven track record of being able to source
funding on an ongoing basis, even in very difficult market conditions, and it
expects to be able to continue doing so. Katoro is in the process of
finalising a significant transaction with regards to a new acquisition and
have an advanced terms sheet that is being finalised for execution.
Katoro also enjoys strong support, with specific reference to funding, from
its corporate broker, SI Capital Ltd, which also has a proven track record of
being able to facilitate ongoing funding.
As noted in earlier in the post balance sheet events section, a general
meeting was held on 15 March 2023 where the nominal value of shares was
reduced from 0.01 to 0.001 which effectively reduced the value of the issued
share capital (based on the 460 412 593 issued shares).
The Directors continue to monitor and manage the Company's cash and overheads
carefully in the best interests of its shareholders.
Whilst the Directors continue to consider it appropriate to prepare the
financial statements on a going concern basis the above constitutes a material
uncertainty that shareholders should be aware of.
Note 3 Audited results
These condensed consolidated financial results have been extracted from the
audited financial statements but are not in itself audited.
Note 4 Basic and dilutive loss per share
The basic loss and weighted average number of ordinary shares used for
calculation purposes comprise the following:
Basic Loss per share 31 December 2022 (£) 31 December 2021 (£)
Loss for the period attributable to equity holders of the parent (977,974) (1,062,598)
Weighted average number of ordinary shares for the purposes of basic loss per 460,412,593 460,412,593
share
Basic loss per ordinary share (pence) (0.23) (0.27)
The Company had warrants in issue as at 31 December 2022 and 2021 though the
inclusion of such warrants in the weighted average number of shares as
possible dilutive instruments in issue during 2022 and 2021 would be
anti-dilutive and therefore they have not been included for the purpose of
calculating the loss per share.
A transaction took place after year-end, effective 11 April 2023 whereby
19,000,000 ordinary shares were issued, which results in an increase in the
number of issued shares to 658,412,593. In addition, 209,085,100 warrants were
issued on the same date.
The Company performed a share capital subdivision subsequent to year end,
whereby each existing ordinary share was split into one ordinary share of
£0.001 and one deferred share of £0.009. The issued ordinary shares did not
change as a result of this transaction and there was no effect on the weighted
average number of ordinary shares. Refer note 11.
Note 5 Exploration and evaluation assets
Exploration and evaluation assets consist solely of separately identifiable
prospecting assets held by Kibo Nickel and its subsidiaries.
The following reconciliation serves to summarise the composition of intangible
prospecting assets as at period end:
Reconciliation of exploration and evaluation assets
Haneti
(£)
Carrying value as at 1 January 2020 209,500
Acquisition of prospecting licences -
Impairment of licences -
Carrying value as at 1 January 2021 209,500
Acquisition of prospecting licences -
Impairment of licences (209,500)
Carrying value as at 31 December 2022 -
Haneti comprises tenements (prospecting licences, offers and applications)
prospective for nickel, platinum-Group-elements and gold. It covers an area of
approximately 5,000 sq. km in central Tanzania and forms a near contiguous
project block. The project area straddles the Dodoma, Kondoa and Manyoni
districts all within the Dodoma (Administrative) Region. The main prospective
belt of rocks within the project, the Haneti-Itiso Ultramafic Complex (HIUC),
is centred on the small town of Haneti, located 88 kilometres north of
Tanzania's capital city Dodoma . The HIUC sporadically crops out over a strike
length of 80 kilometres with most outcrop exposure occurring 15 kilometres
east of Haneti village where artisanal mining of the semi-precious mineral
chrysoprase (nickel-stained chalcedonic quartz) is being carried out at a few
localities.
Historical geophysical and geochemical sampling programmes completed prior to
the 2022 drilling campaign were successful in identifying at least three
high-priority drilling targets at Haneti. As no fresh rock samples had ever
been obtained from the Project, the decision was made to drill these targets.
The main programme goal was to extract fresh rocks to obtain a better
understanding of the subsurface geology as well as to intersect Ni-Cu sulphide
mineralisation.
The 2022 diamond core drilling programme was completed successfully with a
total of 900m drilled. This included three drill holes which were targeting
previously outlined mafic-ultramafic Ni- Cu-PGE sulphide targets at the
Mihanza and Mwaka Hill prospects (on PL no. 11797/2022). The three holes
completed are outlined and summarised below:
• Mwaka Hill Prospect: Hole MWDD01 was drilled to 245.8m down hole depth at
an inclination of -63° and MWDD02 to 224.0m at a -64° inclination. The two
holes intersected significant thicknesses of altered ultramafic rocks
(serpentinite) and mafic rocks (gabbro). Hole MWDD01 gave the highest Ni
intersection of 2.00 m @ 0.45% Ni from 81.5m downhole. In MWDD02 two wider
intersections were encountered with 4.0m @ 0.38% Ni from 151.4m and 4.0m @
0.35% Ni from 159.4m. All elevated Ni results were found exclusively within
serpentinite.
• Mihanza Hill Prospect: Hole MHDD01 at the was drilled to 430.2m at a -64°
inclination. The hole intersected similar rock types as at the Mwaka Hill
prospect but contained no significant Ni intersections but did contain
anomalous PGE, Au and Cu results including: 2.0m of 0.08g/t platinum (Pt) +
palladium (Pd) from 241.3m; 2.0m of 0.21g/t Au from 392.4m; and 2.0m @ 0.11 %
Cu from 236.2m.
The drilling field work phase was followed by laboratory analyses, performed
at SGS's laboratory located in Mwanza, Tanzania with samples also then
transferred to SGS South Africa to mitigate certain operational difficulties
at SGS Tanzania. This re-routing of samples and the additional work required
in respect of the lithium prospectivity added some additional time to the
return of completed findings to the operational team.
As at the time publishing this report, the Company had successfully completed
the diamond drilling programme. The results were analysed and will allow for a
refined approach during the next phase of the project, with focus on specified
areas. This plan has not yet been developed in sufficient detail, and
accordingly further funding has not yet been obtained. Due to this uncertainty
as at 31 December 2022, management has applied a provision for impairment
against the carrying value of the intangible asset to the value of £209,500.
Note 6 Investments
Group (£)
2022 2021
Lake Victoria Gold Limited (LVG) - 37,661
Fair value adjustments - (37,661)
- -
Movements in other investments comprise of:
Opening balance as at 1 January 2022 - -
Shares in LVG received for Reef Miner Limited sale - 37,661
Fair value adjustment - (37,661)
Disposal of shares in LVG upon cancellation of Reef Miner Limited sale at fair £Nil -
value
Closing balance as at 31 December 2022 - -
The investment represents 700,000 ordinary shares in Lake Victoria Gold
Limited, incorporated in Australia. The shares were issued on 15 October 2019
to Katoro Gold PLC in recognition of the Company granting the extension to
receipt of the first tranche of monies due under the term sheet. The
investment in Lake Victoria Gold has been fully impaired due to the
early-stage exploration nature of the underlying investee entity.
During the year the investment in Lake Victoria Gold Limited was cancelled as
a result of the cancellation of the Reef Miners Limited disposal. Refer to
note 8.
Note 7 Other financial assets
Group (£)
2022 2021
Other financial assets comprise:
Lake Victoria Gold receivable 656,283 657,061
Blyvoor Joint Venture receivable 1,287,686 1,223,495
1,943,969 1,880,556
Impairment of other financial assets receivable
Lake Victoria Gold receivable (656,283) (657,061)
Blyvoor Joint Venture receivable (1,287,686) (1,223,495)
(1,943,969) (1,880,556)
Movements in other financial assets comprise of:
Opening balance as at 1 January 2022 1,880,556 1,801,158
Additions 7,560 118,831
Cancellation of Reef Miner Disposal (656,283)
Disposal of Kibo Gold 656,283
Foreign currency translation 55,853 (39,433)
Closing balance as at 31 December 2022 1,943,969 1,880,556
Movements in impairments of other financial assets receivable consist of:
Opening balance as at 1 January 2022 (1,880,556) (1,801,158)
Impairments (7,560) (118,831)
Cancellation of Reef Miner disposal 656,283
Disposal of Kibo Gold (656,283)
Foreign currency translation (55,853) 39,433
Closing balance as at 31 December 2022 (1,943,969) (1,880,556)
Lake Victoria Gold Receivable
Lake Victoria Gold Receivable
Following various administrative difficulties in transferring ownership of
Reef Miners Limited from Kibo Gold Limited to Lake Victoria Gold Limited, both
parties concluded on 07 March 2022 to cancel the previous Sale of Share
Agreement by mutual consent.
As per the cancellation agreement, the Reef Transaction was cancelled by
mutual agreement between the parties, with neither party having any claim
against another party following specifically from the cancellation agreement.
On the same day Katoro Gold plc and Lake Victoria Gold Limited entered into a
"Joint Venture Agreement". Under the terms and conditions of the "Joint
Venture Agreement", Lake Victoria Gold Limited became the 80% shareholder of
Kibo Gold Limited, Cypriot subsidiary of Katoro Gold plc, on the date of the
Agreement with Katoro Gold plc owning the remaining 20%.
Prior to the implementation of the above "Joint Venture Agreement", Katoro
Gold plc held 200 ordinary shares in the equity of Kibo Gold Limited,
constituting 100% of the issued share capital in the company.
On the effective date, Lake Victoria Gold Limited subscribed for 800 new
shares in Kibo Gold Limited, equal to 80% of the total issued share capital of
the company on conclusion of the "Joint Venture Agreement", for the
subscription amount of €88,000.
Katoro Gold plc indemnifies Lake Victoria Gold Limited against any claims
resulting from the cancellation of the Sale of Share Agreement. The position
of ownership of Reef Mining Limited was completely returned to Katoro Gold
plc, and no contingent amounts are due and payable by Lake Victoria Gold
Limited in this regard.
As per the "Joint Venture Agreement", the Conditions Precedent for the
conclusion of the Share Issue have been met on the 7th of March 2022 and that
the "effective date" of transfer of ownership of 80% of the shareholding is on
the 7th of March 2022, as the issued shares to Lake Victoria Gold Limited rank
Pari-Passu with the issued shares.
The "Joint Venture Agreement" furthermore details the following requirements:
· Lake Victoria Gold Limited will contribute capital to Kibo Gold plc
in the form of a shareholder's loan amounting to €792,000;
· Lake Victoria Gold Limited will be obliged to declare a preference
dividend to Katoro Gold Plc in the amount of €792,000 which is payable in
any number of instalments by the earlier of 31 December 2023 and the date it
ceases to be a shareholder in the company; and
· In the event that the preference dividend has not been declared and
paid by Kibo Gold Limited to Katoro Gold plc by 31 December 2023, the
outstanding balance owing will be paid by Lake Victoria Gold Limited to Katoro
Gold plc directly.
The investment in Kibo Gold plc was as of 7 March 2022 recognised as an
associate to reflect the terms of the "Joint Venture Agreement".
The receivable in Lake Victoria Gold has been fully impaired at 31 December
2022 due to the credit risk of LVG, which is as a result of previous payments
not being received as they became due.
The resulting loss on disposal was recognised during the period ended 31
December 2022:
Group
(£)
Assets disposed (144)
Liabilities disposed 13,980
Net liability disposed 13,836
Foreign currency translation reserve reclassified through profit or loss (89,758)
Retained investment in equity - associate (20%) 182,301
Net liabilities after disposal 106,379
Proceeds from disposal of Kibo Gold Group 656,283
Profit on disposal of Kibo Gold Group 762,662
Impairment of Receivable from LVG (656,283)
Impairment of retained equity interest (182,301)
Net loss on disposal for group at 31 December 2022 (75,922)
Blyvoor Joint Operations
On 30 January 2020, the Group entered into a Joint Venture Agreement with
Blyvoor Gold Mines (Pty) Ltd, whereby Katoro Gold plc and Blyvoor Gold Mines
(Pty) Ltd would become 50/50 participants in an unincorporated Joint Venture.
In accordance with the requirements of the Joint Venture Agreement, the Katoro
Group was to provide a ZAR15.0 million loan (approximately £790,000) to the
JV ('the Katoro Loan Facility'), which will fund ongoing development work on
the Project.
As at year end, the Group has advanced funding in the amount of £1,287,686
(2021: £1,223,495) of which 100% relate to expenditure allocated to the Joint
Venture operations, carried by the Katoro Gold plc Group. The funding advanced
during the year amounted to £7,560 and the remainder of the balance of
£56,631 relates to change in translation rate during the year.
The Katoro Loan Facility would have formed part of the development capital
project financing that Katoro was required to procure in accordance with its
obligations contained in the Acquisition Agreement, provided that:
· the balance of the Katoro Loan Facility then outstanding shall be
subordinated to third party creditors participating in the development capital
project financing.
· the Katoro Loan Facility will bear interest at the 12-month London
Inter Bank Offered Rate, or its successor; and
· the Katoro Loan Facility will be repayable within 12 months after:
- the last third-party creditor participating in the project
financing shall have been paid; or
- any earlier date on which the Parties may agree.
As at reporting period end, the counterparty to the Acquisition Agreement had
failed to deliver all the required documentation to satisfy the last condition
precedent, therefore the Group is considering its position and options in this
matter.
Note 8 Investments in associates
Investment in associates consists of equity investments where the Group has an
equity interest between 20% and 50% and does not exercise control over the
investee.
The following reconciliation serves to summarise the composition of
investments in associates as at year end.
Kibo Gold
Limited
(£)
Investments at Cost
At 1 January 2021 -
Disposal of interest in subsidiary -
At 31 December 2021 -
Remaining equity interest following loss of control over investee 180,301
Additional contributions to the investee 19,783
Share of losses for the year (4,408)
Share in other comprehensive loss for the year (91)
Impairment loss recognised as part of remaining equity interest 7 (180,301)
Impairment loss attributable to associate (15,466)
At 31 December 2022 -
During the financial year the Group entered into an agreement with Lake
Victoria Gold Limited whereby LVG purchased Kibo Gold Limited for a total
consideration of £729,203 of which £656,283 is due by LVG to Katoro Gold
Plc. This was pursuant the restructuring of an agreement with LVG relating to
the previous reported disposal of Reef Miners Limited.
The original disposal agreement of Reef Miners was cancelled and LVG purchased
an 80% equity interest in Reef Miners' parent Kibo Gold by way of a share
issue of Kibo Gold. The share issue resulted in a dilution of interest for
Katoro Gold Plc in Kibo Gold and the subsequent loss of control.
On the date that control in Kibo Gold was lost, Katoro Gold raised a residual
interest in Kibo Gold to the value of £180,301 which was impaired on the same
day to reflect the position of the investment in Kibo Gold previously held.
Refer note 7.
Note 9 Share Capital and other equity reserves
The called-up and fully paid share capital of the Company is as follows:
2022 2021
Allotted, issued and fully paid shares
460,412,593 (2021: 460,412,593) Ordinary shares of £0.01 each £4,604,125 £4,604,125
£4,604,125 £4,604,125
A reconciliation of share capital is set out below:
Number of Shares Ordinary Share Capital Share Premium
(£)
(£)
Balance at 31 December 2020 328,698,308 3,286,982 2,472,725
Shares issued during the period 131,714,285 1,317,143 489,857
Balance at 31 December 2021 460,412,593 4,604,125 2,962,582
Balance at 31 December 2021 460,412,593 4,604,125 2,962,582
All ordinary shares issued have the right to vote, right to receive dividends,
a copy of the annual report, and the right to transfer ownership of their
shares. There have been no shares issued during the year.
During the year, 28,408,333 warrants with a reserve value of £117,930 expired
was reclassified to retained earnings. There were no changes to the options
issued and its related reserve during the year. No changes occurred in the
Merger and Capital Contributions reserves.
Note 10 Board of Directors
There were no changes to the board of directors during the period, or any
other committee's composition.
Note 11 Subsequent events
At the general meeting held on 15 March 2023 a resolution was passed whereby
the share capital was subdivided. Before the subdivision the Company had
460,412,593 ordinary shares of £0.01 each after the subdivision the Company
had 460,412,593 New Ordinary Shares of £0.001 each. The Board believes that
the proposed subdivision of share capital will provide the Company with more
flexibility regarding its future funding options and improve trading liquidity
in a very challenging market.
In April 2023 the Company has raised £150,000 (gross) at 0.1 pence per share,
through a placing by SI Capital of £130,000 and Directors' subscription of
£20,000, both of which will be used to fund the Company's ongoing working
capital requirements (the 'Fundraise').
The Company has also issued £59 085 of new ordinary shares at 0.1 pence per
share in settlement of accrued director fees outstanding. Each Financing
Share has an attaching warrant to subscribe for a further new Ordinary Share
at an exercise price of 0.2 pence per warrant, with a life to expiry of 3
years from the Financing Shares admission.
Note 12 Commitments and contingencies
The Group does not have identifiable material contingencies or commitments as
at the reporting date.
Note 13 Segment report
IFRS 8 requires an entity to report financial and descriptive information
about its reportable segments, which are operating segments or aggregations of
operating segments that meet specific criteria. Operating segments are
components of an entity about which separate financial information is
available that is evaluated regularly by the Chief Operating decision maker.
The Chief Executive Officer is the Chief Operating decision maker of the
Group.
Management currently identifies two divisions as operating segments - Mining
(Sub-holding Company and operating entities) and Corporate (Ultimate Holding
Company). These operating segments are monitored, and strategic decisions are
made based upon them together with other non-financial data collated from
exploration activities. Principal activities for these operating segments are
as follows:
2022 Group Mining and Exploration Corporate 31 December 2022 (£)
Group Group Group
Administrative cost (261,794) (627,854) (889,648)
Exploration expenditure (285,374) - (285,374)
Foreign exchange loss (407) - (407)
Finance income 5,260 - 5,260
Loss on disposal of subsidiary - (75,922) (75,922)
Share in loss in associates (4,408) - (4,408)
Loss before tax (546,723) (703,776) (1,250,499)
2021 Group Mining and Exploration Corporate 31 December 2021 (£)
Group Group Group
Administrative cost (272,733) (611,904) (884,637)
Exploration expenditure (284,463) - (284,463)
Foreign exchange loss 15,471 - 15,471
Other income 1,029 - 1,029
Finance income 10,121 - 10,121
Loss after tax (530,575) (611,904) (1,142,479)
2022 Group Mining and Exploration Corporate 31 December 2022 (£)
Group Group Group
Assets
Segment assets 6,103 59,833 65,936
Liabilities
Segment liabilities 219,190 77,652 296,842
2021 Group Mining and Exploration Corporate 31 December 2021 (£)
Group Group Group
Assets
Segment assets 297,194 788,964 1,086,158
Liabilities
Segment liabilities 99,983 63,749 163,732
Geographical segments
The Group operates in four principal geographical areas - United Kingdom,
Cyprus, South Africa and Tanzania.
Tanzania Cyprus United Kingdom South Africa Total
31 December
2022
(£) (£) (£) (£) (£)
Major Operational indicators
Carrying value of segmented assets 4,732 1,941 57,784 1,479 65,936
Loss before tax (300,438) (212,725) (729,695) (7,641) (1,250,499)
Tanzania Cyprus United Kingdom South Africa Total
31 December
2021
(£) (£) (£) (£) (£)
Major Operational indicators
Carrying value of segmented assets 234,899 528 788,964 61,767 1,086,158
Loss after tax (136,879) (125,757) (726,061) (153,782) (1,142,479)
Directors, officers and professional advisers
Board of
Directors
Louis Coetzee (Executive Chairman)
Louis Scheepers (Non-Executive Director)
Myles Campion (Non-Executive Director)
Paul Dudley (Non-Executive Director)
Lukas Maree (Non-Executive Director)
Company
Secretary:
Ben Harber
Shakespeare Martineau LLP
6(th) Floor
60 Gracechurch Street
London
EC3V OHR
Auditors:
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Broker:
SI Capital Limited
46 Bridge Street
Godalming
GU7 1HL
Nominated
adviser:
Beaumont Cornish Limited
3 Hardman Street
Manchester
M3 3HF
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