Unaudited Interim results to end 30 June 2022
16/09/2022 07:00
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RNS Number : 6785Z Katoro Gold PLC 16 September 2022
Katoro Gold plc
(Incorporated in England and Wales)
(Registration Number: 9306219
Share code on the AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
Unaudited Interim results for the six months ended 30 June 2022
Dated 16 September 2022
Katoro Gold plc ('Katoro' or the 'Company') (AIM: KAT), the AIM-listed gold
and nickel exploration and development company, is pleased to announce its
unaudited interim results for the six months ended 30 June 2022. The interim
results will also shortly be available on the Company's website:
https://www.katorogold.com/ (https://www.katorogold.com/)
Overview
• Successful completion of drill program on Haneti Nickel
project, including an exploration update (see RNS dated 31 May 2022)
• Katoro Gold has signed a Joint Venture Agreement with
Lake Victoria Gold for its Imweru Gold Project
• Various new projects currently under assessment, with
some at an advanced stage of discussion
This announcement contains inside information as stipulated under the Market
Abuser Regulations (EU) no. 596/2014.
**END**
For further information, please visit www.katorogold.com
(http://www.katorogold.com) or contact:
Louis Coetzee Katoro Gold plc Executive Chairman louisc@katorogold.com (mailto:louisc@katorogold.com)
Bhavesh Patel RFC Ambian Ltd Nominated Adviser +44 20 3440 6800
Andrew Thompson
Nick Emerson SI Capital Ltd Broker +44 14 8341 3500
Sam Lomanto
Zainab Slemang van Rijmenant Lifa Communications Investor and Public Relations Consultant zainab@lifacommunications.com (mailto:zainab@lifacommunications.com)
Chairman's Statement
Introduction
After two years of pandemic conditions, the world has opened up to trade,
travel and more. This is despite the ongoing war in Ukraine, rising inflation
and increased interest rates adding to uncertainty on all fronts. At the same
time, economic activity remains high and this has led to Katoro Gold making
significant progress with its ongoing projects in the first half of 2022. In
particular, the Company has successfully completed its drill program on its
Haneti Nickel project ('Haneti'), on which it released an exploration update
in a Company RNS dated 31 May 2022. The Company has furthermore signed a Joint
Venture Agreement ('JVA') for its Imweru Gold Project ('Imweru', see further
details below).
Haneti Project and Babayu Lithium Prospect
The Haneti Project is a Joint Venture ('JV') with Power Metals Resources PLC
(LON: POW), which holds a 35% interest in the project while Katoro holds 65%.
The project covers a vast prospective area in central Tanzania, with a
principal target zone of an 80-kilometre ultra-mafic belt of potential nickel
and traces of combined platinum group metals ('PGMs').
On 14 February 2022, the Company announced the completion of the diamond drill
programme that was carried out at Haneti. A total of 900.04 metres were
completed across three drill holes with core logging and sampling prepared for
thin section petrographic analysis and laboratory assay testing for nickel,
platinum, palladium, cobalt, chromium and gold at SGS Tanzania. The drill
programme provided considerable geological information that enabled the
Company to refine the geological modelling for next-stage work. This, as well
as the results of the drill programme, which suggests that the platinum-group
element ('PGE') potential is limited to serpentinite units, and that nickel
and copper mineralisation should preferentially be targeted within the
intrusive gabbro units, were detailed in an RNS dated 31 May 2022.
The same RNS provides clarification of the Babayu Lithium Prospect ('Babayu'),
of which rock samples were taken in tandem with the diamond-drilling campaign
at Haneti. Babayu is located approximately 40 kilometres southwest of Haneti.
The results from the samples confirm significant lithium and tantalum
potential at Babayu, and both this and the results at Haneti have enabled the
Company to re-engage with potential project partners. Additionally, license
applications have been made in respect of the lithium prospective areas and
the JV is in the process of implementing a lithium consolidation strategy to
include and review existing and potential partnerships with local license
holders.
Imweru Gold Project
The Company has entered into a JVA with Lake Victoria Gold ('LVG') for the
further development of its Imweru Gold Project, which it previously announced
the disposal of in a Company RNS dated 12 June 2020. Due to administrative and
statutory barriers related to the transfer of ownership at project level, as
well as the issue of relevant convertible loan notes ('CLN'), the Company
agreed to cancel the sale transaction of the project to LVG and the two
entered into a JV instead. The JVA will see LVG earn up to 80% in the Imweru
project with 20% held by Katoro as a carried interest.
Further to this, all debt funding required by the JV will be procured and/or
provided by LVG, with the JV reimbursing Katoro for previous expenditures to
the amount of €792,000 on or before 31 December 2023. LVG is also developing
the Imwelo Gold Project, located adjacent to Imweru, and this JVA allows for a
more significant economic project that will attract suitable funding to
accelerate the development and exploitation of a combined gold mining project.
Future Outlook
Moving into the second half of 2022, Katoro Gold is in the process of
assessing various new projects to further diversify its portfolio and unlock
value-based opportunities that align with its strategy of being a preeminent
African-focused gold and mineral exploration and development company. At
present, the Company is already in advanced discussions with a number of
parties with regard to the new projects under assessment.
Principle Risk
Refer to Note 15 of the RNS for our assessment of the principal risks.
Conclusion
I remain optimistic about the Company's prospects into the second half of the
year. As such, I thank the directors and management team of Katoro Gold for
their dedication and hard work throughout this period.
Louis Coetzee
Executive Chairman
Unaudited Interim Results for the six months ended 30 June 2022
Unaudited condensed consolidated interim Statement of Comprehensive Income
For the six months ended 30 June 2022
6 months to 12 months to 6 months to
Note 30 June 31 December 30 June
2022 2021 2021
(Unaudited) (Audited) (Unaudited)
£ £ £
Revenue - - -
Cost of sales - - -
Gross Profit - - -
Administrative expenses (422,441) (689,396) (341,987)
Foreign exchanges gain/(loss) 60,714 15,471 69
Share based payment transactions 7 - (195,241) (162,700)
Exploration expenditure (278,645) (284,463) (279,092)
Operating profit/loss (640,372) (1,153,629) (783,710)
Other Income 13 142,045 1,029 -
Finance Income 15,152 10,121 11,919
Profit/(loss) before Tax (483,175) (1,142,479) (771,791)
Tax - - -
Profit/(loss) for the period (483,175) (1,142,479) (771,791)
Other comprehensive Income/(loss):
Exchange differences on translating of foreign operations 105,383 (2,162) (16,456)
Total Comprehensive Income/(loss) (483,175) (1,144,641) (788,247)
Profit/(loss) for the period (483,175) (1,142,479) (771,791)
Attributable to owners of the parent (374,078) (1,062,598) (770,161)
Attributable to non-controlling interest (109,097) (79,881) (1,630)
Total comprehensive Income/(loss) (377,792) (1,144,641) (788,247)
Attributable to owners of the parent (268,695) (1,080,669) (78,617)
Attributable to non-controlling interest (109,097) (79,881) (1,630)
Earnings/(loss) Profit per share
Basic and diluted Earnings/(loss) per share (pence) 4 (0.08) (0.27) (0.21)
Unaudited condensed consolidated interim Statement of Financial Position
As at 30 June 2022
6 months to 12 months to 6 months to
30 June 31 December 30 June
Note 2022 2021 2021
(Unaudited) (Audited) (Unaudited)
£ £ £
Assets
Non-current assets
Intangible 8 209,500 209,500 209,500
assets
Investments in equity instruments 13 182,301 - -
391,801 209,500 209,500
Current assets
Cash and cash equivalents 342,481 827,956 420,860
Other receivables 21,002 48,702 23,104
Other financial assets 13 - - -
Total current assets 363,483 876,658 443,964
Total Assets 755,284 1,086,158 653,464
Equity
Called up share capital 6 4,604,125 4,604,125 3,789,125
Share premium 2,905,532 2,962,582 2,823,382
Capital contribution reserve 10,528 10,528 10,528
Translation reserve (251,532) (356,915) (355,300)
Merger reserve 1,271,715 1,271,715 1,271,715
Warrant and share-based payment reserve 7 946,153 946,153 985,612
Retained deficit (8,756,433) (8,382,355) (8,032,868)
Reserves attributable to owners 730,088 1,055,833 492,194
Minority interest (242,504) (133,407) (71,065)
Total Equity 487,584 922,426 421,129
Liabilities
Current liabilities
Trade and other 3 82,921 88,452 232,335
payables
Other financial liabilities 14 184,779 75,280 -
Total current liabilities 267,700 163,732 232,335
Total Equity and Liabilities 755,284 1,086,158 653,464
Unaudited Condensed Consolidated Statement of Changes in Equity
Share Share Warrant reserve and share based payment reserve Merger Reserve Capital Foreign currency translation reserve Retained deficit Minority interest Total
Capital Premium Contribution Reserve
£ £ £ £ £ £ £ £ £
Balance at 31 December 2021 (audited) 4,604,125 2,962,582 946,153 1,271,715 10,528 (356,915) (8,382,355) (133,407) 922,426
Loss for the period - - - - - - (374,078) (109,097) (483,175)
Other comprehensive loss - exchange differences - - - - - 105,383 - - 105,383
Proceeds of share issue of share capital - (57,050) - - - - - - (57,050)
Balance as at 30 June 2022 4,604,125 2,905,532 946,153 1,271,715 10,528 (251,532)) (8,756,433) (242,504) 487,584
(unaudited)
Balance at 1 January 2021 (audited) 3,286,982 2,472,725 750,912 1,271,715 10,528 (338,844) (7,262,707) (69,435) 121,876
Loss for the period - (1,062,598) (79,881) (1,142,479)
Other comprehensive income - exchange differences - - - - - (18,071) - 15,909 (2,162)
Proceeds of share issue of share capital 1,317,143 489,857 - - - - - - 1,807,000
Issue of share options and share warrants - - 195,241 - - - - - 195,241
Costs relating to share issue - - - - - - (57,050) - (57,050)
Balance at 31 December 2021 (audited) 4,604,125 2,962,582 946,153 1,271,715 10,528 (356,915) (8,382,355) (133,407) 922,426
Balance at 31 December 2020 (audited) 3,286,982 2,472,725 750,912 1,271,715 10,528 (338,844) (7,262,707) (69,435) 121,876
Loss for the period - - - - - - (770,161) (1,630) (771,791)
Other comprehensive loss - exchange differences - - - - - (16,456) - - (16,456)
Proceeds of share issue of share capital 502,143 350,657 - - - - - - 852,800
Issue of share options and share warrants - - 234,700 - - - - - 234,700
Balance as at 30 June 2021 3,789,125 2,823,382 985,612 1,271,715 10,528 (355,300) (8,032,868) (71,065) 421,129
(unaudited)
Unaudited condensed consolidated interim statement of cash flow
For the six months ended 30 June 2022
6 months to 12 months to 6 months to
30 June 31 December 30 June
2022 2021 2021
(Unaudited) (Audited) (Unaudited)
£ £ £
Profit/(loss) for the period before taxation (377,793) (1,142,479) (771,791)
Adjusted for:
Foreign exchange (gain)/ loss (111,257) (23,253) (69)
Share based payment transactions - 195,241 162,700
Profit on disposal of subsidiaries (142,045) - -
Impairments of other financial assets 71,002 142,106 83,532
Non-trade expenses not settled - -
Operating income before working capital changes (560,093) (828,385) (525,628)
Decrease/ (Increase) in trade and other receivables 27,700 (2,297) 23,301
(Decrease)/ Increase in trade and other payables (5,531) (85,198) 17,529
Net cash outflows from operating activities (537,924) (915,880) (484,798)
Cash flows from investing activities
Advances of other financial assets - (125,866) (83,532)
Advances to subsidiaries - - (9,597)
Advances to Reef Miners - - (6,790)
Net cash inflow/(outflow) from investing activities - (125,866) (99,919)
Cash flows from financing activities
Issue of shares (net of share issue costs) (57,050) 1,732,950 907,800
Proceeds from other financial liabilities 109,499 38,975 -
Net cash proceeds from financing activities 52,449 1,771,925 907,800
Net increase in cash and cash equivalents (485,475) 730,179 323,083
Cash and cash equivalents at beginning of period 827,956 97,777 97,777
Cash and Cash equivalents at End of Period 342,481 827,956 420,860
Notes to the unaudited condensed consolidated interim financial statements
For the six months ended 30 June 2022
Note 1 General information
Katoro Gold plc ("Katoro" or the "Company") is incorporated in England &
Wales as a public limited company. The Company's registered office is located
at 60 Gracechurch Street, London EC3V OHR.
The principal activity of Katoro, through its subsidiaries (together the
'Group'), is to carry out evaluation and exploration studies within a licenced
portfolio area with a view to generating commercially viable Mineral
Resources, namely gold and nickel mines. In Haneti, the Group has one nickel
mining project, which has mineral exploration licences currently held by Eagle
Exploration Ltd. In addition, in South Africa the Group has entered into
binding conditional agreement to form a 50/50 unincorporated joint venture
pertaining to gold tailing project.
The condensed interim consolidated financial statements do not represent
statutory accounts within the meaning of section 435 of the Companies Act
2016.
The condensed consolidated financial statements of the Company have been
prepared in accordance with the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority and Accounting Standard IAS 34, 'Interim
Financial Reporting', as adopted by the UK.
The interim report does not include all of the notes of the type normally
included in an annual financial report. Accordingly, this report is to be read
in conjunction with the annual report for the period ended 31 December 2021,
which has been prepared in accordance with UK-adopted IFRSs, and any public
announcements made by Kibo Energy Plc during the interim reporting period.
The condensed consolidated financial statements of the Group are presented in
Pounds Sterling, which is the functional and presentation currency for the
Group and its related subsidiaries.
The condensed consolidated financial statements do not represent statutory
accounts within the meaning of section 435 of the Companies Act 2016.
Accounting policies applied are consistent with those of the previous
financial period and annual report unless where new standards became effective
during the period and a newly adopted accounting policy for Investments in
equity instruments - Associates.
The seasonality or cyclicality of operations does not impact on the interim
financial statements.
Investments in equity instruments - Associates
Associates are all entities over which the group has significant influence but
not control, generally accompanying a shareholding between 20% and 50% of the
voting rights. Investments in associates are accounted for using the equity
method of accounting.
Use of Estimates and Judgements
The preparation of these condensed interim consolidated financial statements
in conformity with IFRS requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience
and various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about
carrying values of assets and liabilities that are not readily apparent from
other sources.
In particular, there are significant areas of estimation, uncertainty and
critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the financial statements.
• Valuation of share options and warrants;
• Credit loss allowance for other financial assets; and
• Valuation of mining licence in Kibo Nickel Ltd.
• Valuation of investments in equity instruments - associates.
Please refer to note 16 where the estimate for investment in equity
instruments - associates valuation is disclosed.
Note 2 Going concern
The Company currently generates no revenue and had net assets of £487,584 as
at 30 June 2022 (31 December 2021: £922,426 and 30 June 2021: £421,129).
The Group has adequate cash and cash equivalents (financial resources) to
ensure the Group is able to continue as a going concern for the foreseeable
future 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.
The Directors 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.
As a result, 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 Trade and other payables
30 June 2022 31 December 2021 30 June 2021
£ £ £
Trade payables 82,921 26,417 122,897
Accruals 184,779 62,035 109,438
267,700 88,452 232,335
Note 4 Earnings per share
The calculation of loss per share is based on the following loss and number
of shares:
30 June 2022 31 December 2021 30 June 2021
£ £ £
Profit/(loss) for the period from continuing operations (374,078) (1,062,598) (770,161)
Weighted Average basic and diluted number of shares 460,412,590 388,524,723 373,931,716
Basic and diluted Earnings/(loss) per share (pence) (0.08) (0.27) (0.21)
The Group presents basic and diluted EPS data on the basis that the current
structure has always been in place. Therefore, the number of Katoro shares in
issue as at the period end has been used in the calculation. Basic
Earnings/loss per share is calculated by dividing the Profit/loss for the
period from continuing operations of the Group by the weighted average number
of shares in issue during the period.
The Company had in issue warrants and options at 30 June 2022, the inclusion
of such warrants and options in the weighted average number of shares in issue
would be anti-dilutive and therefore they have not been included for the
purpose of calculating the loss per share.
Note 5 Unaudited results
These condensed consolidated interim financial results have not been audited
or reviewed by the Group's auditors.
Note 6 Share Capital
The called-up and fully paid share capital of the Company is as follows:
30 June 2022 31 December 2021 30 June 2021
£ £ £
Allotted, called-up and fully paid: 4,604,125 4,604,125 3,789,125
A reconciliation of share capital is set out below:
Number of shares Allotted, called-up and fully paid
£
At 1 January 2022 460,412,593 4,604,125
At 30 June 2022 460,412,593 4,604,125
Note 7 Warrant and Share based payment reserve
Warrants
The following reconciliation serves to summarise the composition of the
warrant reserve as at period end:
30 June 2022 31 December 2021 30 June 2021
£ £ £
Opening balance of warrant reserve 494,597 494,597 494,597
Issue of warrants - - 72,000
494,597 494,597 566,597
Reconciliation of the quantity of warrants in issue:
30 June 2022 31 December 2021 30 June 2021
Opening balance 194,574,999 70,274,999 70,274,999
Warrants exercised - (1,000,000) (1,000,000)
Warrants issued - 129,500,000 48,000,000
Warrants expired - (4,200,000) -
194,574,999 194,574,999 117,274,999
No warrants have been issued in the six-month period ended 30 June 2022.
Share Options
The following reconciliation serves to summarise the composition of the
share-based payment reserve as at period end:
30 June 2022 31 December 2021 30 June 2021
£ £ £
Opening balance of share-based payment reserve 451,556 256,315 256,315
Vesting of share options - 195,241 162,700
451,556 451,556 419,015
Reconciliation of the quantity of Share options in issue:
30 June 2022 31 December 2021 30 June 2021
Opening Balance 32,244,781 32,244,781 32,244,781
32,244,781 32,244,781 32,244,781
During the current year no share options issued in August 2020 vested.
Note 8 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
£
Carrying value as at 1 January 2021 209,500
Carrying value as at 30 June 2021 209,500
Carrying value as at 31 December 2021 209,500
Carrying value as at 30 June 2022 209,500
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.
Note 9 Board of Directors
There were no changes to the board of directors during the interim period, or
any other committee's composition.
Note 10 Subsequent events
Blyvoor Joint Venture Project
During the preceding year, the board of directors were in the process of
seeking admission for the vending of its and the counterparty's interest in
the Joint Venture into a separate company to be listed on the Standard List of
the London Stock Exchange plc. The funding process did not succeed, and the
board is currently considering its position and options in this matter.
Haneti Nickel
A desktop review of all historical exploration data is being undertaken. The
review will take into account the knowledge gained from the 2022 Haneti
diamond drilling campaign (the first ever completed on the Project). The
results are intended to further improve and refine targeting for future
exploration programmes on the Project.
Just prior to Covid-19 restrictions a number of major and mid-tier companies
expressed an interest in Haneti and a key requirement of their due diligence
work was access to diamond drill core for analysis. With that drill core now
in hand the JV will be engaging again with potential project partners.
Babayu Lithium
Additional liaison with the Tanzanian government regarding the lithium licence
applications within the broader Babayu and other related areas. Further
regional desktop studies focusing on the lithium potential of the broader
Dodoma area are to be conducted with the aim of identifying further
prospective target areas for staking and other potential opportunities for
further investment.
Note 11 Commitments and contingencies
There are no material contingent assets or liabilities as at 30 June 2022.
Note 12 Segment report
Segmental disclosure per category
Mining Corporate Total
£ £ £
30 June 2022
Loss after tax (352,077) (131,098) (483,175)
Segmental assets 244,817 510,467 755,284
Segmental liabilities 211,907 55,793 267,700
30 June 2021
Loss after tax (369,842) (401,949) (771,791)
Segmental assets 217,519 435,945 653,464
Segmental liabilities 113,169 119,166 232,335
Segmental disclosure per geographical location
Tanzania Cyprus UK South Africa Total
£ £ £ £ £
30 June 2022
Profit/(Loss) after tax (282,130) 754,127 (1,036,269) (2,569) (566,841)
Segmental assets 215,252 806,676 (293,922) 27,278 755.284
Segmental liabilities
30 June 2021
Loss after tax (120,438) (131,894) (401,949) (117,509) (771,791)
Segmental assets 214,705 996 435,945 1,818 653,464
Segmental liabilities 9,553 102,117 119,166 1,499 232,335
There are no notable changes from the prior interim report. During the
preceding interim period there was an addition of a new geographical location
in which the Group prospecting operation has been initiated which is South
Africa where the Group has entered into binding conditional agreement to form
a 50/50 unincorporated joint venture pertaining to gold tailing project.
Note 13 Other financial assets
30 June 2022 31 December 2021 30 June 2021
£ £ £
Other financial assets consist of:
Lake Victoria Gold 656,283 657,061 -
Impairment (656,283) (657,061) -
- - -
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 owing 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 is
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 30 June 2022
due to the credit risk of LVG, which is as a result of previous payments not
being received as they become due and is still outstanding at the date of this
interim report.
The resulting profit on disposal was recognised during the period ended 30
June 2022:
Group (£)
Assets disposed (2,296)
Liabilities disposed 8,698
Net liability disposed 6,402
Foreign currency translation reserve reclassified through profit or loss (46,658)
Retained investment in equity - associate (20%) (refer note 16) 182,301
Net liabilities after disposal 142,045
Proceeds from disposal of Kibo Gold Group 729,203
Profit on disposal of Kibo Gold Group 871,248
Impairment of Receivable from LVG (656,283)
Amounts received previously offset against proceeds (72,920)
Net profit on disposal for group at 30 June 2022 142,045
Blyvoor Joint Venture
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 31 December 2020, the Group has advanced funding in the amount of
£1,201,767 of which 100% relate to expenditure allocated to the Joint Venture
operations, carried by the Katoro Gold plc Group.
Furthermore, the Group has continued to advance funding in the amount of
£97,207 of which 100% relate to expenditure allocated to the Joint Venture
operations, carried out by the Katoro Gold plc Group.
The Katoro Loan Facility shall form part of the development capital project
financing that Katoro shall procure in accordance with its obligations
contained in the Agreement, as detailed below, 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.
Note 14 Related parties
Relationships
Name
Relationship
Kibo Energy plc
Significant
shareholder and controlling parent
Related party balances trade receivables/(trade payables) 30 June 2022 31 December 2021 30 June 2021
£ £ £
Kibo Energy plc (20,247) - -
(20,247) - -
Related parties of the Group comprise subsidiaries, significant shareholders,
and the Directors.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
Transactions with related parties are effected on a commercial basis and
related party debts are repayable on a commercial basis.
The transactions during the period between the Company and its subsidiaries
included the settlement of expenditure to/from subsidiaries, working capital
funding, and settlement of the Company's liabilities through the issue of
equity in subsidiaries. The loans to/from Group companies do not have fixed
repayment terms and are unsecured.
Note 15 Principal risks
The principal risks and uncertainties identified in the last Annual Report of
Katoro Gold plc, issued in May 2021, have not materially changed/altered in
the interim period.
Note 16 Use of Estimates and Judgements
The investment in equity instruments - associates have been valued on the fair
value of the disposal price of the Kibo Gold Subgroup to LVG:
(£)
Proceeds for the disposal of 80% of Kibo Gold Subgroup to LVG 729,203
Fair value of the 100% shareholding of Kibo Gold Subgroup 911,504
Fair value of the 20% interest in Kibo Gold Subgroup retained 182,301
Note 17 Financial instruments - Fair value and Risk
Management
The carrying amount of all financial assets and liabilities approximates the
fair value. Directors consider the carrying value of financial instruments of
a short-term nature, that mature in 12 months or less, to approximate the fair
value of such assets or liability classes.
The carrying values of longer-term assets are considered to approximate their
fair value as these instruments bear interest at interest rates appropriate to
the risk profile of the asset or liability class.
The Group does carry any unlisted financial instruments measured in the
statement of financial position at fair value at 30 June 2022 nor in any of
the comparative periods.
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