REG - Gem Resources PLC - Annual Financial Report
30/04/2025 07:00
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RNS Number : 7922G Gem Resources PLC 30 April 2025
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET
ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK
MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
30 April 2025
Gem Resources plc
("GEMR" or the "Company")
Final results for the year ended 31 December 2024
Gem Resources plc (LSE: GEMR), the mineral exploration and mining group listed
on the Standard List segment of the main market of the London Stock Exchange
announces its audited results for the year ended 31 December 2024 (the "Annual
Report").
The full report is available on the Company's website at
www.gemresources.co.uk (http://www.gemresources.co.uk) .
In accordance with Listing Rule 14.3.6R and 14.3.7R of the UK Financial
Conduct Authority ("FCA"), a copy of the Annual Report will also be submitted
to the FCA via the National Storage Mechanism and will shortly be available to
the public for inspection at:
https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism
(https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism)
The Company will provide details of the Annual General Meeting in due course.
Key Highlights
· Transition to Production: Restoration of the Gravelotte Emerald
Mine completed; commencement of hard rock mining operations in January 2025
after final plant commissioning.
· Strategic Acquisition: Acquisition of a 65% interest in the
Curlew Emerald Project in Western Australia, providing a second
high-potential, open-cast emerald development opportunity.
· Independent Valuation: Updated financial model for Gravelotte
reviewed by ACA Howe International, confirming an estimated project NPV of USD
22.4 million and a projected pre-tax profit of USD 79.5 million.
· First Emerald Sales Completed (Post Period): Successful trial
sales of 8,130 carats of mixed-grade emeralds at an average price per carat of
$5.3/ct, 818 grams of green beryl, and 3,000 grams of tailings-derived
material, generating total gross revenue of USD 57,000.
Enquiries:
Gem Resources plc +44 (0)746 368 6497
Chief Executive Officer
Bernard Olivier
Director
Peter Redmond
Chief Operating Officer
Jeremy Sturgess-Smith
info@gemresources.co.uk (mailto:info@gemresources.co.uk)
Peterhouse Capital Limited +44 (0)20 7469 0930
Joint Corporate Broker
Lucy Williams
Duncan Vasey
Capital Plus Partners
Joint Corporate Broker
Jon Critchley +44 (0)203 821 6169
All references to pages in the financial statements below refer to the Annual
Report which can be accessed via the link set out above.
Company Number: 05329401 (England & Wales)
GEM RESOURCES PLC
(FORMERLY URA HOLDINGS PLC)
Annual Report and Consolidated Financial Statements
For the year ended 31 December 2024
CONTENTS
CORPORATE
INFORMATION
CHAIRMAN'S
STATEMENT
STRATEGIC
REPORT
DIRECTORS'
REPORT
REMUNERATION REPORT AND
PLAN
INDEPENDENT AUDITORS'
REPORT
CONSOLIDATED AND COMPANY STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
COMPANY STATEMENT OF FINANCIAL
POSITION
COMPANY STATEMENT OF CHANGES IN
EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
CONSOLIDATED AND COMPANY STATEMENT OF CASH
FLOWS
NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS
Corporate Information
Directors Edward Nealon Non-Executive Chairman
Bernard Olivier Chief Executive Officer
Peter Redmond Executive Director
John Treacy Independent Non-Executive Director
Sam Mulligan Operations Director
Company Secretary OHS Secretaries Limited
Registered Office 9th Floor,
107 Cheapside
London
EC2V 6DN
Company Number 05329401
Auditor Gerald Edelman LLP
73 Cornhill
London
EC3V 3QQ
Share Registrar Computershare Services plc
P.O. Box 82
The Pavilions
Bridgwater Road
Bristol
BS99 7NH
Bankers Barclays Bank plc
Level 27
1 Churchill Place
London
E14 5HP
Solicitors Orrick Herrington & Sutcliffe LLP
107 Cheapside
London
EC2V 6DN
Brokers Peterhouse Capital Limited
3rd Floor
80 Cheapside
London
EC2V 6EE
Capital Plus Partners
First Floor
85 Great Portland St
London
W1W 7LT
Chairman's Statement
Dear Shareholder
It is with great appreciation that I present to you the Annual Report for Gem
Resources Plc for the year ended 31 December 2024.
This past financial year has been pivotal in the Company's history. Our
restoration of the long-abandoned Gravelotte Emerald Mine to operational
status was completed remarkably quickly and on a tightly controlled budget.
Gravelotte is now positioned to become one of the world's major emerald
producers once again. Over the last few years, we have fully restored the
mine's infrastructure, built an efficient new production line, and engaged
leading gem industry experts to evaluate Gravelotte's prospective size and
potential.
While we had hoped to commence mining and achieve an initial sale before the
end of 2024, this ambitious goal was delayed slightly. Hardrock Mining
operations successfully commenced in late January 2025, and we produced a
trial package of material predominantly mined during February 2025 being the
first full month of hard rock mining.
In addition, in October 2024, we acquired a controlling 65% stake in the
Curlew Emerald Project in Western Australia for £232,000, with the right to
acquire the remaining 35% at a later date. Similar to Gravelotte, Curlew is an
open-cast project that was historically exploited at an artisanal level, but
it clearly has significant resources, including high carat, high-quality
emeralds.
Independent Evaluation of Gravelotte
At the time of acquisition and subsequently, independent evaluations have
confirmed Gravelotte's robust potential. A review by ACA Howe International
Limited, a firm with knowledge of the mine dating back to 2003, inferred a
mineral resource estimate of 29 million carats within the Cobra and Discovery
areas alone and an exploration target of between 155 million and 360 million
carats across the wider licence area.
In July 2024, ACA Howe independently reviewed the Company's discounted cash
flow model. On conservative assumptions, they estimated a net present value of
USD 22.4 million for the Cobra and Discovery pits and an estimated pre-tax
profit of USD 79.5 million, based on the current inferred JORC resource and a
projected 17-year mine life.
These independent assessments highlight the significant value potential of
Gravelotte, which is not reflected in the Company's current market valuation.
Strategic Transformation and Growth
2024 marked a major period of transformation for Gem Resources. The Company
changed its name from URA Holdings Plc to Gem Resources Plc, reflecting a
sharpened focus on high-value gemstone assets, particularly emeralds.
Our key achievements include the commissioning of our processing plant and
sorter and the commencement of phased emerald production at Gravelotte. While
production during 2024 primarily involved historical tailings and stockpiled
material, these early operations allowed us to refine our recovery processes
in preparation for hard rock mining.
Although technical issues, including the failure of key second-hand processing
equipment, delayed initial production targets, these challenges were overcome,
and the recovery plant has now been optimised for ongoing operations.
Preparation for new mining activities began in the fourth quarter of 2024, and
hard rock mining at the Cobra open pit commenced in late January 2025. This
represents the beginning of Gravelotte's reestablishment as an important
global emerald producer.
First Emerald Sales and Market Insights
As announced on 25 April 2025, we completed our first test sales of emeralds
from Gravelotte. The sale included 8,130 carats of mixed-grade emeralds, 818
grams of green beryl, and 3,000 grams of tailings-derived material, generating
total gross revenue of USD 57,000.
These sales establish initial price points across product categories and
enable benchmarking as we transition toward full-scale production. Notably,
the majority of the emeralds sold were mined during February 2025.
While achieved prices averaged USD 5.29 per carat, reflecting challenging
market conditions including uncertainty around U.S. tariffs and subdued demand
in Asia, the operational viability of the mine remains intact. Under
normalised market conditions, we believe significantly higher price points can
be achieved.
Sustainability and Ethical Mining
We remain committed to responsible and sustainable operations. Our emeralds
are fully traceable, supporting ethical sourcing throughout the value chain.
We are compliant with South African Black Economic Empowerment (BEE)
legislation, maintaining a 26% BEE shareholding structure that includes local
community participation. This reflects our commitment to inclusive development
and equitable benefit-sharing.
Financial Prudence and Low-Cost Development
Financial discipline remains a core focus. Our efficient deployment of capital
has enabled significant operational progress with minimal dilution.
In 2024, we raised £475,000 (before expenses) through a placement in February
and a further £425,000 (before expenses) through an institutional placement
in July. These funds strengthened our financial position and supported both
Gravelotte operations and the acquisition of the Curlew Project.
The Group reported a loss of £2 million for the year (0.64p per share)
compared to a loss of £1.1 million in 2023 (0.42p per share). The increased
loss reflects pre-revenue investments to restart mining operations. With hard
rock mining now underway, we anticipate an improved financial performance in
the coming year. However, the Group will require further funding from external
sources as disclosed in the going concern note.
Outlook
While much work remains, we have entered 2025 with strong operational
momentum. Our priorities are to scale up production at Gravelotte, optimise
recoveries, and advance the Curlew Project toward initial development.
As market conditions stabilise, Gem Resources aims to become a leading,
ethical emerald producer, delivering sustainable value for all stakeholders.
Edward Nealon
Chairman
Date: 30 April 2025
Strategic Report
The Directors present their Strategic Report for the year ended 31 December
2024.
Principal Activities
Throughout the period under review, the Company and its subsidiaries (the
"Group") operated as a mining and mineral exploration company. The principal
activity of the Group during the year was the advancement and development of
its acquired assets, with the overarching objective of creating long-term
value for shareholders through capital growth and/or dividends.
The Company's main strategic focus during the reporting period was to:
· utilise the in-house expertise of the Directors and management to
progress the Gravelotte Emerald Mine through to initial emerald production and
refine its processing methodology to maximise efficiency;
· develop a detailed understanding of the available tailings and
ore at Gravelotte prior to commencing further mining activities and confirming
a route to market;
· pursue joint venture opportunities for its strategic mineral
licence in Zambia, aimed at unlocking value through technical and commercial
partnerships; and
· commence early-stage development planning for the Curlew Emerald
Mine in Australia, with a view to restarting cost-effective mining and
processing operations in a phased and sustainable manner.
Investing in small natural resource projects can be very rewarding, but
because of the issues and uncertainties arising from the principal risks
disclosed from page 8 below, there is a significant possibility of such reward
not materialising. As a result of the nature and size of the Group and Company
it will, in the early years particularly, be exposed to a concentration of
risk either by sector or geographically, or possibly both. These risks are
outlined in more detail below.
Review of Business and Development in the Year
A review of the years activities and future prospects is contained in the
Chairman's Statement.
Financial and Performance Review
The Company did not have any income producing assets during the year under
review, though since the year end, production from the Gravelotte Emerald Mine
has meant the Company is now revenue producing.
The results for the Company and Group are set out in detail in the financial
statements. The Company reports a loss of £1,468,000 for the year ended 31
December 2024 (2023: loss £868,000). The Group reports a loss of £1,956,000
for the year ended 31 December 2024 (2023: loss £1,132,000).
Key Performance Indicators
The Company's primary financial key performance indicator ('KPI') at this
stage of its development is the monitoring of its cash balances. The Company's
cash at 31 December 2024 was £283,000 (2023: £667,000). The Groups cash at
31 December 2024 was £414,000 (2023: £674,000). The critical non-financial
KPI during the period was the ability of the Group and Company to develop its
principal exploration project (Gravelotte) to the point of being brought back
into production, which the Group and Company achieved during the first half of
2024.
Cashflow
During the year, net cash outflow from Group operating activities was
£550,000 (2023: £950,000). The change is primarily attributable to the
ramping up of operational activities at the Gravelotte Emerald Mine. Cashflow
forecasts are reported to the Board on a monthly basis to ensure progress is
in line with budget. Long term forecasts are also provided to ensure that the
strategy of the business can be adequately funded.
In July 2024, the Company announced the payment of AU$450,000 to acquire a 65%
interest in Prasinus Exploration Limited, the owner of the Curlew Emerald
Mine. The mine, located in the Pilbara region of Western Australia, holds a
mining lease which runs through to May 2044.
The Group raised cash net of costs of £727,000 (2023: £1,330,000) during the
year from placing of Ordinary Shares.
The Group had a £256,000 net decrease (2023: increase £371,000) in cash and
cash equivalents at year end.
Balance Sheet
During 2024, non-current assets decreased to £1,156,000 (2023: £1,504,000),
this was mainly due to the impairment of one licence that was held by Malaika
Exploration (Zambia) Limited that was rejected during the year, offset by the
acquisition of the Australian company.
The total liabilities increased to £1,017,000 (2023: £552,000). This
resulted primarily from the accrued and unpaid directors' fees.
Cash has been used to fund the Group's operations and facilitate its
acquisition of relevant targets. Administrative expenses are the expenses
related to the Group's ability to run the corporate functions to ensure it can
perform its operational commitments. Exploration costs, capitalised during the
year, consist of exploration expenditure on the Group's exploration licences.
Risk & Uncertainties
This business carries a high level of risk and uncertainty, although the
potential rewards can be outstanding. The Directors have identified the
following principal risks in regards to the Group's future. The relative
importance of risks faced by the Group can, and is likely to, change as the
Group executes its strategy and as the external business environment evolves
the strategy as may be required based on developments and exploration results.
Key elements of this process are the Group's reporting and Board meetings. The
main risks include:
Strategic risk
The Group's strategy may not deliver the results expected by shareholders. The
Directors regularly monitor the appropriateness of the strategy, taking into
account both internal and external factors, together with progress in, and
modification to, the Company's strategy.
Geographic Risks
The concentration of the Group's licences lies in three projects, the
Gravelotte Emerald Mine, Curlew Emerald Mine and Strategic Mineral Projects,
located in South Africa, Australia and Zambia, respectively.
The limited number of separate projects and ongoing investments creates risk.
The Company is an African and Australian focused mining company with a
particular focus on coloured gemstones, specifically, emeralds at the
Gravelotte and Curlew Emerald Mines and high-grade graphite, coltan
(containing niobium & tantalum), lithium, and rare earth elements (REEs)
at the Strategic Mineral Projects.
The Group has limited diversification in its asset base in South Africa,
Australia and Zambia. In view of its initial focus on the Gravelotte Emerald
Mine, the Group will be exposed to the concentration risk of only having
current operations in the coloured gemstones sector, where concentration risk
may further relate to sub-sector, geography, the relative size of an
investment or other factors. The Group has focused its investment strategy on
the Gravelotte Emerald Mine, which as a result may expose the Group to country
and local government-associated risk, and fluctuations in the demand for and
the price of gemstones, specifically, emeralds and in the future, high-grade
graphite, coltan (containing niobium & tantalum), lithium, and rare earth
elements (REEs). Any delay in the active development of the Gravelotte Emerald
Mine, or any unexpected interference in operations in the coloured gemstones
sector, could in turn, materially adversely affect the revenue, business,
results of operations and financial condition of the Group.
Access to infrastructure
Mining, processing, development and exploration activities depend, to a
significant degree, on adequate infrastructure. Reliable roads, power sources
and water supply are important determinants, which affect capital and
operating costs.
Unusual or infrequent weather phenomena, sabotage, government or other
interference in the maintenance or provision of such infrastructure could
materially adversely affect the Group's operations, financial condition and
results of operations. Any such issues arising in respect of the supporting
infrastructure or on the Group's sites could materially adversely affect the
Group's results of operations or financial condition.
Furthermore, any failure or unavailability of the Group's operational
infrastructure (for example, through equipment failure) could materially
adversely affect the production output from its mines or development of a mine
or project.
Operational Risks
There can be no guarantee of the results of any detailed exploration activity
at the Strategic Minerals Project. The prospects of the discovery of
commercially viable mineral resources and ore reserves on the Group's
exploratory licence area associated with the Strategic Minerals Project are
based on the judgement of the Directors, and historical data from the
Strategic Minerals Project and adjacent areas which are anticipated to have
similar geology. Whilst the Directors have engaged geologists to support and
inform their decisions to acquire interests in the exploration licence area
associated with the Strategic Minerals Project, no mineral resource and
reserve estimate has, to date, been prepared in relation to it. Until the
Group carries out extensive and detailed exploration studies on the licence
areas, the assumptions as to the presence of mineral resources and ore
reserves on the exploration licence area associated with the Strategic
Minerals Project, remain based on theoretical and limited anecdotal physical
evidence and data.
Mineral exploration is an inherently speculative activity. The Group holds one
exploration licence in Zambia in respect of the Strategic Minerals Project and
is at an early stage of exploration in these licence areas. The Strategic
Minerals Project has been selected on the basis of a set of prevailing
geological conditions in the associated exploration licence area, however the
asset base has yet to be comprehensively explored or tested. In the event that
further exploration and/or testing reveals that the Strategic Minerals Project
does not have a viable asset base, the Group will rely heavily on the benefit
of having the newly acquired Curlew Emerald Mine in Australia and a JORC
compliant maiden mineral resource estimate for the Gravelotte Emerald Mine in
South Africa.
In the event that the geology in the associated licence areas turns out to be
other than as expected and even if the geology is as anticipated, there is
significant risk after spending significant sums on exploration and testing
activity that no commercially viable mineral resources and ore reserves will
be discovered. There is accordingly a material risk that activity at the
Strategic Minerals Project could yield results that are materially below
expectations which could in turn materially adversely affect the revenue,
business, results of operations and financial condition of the Group.
The financial performance of the Group is also subject to its ability to
achieve production at its Gravelotte Emerald Mine at target quantities and
quality. Failure to do so may result in material adverse impact on the
business, operations and financial performance of the Group.
Any unscheduled interruptions in the Group's operations due to mechanical,
electrical or other failures or industrial relations related issues or
problems or issues with the supply of goods or services could have a serious
impact on the financial performance of those operations.
Legal and Regulatory Risks
The Group's intended activities in South Africa are also subject to extensive
laws and regulations governing mining and mineral exploration companies. For
example, the Mineral and Petroleum Resources Development Act No. 28 of 2002
and the MPRDA Amendment Act No.49 of 2008 ("MPRDA"), the Mineral and Petroleum
Resources Royalty Act 2008, the Mining Titles Registration Act 1967, the
Precious Metals Act 2005, National Environmental Management Act 1998 (NEMA)
and Diamonds Act 1986 regulate mining in South Africa. The MPRDA outlines key
requirements for exploration companies including imposing on these companies
the obligation, after a prospecting right or mining right is granted, to lodge
for registration with the Mineral and Petroleum Titles Registration Office
within 60 days of the notarial execution of the mining right. The holder of
the mining rights has various obligations during the duration of the right,
such as reporting obligations. There are additional considerations related to
environmental regulations and authorisations which are required for
prospecting or mining operations and related activities, including the
requirement by the Department of Mineral Resources and Energy of South Africa
("DMRE") to grant environmental authorisations and approve prescribed
financial provisions (the amounts set aside by mining companies for the
remediation and rehabilitation of the environment in relation to mining
activities).
The Group's current and prospective activities in Australia will similarly be
governed by extensive laws and regulations pertaining to environmental
protection, mining, and land use. Key legislative frameworks include the
Environmental Protection and Biodiversity Conservation Act 1999 (EPBC Act),
which outlines requirements for environmental assessments and approvals for
projects likely to have significant impacts on matters of national
environmental significance. The Group's compliance obligations also extend to
the Mining Act 1978 (Western Australia), the Work Health and Safety Act 2011,
and the Aboriginal Heritage Act 1972 (Western Australia), which protects
culturally significant sites. Australian states also enforce specific
environmental and mining regulations, including the obligation to submit
environmental management plans, remediation strategies, and financial
assurance for mine site rehabilitation. Additionally, the Australian
government requires mining operators to obtain permits for water use, waste
management, and greenhouse gas emissions under various federal and state
regulations. Non-compliance with these requirements can result in significant
penalties, project delays, and/or operational restrictions.
The Group's operating activities in Zambia are subject to extensive laws and
regulations governing waste disposal, protection of the environment, mine
development, land and water use, prospecting, mineral production and other
matters in Zambia (including the protection of Aboriginal heritage sites)
under the Zambian Environmental Act, the Occupational Health and Safety Act
No. 36 of 2010, the Mines and Minerals (Environmental) Regulations No. 29 of
1997 and the Environmental Protection and Pollution Control (Environmental
Impact Assessment) Regulations SI No. 28 of 1997 (EIA Regulations).
Environmental considerations are integral to the Group's operations across all
jurisdictions. In Zambia, South Africa, and Australia, compliance with
environmental laws encompasses obtaining permits for activities that may
affect air, water, or soil quality, implementing mitigation measures to manage
environmental risks, and adhering to stringent monitoring and reporting
requirements. The Group is committed to sustainable practices, ensuring that
operations align with environmental, social, and governance (ESG) principles,
particularly with respect to the remediation and rehabilitation of affected
sites and reducing the environmental footprint of its activities.
Market and Commodity Price Risks
The financial health of the Group is significantly tied to the market prices
of emeralds and other minerals. Price drops can decrease asset valuations,
diminish revenue, and reduce overall profitability, thereby affecting the
Group's financial condition and operational viability.
Political, Economic and Regulatory regime
The licences and operations of the Group are in jurisdictions outside the
United Kingdom and accordingly, there will be a number of risks which the
Group will be unable to control. Whilst the Group will make every effort to
ensure it has robust commercial agreements covering its activities, there is a
risk that the Group's activities will be adversely affected by economic and
political factors such as the imposition of additional taxes and charges,
cancellation or suspension of licences and changes to the laws governing
mineral exploration and operations.
The Group's activities will be dependent upon the grant of appropriate
licences, concessions, leases, permits, and regulatory consents that may be
withdrawn or made subject to limitations. There can be no assurance that they
will be granted or renewed or if so, on what terms. There is also the
possibility that the terms of any licence may be changed other than as
represented or expected.
The current focus of the Group's activities, offer stable political frameworks
and actively support foreign investment. The countries have well-developed
exploration and mining code and proactive support for foreign companies.
Through a programme of proactive engagement with each Government at all
levels, the Group is able to partially mitigate these risks by establishing
professional working relationships.
Financial Risks
The Group's operations expose it to different financial risks including
foreign exchange risk, credit risk, liquidity risk and interest rate risk.
Details of the principal financial risks are set out in note 19.
To develop its extraction processes in South Africa and Australia, the Group
may require significant financial resources. These needs may arise from the
necessity to increase or expand mineral development activities, subject to
availability of capital on favourable terms.
Refer to note 2 to the consolidated and group financial statements which
explains that the Group is reliant on revenue from production at the
Gravelotte Emerald Mine's ramp up and on management's ability to secure
additional funding in order to meet its obligation as they become due. A
material uncertainty therefore exists that may cast significant doubt on the
Group's and Company's ability as a going concern.
Furthermore, financial performance may be impacted by fluctuations in the
exchange rates between the US Dollar, South African Rand, Zambian Kwacha,
Australian Dollar and UK Pounds Sterling, particularly because the Group
operates in multiple currencies, but raises capital primarily in Sterling.
Human Capital Risks
The Group's operational success and strategic management are critically
dependent on the retention of skilled directors and senior management.
Difficulty in maintaining or recruiting such personnel poses significant risks
to operational continuity and the execution of strategic objectives.
Nevertheless, through programmes of incentivising staff, appropriate
succession planning, and good management these risks can be largely mitigated.
Exploration and Development Risks
The estimates of mineral resources and reserves involve significant
uncertainties. These estimations are based on historical geological data and
management's judgement, which may not always accurately predict actual mineral
deposits. Misjudgements or errors in these estimates could lead to
unanticipated variations in reserves, affecting the feasibility and
profitability of mining operations. Even if there are economically recoverable
deposits, delays in the construction and commissioning of mining projects or
other technical difficulties may make the deposits difficult to exploit. The
exploration and development of any project may be disrupted, damaged or
delayed by a variety of risks and hazards which are beyond the control of the
Group. These include (without limitation) geological, geotechnical and seismic
factors, environmental hazards, technical failures, adverse weather
conditions, acts of God and government regulations or delays.
Exploration is also subject to general industrial operating risks, such as
equipment failure, explosions, fires and industrial accidents, which may
result in potential delays or liabilities, loss of life, injury, environmental
damage, damage to or destruction of property and regulatory investigations.
The Group may also be liable for the mining activities of previous miners and
previous exploration works. Although the Group intends, itself or through its
operators, to maintain insurance in accordance with industry practice, no
assurance can be given that the Group or the operator of an exploration
project will be able to obtain insurance coverage at reasonable rates (or at
all), or that any coverage it obtains will be adequate and available to cover
any such claims. The Group may elect not to become insured because of high
premium costs or may incur a liability to third parties (in excess of any
insurance cover) arising from pollution or other damage or injury.
Environmental, Regulatory and Operational Safety Risks
Operations must adhere to strict environmental standards, which are subject to
changes and could become more stringent. Failure to comply can lead to
substantial fines and operational disruptions. Mining operations are exposed
to potential accidents and infrastructure failures. Any significant safety
incidents or infrastructural damages could lead to operational halts,
increased costs, and legal liabilities. While the Group believes that its
operations and future projects are currently, and will be, in substantial
compliance with all relevant material environmental and health and safety laws
and regulations, including relevant international standards, there can be no
assurance that new laws and regulations, or amendments to, or stringent
enforcement of, existing laws and regulations will not be introduced.
Nevertheless, the Group will continue to vigorously apply international
standards to the design and execution of any and all of its activities,
including engagement and consultation with local communities, and
non-governmental and Governmental organisations to ensure any impacts of
current and future activities are minimised and appropriately managed. The
Group has established a comprehensive suite of health, safety, environmental
and community policies which will underpin all future activities.
Other business risks
In addition to the current principal risks identified above, the Group's
business is subject to risks relating to the financial markets and commodity
markets. The buoyancy of both the aforementioned markets can affect the
ability of the Group to raise funds. The Group has identified certain risks
pertinent to its business including:
Strategic and Economic:
• Business environment changes
• Limited diversification
Operational:
• Difficulty in obtaining / maintaining / renewing licences /
approvals
Commercial:
• Failure to maximise value from its projects
• Loss of interest in key assets
• Regulatory, compliance and legal
Human Resources and Management:
• Failure to recruit and retain key personnel
• Human error or deliberate negative action
• Inadequate management processes
Financial:
• Restrictions in capital markets impacting available financial
resources
• Cost escalation and budget overruns
• Fraud and corruption
The Directors regularly monitor such risks, using information obtained or
developed from external and internal sources, and will take actions as
appropriate to mitigate these. Effective risk mitigation may be critical to
the Group in achieving its strategic objectives and protecting its assets,
personnel and reputation. The Group assesses its risk on an ongoing basis to
ensure it identifies key business risks and takes measures to mitigate these.
Other steps include regular Board review of the business, monthly management
reporting, financial operating procedures and antibribery management systems.
The Group reviews its business risks and management systems on a regular basis
Promotion of the Company for the benefit of the members as a whole
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
· Consider the likely consequences of any decision in the
long term;
· Act fairly between members of the Group and Company;
· Maintain a reputation for high standards of business
conduct;
· Consider the interest of the Group and Company's
employees;
· Foster the Group and Company's relationships with
suppliers, customers and others; and
· Consider the impact of the Group and Company's operations
on the community and the environment.
The Group and Company has sought to act in a way that upholds these
principles. The Directors believe that the application of s172 requirements
can be demonstrated in relation to some of the key decisions made and actions
taken during the year.
Category How the Directors have engaged Impact of action
Shareholders and investors The Directors have communicated regularly with its shareholders and investors The Group and Company has received positive feedback from shareholders and is
via public announcements, PR outreach via platforms such as ProActive listed on the Equity Shares (Transition) category and is trading on the Main
Investor. Market of the London Stock Exchange.
The Directors have also maintained the listing of the Company on the Equity The Company, on behalf of the Group, raised fresh capital during the period
Shares (Transition) category of the London Stock Exchange. with which to run its operations, demonstrating a strong relationship with
investors and existing shareholders, who participated in the fundraise.
Suppliers The Group and Company has focused on developing long term and mutually Relationships have been maintained with all suppliers in place at the
beneficial relationships with its suppliers through consistent communication, beginning of the period.
efficient use of their time, prompt payment and reasonable requests.
The Company also maintains strong Health and Safety policies on its
operational mine sites to ensure the wellbeing of all suppliers.
Employees Whilst the Group and Company is small, it makes sure that it works closely There were 11 additional employees employed at the South African subsidiary.
with its employees and Directors, keeping them all closely and regularly
informed of all developments at the Company.
The Company's one employee is in regular contact with the Board and the
Directors all communicate independently and via regular Board Meetings.
Employees of the Company's South African subsidiary are on-site staff and
regularly interact with senior management/directors - mainly Wessel Marais,
Louis Swart and Bernard Olivier. There are 22 employees at the South African
subsidiary.
There is one director engaged in Australia - Michael Ast.
There are two resident directors in Zambia and no employees.
Environmental, social and governance ("ESG") The Directors acknowledge that our business activities could affect the No environmental or safety incidents were reported during the year.
society and environment around us, and that we have an opportunity and an
implicit duty to ensure this impact is positive.
The Company has a fully remote set up, no UK physical locations, has under 500
employees and consumes less than 40,000 kwh of energy.
Government The Directors are aware of the importance of retaining close and strong The Company ensures that it is always operating within the parameters set by
working relationships with Government (both national and local) in the local laws, as evidenced by its successful renewal of the Zambian licence, up
jurisdictions that the Group operates in. to date filings in Australia and the deposit made for mine site rehabilitation
in RSA.
Local Community At the subsidiary level, management and the Group and Company's employees This created, and will continue to create, increased economic activity in the
continue to maintain excellent relationships with the local communities where areas in which the Company operates. Local management also maintains regular
they operate. During the year under review, the Group and Company used local dialogue with the local population and leaders to ensure support for its
businesses for the provision of certain services, specifically for geological activities.
prospecting assistance, earth works, food and
shelter.
The Company also fully complies with local Black Economic Empowerment ('BEE')
rules given the 26% shareholding of the BEE partners in the mining operations
in South Africa and maintains a strong relationship with its BEE partners.
Its members will be fully aware, through detailed announcements, shareholder
meetings and financial communications, of the Board's broad and specific
intentions and the rationale for its decisions. The Company pays its employees
and creditors promptly and keeps its costs to a minimum to protect
shareholders funds.
Use of financial instruments
The Company's financial risk management objectives are to minimise its
liabilities wherever possible, to fund its activities through equity or debt
financing and to ensure the Company has sufficient working capital to pursue
its corporate strategic objectives.
Edward Nealon
Chairman
Date: 30 April 2025
Directors' Report
The Directors present their Directors' Report together with the audited
financial statements of Gem Resources Plc (the "Company" or "GEMR"). A
commentary on the business for the year is included in the Chairman's
Statement on page 4. A review of the business is also included in the
Strategic Report on page 7.
The shareholdings of the Directors and Key Management Personnel ("KMP") who
held office throughout the period and at the date of publication are as
follows as at the end of the period:
Name Number of Ordinary Shares Percentage of share capital
African Critical Metals Limited 60,000,000 19.44%
Ed Nealon 10,680,768 3.46%
Peter Redmond 8,949,357 2.90%
Bernard Olivier 4,964,103 1.61%
Sam Mulligan 1,000,000 0.32%
Jeremy Sturgess-Smith 940,170 0.30%
At the time of publication of the accounts, Ed Nealon holds 49.5% of the
issued share capital of Africa Critical Metals Limited ("ACM") through his
family investment company, Almaretta Pty Ltd. Mr Nealon is considered to be
interested, inter alia, in the shares held by Africa Critical Metals Limited
in the proportions set out above. Mr Nealon is a director of ACM.
Mr Nealon's interest in shares includes 5,384,615 shares held through his
family investment company, Almaretta Pty Ltd.
The Directors mitigate the risk to independence from the Chairman's large
shareholding through significant decisions being made by the entire board and
by consulting with the Group and Company's legal council, Orrick, and with the
Company's independent director, John Treacy, on all corporate activities.
Results and dividends
The results for the year ended 31 December 2024 are set out on page 47.
The Group reports a loss of £1,956,000 for the year ended 31 December 2024
(2023: loss £1,132,000). The Company reports a loss of £1,468,000 for the
year ended 31 December 2024 (2023: loss £868,000).
The loss attributable to the owners of the parent was £1,822,000 (2023:
£1,063,000) and the loss attributable to non-controlling interests was
£134,000 (2023: £69,000), consistent with the financial statements.
There were no dividends paid (2023: £nil) in the financial year ending 31
December 2024.
Directors' Insurance and Indemnity Provision
The Company maintains Directors' & Officers' liability insurance which
gives appropriate cover for any legal action brought against its Directors.
In accordance with Section 234 of the Companies Act 2006, qualifying third
party indemnity provisions are in place for the Directors in respect of
liabilities incurred as a result of their office to the extent permitted by
law.
Employment Policy
It is the policy of the Group and Company to operate a fair employment
policy. No employee or job applicant is less favourably treated than another
on the grounds of their sex, sexual orientation, age, marital status,
religion, race, nationality, ethnic or national origin, colour or disability
and all appointments and promotions are determined solely on merit. The
Directors encourage employees to be aware of all issues affecting the Group
and Company and place considerable emphasis on employees sharing in its
success.
Changes in share capital
Details of movements in share capital during the period are set out in note 18
to these consolidated financial statements.
Pensions
The Company did not operate a pension scheme during the period and has not
paid any contributions to any scheme for Directors and employees.
All eligible Directors and employees have been invited to participate in the
Company's pension scheme with True Potential. At the time of publication all
Directors and employees have opted out of the workplace pension.
Energy and Emissions Data
As the Company has not consumed more than 40,000 kwh of energy in this
reporting period, it qualifies as a low energy user under these regulations
and is not required to report on its emission, energy consumption or energy
efficiency activities. Additionally, during the reporting period, there were
no significant contracts in place that would affect the Energy or Emissions
Data.
Going concern
During the year ended 31 December 2024, the Group incurred a loss of £2
million (2023: loss £1.1 million), the Company incurred a loss of £1.5
million (2023: loss £0.9 million) and experienced net cash outflows from
operating activities. Cash and cash equivalents for the Group totalled
£414,000 as at 31 December 2024 (2023: £674,000) and £283,000 as at
31 December 2024 (2023: £667,000) for the Company.
The Group and Company has no current source of operating revenue other than
from the Gravelotte Emerald Mine and relies on existing cash resources,
facilities, and planned fundraisings to meet its overheads and operational
requirements.
Recent policy changes in the United States of America have introduced
significant shifts that have affected the financial markets. The financial
markets have experienced considerable turmoil due to ongoing trade tensions
and the imposition of tariffs. These policies may result in higher inflation
and disruptions in global trade, which could impact the Group's and Company's
operations and financial performance.
In assessing the appropriateness of applying the going concern basis in the
preparation of the consolidated financial statements, the Directors have
considered the Group's and Company's liquidity and forecast cash flows under a
range of potential scenarios taking into account reasonably possible outcomes
over an 18-month period from the date of approval of these financial
statements. These forecasts indicate that further funding will be required in
the near term to meet the Group's and Company's working capital requirements
and to advance its planned operational activities.
Scenario modelling evaluated the Group's and Company's committed cash flows,
liquidity position, and future funding access, assuming no internal revenue
generation, sustained working capital, and successful fundraises over 18
months.
The scenarios modelled did not consider the quantity and quality of production
at Gravelotte and the restart of operations at Curlew leading to successful
sales, nor the point at which the Director's expect the Group and Company to
reach gross profit levels.
The Group and Company currently holds no facilities or indebtedness.
Base Case Scenario
The Group's and Company's cash flow forecasts indicate positive liquidity
under the base case scenario, assuming timely successful fundraising efforts,
which was required due to the absence of any turnover in the 18-month period.
Should any delays or reductions in the expected funding occur, management has
identified discretionary cost reductions to preserve liquidity within the
forecasted period.
The Group and Company has been successful in historic fundraising efforts to
develop its Gravelotte asset in South Africa. The Group and Company has also
taken into consideration mitigating actions available to it, these include
stopping all non-essential capital expenditure over the 18-month forecasted
period which has been modelled under the base case scenario. In addition, the
Group and Company has taken steps to reduce operational and administrative
costs, in order to further preserve liquidity. As part of ongoing efforts to
manage cash flow more effectively, management have made arrangements to extend
payment terms with certain suppliers. Further steps would be taken to operate
at a minimal cost basis should the Directors consider it necessary.
Under the base case scenario, the Group and Company maintains positive
liquidity against available cash facilities throughout the forecasted period
up to June 2026, therefore a period of at least 12 months from the date of
the annual report and financial statements.
As such, there is considered to be a material uncertainty as to whether the
Group and Company will be able to support its working capital requirements and
pay its liabilities when it becomes due.
Considering the liquidity implications of the scenario analysis and the
uncertainty, the Board are assessing several options with regard to additional
sources of liquidity including the raise of additional equity funding.
Severe but Plausible Downside Scenario
Given the current uncertainty around securing successful funds through equity
raises and generation of turnover at the Group's Gravelotte or Curlew project,
the Directors have considered the following severe but plausible downside
scenarios to stress test the Group's and Company's financial forecasts.
Under this scenario the Group and Company would be unable to raise successful
equity funding during the required funding periods. This scenario also assumed
that no turnover is generated from operations during the forecasted 18-month
period and that the Group and Company would require additional funding from
August 2025 and would not have sufficient liquidity to sustain working capital
requirements beyond this point. These circumstances represent a material
uncertainty that may cast significant doubt on the Group's and Company's
ability to continue as a going concern and therefore where the Group and
Company are unable to raise funds successfully in the short term the Group and
Company will be unable to realise its assets and discharge its liabilities in
the normal course of business that may lead to the Group and Company becoming
insolvent.
Conclusion
In response to potential funding constraints, the Group and Company have
developed contingency measures, including ceasing all non-essential
expenditure and exploring supplementary funding options, such as shareholder
support and asset-level transactions.
Further uncertainties exist around the successful ramp-up of the production at
the Group's and Company's Gravelotte project to allow consistent production
and sales and required funding from a capital raise during the coming months
and across the forecast period. Given the sensitivity to immediate fundraising
and operational profits, material uncertainties exist in respect of the Group
and Company's ability to secure a successful fundraise and sustain current
operations as sufficient liquidity does not exist to fund operational
activities without the generation of operational turnover. In those
circumstances the Directors may consider the sale of assets.
While the Directors remain confident in the Group's and Company's ability to
secure adequate resources in the required timeframe, and in the underlying
viability of the Group's projects, there can be no absolute certainty that
fundraising will be concluded on acceptable terms.
The Directors have assessed the Group's ability to continue as a going
concern, considering cash flow forecasts, funding requirements, and mitigating
actions such as cost controls and potential asset sales. While material
uncertainties exist, the Directors remain confident in securing additional
funding.
The financial report does not include adjustments relating to the
recoverability and classification of recorded asset amounts or to the amounts
and classification of liabilities that might be necessary should the Group and
Company not continue as a going concern.
Directors' remuneration
Details of the remuneration of the Directors can be found in note 5 to these
accounts.
Directors' interests in transactions
Other than disclosed in note 5 no Director had during, or at the end of the
period, a material interest in any contract which was significant in relation
to the Company's business.
Directors
The following Directors held office during the period:
Peter Redmond
John Treacy
Edward Nealon
Bernard Olivier
Sam Mulligan
Board Assessment
The Directors are aware that now GEMR has been listed for over 3 years, a full
board evaluation is recommended. Whilst this has not happened yet, the
Directors intend to source an independent evaluator who will review both the
Board's assessment over the past years and also remuneration (the
recommendations of this will be passed to the remuneration committee for
review and implementation). In the interim, the performance of the Board is
assessed by the Remuneration Committee keeping in view the progress through
exploration, development and commissioning phases and into production.
Internal controls and corporate governance
The Board is responsible for identifying and evaluating the major business
risks faced by the Company and for determining and monitoring the appropriate
course of action to manage these risks.
Environmental, Social and Governance ("ESG") Statement
GEMR is committed to operating its mining and exploration activities in a
responsible, ethical, and sustainable manner. While the Company is still in
the early stages of production, ESG considerations are incorporated into all
strategic and operational decisions as part of our long-term value creation
plan.
Environmental Stewardship
GEMR acknowledges the environmental sensitivity of gemstone mining. The
Company strives to:
· Minimise environmental impact through responsible land use and
rehabilitation planning;
· Monitor water and waste management at its project sites;
· Ensure that future energy sourcing decisions incorporate
efficiency and sustainability considerations.
During 2024, mining and processing activities were limited to tailings and
low-impact hard rock mining, which allowed the Company to optimise recovery
while minimising its operational footprint
Social Responsibility
GEMR is committed to building enduring relationships with the local
communities in which it operates. Highlights include:
· 26% Black Economic Empowerment (BEE) ownership at the Gravelotte
operation, which includes participation by the local community;
· Local employment preference at Gravelotte, providing jobs and
skills development to the surrounding communities;
· Ethical sourcing and full traceability of GEMR's emeralds,
contributing to consumer confidence.
Community consultation remains an ongoing part of the Company's site
development and expansion planning. The inclusion of local community
stakeholders in the BEE structure is a central part of GEMR's social licence
to operate and long-term development strategy.
Governance and Compliance
The Board of GEMR recognises that strong governance underpins its ability to
deliver on its strategic and ESG objectives. Key features include:
· Board oversight of ESG matters via the Audit and Risk Committee;
· Policies in place addressing anti-bribery and market disclosure;
· Compliance with the UK Corporate Governance Code as applicable to
a standard listed company.
As the Company grows, it intends to enhance formal ESG reporting frameworks
and adopt metrics consistent with the International Sustainability Standards
Board (ISSB) and Sustainability Accounting Standards Board (SASB) guidance
where relevant.
Streamlined Energy and Carbon Reporting (SECR)
GEMR does not meet the size or activity thresholds that would trigger
mandatory disclosure under the UK Government's Streamlined Energy and Carbon
Reporting (SECR) framework.
However, the Company remains committed to operating responsibly and will
continue to monitor its environmental impact. As operations scale, GEMR will
review the implementation of energy use monitoring and voluntary emissions
reporting in line with recognised ESG reporting standards.
Whistleblowing
The Group has adopted a formal whistleblowing policy which aims to promote a
very open dialogue with all its employees which gives every opportunity for
employees to raise concerns about possible improprieties in financial
reporting or other matters.
To date, no reports have been filed under this policy.
Diversity
The Board is aware of its lack of diversity in its Board and senior
management. It has an all male Board. It therefore does not meet, either
during the year or at the current time, the board diversity targets as
detailed out in Policy Statement PS 22/3 of the Listing Rules and DTR
requirements, on gender and on ethnicity. The Board will continue to address
these issues going forward, however, the Board is conscious that the Group is
small, with only one employee and the recruitment of a diverse Board in the
immediate future may not be feasible owing to the necessary expertise required
and prioritisation of reaching revenue generation.
Market Abuse Regulations
The Group is required to comply with article 18(2) of the Market Abuse
Regulation ("MAR") with reference to insider dealing and unlawful disclosure
of inside information. The LSE requires traded companies to maintain insider
lists as set out in the MAR. The Board has put in place a MAR compliance
process and the Company's regulatory announcements are overseen by the Board
of Directors.
Substantial shareholdings
As at 31 December 2024, the Directors are aware that following shareholders
hold more than 5% of the issued share capital:
Name Number of Ordinary Shares Percentage of share capital
Africa Critical Metals Limited 60,000,000 19.82%
Nortrust Nominees Limited 24,675,000 8.15%
Peel Hunt Partnership Limited 16,579154 5.48%
The Bank of New York (Nominees) Limited 15,200,730 5.02%
Number of shares not in public hands as at 31 December 2024, are 127,074,534
which equates to 41.99% of issued share capital.
Subsequent events
Following the end of the reporting period, the Group and Company announced
that it has recorded first sales at the Gravelotte Emerald Mine, more details
of this and other subsequent events are disclosed in note 24 of the
consolidated financial statements.
Annual general meeting
This report and the consolidated financial statements will be presented to
shareholders for their approval at the Company's Annual General Meeting
("AGM"). The Notice of the AGM will be distributed to shareholders together
with the Annual Report.
Audit committee
The Audit and Risk Committee comprises Peter Redmond as Chair and John Treacy,
and meets at least twice a year. The Audit and Risk Committee is responsible
for making recommendations to the Board on the appointment of auditors and the
audit fee and for ensuring that the financial performance of the Company is
properly monitored and reported. In addition, the Audit and Risk Committee
receives and reviews reports from management and the auditors relating to the
interim report, the annual report and accounts and the internal control
systems of the Company.
The audit committee met 3 times during the year to 31 December 2024.
Corporate Governance Statement
The Company observes the requirements of the UK Corporate Governance Code
issued by the Financial Reporting Council in the UK from time to time (the "UK
Corporate Governance Code") (so far as it is practicable).
The Directors believe that the board is effective, have an entrepreneurial
spirit and the objective of the Directors is to promote the long-term
sustainable success of the company (Principle 1).
The Company has established a Remuneration Committee (Principle 5) and an
audit and risk committee (Principle 4) of the Board (the "Audit and Risk
Committee") with formally delegated duties and responsibilities.
The Remuneration Committee comprises John Treacy as chair and Peter Redmond,
and meets at least once each year. The Remuneration Committee is responsible
for the review and recommendation of the scale and structure of remuneration
for Directors and any senior management, including any bonus arrangements or
the award of share options with due regard to the interests of the
Shareholders and other stakeholders.
As at the date of this report, the Company is, in compliance with the UK
Corporate Governance Code, save as set out below:
(a) Principle 2, Division of Responsibilities - given the size of the
Company, the Board only has one independent Director.
(b) Principle 3, Composition, Succession and Evaluation - the Board of the
Company, due to its short time on the Equity Shares (Transition) category, has
not had any turnover in Directors and so this principle has not been required.
Though the Directors will ensure that when the board terms are almost over, a
formal procedure is used to evaluate any incoming directors.
My fellow directors and I are committed to maintaining and enhancing our
corporate governance skills and expertise through ongoing professional
development and active engagement with industry best practices. We ensure that
we stay abreast of the latest developments in corporate governance through
continuous monitoring of regulatory updates. This dedication to staying
informed and knowledgeable empowers our Board to make informed decisions that
uphold the highest standards of corporate governance, fostering trust and
confidence among our shareholders and stakeholders.
Political and charitable contributions
The Company made no charitable nor political donation in 2024 (2023: £nil).
Statement of Directors' responsibilities
The Directors are responsible for preparing the Strategic Report, the
Directors' Report, the Remuneration Report and the consolidated financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each
financial year. Under that law, the directors are required to prepare
financial statements in accordance with UK adopted International Financial
Reporting Standards. Under Company Law, the directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and profit or loss of the Company
for that year. In preparing these financial statements, the directors are
required to:
• select suitable accounting policies and then apply
them consistently
• make judgements and accounting estimates that are
reasonable and prudent
• state whether applicable accounting standards, UK
adopted IFRS have been followed, subject to any material departures disclosed
and explained in the financial statements
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Company will continue in
business
• prepare a directors' reports, strategic report and
directors' remuneration report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements and the Directors
remuneration report comply with the Companies Act 2006 and Article 4 of the
IAS Regulations. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors confirm that:
• so far as each Director is aware, there is no relevant
audit information of which the Company's auditor is unaware;
• the Directors have taken all steps that they ought to
have taken to make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information; and
• the Directors are responsible for preparing the annual
report in accordance with applicable law and regulations. The Directors
consider the annual report and the financial statements, taken as a whole,
provides the information necessary to assess the Company's performance,
business model and strategy and is fair, balanced and understandable.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Information to shareholders - Website
The Company has its own website (www.gemresources.co.uk
(http://www.gemresources.co.uk) ) for the purposes of improving information
flow to shareholders as well as to potential investors.
Directors' Responsibilities Pursuant to DTR4
To the best of their knowledge, the Directors confirm:
• the Group and Company financial statements, prepared in
accordance with the applicable set of accounting standards, give a true and
fair view of the assets, liabilities, financial position of the Group and
Company and its loss as at 31 December 2024; and
• the annual report, including the Strategic Report
includes a fair review of the development and performance of the business and
the position of the Group and Company, together with a description of the
principal risks and uncertainties faced.
Statement of disclosures to auditor
So far as all the Directors, at the time of approval of their report, are
aware:
a) there is no relevant audit information of which the
Company's auditors are unaware; and
b) each Director has taken all the steps that they ought to
have taken as Directors in order to make themselves aware of any relevant
audit information and to establish that the Company's auditors are aware of
that information.
By order of the Board
Edward Nealon
Chairman
Date: 30 April 2025
Board of Directors
Edward Nealon - Non-Executive Chairman
Edward Nealon is a geologist with 48 years' experience in the mining and
exploration industry. After graduating in 1974, he commenced his career in
South Africa with Anglo American Corporation, before moving to Australia in
1980 where he spent two years in exploration with Rio Tinto. He founded his
own consulting company in 1983 and has practiced in most of the world's major
mining centres. Mr Nealon was co-founder and former Chairman of Aquarius
Platinum Ltd dual listed on AIM and ASX, co-founder of Sylvania Platinum Ltd
(AIM and ASX), co-founder of Tanzanite One (AIM). He holds a Masters degree
in Geology and is a member of the Australian Institute of Mining and
Metallurgy. Mr Nealon currently also serves as the Non-Executive Chairman for
Lexington Gold Ltd.
Bernard Olivier - Chief Executive Officer
Dr Bernard Olivier is a qualified geologist and has been involved with the
mining and exploration industry for the past 26 years. Dr Olivier has over 17
years' experience as a public company director of ASX-listed and AIM-quoted
mining and exploration companies. Dr Olivier was previously the CEO of
Richland (formerly Tanzanite One Limited) and was credited with restructuring
and returning the group to profitability in 2010. As CEO he also led the team
which established a maiden JORC Resource estimate of 3.9 million gold ounces
for Bezant Resources plc's Mankayan project and achieved an 8 pence per share
return of capital to its shareholders. Dr Olivier is a Member of the
Australasian Institute of Mining and Metallurgy (AusIMM). Dr Olivier currently
serves as a Director and Chief Executive Officer of Lexington Gold Ltd.
Peter Redmond - Executive Director
Peter Redmond is a corporate financier with over 35 years' experience in
corporate finance and venture capital. He has acted on and assisted a wide
range of companies to attain a listing over many years on the Unlisted
Securities Market, the Main Market of the London Stock Exchange and AIM,
whether by IPO or in many cases via reverse takeovers, across a wide range of
sectors, ranging from technology through financial services to natural
resources and, in recent years has done so as a director of the companies
concerned. He was a founder director of Cleeve Capital plc (now BigBlu
Operations Limited) and Mithril Capital plc (now Be Heard Group Limited), both
formerly listed on AIM prior to takeovers, and took a leading role in the
reconstruction and refinancing of AIM-quoted 3Legs Resources plc (now SalvaRx
Group plc). He is also a director of Hemogenyx plc (where he was involved in
creating the precursor vehicle).
Sam Mulligan - Executive Director
Sam Mulligan, founder of Malaika Exploration (Zambia) Limited, has developed
several successful businesses across China and Asia. He now resides in Zambia.
Based in Lusaka, Mr. Sam Mulligan is the managing director and founder of
Africa Prospect Development Zambia (APDZ). APDZ focusses on identifying
potential new sources of critical metals. These metals are in short supply and
will fuel the fourth industrial revolution. The company commenced operations
in Zambia in 2016. Prior to APDZ, Sam Mulligan spent 25 years working in the
market intelligence sector across Asia. During his time in Asia, Sam has
worked across Japan, Korea, Australia, Singapore and China. In 2001, Sam
founded a strategic market research company called Data Driven Marketing Asia
(DDMA). DDMA specialized in market entry and opportunity appraisal for large
scale multinationals to the China market and worked directly with many leading
companies including Brown Forman, Anheuser Busch, Walmart, The Australian Wool
Board, The Chinese Sports Lottery, Standard Chartered Bank, The Norwegian
Seafood Council as well as a selection of other government and foreign
investment groups.
John Treacy - Independent Non-Executive Director
John Treacy is an experienced London-based financier who specialises in
working with growing companies. He qualified as a solicitor in the London
office of a major international law firm where he specialised in Capital
Markets and Mergers & Acquisitions. From there he moved on to practice
corporate finance in the advisory teams of several prominent UK brokerages
where he acted as an adviser to a number of AIM companies and advised on
numerous initial public offerings, acquisitions, debt restructurings and
placings.
Remuneration Report and Plan
Dear Shareholder,
On behalf of the Board, I am pleased to present our Remuneration Report. It
has been prepared in accordance with the requirements of The Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2013 (the "Regulations") and, after this introductory letter, is
split into two areas: the Annual Report on Remuneration the Remuneration
Policy, in that order.
GEMR's shares were admitted to what is now the Equity Shares (Transition)
category and to trading on the Main Market of the London Stock Exchange on 2
March 2022. Since the listing, GEMR has been a mineral exploration company,
operating its exploration assets in North-East Zambia via its subsidiary
Malaika. During 2023 it acquired Gem - Venus Holdings Proprietary Limited the
owner of the Gravelotte Emerald Mine in South Africa and in 2024 Prasinus
Exploration Pty Ltd, the owner of the Curlew Emerald Mine in Western
Australia.
During the period, the Company has had five Directors, three executive and two
non-executives, and one employee, Jeremy Sturgess-Smith, who is deemed KMP. We
had stated in our 13 December 2023 prospectus that the Directors will be paid
annual amounts of:
· Ed Nealon - £40,000 per annum;
· Bernard Olivier - £50,000 per annum;
· Sam Mulligan - £40,000 per annum;
· Peter Redmond - £24,000 per annum;
· John Treacy - £24,000 per annum; and
· Jeremy Sturgess-Smith (employee) - £40,000 per
annum.
The remuneration was amended (while others' remuneration remains the same)
with effect from 1 May 2024 to:
· Edward Nealon - £45,000 per annum;
· Bernard Olivier - £70,000 per annum; and
· Peter Redmond - £40,000 per annum.
Wessel Marais and Louis Swart are directors at the South African entities and
are also deemed key management personnel and are paid:
· Wessel Marais - £61,510 per annum; and
· Louis Swart - £36,000 per annum.
No other remuneration has been paid to Directors. However, in order to
preserve cash, 50% of all Directors salaries were accrued (as was 50% of the
salary of GEMR's only employee).
At year end, the following amounts was outstanding to the
Directors/employee:
2024 2023
£ £
Peter Redmond 14,667 5,000
John Treacy 9,000 5,000
Ed Nealon 18,333 15,000
Bernard Olivier 32,083 18,750
Sam Mulligan 29,167 15,833
Jeremy Sturgess-Smith 21,667 8,333
Total 124,917 67,916
As was announced on 28 February 2025, the Company issued 5,999,998 new
ordinary shares of £0.0001 each ("Ordinary Shares") at an issue price of 0.65
pence per Ordinary Share to the directors, Bernard Olivier, Ed Nealon and
Peter Redmond in lieu of cash settlement of part of their accrued fees.
Refer to note 24.
On 1 September 2021, the Company adopted an unapproved share option plan,
which all executives and employees of the Company and its subsidiaries are
eligible to participate in. The Remuneration Committee have not granted any
further options beyond those detailed in the Remuneration Policy below;
however they will select individuals to whom any further share options are to
be granted from time to time.
Shareholders should note that the Company's Remuneration Policy contains
provisions that the Remuneration Committee be granted powers to set new
remuneration arrangements from time to time. As referred to above, the
Remuneration Committee implemented an option plan in 2021. An annual review
will be undertaken to ensure Remuneration is competitive and in line with
market practice and good governance. No arrangements other than the unapproved
option plan will be implemented for the Executive Directors or any other
directors or employees until such a time as the Remuneration Committee may
feel it is appropriate. Any changes to the Remuneration Policy will be put to
shareholders at the next available Annual General Meeting.
John Treacy
Chairman of Remuneration Committee
Date: 30 April 2025
Remuneration Policy
As part of the current Remuneration Policy, the Remuneration Committee has
extensive discretionary powers to set new remuneration arrangements that are
commensurate with the business, from time to time. The Remuneration Committee
would expect to change salary levels of the existing Executive Directors, set
salaries and compensation and introduce benefits, pension, annual bonus and
long term incentive arrangements which are competitive and in line with market
practice and governance guidelines and which would be designed to align the
interests of shareholder growth and director compensation. Salaries and fees
of all Directors were agreed following the admission of the Company's shares
to what is now the Equity Shares (Transition) category and to trading on the
Main Market of the London Stock Exchange on 2 March 2022, with an amendment
to Ed Nealon, Bernard Olivier and Peter Redmond's remuneration effective 1 May
2025. No further arrangements other than the unapproved option plan took place
for the existing directors before 31 December 2024 but the Remuneration
Committee will keep the matter under review as the Company develops.
Element Detail
Base salary Directors:
· Ed Nealon - £45,000 per annum;
· Bernard Olivier - £70,000 per annum;
· Sam Mulligan - £40,000 per annum;
· Peter Redmond - £40,000 per annum; and
· John Treacy - £24,000 per annum.
Key Management Personnel:
· Jeremy Sturgess-Smith - £40,000 per annum;
· Wessel Marais - £61,510 per annum; and
· Louis Swart - £36,000 per annum.
At the end of the reporting period, a total of £124,917 of the above based
salary remains unpaid and accrued.
Benefits No benefits are currently provided. A detailed review will be undertaken on
the 12-month anniversary of publication of these accounts.
Pension All eligible Directors and employees have been invited to participate in the
Company's pension scheme with True Potential. At the time of publication,
all eligible Directors and employees have opted out.
Annual Bonus No annual bonus scheme is intended to be implemented during 2024 or 2025. A
detailed review will be undertaken on the 12-month anniversary of publication
of these accounts. The review will reflect the scale and complexity of the
business at the time. Given the strategy of the Company, the Committee will
continue to monitor this throughout the period.
Option Plan The unapproved option plan put in place on Admission in March 2022 is intended
to support the delivery of the Company's strategy, to retain the Directors and
reward them for driving its successful delivery. At this stage, the Option
Plan is the Company's sole long-term incentive plan for current Directors and
employees following admission. The Option Plan operates over a period
commencing on admission to what is now the Equity Shares (Transition) category
and trading on the Main Market of the London Stock Exchange and ending on the
10(th) anniversary of this date (2 March 2032). For the full terms of the
Option Plan, please refer to the Company's prospectus published on its
website.
(https://gemresources.co.uk/publications/
(https://gemresources.co.uk/publications/) ).
At the time of publication, current participants are as follows as follows:
Name Number of Options: Exercise Price: Date of Grant: Expiry Date:
Bernard Olivier 8,000,000 1(st) Tranche - 2p per share; 2(nd) tranche- 2.5p per share and 3rd tranche 1 September 2021 1 September 2031
2.7p per share.
Peter Redmond 4,000,000 1(st) Tranche - 2p per share; 2(nd) tranche- 2.5p per share and 3rd tranche 1 September 2021 1 September 2031
2.7p per share.
Jeremy Sturgess-Smith 8,000,000 1(st) Tranche - 2p per share; 2(nd) tranche- 2.5p per share and 3rd tranche 1 September 2021 1 September 2031
2.7p per share.
As at 31 December 2024, none of the options have been exercised.
No other incentive plan is in place.
As at 31 December 2024, none of the options have been exercised.
No other incentive plan is in place.
Notice periods
The notice period for all Directors is 12 months' notice in writing.
Other Employees
Jeremy Sturgess-Smith is the Company's only employee. He also has a 12 month
notice period.
Other policy matters
Policy sections normally set out approaches in the areas of executive
recruitment, termination of employment, shareholder consultation,
consideration of employment conditions elsewhere in the Company and employee
consultation. Other than items explained above, the Company believes that
these issues are not applicable at present.
Annual Report on Remuneration
The Remuneration Committee presents its report for the year ended 31 December
2024.
The Remuneration Committee's main responsibilities
· The Remuneration Committee considers the remuneration
policy, employment terms and remuneration of the Board and advisers;
· The Remuneration Committee's role is advisory in nature,
and it makes recommendations to the Board on the overall remuneration
packages; and
· The Remuneration Committee, when considering the
remuneration packages of the Company's Board, will review the policies of
comparable companies in the industry.
· The remuneration committee met once during the period to
31 December 2024.
Membership of the Remuneration Committee, meetings and Advisers
The Remuneration Committee is comprised of Peter Redmond as Chair and John
Treacy (both Non-Executive Directors). A meeting was held on 24 June 2024 and
the Chairman of the Remuneration Committee presented an initial recommendation
to the Board.
The items included in this report are unaudited unless otherwise stated.
Report Approval
A resolution to approve this report will be proposed at the AGM of the
Company. The vote will have advisory status.
Directors' and Key Management Personnel ("KMP") emoluments and compensation
(audited)
Set out below are the emoluments of the Directors and KMP for the years ended
31 December 2024 and 31 December 2023:
2024 2023
£ £
Directors
Peter Redmond 34,667 24,000
John Treacy 24,000 24,000
Ed Nealon 43,333 40,000
Bernard Olivier 63,333 50,000
Sam Mulligan 40,000 38,333
Total 205,333 176,333
KMP
Jeremy Sturgess-Smith 40,000 44,000
Wessel Marais 61,510 61,799
Louis Swart 15,000 -
Total 116,510 105,799
At the end of the reporting period, a total of £103,250 of the total board
remuneration of £205,333 remains unpaid and accrued. Accrued and unpaid
fees totalling £39,000 was converted to shares (refer note 24) at a 31%
premium, as was announced on 28 February 2025.
Long term incentive plan arrangements
There is a charge of £34,161 (2023: £34,162) for Bernard Olivier and a
charge of £17,081 (2023: £17,080) for Peter Redmond charged to the
Comprehensive Income in the year for the unapproved option plan.
Other disclosures on remuneration during 2024 and intention for 2025
Other than the salaries and fees, detailed above in this Report, and the
Directors' and Employee option plan participation, no other remuneration was
paid, payable or is at present expected to be paid or payable for 2024. As
such, there are no further disclosures to be made in respect of salary or fee
changes for 2024, pension, benefits, annual bonus in respect of 2023 or 2024,
vesting, outstanding or forward long-term incentive plan awards. No payments
were made for loss of office during the year ended 31 December 2024.
UK 10-year performance graph against CEO remuneration
The Directors have considered the requirement for a UK 10-year performance
graph comparing the Company's Total Shareholder Return with that of a
comparable indicator. The Directors do not currently consider that including
the graph will be meaningful because the Company is not paying dividends. The
Directors will continue to monitor the appropriateness or not of including a
graph for future annual reports.
Relative importance of spend on pay
The table below illustrates the year-on-year change in total remuneration
compared to distributions to shareholders and operational cash flow for the
financial periods ended 31 December 2024 and 2023:
Distribution to shareholders Total directors and employee pay Operational cash outflow
£'000 £'000 £'000
31 December 2024 Nil 322 550
31 December 2023 Nil 282 950
Total employee pay includes wages and salaries, social security costs and
pension costs for employees. Further details on Employee remuneration are
provided in note 5.
UK Remuneration percentage changes
Listed companies are required to make disclosures in respect of percentage
year-on-year changes in the lead executive's and employee remuneration, the
ratio of the lead executive's remuneration to that of different employee
groups. These disclosures are not applicable due to there being only one
employee.
Compliance with the Corporate Governance Code
The Committee has considered and will continue to monitor the regulatory
environment and in particular, the revised UK Corporate Governance Code. As
the Company develops and introduces a formal remuneration policy, the
Committee will reflect on these issues. The Committee is satisfied that in
respect of 2024 the remuneration policy operated as intended in terms of
Company performance and quantum.
The Committee will ensure that policies and practices are consistent with the
six factors set out in Provision 40 of the Code including Clarity, Simplicity,
Risk, Predictability, Proportionality and Alignment of Culture. Given the
limited and simple nature of existing remuneration arrangements, the Committee
believes they are consistent with these principles.
UK Directors' shares (audited)
The interests of the Directors who served during the year in the share capital
of the Company as of 31 December 2024 and at the date of this report has been
set out in the Directors' Report on page18.
Policy Approval
A resolution to approve this policy will be proposed at the AGM of the
Company.
Approved on behalf of the Board of Directors by:
John Treacy
Chair of the Remuneration Committee
Date: 30 April 2025
Independent Auditors' Report
FOR THE YEAR ENDED 31 DECEMBER 2024
Registered number 05329401
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF GEM RESOURCES PLC
Opinion
We have audited the financial statements of Gem Resources Plc (the 'Company')
and its subsidiaries (the 'Group') for the year ended 31 December 2024 which
comprise the Consolidated and Company Statement of Comprehensive Income, the
Consolidated and Company Statement of Financial Position, the Company
Statement of Changes in Equity, the Consolidated Statement of Changes in
Equity, the Consolidated and Company Statement of Cash Flows, and the notes to
the Consolidated and Company Financial Statements, including significant
accounting policies.
The financial reporting framework that has been applied in the preparation of
the Group financial statements is applicable law and UK adopted International
Accounting Standards in conformity with the requirements of the Companies Act
2006. The financial reporting framework that has been applied in the
preparation of the Company financial statements is applicable law and United
Kingdom Adopted International Accounting Standards.
In our opinion:
· the financial statements give a true and fair view of the state of
the Group's and of the Company's affairs as at 31 December 2024 and of the
Group's and Company's loss for the year then ended;
· the Group's financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
· the Company's financial statements have been properly prepared in
accordance with UK adopted international accounting standards; and
· the Group's and Company's financial statements have been prepared in
accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the Group and the Company in accordance with the ethical requirements that are
relevant to our audit of financial statements in the UK, including the FRC's
Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 of the financial statements, which indicates that
the Group and the Company generated a loss for the year and will require
additional funding in the short to medium term in order to continue to fund
the Group's and the Company's operations and to meet its liabilities as they
fall due. The Group's and Company's projected working capital requirements,
expenditure for further exploration, level of projected production and
financial returns thereon are dependent on the Group's and Company's ability
to secure additional funding. As stated in note 2, these events or conditions,
along with the other matters as set forth in note 2, indicate that a material
uncertainty exists that may cast significant doubt on the Group's and the
Company's ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
In auditing the financial statements, we have concluded that the Directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Given the conditions and uncertainties
disclosed in note 1, we considered going concern to be a Key Audit Matter.
Our evaluation of the Directors' assessment of the Group's and the Company's
ability to continue to adopt the going concern basis of accounting and in
response to the Key Audit Matter included the following:
We obtained an understanding of the Group's and Company's relevant controls
over the preparation and review of cash flow projections and assumptions used
in the cash flow forecasts to support the going concern assumption and
understood the design and implementation of these controls;
· We obtained and evaluated the financial forecasts through
comparing actual outcomes in the current year against prior forecasts. We
assessed the reasonableness of key assumptions, including operating and
capital expenditure by considering factors such as commitments under licences,
and comparison to historic actuals in order to assess the reasonableness of
the forecasts. As appropriate we confirmed the key inputs to publicly
available information and underlying source documentation.
· We considered the Group's and Company's ability to achieve the
forecasted production levels during a period of at least twelve months from
the date of approval of the financial statements.
· We assessed the mathematical accuracy of the Group's and
Company's cash flow forecasts.
· We assessed the ability of the Directors' to raise additional
funding based on historical successful fundraising. We also assessed
alternative sources of funding available to the Group and Company.
· We performed sensitivity analysis on the Group's cash flow
forecast to consider the available headroom under different reasonably
possible scenarios such as the Directors' inability to secure additional
funding.
· We performed a reverse stress test that considered the possible
impact on cash flows if no production were to occur at Gravelotte and Curlew.
· We made enquiries of Management and Directors and reviewed Board
minutes and key operational contracts to assess the completeness of
commitments considered in the cash flow forecasts.
· We evaluated the adequacy of disclosures made in the financial
statements in respect of going concern.
Our responsibilities and the responsibilities of the Directors with respect to
going concern are described in the relevant sections of this report.
Overview
Coverage 95% (2023: 96%) of Group loss before tax
87% (2023: 98%) of Group total assets
Key audit matters 2024 2023
1. Going concern X
X
2. Classification and capitalisation
of assets (licenses, exploration,
X X
evaluation and production assets)
3. Carrying value (impairment)
of assets (licenses, exploration,
X X
evaluation and production assets).
4. Accounting for acquisition of X
Australian subsidiary
5. Accounting for acquisition
of X
South African
subsidiary
The acquisition of the Australian entity occurred in the current financial
year, and contributed to the recognition of the material goodwill balance. The
accounting for the acquisition of the Australian subsidiary occurred in the
year ended 31 December 2024 and therefore considered a Key Audit Matter for
the first time in the year ended 31 December 2024. In the prior year, the
acquisition of the South African entities was considered a Key Audit Matter
and no reassessment of the acquisition accounting is required in the following
year, therefore it is no longer considered a Key Audit Matter for the year
ended 31 December 2024.
Materiality Group financial statements as a whole £25,000 (2022: £42,000) based on 1.5%
(2023: 1.5%) of Total Assets. Company financial statements as a whole £22,500
(2023: £21,000) based on 1.5% of Total Assets capped to 90% of Group
materiality (2023: 1.5% of Total Assets capped to 50% of Group materiality)
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
looked at where the directors made subjective judgments, for example in
respect of significant accounting estimates that involved making assumptions
and considering future events that are inherently uncertain. As in all of our
audits we also addressed the risk of management override of internal controls,
including evaluating whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to
be able to give an opinion on the financial statements as a whole, taking into
account the structure of the Group and the Company, the accounting processes
and controls, and the industry in which they operate.
The Company is a significant component and was subject to full scope audit
procedures by the Group audit team. Adit Mining Consultants and Trading
(Proprietary) Limited is a significant component and were subject to full
scope audit procedures by a non-member firm. Our scope on the non-significant
components were the performance of analytical review procedures by the Group
audit team and non-member firm. We also performed specified audit procedures
over certain account balances and transaction classes that we regarded as
material to the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on, the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matter
described in the Material Uncertainty related to going concern section, we
have determined the matters described below to be the key audit matters to be
communicated in our report.
Key audit matter How our audit addressed the key audit matter
Classification and capitalisation of assets (licenses, exploration, evaluation We have performed the following audit procedures:
and production assets)
The group is currently in the exploration, as well as production phases with
regards to its respective emerald projects. Consequent to this, the Group's · We evaluated the Directors' and Management's impairment review
most significant asset on the consolidated statement of financial position is for each cash generating unit identified.
its intangible and tangible mining assets.
· We challenged if the capitalisation of the intangible asset is in
There is a risk of inappropriate capitalisation of assets. line with the relevant accounting standard and agreed a sample of transactions
to supporting invoices.
During the year-ended 31 December 2024, the Group commenced operations at its
Gravelotte mine. There is a risk that the transfer of the asset from an · We obtained the Directors' and Management's assessment of
exploration and evaluation asset ('intangible') to a production asset commencement of production at Gravelotte to establish whether it was
('tangible') occurred incorrectly and resulted in the incorrect capitalisation transferred from intangible to fixed assets at the appropriate date, and that
of costs. costs incurred after that date have been expensed appropriately.
As explained in Note 10 and 12 to the consolidated financial statements, the · We obtained and inspected third party documents relating to the
classification and cost capitalisation to the licenses in relation to the licence status and commitments to check legal title and validity of each of
exploration, developed and production assets under the relevant accounting the licences.
standard require the exercise of significant judgement by Management and the
Directors. · We assessed the function of the operating facilities through
enquiries of Directors and Management in order to confirm our understanding of
Given the significance of the assets to the Group's consolidated statement of the operations and appropriate classification. We further inspected board
financial position and the significant management judgements and estimates minutes and other publicly available information.
involved in this area, we considered this a key audit matter.
· We assessed the adequacy and reasonableness of disclosures in the
Refer to Accounting Policies, Note 10 and Note 12. financial statement in this regard.
Key observations:
Based on the audit work performed, we do not have any key observations to
note.
Carrying value of assets (licenses, exploration, evaluation and production We have performed the following audit procedures:
assets).
The group carries significant exploration and evaluation assets, as well as
production assets for the year ended 31 December 2024. Management are required · We evaluated the Directors' and Management's impairment review
to perform an indicator of impairment assessment on the valuation of the for each cash generating unit identified.
exploration and evaluation assets (Zambia) per IFRS 6. Further, they are
required to assess the production asset (South Africa and Australia) for · We assessed the function of the operating facilities through
impairment per IAS 36. These assessments involved significant Management enquiries of Directors and Management in order to confirm our understanding of
judgements and estimates. the operations and in order to assess whether there are any indicators of
impairment. We further inspected board minutes and other publicly available
As explained in Note 10 and 12 to the consolidated financial statements, the information.
indicators of impairment assessment in relation to the exploration assets
under the relevant accounting standard require the exercise of significant · We critically challenged the considerations made regarding
judgement by Management and the Directors. Management and the Directors are indicators of impairment in accordance with the relevant accounting standards
required to assess whether there are any potential impairment triggers which by performing the following procedures:
would indicate that the carrying value of the assets may not be recoverable
for each cash generating unit. Management identified the expired licence at o We assessed the Directors' and Management's impairment indicator review to
its Zambian operations as an indicator of impairment for that cash generating establish whether it was performed in accordance with the requirements of the
unit. relevant accounting standards for the Group's exploration assets (Zambia).
Management and the Directors are required to assess whether there are any o We assessed the Directors' and Management's impairment review (to
impairment to its developed and production asset by considering these cash establish whether it was performed in accordance with the requirements of the
generating units value in use or fair value less costs to sell. The Directors relevant accounting standards for the Group's developed and production assets
did not identify any indicators of impairment with regards to its South Australia and South Africa).
African or Australian assets.
o We obtained and inspected third party documents relating to the licence
Given the significance of the assets to the Group's consolidated statement of status and commitments to check legal title and validity of each of the
financial position and the significant management judgements and estimates licences.
involved in this area, we considered this a key audit matter.
o We inspected third party reports obtained from the Directors and
Refer to Accounting Policies, Note 10 and Note 12. Management's experts relating to the reserves and resources impacting the
impairment indicator assessment. We challenged the Competent Person's Report
for any impairment indicators based on the reserve and resource profile.
o We performed an assessment of the competence, independence and objectivity
of Management's expert.
· We assessed the adequacy and reasonableness of disclosures in the
financial statement in this regard.
Key observations:
Based on the audit work performed, we do not have any key observations to
note.
Accounting for acquisition of Australian subsidiary under IFRS 3 inclusive of
recognition and impairment of goodwill.
We have performed the following audit procedures:
On 18 July 2024, the Group acquired a new subsidiary, Prasinus Exploration
Proprietary Limited, which included material developed assets. Management's
and the Directors' assessment of the transaction required making a number of
judgements, which includes an assessment of the fair value of the acquired · We challenged the reasonableness of the Group's considerations of
asset and liabilities, fair value of consideration paid and the related their assessment of the fair value of the net assets acquired in accordance
goodwill recognition. The risk exist that acquired assets and liabilities and with the relevant accounting standards.
consideration paid are not complete or accurately valued, and the resulting
goodwill recognised is therefore not appropriate. Given the significant · We challenged the Directors' and Management's determination of
management judgements and estimates involved to determine the fair values this the fair value of the assets and liabilities acquired in order to assess
was considered to be a key audit matter. whether the fair values are supportable by agreeing a sample to underlying
support such as invoices and agreements.
Refer to Accounting Policies and Note 13.
· We assessed the completeness of the fair value of assets and
liabilities acquired by inspecting the trial balance of the acquired entities
at acquisition date and comparing these to Management's purchase price
allocation and appropriateness to the relevant accounting standard.
· We compared the fair value of the assets and liabilities to 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
to assess the appropriateness of the fair value of the consideration paid and
consequent recognition of goodwill.
· We challenged the Directors' and Management's assessment of the
fair value of assets and liabilities evident in the Competent Person's Report
as identified by the expert.
· We performed an assessment of the competence, independence and
objectivity of the Management's expert.
· We assessed the adequacy and reasonableness of disclosures in the
financial statement in this regard.
Key observations:
Based on the audit work performed, we do not have any key observations to
note..
Our application of materiality
Materiality is assessed as the magnitude of an omission or misstatement that,
individually or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements. Misstatements
below these levels will not necessarily be evaluated as immaterial as we also
take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the
financial statements as a whole. Materiality provides a basis for determining
the nature and extent of our audit procedures.
Based on our professional judgment, we determined materiality for the
financial statements as a whole as follows:
Group financial
statements Company
financial statements
Overall materiality £25,000 (PY:
£42,000)
£22,500 (PY: £21,000)
How we determined it Based on 1.5% (PY: 1.5%) of gross assets. Based
on 1.5% (PY: 1.5%) of gross assets
capped to 90% (PY: 50%) of Group
materiality given the assessment of the
components aggregation risk, and size
based on total assets of the Group.
Rationale for benchmark applied We considered total assets to be the most significant consideration for users We considered gross assets to be the primary measure used by shareholders in
of the financial statements as the Group continues to explore its portfolio of assessing the performance of the Company as it is the holding company within
gem assets through to production. the group.
Performance materiality £15,000 (PY: £27,300) £13,500 (PY: £13,650)
Basis for determining performance materiality 60% (PY: 65%) of materiality. In reaching our conclusion on the level of 60% (PY: 65%) of materiality. In reaching our conclusion on the level of
performance materiality to be applied we considered a number of factors performance materiality to be applied we considered a number of factors
including the expected total value of known and likely misstatements (based on including the expected total value of known and likely misstatements (based on
past experience), our knowledge of the Group's control environment and past experience), our knowledge of the Company's control environment and
management's attitude towards proposed adjustments. management's attitude towards proposed adjustments.
Component materiality
For each component in the scope of our Group audit, we allocated a materiality
that is equal to or less than our overall Group materiality. The range of
materiality allocated across components is ranged from £13,500 to £22,500.
We set materiality for each significant component of the Group based on a
percentage of between 60% and 90% of Group materiality dependent on the size
and our assessment of the risk of material misstatement of that component. In
the audit of each component, we further applied performance materiality levels
of 60% of the component materiality to our testing to ensure that the risk of
errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report all misstatements
above £1,250 (2023: £2,100) for both the Group and Company audit, as well as
misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise
to a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have
performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Company
and its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the Group and
Company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the Company's financial statements and the part of the directors'
remuneration report to be audited are not in agreement with the accounting
records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we require
for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors' responsibilities
statement set out on page 26, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group's and Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
The objectives of our audit, in respect to fraud are to identify and assess
the risks of material misstatement of the financial statements due to fraud;
to obtain sufficient appropriate audit evidence regarding the assessed risks
of material misstatements due to fraud, through designing and implementing
appropriate responses; and to respond appropriately to fraud or suspected
fraud identified during the audit. However, the primary responsibility for the
prevention and detection of fraud rests with both those charged with
governance of the entity and management.
Our approach to identifying and assessing the risks of material misstatement
in respect of irregularities, including fraud and non-compliance with laws and
regulations, was as follows:
· the senior statutory auditor ensured the engagement team collectively
had the appropriate competence, capabilities and skills to identify or
recognise non-compliance with applicable laws and regulations in the United
Kingdom, South African, Australia and Zambia.
· we identified the laws and regulations applicable to the Group and
Company through discussions with directors and other management, and from our
knowledge and experience of the entity's activities.
· we focused on specific laws and regulations which we considered may
have a direct material effect on the financial statements or the operations of
the company, including Companies Act 2006, taxation legislation, data
protection, employment and health and safety legislation.
· We instructed our component auditor to focus on specific laws and
regulations which we considered may have a direct material effect on the
financial statements or the operations of the company, including local
environmental legislation, mining legislation, taxation legislation, data
protection, employment and health and safety legislation.
· we assessed the extent of compliance with the laws and regulations
identified above through making enquiries of management and reviewing legal
expenditure; and
· identified laws and regulations were communicated within the audit
team regularly and the team remained alert to instances of non-compliance
throughout the audit.
We assessed the susceptibility of the company's financial statements to
material misstatement, including obtaining an understanding of how fraud might
occur, by:
· making enquiries of management as to where they considered there was
susceptibility to fraud, their knowledge of actual, suspected and alleged
fraud; and
· considering the internal controls in place to mitigate risks of fraud
and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls,
we:
· performed analytical procedures to identify any unusual or unexpected
relationships;
· tested journal entries to identify unusual transactions;
· assessed whether judgements and assumptions made in determining the
accounting estimates were indicative of potential bias. Key judgements and
assumptions are comprised in the impairment assessment of the carrying value
of intangible assets and goodwill, going concern and the purchase price
allocation for the acquisition of the Australian entity as assessed within our
Key Audit Matters above; and
· investigated the rationale behind significant or unusual
transactions.
In response to the risk of irregularities and non-compliance with laws and
regulations, we designed procedures which included, but were not limited to:
· agreeing financial statement disclosures to underlying supporting
documentation which included our evaluation of Management's assessment on the
impact of climate change on the Group and Company and related disclosures;
· reading the minutes of meetings of those charged with governance; and
· enquiring of management as to actual and potential litigation and
claims
There are inherent limitations in our audit procedures described above. The
more removed that laws and regulations are from financial transactions, the
less likely it is that we would become aware of non-compliance. Auditing
standards also limit the audit procedures required to identify noncompliance
with laws and regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than
those that arise from error as they may involve deliberate concealment or
collusion.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities.
(http://www.frc.org.uk/auditorsresponsibilities.)
This description forms part of our auditor's report.
Use of this report
This report, including the opinions, has been prepared for and only for the
Company's members as a body in accordance with Chapter 3 of Part 16 of the
Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Hemen Doshi FCCA (Senior Statutory Auditor)
For and on behalf of Gerald Edelman LLP,
Chartered Accountants
Statutory Auditor
73 Cornhill
London
EC3V 3QQ
Date: 30 April 2025
Consolidated and Company Statement of Comprehensive Income
GROUP COMPANY
31 Dec 2024 31 Dec 2023 31 Dec 2024 31 Dec 2023
£'000s £'000s £'000s £'000s
Note Restated* Restated*
Continuing operations
Operating expenses 4 (1,152) (1,128) (672) (868)
Impairment 9, 12, 13 (754) - (752) -
Finance costs (50) (4) (44) -
Loss before taxation (1,956) (1,132) (1,468) (868)
Taxation 3 - - - -
Loss for the year (1,956) (1,132) (1,468) (868)
Attributable to:
Owners of the parent (1,822) (1,063) (1,468) (868)
Non-controlling interest (134) (69) - -
(1,956) (1,132) (1,468) (868)
Other comprehensive income
Loss for the year (1,956) (1,132) (1,468) (868)
Items that may be reclassified to profit or loss:
Exchange difference on translation of foreign operations (66) (101) - -
Total comprehensive loss for the year (2,022) (1,233) (1,468) (868)
Attributable to:
Owners of the parent (1,866) (1,164) (1,468) (868)
Non-controlling interest (156) (69) - -
(2,022) (1,233) (1,468) (868)
Earnings per share
Basic and diluted earnings per share (pence) 21 (0.64) (0.42) (0.52) (0.34)
The notes to these consolidated financial statements on pages 53 to 82 form an
integral part of these consolidated financial statements. * For details of
restatement please refer to note 25.
Consolidated Statement of Financial Position
Company number: 05329401 31 Dec 2024 31 Dec 2023 1 Jan 2023
£'000s £'000s £'000s
ASSETS Note Restated* Restated*
Non-current assets
Exploration asset 12 26 153 11
Goodwill 13 728 1,286 995
Property, plant and equipment 10 373 31 -
Right of use asset 11 29 34 -
Total non-current assets 1,156 1,504 1,006
Current assets
Inventories 6 9 - -
Other receivables 7 101 239 27
Restricted cash 8 12 - -
Cash and cash equivalents 414 674 362
Total current assets 536 913 389
Total assets 1,692 2,417 1,395
LIABILITIES
Non-current liabilities
Lease liabilities 11 (19) (26) -
Other payables 15 (479) (436) -
Provisions 16 (12) - -
Deferred tax liability 17 (8) - -
Total non-current liabilities (518) (462) -
Current liabilities
Trade and other payables 14 (489) (81) (132)
Lease liabilities 11 (10) (9) -
Total current liabilities (499) (90) (132)
Total liabilities (1,017) (552) (132)
NET ASSETS 675 1,865 1,263
EQUITY
Share capital 18 30 25 14
Share premium 18 4,690 3,980 2,546
Other reserves 18 344 291 57
Retained earnings (4,184) (2,362) (1,354)
Total equity attributable to equity owners of the parent 880 1,934 1,263
Non-controlling interest (205) (69) -
TOTAL EQUITY 675 1,865 1,263
The notes to these consolidated financial statements on pages 53 to 82 form an
integral part of these consolidated financial statements. * For details of
restatement please refer to note 25.
These consolidated financial statements were approved and authorised for issue by the Board of Directors on 30 April 2025 and signed on its behalf by:
Edward Nealon
Chairman
Company Statement of Financial Position
Company number: 05329401 31 Dec 2024 31 Dec 2023 1 Jan 2023
£'000s £'000s £'000s
ASSETS Note Restated* Restated*
Non-current assets
Investment in Subsidiary 9 752 1,272 1,000
Total non-current assets 752 1,272 1,000
Current assets
Other receivables 7 1,348 846 48
Cash and cash equivalents 283 667 362
Total current assets 1,631 1,513 410
Total assets 2,383 2,785 1,410
LIABILITIES
Non-current liabilities
Other payables 15 (479) (436) -
Total non-current liabilities (479) (436) -
Current liabilities
Trade and other payables 14 (356) (145) (118)
Total current liabilities (356) (145) (118)
Total liabilities (835) (581) (118)
NET ASSETS 1,548 2,204 1,292
EQUITY
Share capital 18 30 25 14
Share premium 18 4,690 3,980 2,546
Other reserves 18 489 392 57
Retained earnings (3,661) (2,193) (1,325)
TOTAL EQUITY 1,548 2,204 1,292
The notes to these consolidated financial statements on pages 53 to 82 form an
integral part of these consolidated financial statements. * For details of
restatement please refer to note 25.
These financial statements were approved and authorised for issue by the Board
of Directors on 30 April 2025 and signed on its behalf by:
Edward Nealon
Chairman
Company Statement of Changes in Equity
COMPANY Share Share Other Retained Total
Capital premium Reserves earnings equity
£'000s £'000s £'000s £'000s £'000s
Balance at 1 14 2,546 57 (1,325) 1,292
January 2023
Total comprehensive income (restated*) - - - (868) (868)
Net equity issued (restated*) 11 1,434 - - 1,445
Share warrant reserve - - 250 - 250
Share option reserve - - 85 - 85
Balance at 31 25 3,980 392 (2,193) 2,204
December 2023 (restated*)
Total comprehensive income - - - (1,468) (1,468)
Net equity issued 5 722 - - 727
Share warrant reserve - (12) 12 - -
Share option reserve - - 85 - 85
Balance at 31 30 4,690 489 (3,661) 1,548
December 2024
The notes to these consolidated financial statements on pages 53 to 82 form an
integral part of these consolidated financial statements. * For details of
restatement please refer to note 25.
Consolidated Statement of Changes in Equity
GROUP Share Share Other Retained Non-controlling interest Total
Capital premium Reserves earnings equity
£'000s £'000s £'000s £'000s £'000s £'000s
Balance at 1 14 2,546 57 (1,354) - 1,263
January 2023
Total comprehensive income (restated*) - - (101) (1,008) (69) (1,178)
Net equity issued (restated*) 11 1,434 - - - 1,445
Share warrant reserve - - 250 - - 250
Share option reserve - - 85 - - 85
Balance at 31 25 3,980 291 (2,362) (69) 1,865
December 2023 (restated*)
Total comprehensive income - - (44) (1,822) (156) (2,022)
Net equity issued 5 722 - - - 727
Share warrant reserve - (12) 12 - - -
Share option reserve - - 85 - - 85
Acquisition of subsidiary - - - - 20 20
Balance at 31 30 4,690 344 (4,184) (205) 675
December 2024
The notes to these consolidated financial statements on pages 53 to 82 form an
integral part of these consolidated financial statements. * For details of
restatement please refer to note 25.
Consolidated and Company Statement of Cash Flows
GROUP COMPANY
Note 31 Dec 2024 31 Dec 2023 31 Dec 2024 31 Dec 2023
£'000s £'000s £'000s £'000s
Cash flows from operating activities Restated* Restated*
Loss for the period (1,956) (1,132) (1,468) (868)
Finance costs 50 4 44 -
Amortisation/depreciation and impairment 799 22 752 -
Share warrant reserve - 250 - 250
Share based payment 85 85 85 85
Foreign exchange - 2 - -
(Increase)/decrease in inventories 6 (9) - - -
(Increase)/decrease in receivables 7 85 187 60 (76)
Increase/(decrease) in payables 14 396 (368) 211 27
Net cash used in operating activities (550) (950) (316) (582)
Cash flows from investing activities
Purchase of property plant and equipment 10 (125) (7) - -
Purchase of intangible asset 12 (58) - - -
Acquisition of subsidiary, net of cash acquired 22 (232) 9 (232) -
Loans provided to subsidiaries - - (563) (443)
Net cash used in investing activities (415) 2 (795) (443)
Cash flows from financing activities
Issue of shares for cash, net of costs 18 727 1,330 727 1,330
Finance costs (6) (4) - -
Finance lease payments (12) (7) - -
Net cash from financing activities 709 1,319 727 1,330
(Decrease) / Increase in cash and cash equivalents (256) 371 (384) 305
Foreign exchange translation differences (4) (59) - -
Cash and cash equivalents at beginning of the year 674 362 667 362
Cash and cash equivalents at the end of the year 414 674 283 667
The notes to these consolidated financial statements on pages 53 to 82 form an
integral part of these consolidated financial statements. * For details of
restatement please refer to note 25.
Notes to the Consolidated and Company Financial Statements
1. General information
Gem Resources Plc ("the Company" or "GEMR") is domiciled in England having
been incorporated on 11 January 2005 under the Companies Act with registered
number 05329401 as a public company limited by shares. The Company's shares
were delisted from trading on the AIM Market ("AIM") of the London Stock
Exchange plc on 20 December 2018. On 2 March 2022 the Company's shares were
admitted to what is now the Equity Shares (Transition) category and to trading
on the Main Market of the London Stock Exchange. The Company changed its name
from URA Holdings Plc to Gem Resources Plc on 30 September 2024.
The principal accounting policies applied in the preparation of these
consolidated and company financial statements are set out below. These
policies have been applied to all years presented, unless otherwise stated
below.
In the opinion of the Directors the consolidated financial statements present
fairly the financial position, and results from operations and cash flows for
the period in conformity with the generally accepted accounting principles
consistently applied.
2. Accounting policies
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted in the United
Kingdom.
Basis of preparation
The consolidated and company financial statements are prepared on the going
concern basis, under the historical cost convention as modified for fair value
accounting, if applicable. The consolidated financial statements are presented
in Pounds Sterling and have been rounded to the nearest £'000.
The functional currency for each entity in the Group is determined as the
currency of the primary economic environment in which it operates. The
functional currency of the parent company is Pounds Sterling (£) as this is
the currency that finance is raised in. The functional currency of its South
African subsidiary is South African Rands (ZAR) as this is the currency that
mainly influences labour, material and other costs of providing services. The
functional currency of its Zambian subsidiary is Zambian Kwacha, being the
currency in which the majority of the Zambian company's transactions are
denominated. The functional currency of its Australian subsidiary is
Australian Dollars, being the currency in which the majority of the company's
transactions are denominated. The Group has chosen to present its consolidated
financial statements in Pounds Sterling (£), as the Directors believe it is
the most relevant presentational currency for users of the consolidated
financial statements. All values are rounded to the nearest thousand pounds
(£'000) unless otherwise stated. Foreign operations are included in
accordance with the policies set out below.
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial information are disclosed in this
note.
Going concern
During the year ended 31 December 2024, the Group incurred a loss of £2
million (2023: loss £1.1 million), the Company incurred a loss of £1.5
million (2023: loss £0.9 million) and experienced net cash outflows from
operating activities. Cash and cash equivalents for the Group totalled
£414,000 as at 31 December 2024 (2023: £674,000) and £283,000 as at
31 December 2024 (2023: £667,000) for the Company.
The Group and Company has no current source of operating revenue other than
from the Gravelotte Emerald Mine and relies on existing cash resources,
facilities, and planned fundraisings to meet its overheads and operational
requirements.
Recent policy changes in the United States of America have introduced
significant shifts that have affected the financial markets. The financial
markets have experienced considerable turmoil due to ongoing trade tensions
and the imposition of tariffs. These policies may result in higher inflation
and disruptions in global trade, which could impact the Group's and Company's
operations and financial performance.
In assessing the appropriateness of applying the going concern basis in the
preparation of the consolidated financial statements, the Directors have
considered the Group's and Company's liquidity and forecast cash flows under a
range of potential scenarios taking into account reasonably possible outcomes
over an 18-month period from the date of approval of these financial
statements. These forecasts indicate that further funding will be required in
the near term to meet the Group's and Company's working capital requirements
and to advance its planned operational activities.
Scenario modelling evaluated the Group's and Company's committed cash flows,
liquidity position, and future funding access, assuming no internal revenue
generation, sustained working capital, and successful fundraises over 18
months.
The scenarios modelled did not consider the quantity and quality of production
at Gravelotte and the restart of operations at Curlew leading to successful
sales, nor the point at which the Director's expect the Group and Company to
reach gross profit levels.
The Group and Company currently holds no facilities or indebtedness.
Base Case Scenario
The Group's and Company's cash flow forecasts indicate positive liquidity
under the base case scenario, assuming timely successful fundraising efforts,
which was required due to the absence of any turnover in the 18 month period.
Should any delays or reductions in the expected funding occur, management has
identified discretionary cost reductions to preserve liquidity within the
forecasted period.
The Group and Company has been successful in historical fundraising efforts to
develop its Gravelotte asset in South Africa. The Group and Company has also
taken into consideration mitigating actions available to it, these include
stopping all non-essential capital expenditure over the 18-month forecasted
period which has been modelled under the base case scenario. In addition, the
Group and Company has taken steps to reduce operational and administrative
costs, in order to further preserve liquidity. As part of ongoing efforts to
manage cash flow more effectively, management have made arrangements to extend
payment terms with certain suppliers. Further steps would be taken to operate
at a minimal cost basis should the Directors consider it necessary.
Under the base case scenario, the Group and Company maintains positive
liquidity against available cash facilities throughout the forecasted period
up to June 2026, therefore a period of at least 12 months from the date of
the annual report and financial statements.
As such, there is considered to be a material uncertainty as to whether the
Group and Company will be able to support its working capital requirements and
pay its liabilities when it becomes due.
Considering the liquidity implications of the scenario analysis and the
uncertainty, the Board are assessing several options with regard to additional
sources of liquidity including the raise of additional equity funding.
Severe but Plausible Downside Scenario
Given the current uncertainty around securing successful funds through equity
raises and generation of turnover at the Group's Gravelotte or Curlew project,
the Directors have considered the following severe but plausible downside
scenarios to stress test the Group's and Company's financial forecasts.
Under this scenario the Group and Company would be unable to raise successful
equity funding during the required funding periods. This scenario also assumed
that no turnover is generated from operations during the forecasted 18-month
period and that the Group and Company would require additional funding from
August 2025 and would not have sufficient liquidity to sustain working capital
requirements beyond this point. These circumstances represent a material
uncertainty that may cast significant doubt on the Group's and Company's
ability to continue as a going concern and therefore where the Group and
Company are unable to raise funds successfully in the short term the Group and
Company will be unable to realise its assets and discharge its liabilities in
the normal course of business that may lead to the Group and Company becoming
insolvent.
Conclusion
In response to potential funding constraints, the Group and Company have
developed contingency measures, including ceasing all non-essential
expenditure and exploring supplementary funding options, such as shareholder
support and asset-level transactions.
Further uncertainties exist around the successful ramp-up of the production at
the Group's and Company's Gravelotte project to allow consistent production
and sales and required funding from a capital raise during the coming months
and across the forecast period. Given the sensitivity to immediate fundraising
and operational profits, material uncertainties exist in respect of the Group
and Company's ability to secure a successful fundraise and sustain current
operations as sufficient liquidity does not exist to fund operational
activities without the generation of operational turnover. In those
circumstances the Directors may consider the sale of assets.
While the Directors remain confident in the Group's and Company's ability to
secure adequate resources in the required timeframe, and in the underlying
viability of the Group's projects, there can be no absolute certainty that
fundraising will be concluded on acceptable terms.
The Directors have assessed the Group's ability to continue as a going
concern, considering cash flow forecasts, funding requirements, and mitigating
actions such as cost controls and potential asset sales. While material
uncertainties exist, the Directors remain confident in securing additional
funding.
The financial report does not include adjustments relating to the
recoverability and classification of recorded asset amounts or to the amounts
and classification of liabilities that might be necessary should the Group and
Company not continue as a going concern.
Cash and cash equivalents
Cash and cash equivalents are carried in the consolidated statement of
financial position at cost and comprise cash in hand, cash at bank, deposits
held at call with banks, other short-term highly liquid investments with
original maturities of three months or less. Bank overdrafts are included
within borrowings in current liabilities on the consolidated statement of
financial position. For the purposes of the statement of cash flows, cash and
cash equivalents also includes any bank overdrafts.
Property plant and equipment
Property, plant, equipment and mine development includes buildings and
infrastructure, machinery, plant and equipment, site preparation and
development that are expected to be used during more than one period.
Assets that are in the process of being constructed are measured at cost less
accumulated impairment and are not depreciated. All other classes of property,
plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment.
Direct costs incurred on major projects during the period of development are
capitalised. Subsequent expenditure on property, plant and equipment is
capitalised only when the expenditure enhances the value or output of the
asset beyond original expectations, it is probable that future economic
benefits associated with the item will flow to the entity and the cost of the
item can be measured reliably. Costs incurred on repairing and maintaining
assets are recognised in the income statement in the period in which they are
incurred.
Gains and losses on disposals are determined by comparing proceeds with
carrying amount. These are included in profit or loss.
Depreciation is charged to profit or loss so as to allocate the cost of assets
less their residual values over their estimated useful lives, using the
straight-line method or unit of production method. The following useful lives
are used for the depreciation of property, plant and equipment:
Item Depreciation method Average useful life
Furniture and fittings Straight line 6
Vehicles Straight line 5
Plant and equipment Straight line 6
Mine Development and Stripping Activity Units of production Life of Mine*
* Depreciation of mining assets is computed principally by the
units-of-production method over life-of-identified ore based on estimated
quantities of recoverable inferred resources, which can be recovered in future
from known mineral deposits.
Development begins once the technical feasibility and commercial viability of
extracting mineral resources have been established. At this stage,
expenditures incurred to bring the property to commercial production are
classified as development costs. These costs include activities such as
constructing haul roads, removing overburden, and building facilities
necessary for extraction and treatment.
The costs of stripping activity which provides a benefit in the form of
improved access to ore is capitalised as a non-current asset.
Intangible assets - Exploration assets
All costs incurred prior to obtaining the legal right to undertake exploration
and evaluation activities on a project are written off as incurred. Following
the granting of a prospecting right, general administration and overhead costs
directly attributable to exploration and evaluation activities are expensed
and all other costs are capitalised and recorded at cost on initial
recognition. As the capitalised exploration and evaluation expenditure asset
is not available for use, it is not depreciated.
The following expenditures are included in the initial and subsequent
measurement of the
exploration and evaluation assets:
· Acquisition of rights to explore;
· Topographical, geological, geochemical or geographical studies;
· Exploratory drilling;
· Trenching;
· Sampling;
· Activities in relation to the evaluation of both the technical
feasibility and the commercial
· viability of extracting minerals;
· Exploration staff related costs; and
· Equipment and infrastructure.
Exploration and evaluation costs that have been capitalised are classified as
either tangible or intangible according to the nature of the assets acquired
and this classification is consistently applied.
If commercial reserves are developed, the related deferred exploration and
evaluation costs are then reclassified as development and production assets
within property, plant and equipment.
All capitalised exploration and evaluation expenditure is monitored for
indications of impairment in accordance with IFRS 6.
The useful lives of intangible assets are assessed annually. Exploration
assets are not amortised until commercial production begins. Goodwill is not
amortised but is tested for impairment annually.
Taxation
Current income tax assets and liabilities for the current period are measured
at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, at the reporting date, in the
countries where the Group operates.
Deferred tax is accounted for using the liability method in respect of
temporary differences arising from differences between the carrying amount of
assets and liabilities in the Financial Statements and the corresponding tax
bases used in the computation of taxable profit or loss. In principle,
deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised.
The Group has losses to be carried forward on which no deferred tax asset is
recognised due to the uncertainty as to the timing of profit.
Financial instruments
Financial assets
Initial recognition and measurement
Financial assets within the scope of IFRS 9 are classified as financial assets
at fair value through profit or loss, loans and receivables, held-to-maturity
investments, available-for-sale financial assets, or as derivatives designated
as hedging instruments in an effective hedge, as appropriate. The Group and
the Company determines the classification of its financial assets at initial
recognition.
All financial assets are recognized initially at fair value plus transaction
costs, except in the case of financial assets recorded at fair value through
profit or loss.
Purchases or sales of financial assets that require delivery of assets within
a time frame established by regulation or convention in the market place
(regular way trades) are recognized on the trade date, i.e. the date that the
Group and the Company commits to purchase or sell the asset.
The Group's and the Company's financial assets include cash and short-term
deposits, other receivables and loans and other receivables.
Subsequent measurement - Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. After initial
measurement, such financial assets are subsequently measured at amortised cost
using the effective interest rate (EIR) method, less impairment. Amortised
cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included in finance income in the income statement. The losses
arising from impairment are recognized in the income statement in finance
costs for loans and in cost of sales or other operating expenses for
receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part
of a Group of similar financial assets) is derecognised when:
· The rights to receive cash flows from the asset have expired
· The Group and the Company has transferred its rights to receive cash
flows from the asset or has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a 'pass-through'
arrangement; and either (a) the Group and the Company has transferred
substantially all the risks and rewards of the asset, or (b) the Group and the
Company has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset
When the Group and the Company has transferred its rights to receive cash
flows from an asset or has entered into a pass-through arrangement, it
evaluates if and to what extent it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of
the risks and rewards of the asset, nor transferred control of the asset, the
asset is recognized to the extent of the Group's and the Company's continuing
involvement in the asset. In that case, the Group and the Company also
recognizes an associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and obligations
that the Group and the Company has retained.
Intercompany receivable balances
Financial receivables are classified as financial assets measured at amortised
cost under IFRS 9. These receivables are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest rate
method, less any impairment losses. Impairment is assessed using the Expected
Credit Loss (ECL) model, which incorporates historical data, current
conditions, and forward-looking estimates to determine the likelihood of
recoverability. The simplified approach is applied for short-term receivables,
where lifetime ECLs are recognised.
Receivables are derecognised when the rights to receive cash flows from the
asset have expired or when the Group transfers substantially all risks and
rewards of ownership. Any impairment losses are recognised in profit or loss,
and reversals of impairment losses are credited to profit or loss when
recovery is objectively evident.
Investments
Investments are recognised at the lower of cost or market value.
Financial liabilities
Basic financial liabilities, including trade and other payables, are initially
recognised at transaction price, unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present
value of the future receipts discounted at a market rate of interest. Debt
instruments are subsequently carried at amortised cost, using the effective
interest rate method. Trade payables are obligations to pay for goods or
services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment
is due within one year or less. If not, they are presented as non-current
liabilities. Trade payables are recognised initially at transaction price and
subsequently measured at amortised cost using the effective interest method.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the increase of new shares or options are shown in equity as a
deduction from the proceeds.
Share based payments
The Company enters equity-settled share-based compensation plans with its
Directors and contractors, in which the counterparty provides services to the
Company in exchange for remuneration in the form of certain equity instruments
of the Company. The equity instruments comprise warrants and share options.
The services received by the Company in these share-based payment agreements
are measured by reference to the fair value of the equity instruments at the
date of grant and are recognised as an expense in the statement of total
comprehensive income with a corresponding increase in equity
The Company estimates the fair value of the equity instruments at the grant
date using the Black Scholes model in which the terms and conditions upon
which those equity instruments were granted are considered. Share options
exercised or lapsed are derecognised at that point in time.
Warrants
Warrants issued for are recognised at fair value at the date of grant. The
fair value is measured using the Black-Scholes model. Where warrants are
issued in respect of services rendered, the fair value is expensed over the
vesting period (if applicable). Where warrants are considered to represent a
transaction cost attributable to a liability recorded at amortised cost, the
fair value is deducted from the liability and amortised subsequently through
the effective interest rate. Where a fixed number of warrants are issued and
the exercise price is in functional currency of the issuer the warrant fair
value is credited to equity.
Foreign Currency and foreign exchange reserves
In preparing the financial statements of the Group entities, transactions in
currencies other than the entity's functional currency (foreign currencies)
are recognised at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are translated at the rates prevailing at the date when the
fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which
they arise except for:
· exchange differences on foreign currency borrowings relating to
assets under construction for future productive use, which are included in the
cost of those assets when they are regarded as an adjustment to interest costs
on those foreign currency borrowings;
· exchange differences on transactions entered into to hedge certain
foreign currency risks (see below under financial instruments/hedge
accounting); and
· exchange differences on monetary items receivable from or payable to
a foreign operation for which settlement is neither planned nor likely to
occur in the foreseeable future (therefore forming part of the net investment
in the foreign operation), which are recognised initially in other
comprehensive income and reclassified from equity to profit or loss on
disposal or partial disposal of the net investment.
For the purpose of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates
at the date of transactions are used. Exchange differences arising, if any,
are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. Exchange differences arising are recognised in
other comprehensive income.
Earnings per share
Basic earnings per share is calculated by dividing;
· the profit or loss attributable to the owners of the company,
excluding any costs of servicing equity other than ordinary shares;
· by the weighted average number of ordinary shares outstanding during
the financial year.
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account:
· after income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares; and
· weighted average number of ordinary shares that would have been
outstanding assuming the conversion of all dilutive potential ordinary shares.
New standards and interpretations
a) New standards, amendments and interpretations adopted by the Group.
There were no new or amended accounting standards that required the Group to
change its accounting policies for the year ended 31 December 2024 and no new
standards, amendments or interpretations were adopted by the Group.
b) New standards, amendments and interpretations not yet adopted by the
Group.
The standards and interpretations that are relevant to the Group, issued, but
not yet effective, up to the date of the Financial Statements are listed
below. The Group intends to adopt these standards, if applicable, when they
become effective. The Directors do not expect any material impact as a result
of adopting the standards and amendments listed above in the financial year
they become effective.
Standard Impact on initial application Effective date
Lack of Exchangeability (Amendments to IAS 21) The amendments contain guidance to specify when a currency is exchangeable and 1 January 2025
how to determine the exchange rate when it is not.
Amendments IFRS 9 and IFRS 7 regarding the classification and measurement of The amendments address matters identified during the post-implementation 1 January 2026
financial instruments review of the classification and measurement requirements of IFRS 9 Financial
Instruments.
IFRS 18 Presentation and Disclosures in Financial Statements IFRS 18 includes requirements for all entities applying IFRS for the 1 January 2027
presentation and disclosure of information in financial statements.
IFRS 19 Subsidiaries without Public Accountability: Disclosures IFRS 19 specifies the disclosure requirements an eligible subsidiary is 1 January 2027
permitted to apply instead of the disclosure requirements in other IFRS
Accounting Standards.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. Per IFRS 10, control is achieved when the Company:
· has the power over the investee;
· is exposed, or has rights, to variable returns from its involvement
with the investee; and
· has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three
elements of control listed above. When the Company has less than a majority of
the voting rights of an investee, it considers that it has power over the
investee when the voting rights are sufficient to give it the practical
ability to direct the relevant activities of the investee unilaterally. The
Company considers all relevant facts and circumstances in assessing whether or
not the Company's voting rights in an investee are sufficient to give it
power, including:
· the size of the Company's holding of voting rights relative to the
size and dispersion of holdings of the other vote holders;
· potential voting rights held by the Company, other vote holders or
other parties;
· rights arising from other contractual arrangements; and
· any additional facts and circumstances that indicate that the Company
has, or does not have, the current ability to direct the relevant activities
at the time that decisions need to be made, including voting patterns at
previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary.
Specifically, the results of subsidiaries acquired or disposed of during the
year are included in profit or loss from the date the Company gains control
until the date when the Company ceases to control the subsidiary. Where
necessary, adjustments are made to the financial statements of subsidiaries to
bring the accounting policies used into line with the Group's accounting
policies.
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated. Unrealised losses are also eliminated.
When necessary, amounts reported by subsidiaries have been adjusted to conform
with the group's accounting policies.
The Group recognises any non-controlling interest in the acquired entity at
the non-controlling interest's proportionate share of the acquired entity's
net identifiable assets. Subsequent to acquisition, the carrying amount of
non-controlling interests is the amount of those interests at initial
recognition plus the non-controlling interests' share of subsequent changes in
equity. The Group treats transactions with non-controlling interests that do
not result in a loss of control as transactions with equity owners of the
group. A change in ownership interest results in an adjustment between the
carrying amounts of the controlling and non-controlling interests to reflect
their relative interests in the subsidiary.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling interests. Total
comprehensive income of the subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
The loss attributable to non-controlling interest represents 26% of the total
losses from the South African subsidiaries' operations, reflecting the
minority equity share held by BEE partners as part of the Group's ownership
structure. Non-controlling interests represent a 26% equity interest held by
BEE shareholders in the Group's South African operations. Losses attributable
to non-controlling interests have been calculated proportionally and reported
within equity.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of the consideration
transferred, measured at acquisition date fair value and the amount of any
non-controlling interest in the acquiree. For each business combination, the
Group elects whether it measures the non-controlling interest in the acquiree
either at fair value or at the proportionate share of the acquiree's
identifiable net assets. Acquisition costs incurred are expensed and included
in administrative expenses.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
Any contingent consideration to be transferred by the acquirer will be
recognized at fair value at the acquisition date. Contingent consideration
classified as an asset or liability that is a financial instrument and within
the scope of IFRS 9 Financial Instruments, is measured at fair value with
changes in fair value recognized either in the profit or loss or as a change
to other comprehensive income.
Goodwill is initially measured at cost, being the excess of the aggregate of
the consideration transferred and the amount recognized for non-controlling
interest over the net identifiable assets acquired and liabilities assumed. If
the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the gain is recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in
a business combination is, from the acquisition date, allocated to each of the
Group's cash-generating units that are expected to benefit from the
combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units.
Right-of-use-assets
The group recognises right-of-use assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated depreciation and impairment
losses, and adjusted for any remeasurement of lease liabilities. The cost of
right-of-use-assets includes the amount of lease liabilities recognised,
initial direct costs, and lease payments made at or before the commencement
date less any incentives received.
Right-of-use-assets are depreciated on a straight-line basis over the shorter
of the lease term and the estimated useful lives of the assets. If the
ownership of the leased assets transfers to the group at the end of the lease
term or the cost reflects the exercise of a purchase option, depreciation is
calculated using the estimated useful life of the asset.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease
term. The lease payments include fixed payments (including in substance fixed
payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise price of a
purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating the lease, if the lease term reflects the Group
exercising the option to terminate. Variable lease payments that do not depend
on an index or a rate are recognised as expenses (unless they are incurred to
produce inventories) in the period in which the event or condition that
triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its
incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement
date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such
lease payments) or a change in the assessment of an option to purchase the
underlying asset.
Provisions
A provision is recognised when the Group has a present obligation (legal or
constructive) as a result of a past event and it is probable that an outflow
of resources embodying economic benefit will be required to settle the
obligation, and a reliable estimate can be made of the amount of obligation.
If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
The provision for environmental rehabilitation is recognised as and when an
obligation to incur rehabilitation and mine closure costs arises from
environmental disturbance caused by the development or ongoing production of a
mining property. For South Africa, the liability is calculated based on the
determined values as per the Department of Mineral Resources and Energy
("DMRE").
Critical Accounting Estimates and Judgements
In applying the Group's accounting policies, which are described in note 2,
the Directors are required to make judgements (other than those involving
estimations) that have a significant impact on the amounts recognised and to
make estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
a) Critical judgement in the recoverability of exploration and evaluation
assets
Exploration and evaluation assets include mineral rights and exploration and
evaluation costs, including geophysical, topographical, geological and similar
types of costs. Exploration and evaluation costs are capitalised if management
concludes that future economic benefits are likely to be realised and
determines that economically viable extraction operation can be established as
a result of exploration activities and internal assessment of mineral
resources. According to 'IFRS 6 Exploration for and evaluation of mineral
resources', the potential indicators of impairment include: management's plans
to discontinue the exploration activities, lack of further substantial
exploration expenditure planned, expiry of exploration licences in the period
or in the nearest future, or existence of other data indicating the
expenditure capitalised is not recoverable. At the end of each reporting
period, management assesses whether such indicators exist for the exploration
and evaluation assets capitalised, which requires significant judgement.
During the year, the Company was informed that the renewal of one of its
licences held by Malaika Exploration (Zambia) Limited was rejected. Following
this, an appeal was lodged directly with the Minister of Mines and are
awaiting a response. Given the uncertainty around the renewal, an impairment
charge was recorded. Other than that, the other exploration projects are
actively being progressed and therefore the Company does not believe any
circumstances have arisen to indicate these assets require impairment.
b) Critical estimate in accounting for share-based payments and warrants
The Group has issued various share options and warrants to its service
providers. These are valued in accordance with IFRS 2 "Share-based payments".
The grant date fair value of such share-based payments is calculated using a
Black-Scholes model whose input assumptions are derived from market and other
internal estimates. These are set out in note 5 to the accounts. Changes to
these inputs may impact the related charge.
c) Critical judgement in accounting for contingent consideration
At 31 December 2024, the Group recognised an amount of £479,179 (2023:
£435,618) within other payables, which relates to contingent consideration
payable to the owners of Gem - Venus Holdings Proprietary Limited, on
acquisition of the shares in Gem - Venus Holdings. Under the terms of the SPA,
the company was to pay a consideration of AU$200,000 (Two hundred thousand
Australian dollars only) for each tranche of 5 million Carats of emerald
mined, up to a maximum of AU$2 million (Two million Australian dollars only).
In accordance with IFRS 3 paragraph 37, the management has recognised the
contingent consideration as part of the consideration transferred in exchange
for the acquiree, accordingly the contingent consideration meets the
definition of financial instrument as a financial liability, and therefore the
management have recognised this in accordance with IAS 32. In recognising this
financial liability, the management has used a discount rate of 10%, in
accordance with the market conditions, having regard to risk free rate, equity
risk premium and country specific risk premium. Changes to these may impact
the amount of liability recognised.
d) Company Only - Critical judgement in the impairment assessment of
investment in subsidiaries
In preparing the parent company financial statements, the Directors apply
their judgement to decide if any or all of the Company's investments
(including capital contributions) in its subsidiaries should be impaired.
In undertaking their review, the Directors consider the outcome of their
impairment assessment in accordance with IAS 36. The Company assesses, at
each reporting date, whether there is an indication that an investment may be
impaired. If any indication exists, or when annual impairment testing for an
investment is required, the Company estimates the investment's recoverable
amount. Recoverable amount is the higher of an investment's or cash-generating
unit's (CGU) fair value less costs to sell and its value in use. The CGU's
were determined to be the three operational locations at Gravelotte, Malaika
and Prasinus. Recoverable amount is determined for an individual investment,
unless the investment does not generate cash inflows that are largely
independent of those from other investment or Groups of investments. When the
carrying amount of an investment or CGU exceeds its recoverable amount, the
investment is considered impaired and is written down to its recoverable
amount.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
e) Critical judgement in accounting for business combination
The group completed the acquisition of Prasinus Exploration Pty Ltd
("Prasinus") on the 17 July 2024. In accordance with IFRS 3 the management
carried out an exercise of determining the fair value of assets and
liabilities acquired on acquisition of Prasinus, and it was concluded by the
management after their review of the assets and liabilities acquired that the
fair value of assets be uplifted by £31,000.
In undertaking their review the directors considered each class of
assets/liabilities acquired and accordingly assessed its fair value.
3. Taxation
(Group) 2024 2023
£'000s £'000s
UK Corporation tax - -
Deferred tax - -
Total tax charge - -
The tax charge can be reconciled to the profit for the period as follows: (1,956) (1,132)
Loss for the period
Tax at the standard rate of UK corporation tax of 25% (2023: 25%) (489) (283)
Effects of:
Disallowed expenses 1 6
Increase in tax losses carried forward 488 277
Total tax charge - -
(Company) 2024 2023
£'000s £'000s
UK Corporation tax - -
Deferred tax - -
Total tax charge - -
The tax charge can be reconciled to the profit for the period as follows: (1,468) (868)
Loss for the period
Tax at the standard rate of UK corporation tax of 25% (2023: 25%) (367) (217)
Effects of:
Disallowed expenses - 1
Increase in tax losses carried forward 367 216
Total tax charge - -
As at 31 December 2024 the Company had unused tax losses of £5.4 million
(2023: £4.88 million) available for offset against future profits. The
deferred tax asset relating to these losses is not provided for due to the
uncertainty over the timing of any future non-trading profits. The management
plans to utilise the losses within the 5-year period on the basis of future
expected profit forecast and projections prepared by the management.
4. Operating expenses
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Audit fee - Group (90) (85) (90) (70)
Audit fee - Group - preceding periods under accrual (25) - (25) -
Audit fee - Subsidiaries (13) (12) - -
Accounting (49) (2) (28) (2)
Amortisation and depreciation (45) (22) - -
Directors' remuneration (205) (176) (205) (176)
Staff salaries (40) (43) (40) (43)
General expenses (51) (69) (16) (54)
Legal and professional fees (123) (107) (118) (118)
Foreign exchange losses - (2) - -
Consultancy fees (13) (24) (13) (17)
UK Listing Authority application fee (25) (40) (25) (40)
Director and officer insurance (8) (17) (8) (9)
Share based payment expense (85) (335) (85) (335)
Other operating expenses (380) (194) (19) (4)
Total (1,152) (1,128) (672) (868)
Legal and professional fee comprise fee in relation to stock exchange and
regulatory fee and 2023 includes a fee of £5,000 paid in respect of
acquisition of Gem - Venus Holdings Proprietary Limited and a fee of £1,000
in 2024 in relation to the acquisition of Prasinus Exploration Pty Ltd.
5. Staff Costs (including Directors)
Key management of the Company are considered to be the Directors of the
Company and their accrued remuneration was as follows:
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Peter Redmond 35 24 35 24
John Treacy 24 24 24 24
Ed Nealon 43 40 43 40
Bernard Olivier 63 50 63 50
Sam Mulligan 40 38 40 38
Other staff 40 44 40 43
Other consultants 77 62 15 -
Closing balance 322 282 260 219
The average monthly number of employees, including the directors, during the
year was as follows:
GROUP COMPANY
2024 2023 2024 2023
Staff/consultants 28 16 2 1
Directors 5 5 5 5
Total 33 21 7 6
Included within staff costs is an amount of £40,000 paid to Jeremy
Sturgess-Smith who is a Key Management Personnel. An amount of £34,161 (2023:
£34,161) has been charged in respect of unapproved option plan for Jeremy
Sturgess-Smith.
Wessel Marais and Louis Swart are both directors at the South African entities
of the Group and is considered Key Management Personnel. An amount of
£61,510 (2023: £61,799) has been charged to professional and accounting fees
for Wessel Marais and £15,000 (2023: £nil) for Louis Swart.
Share based payments
The amount recognised in respect of share-based payments was £85,403 (2023:
£335,477).
The Group has established share option programmes that entitle certain
employees to purchase shares in the Group.
There are no performance conditions attaching to these options. No options
were exercised in 2024 (2023: Nil).
No new options were issued during 2024 and the total options on issue as at 31
December 2024 amount to 20,000,000 (2023: 20,000,000).
Total number of warrants in issue as at 31 December 2024 amounted to
29,559,000.
The share options have been valued using a binomial model applying the
following inputs:
• Exercise price - equal to the share price at grant date,
• Vesting date - all options vest in three tranches, on the first,
second and third anniversary from the grant date;
• Expiry/Exercise date - 114 months from the grant date, expiring 1
September 2031;
• Volatility (sigma) - 45.4%. This has been calculated based on the
historic volatility of the Company's share price.
• Risk free rate - yield on a zero-coupon government security at
each grant date with a life congruent with the expected option life;
• Dividend yield - 0%; and
• Performance conditions - none
6. Inventories
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Rough inventory carried at net realisable value 9 - - -
Closing balance 9 - - -
7. Other Receivables
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Prepayments 30 17 30 15
Sundry debtors 15 180 15 72
Amounts owed by group companies - - 1,285 722
VAT recoverable 56 42 18 37
Closing balance 101 239 1,348 846
The Directors consider that the carrying amount of other receivables is
approximately equal to their fair value. Included in sundry debtors is an
amount of £15,000 due by Peter Redmond.
Amounts owed by group companies total £1,285,000 as at 31 December 2024 and
are classified as financial assets measured at amortised cost under IFRS 9.
These balances arise from unsecured intra-group transactions and funding
arrangements. They are interest-free with no fixed repayment terms, making
them repayable on demand. The receivables have been assessed as current assets
based on management's expectation of repayment timing.
The Company evaluates impairment using the Expected Credit Loss (ECL) model
under IFRS 9, applying the simplified approach due to the short-term nature
and liquidity of these balances. This assessment considers historical
repayment performance, the financial condition of the subsidiaries, and
forward-looking estimates about future cash flow generation. No impairment has
been recognised for the year ended 31 December 2024, as the subsidiaries are
forecasted to maintain sufficient solvency and liquidity.
The carrying amount of intercompany receivables approximates fair value due to
their short-term nature and immediate repayment terms. These balances are
assessed for recoverability at each reporting date based on the subsidiaries'
operational forecasts and financial health.
Management monitors credit risk associated with these receivables by
maintaining regular oversight of subsidiary financial performance, including
monthly cash flow analysis and ongoing dialogue with subsidiary management
teams. While the receivables are unsecured, the subsidiaries have sufficient
equity and operational capacity to mitigate any material credit risk.
Sensitivity analysis indicates that adverse changes in subsidiary cash flow or
liquidity would not materially impact recoverability.
The directors have considered the recoverability of amounts owed by group
companies to the Company and having regard to the future cashflow of the
subsidiaries are satisfied that the amount owed by group companies is fully
recoverable. Amounts owed by group undertakings are interest free and
repayable on demand.
8. Restricted cash
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
At beginning of period - - - -
Deposit held at DMRE 12 - - -
Closing balance 12 - - -
Restricted cash consists of amounts paid as rehabilitation deposit to the
Department of Mineral Resources and Energy ("DMRE") in South Africa.
9. Investments in Subsidiaries
GROUP COMPANY
Cost and net book value 2024 2023 2024 2023
£'000s £'000s £'000s £'000s
At beginning of period - - 1,272 1,000
Investment in subsidiaries - - 232 272
Impairment - - (752) -
Closing balance - - 752 1,272
The Company's investments at the Statement of Financial Position date in the
share capital of companies include the following:
Subsidiary companies
Name Address of the registered office Nature of business 2024 2023
Proportion of ordinary shares held by parent Proportion of
(%) ordinary shares
held by parent
(%)
Malaika Exploration (Ireland) Limited FDW House, Blackthorn Business Park, Coes Road, Dundalk, Co. Louth, Ireland Exploration 100 100
Malaika Developments Limited** Zambia Exploration 100 100
Gem - Venus Holdings (Pty) Ltd South Africa Investment 100 100
Adit Mining Consultants and Trading (Pty) Ltd** South Africa Mining 74 74
Venus Emeralds (Pty) Ltd** South Africa Exploration 74 74
Prasinus Exploration Pty Ltd Australia Mining 65 -
** Subsidiaries held indirectly through Gem - Venus Holdings Proprietary
Limited and Malaika Exploration (Ireland) Limited.
The Company owns 100% of Malaika Exploration (Ireland) Limited, which owns
100% of Malaika Developments Limited.
On 24 February 2023, the Company acquired 100% of the shares in Gem - Venus
Holdings Proprietary Limited. On 18 July 2024, the Company acquired 65% of
the shares in Prasinus Exploration Pty Ltd. Refer to note 22 for further
detail of the acquisitions.
The directors have reviewed investment for any indication of impairment, in
assessing this the directors consider the investment's recoverable amount. The
recoverable amount is higher of the investment's or cash-generating units
(CGU) fair value less costs to sell and its value in use. In assessing value
is use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks associated with the investments.
10. Property, plant and equipment (Group)
COST Fixture and fittings Plant and equipment Mine deve-lopment and stripping activity Total Assets
£'000 £'000 £'000 £'000
At 1 January 2024 20 24 - 44
Additions 7 114 4 125
Acquired through business combination - 83 - 83
Transfers from exploration asset - - 175 175
Foreign exchange - (5) (2) (7)
At 31 December 2024 27 216 177 420
AMORTISATION / IMPAIRMENT
At 1 January 2024 - 13 - 13
Charge for the year 7 28 - 35
Foreign exchange - (1) - (1)
At 31 December 2024 7 40 - 47
CARRYING VALUE
At 31 December 2024 20 176 177 373
At 31 December 2023 20 11 - 31
11. Leases (Group)
Right of use asset
Following are the changes in the carrying value of right of use assets for the
year ended 31 December 2024.
COST Car Lease
£'000
At 1 January 2024 43
Foreign exchange (9)
At 31 December 2024 34
DEPRECIATION
At 1 January 2024 9
Charge for the year 10
Foreign exchange (14)
At 31 December 2024 5
CARRYING VALUE
At 31 December 2024 29
At 31 December 2023 34
31 December 2024 31 December 2023
£'000 £'000
Current lease liabilities 10 9
Non-current lease liabilities 19 26
29 35
The non-current lease liabilities are all due within one to five years.
12. Exploration asset
GROUP COMPANY
Cost and net book value 2024 2023 2024 2023
£'000s £'000s £'000s £'000s
At beginning of period 153 11 - -
Additions during the year 58 142 - -
Transfer to property, plant and equipment (175) - - -
Impairment (7) - - -
Foreign exchange (3) - - -
Closing balance 26 153 - -
In November 2022, the company published its Maiden Resource Estimate for its
Gravelotte Emerald Mine, which reported that there is an estimated 29 million
carats of contained emeralds, 12 additional JORC exploration targets totalling
between 168 million carats and 344 million carats. The company further had a
Competent Persons Report (CPR), in November 2023, which confirmed the above
resource at the Gravelotte Emerald Mine.
In accordance with IFRS 6, the Directors undertook an assessment of the
following areas and circumstances which could indicate the existence of
impairment:
· The Group's right to explore in an area has expired or will expire in
the near future without renewal.
· No further exploration or evaluation is planned or budgeted for.
· A decision has been taken by the Board to discontinue exploration and
evaluation in an area due to the absence of a commercial level of reserves.
· Sufficient data exists to indicate that the book value may not be
fully recovered from future development and production.
During the year, the Company was informed that the renewal of one of its
licences held by Malaika Exploration (Zambia) Limited was rejected. Following
this, an appeal was lodged directly with the Minister of Mines and are
awaiting a response. Given the uncertainty around the renewal, the directors
concluded that an impairment charge in respect of the rejected licence
application, was necessary for the year ended 31 December 2024 of £7,000
(2023: £nil). The estimate was based on the proportionate size of the
licence area not renewed.
13. Goodwill (Group only)
Carrying value Goodwill
£'000
At 1 January 2024 1,487
Additions 189
At 31 December 2024 1,676
AMORTISATION / IMPAIRMENT
At 1 January 2024 201
Impairment 747
At 31 December 2024 948
CARRYING VALUE
At 31 December 2024 728
At 31 December 2023 1,286
Goodwill arose as a result of acquisitions carried out by the group over the
years. During the year, the Company acquired 65% of the shares in Prasinus
Exploration Pty Ltd. Refer to note 22 for further detail of the acquisition.
Goodwill is reviewed for impairment annually. During the year, the Company
was informed that the renewal of one of its licences held by Malaika
Exploration (Zambia) Limited was rejected. Following this, an appeal was
lodged directly with the Minister of Mines and are awaiting a response.
Given the uncertainty around the renewal, an impairment charge was recorded.
14. Trade and other payables
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Trade payables 232 30 124 30
Other payables 17 - 17 -
Accruals 240 51 215 115
Closing balance 489 81 356 145
The Directors consider that the carrying amount of trade payables approximates
to their fair value. Accruals predominantly comprise audit fee accrual of
£88,000 (2023: £97,000) and accrued and unpaid directors and salaries of
approximately £125,000 (2023: £68,000).
15. Other payables
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Contingent consideration
At beginning of period 436 - 436 -
Contingent consideration on acquisition of Gem - Venus Holdings Proprietary - 436 - 436
Limited
Accretion 43 - 43 436
Closing balance 479 436 479 436
The contingent consideration represents consideration payable on acquisition
of Gem - Venus Holdings Proprietary Limited ("GEMV"). The total contingent
consideration payable is a maximum of AU$2 million, payable in tranches of
AU$200,000 for each 5 million carats of emerald mined. In accordance with IFRS
3, management has recognised the contingent consideration as part of the
consideration transferred in exchange for the acquiree. Accordingly, the
contingent consideration meets the definition of financial instrument as a
financial liability, and therefore management have recognised this in
accordance with IAS 32. In recognising this financial liability, the
management has used a discount rate of 10% having regards to risk free rate,
equity risk premium and country specific risk premium.
The contingent consideration liability was calculated using a discount rate of
10%, reflecting market conditions. Sensitivity analysis indicates that using a
9% rate would increase the liability to £525,000, whereas applying an 11%
rate would reduce the liability to £438,000.
16. Provisions
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
Rehabilitation
At beginning of period - - - -
Provision raised 12 - - -
Closing balance 12 - - -
The rehabilitation provision was provided based on DMRE agreed values.
17. Deferred tax liability
GROUP COMPANY
2024 2023 2024 2023
£'000s £'000s £'000s £'000s
At beginning of period - - - -
Acquired through business combination 8 - - -
Closing balance 8 - - -
18. Share capital
2024 2023
£'000s £'000s
Allotted, called up and fully paid share capital 30 25
Movements in Equity
Number of shares in issue
Opening balance of Ordinary Shares in issue of £0.0001 each 252,345,590
Shares issued in 2024 50,312,500
Closing balance of Ordinary Shares in issue of £0.0001 each 302,658,090
In prior year the movements in equity were as below:
Number of shares in issue
Opening balance of Ordinary Shares in issue of £0.0001 each 141,845,592
Shares issued in 2023 110,499,998
Closing balance of Ordinary Shares in issue of £0.0001 each 252,345,590
The Company has one class of ordinary shares which carry no right to fixed
income.
Share Capital 2024 2023
£'000s £'000s
Cost b/f 25 14
Shares issued in year 5 11
30 25
Share Premium 2024 2023
£'000s £'000s
Cost b/f 3,980 2,546
Shares issued in year 710 1,434
4,690 3,980
Ordinary shares
All shares rank equally with regard to the Company's residual assets. The
holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the
company.
Share Premium
Represents excess paid above nominal value of shares issued.
Other reserves:
Other reserves include:
Share Option Reserve £227,000 (2023: £142,000)
This represents the amounts charged on share options that have been granted to
employees and directors.
Share warrant reserve £262,000 (2023: £250,000)
This represents amounts charged on share warrants granted to service
providers. During the year 1,425,000 warrants were issued with an exercise
price of 2p per share. In 2023, 3,309,000 warrants were issued with an
exercise price ranging from 1.25p to 2.4p per share. No warrants were
exercised or lapsed during the year.
Foreign exchange translation reserve debit £145,000 (2023: £101,000)
This represents amounts charged through other comprehensive income related to
the translation of subsidiaries' financial statements from a currency other
than £.
19. Financial instruments (Group and Company)
Interest rate risk
The Company's exposure to interest rate risk, which is the risk that a
financial instrument's value will fluctuate as a result of changes in market
interest rates on classes of financial assets and financial liabilities, was
as follows:
Floating interest rate Floating interest rate
2024 2023
£'000s £'000s
Cash 414 674
414 674
The net fair value of financial assets and financial liabilities approximates
to their carrying amount as disclosed in the statement of financial position
and in the related notes.
Financial risk management
The Directors recognise that this is an area in which they may need to develop
specific policies should the Company become exposed to further financial risks
as the business develops.
Capital risk management
The Company considers capital to be its equity reserves. At the current stage
of the Company's life cycle, the Company's objective in managing its capital
is to ensure funds raised meet the Company's working capital commitments.
Credit risk management
With respect to credit risk arising from financial assets of the Company,
which comprise cash and cash equivalents held in financial institutions, the
Company are deemed to be at low credit risk.
Liquidity risk
The Company manages liquidity risk by maintaining adequate banking facilities
and no current borrowing facilities. The Company continuously monitor
forecasts and actual cash flows, matching the maturity profiles of financial
assets and liabilities and future capital and operating comments. The
Directors consider the Company to have adequate current assets and forecast
cash from operations to manage liquidity risks arising from current and
non-current liabilities.
Foreign currency risk
Foreign currency risk is the risk that fair value or future cash flows of a
financial instrument will fluctuate because of changes in foreign exchange
rates. The Group reports in Pounds Sterling, but the functional currency of
its subsidiary is in Australian Dollars (AU$), South African Rands (ZAR) and
Zambian Kwacha (ZMW). The Group does not currently hedge its exposure to other
currencies. The Group's cash and cash equivalents are held in Pounds Sterling,
Australian Dollars, South African Rand and Zambian Kwacha.
Sensitivity analysis
A 10 per cent strengthening of the Pounds Sterling against the following
currencies at 31 December would have increased/(decreased) profit or loss by
the amounts shown below. The analysis assumes that all other variables, in
particular interest rates, remain constant. The analysis is performed on the
same basis as at 31 December 2023.
2024 2023
£'000 £'000
Australian Dollars (5) -
South African Rand (39) (24)
Zambian Kwacha 1 -
Funding risk
Funding risk is the possibility that the Group might not have access to the
financing it needs. The Group's continued future operations depend on the
ability to raise sufficient working capital through the issue of equity share
capital. The Directors are confident that adequate funding will be forthcoming
with which to finance operations. The Directors have a strong track record of
raising funds as required. Controls over expenditure are carefully managed and
activities planned to ensure that the Group has sufficient funding.
20. Related party transactions
The only transactions with the Directors relate to:
· all the Director's remuneration as disclosed in note 5.
· Directors participation in the Company's placements during 2024 on
the same terms and conditions as all other participants in the placements.
21. Earnings per share
Earnings per share is calculated by dividing the loss for the period
attributable to ordinary equity shareholders of the parent by the number of
ordinary shares outstanding during the year.
During the year the calculation was based on the loss for the year
attributable to owners of the parent of £1,822,000 (2023: £1,063,000)
divided by the weighted number of ordinary shares 283,957,748 (2023:
252,345,590).
The diluted loss per share and the basic loss per share are recorded as the
same amount as conversion of the share options and warrants decreases the
basic loss per share, thus being anti-dilutive.
22. Acquisition of subsidiaries
On 17 July 2024, the Company announce the acquisition of a 65% interest in
Prasinus Exploration Pty Ltd ("Prasinus"), the owner of the Curlew Emerald
Mine located in the Pilbara Region of Western Australia ("Curlew Mine") for a
consideration of A$450,000 and an option to acquire the remaining 35% interest
for a further A$300,000 in GEMR shares after an initial 12-month period
(expiring on 18 October 2025). This acquisition represents a significant
addition to GEMR's asset portfolio, of producing emerald mines and enhancing
its strategic position in the global gemstone market.
The group gained control on 17 July 2024, being the date when the group had a
control of the board of directors of Prasinus.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed as a result of the acquisition are as follows:
Net book value of assets acquired Fair value adjustments Fair value
of assets
acquired
£'000 £'000 £'000
Property, plant and equipment 52 31 83
Trade and other receivables 1 - 1
Trade and other payables (13) - (13)
Deferred tax liability - (8) (8)
Non-controlling interest at proportionate share (14) (6) (20)
Total identifiable assets acquired, and liabilities assumed 26 17 43
Goodwill arising on acquisition 189
Total consideration 232
Fair value of consideration paid:
Cash paid 232
Consideration transferred 232
Costs and expenses amounting to £1,000 were incurred which have been expensed
through profit and loss (see note 4).
From the date of acquisition (17 July 2024) to 31 December 2024, Prasinus
contributed £nil to Group revenue and £12,000 to Group expenses. If the
acquisition of Prasinus had taken place at the beginning of the year, Group
loss for the 2024 year would have been £1,679,000.
The fair value adjustment relates to the uplift in value of onsite equipment.
In the prior year, on 24 February 2023, the Company completed its acquisition
of the entire issued share capital of Gem - Venus Holdings Proprietary
Limited, a company based in South Africa, for a consideration in form of fully
paid up GEMR shares amounting to £100,000 and a contingent consideration of a
maximum of AU$2 million, payable in tranches of AU$200,000 for every
5 million carats of gemstones produced by the mine. The acquisition provides
the company with the opportunity to expand its mineral exploration programme.
Gem Resources Plc was deemed to have gained control over Gem - Venus Holdings
Proprietary Limited on 24 February 2023, due to holding the majority of the
voting rights on the board of directors of Gem - Venus Holdings Proprietary
Limited.
The amounts recognised in respect of the identifiable assets acquired and
liabilities assumed as a result of the acquisition are as follows:
Net book value of assets acquired Fair value adjustments Fair value
of assets
acquired
£'000 £'000 £'000
Intangible assets 151 - 151
Tangible assets 43 45 88
Financial assets 341 - 341
Financial liabilities (543) (58) (601)
Intragroup loan 264 - 264
Total identifiable assets acquired, and liabilities assumed 256 (13) 243
Goodwill arising on acquisition 292
Total consideration 535
Fair value of consideration paid:
Share consideration 100
Contingent consideration 435
Consideration transferred 535
Costs and expenses amounting to £5,000 were incurred which have been expensed
through profit and loss (see note 4).
The fair value adjustment relates to recognition of right of use assets and
corresponding lease liabilities and provision for rehabilitation of the site.
The right of use asset and corresponding lease liabilities' fair value was
determined by use of the interest rate implicit in the lease agreement over
the lease period. The rehabilitation provision was fair valued in line with
funds acquired at acquisition.
23. Segment information
Operating segments
The Board considers that the Group has one operating segment, being that of
emerald mining and exploration. Accordingly, all revenues, operating
results, assets and liabilities are allocated to this activity.
Geographical segments
The Group operates in three principal geographical areas - South Africa,
Zambia and Australia.
The Group's non-current assets by location of assets are detailed below.
South Africa Zambia Australia Group
£'000 £'000 £'000 £'000
As at 31 December 2024
Total non-current assets 623 270 263 1,156
As at 31 December 2023
Total non-current assets 501 1,003 - 1,504
24. Events after the period end date
Hard Rock Mining Commencement
In early 2025, we initiated hard rock mining operations at Gravelotte, marking
an important step in accessing deeper, higher-grade emerald deposits.
First Sale
As was announced on 25 April 2025, the Gravelotte Emerald Mine recorded its
first test sales of emeralds, totalling USD 57,000. Of this, USD 43,000
was achieved from the sale of 8,130 carats of mixed-grade emeralds, achieving
an average price of USD 5.29 per carat. These initial sales represent a
significant operational milestone for the Company and provide encouraging
indications regarding the geological model, recovery process, and the
potential for future commercial viability.
Issue of Equity in Lieu of Director's Fees
On 28 February 2025, Directors Dr Bernard Oliver, Edward Nealon and Peter
Redmond, agreed to issue 5,999,998 new ordinary shares of £0.0001 each
("Ordinary Shares") at an issue price of 0.65 pence per Ordinary Share in lieu
of cash settlement of part of their accrued and unpaid fees.
Following such issuances, Directors have the following interests in Ordinary
Shares:
Name of Director Interest in Ordinary Shares (Number) Interest in Ordinary Shares (Percentage)
Bernard Olivier 4,964,103 1.61%
Edward Nealon 10,680,768 3.46%
Peter Redmond 8,949,357 2.90%
25. Prior period adjustments
(i) Restatement of prior year balances
The Group holds 74% in Venus Emeralds Proprietary Limited and Adit Mining
Consultants and Trading Proprietary Limited via Gem - Venus Holdings
Proprietary Limited. The prior year statement of comprehensive income did
not reflect the 26% portion of the profit or loss attributable to
non-controlling interests and has therefore been restated. The non-controlling
interest debit adjustment of £69,000 reflects the 26% share of losses
attributable to South African subsidiaries, in compliance with IFRS 10. This
adjustment aligns with the proportional allocation of equity ownership within
the Group
The earnings per share have been restated as the adjustment affects the profit
or loss attributable to owners of the parent used as the numerator.
During a review of the share premium balance it was discovered that £15,000
paid by Ed Nealon in September 2023 and £15,000 due by Peter Redmond was not
recorded as part of the capital raise as was announced on 1 September 2023. In
addition, share issue cost was overcharged by £12,000 for which a refund was
received in 2024. The overcharge was not recorded as a debtor in 2023. It
was also discovered that fees amounting to £38,000 paid on behalf of a
subsidiary was incorrectly charged to profit and loss and should have been
allocated against the intercompany loan account.
Impact on adjustment on the consolidated statement of changes in equity
31 Dec 2023 Prior year adjustment 31 Dec 2023
(as previously stated (as re-stated)
£'000 £'000 £'000
Increase in share premium 3,938 42 3,980
Decrease in non-controlling interest - (69) (69)
Increase in retained earnings (2,469) 107 (2,362)
Impact on Profit and Loss (1,170) 38 (1,132)
Effect on total equity - 80 -
Impact on adjustment on the company statement of changes in equity
31 Dec 2023 Prior year adjustment 31 Dec 2023
(as previously stated (as re-stated)
£'000 £'000 £'000
Increase in share premium 3,938 42 3,980
Increase in retained earnings (2,231) 38 (2,193)
Impact on Profit and Loss (906) 38 (868)
Effect on total equity - 80 -
(ii) Restatement of prior year statement of cash flows
The Group and Company have restated certain prior year comparatives to
correctly present amounts in the Group and Company financial statements for
the year ended 31 December 2023.
The prior year cash flow incorrectly included non-cash movements related to
the acquisition of Gem - Venus Holdings Proprietary Limited.
Accordingly the prior year statement of cash flows has been restated to
correct these errors.
Impact on adjustment on the consolidated statement of cash flows
31 Dec 2023 Prior year adjustment 31 Dec 2023
(as previously stated (as re-stated)
£'000 £'000 £'000
Cash flows from operating activities
Contingent consideration 436 (436) -
(Increase)/decrease in receivables 10 177 187
Increase/(decrease) in payables 50 (418) (368)
Cash flows from investment activities
Purchase of subsidiary, property plant and equipment (559) 559 -
Purchase of property plant and equipment - (7) (7)
Acquisition of subsidiary, net of cash acquired - 9 9
Cash flow from financing activities
Issue of shares for cash, net of costs 1,402 (72) 1,330
Impact on adjustment on the company statement of cash flows
31 Dec 2023 Prior year adjustment 31 Dec 2023
(as previously stated (as re-stated)
£'000 £'000 £'000
Cash flows from operating activities
Contingent consideration 436 (436) -
(Increase)/decrease in receivables (453) 377 (76)
Cash flows from investment activities
Purchase of subsidiary, property plant and equipment (536) 536 -
Loans provided to subsidiaries - (443) (443)
Cash flow from financing activities
Issue of shares for cash, net of costs 1,402 (72) 1,330
(iii) Restatement of prior year goodwill
The Group and Company have restated certain prior year comparatives to
correctly reflect the loan provided to Venus Emeralds Proprietary Limited in
2022. Venus Emeralds Proprietary Limited was acquired in 2023 as part of the
Gem - Venus Holdings Proprietary Limited group acquisition and the loan
balance of £264,000 that was impaired by GEMR in 2022, but was not included
in the net asset acquired calculation in 2023.
Impact on adjustment on the consolidated statement of financial position
31 Dec 2023 Prior year adjustment 31 Dec 2023
(as previously stated (as re-stated)
£'000 £'000 £'000
Decrease in goodwill 1,550 (264) 1,286
Decrease in other payables (345) 264 (81)
Impact on adjustment on the company statement of financial position
31 Dec 2023 Prior year adjustment 31 Dec 2023
(as previously stated (as re-stated)
£'000 £'000 £'000
Investment in subsidiary 1,536 (264) 1,272
Increase in other receivables 582 264 846
- Ends - (https://uraholdingsplc.co.uk/announcements-publications.php)
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