RCS - Altona Rare Earths - Final Results

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15/12/2022 08:15

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RNS Number : 7631J  Altona Rare Earths PLC  15 December 2022

 

 

15 December 2022

 

 

ALTONA RARE EARTHS PLC

("Altona" or "the Company")

 

 

FINAL RESULTS

 

Altona (AQSE: ANR.PL), a mining exploration company focused on the development
of its flagship Monte Muambe Rare Earths mining project in Africa, is pleased
to announce its final results for the year ended 30 June 2022.

 

 

HIGHLIGHTS

 

·    Completed 2022 drilling programme (Resource) on schedule and on
budget

·    Raised £1.75m in capital

·    Published JORC Exploration Target (August 2022) for Monte Muambe
which reported

-    Estimated total tonnage up to 56.6 million tonnes

-    Total Rare Earth Oxide ("TREO") at 1.65%

-    High grade zone of 11.5 mt @ 2.41% TREO

·    On track to publish maiden Resource Estimate (Q1 2023) & Scoping
Study (Q2 2023)

 

FINANCIAL HIGHLIGHTS

 

·    Increase in total assets to £1.4m (FY 2021: £0.46m)

·    Loss per share reduced to 2.72p (FY 2021: 7.7p)

·    Operating loss £0.8m (FY 2021: £0.73m)

·    Cash used in operations £0.83m (FY 2021: £0.53m)

 

 

Christian Taylor-Wilkinson, Chief Executive of Altona, commented, "Rare earths
are at the top of the global critical metals list due to their requirement in
many key industries. The European Commission recently announced the launch of
a European Critical Raw Materials Act and its president stated that 'rare
earths will soon be more important that oil and gas'.

 

"For the past two years Altona has been working efficiently towards delivering
a resource estimate which will be the first independent evaluation of our
Monte Muambe project. We believe this report will clearly demonstrate the
significance and viability of the asset ahead of us commencing pre-feasibility
work in 2023."

 

 

The Company's Annual General Meeting will be held at the office of Altona's
Company Secretary, Orana Corporate LLP, at Eccleston Place, 25 Eccleston
Yards, London, SW1W 9NF, on Wednesday 11 January 2023 at 11.00 a.m. A copy of
the Annual Report and voting proxy forms have been posted on the Company's
website: www.altonaRE.com/investors/documents
(http://www.altonaRE.com/investors/documents)

 

For more information on Altona and its current mining projects please visit:
www.altonaRE.com (http://www.altonaRE.com)

 

-ends-

 

Altona Rare Earths Plc

Christian Taylor-Wilkinson, Chief
Executive
+44 (0) 7795 168 157

Martin Wood, Non-Executive
Chairman
+44 (0) 7880 787 080

 

Alfred Henry Corporate Finance Ltd (AQSE Corporate Adviser)

Nick
Michaels
+44 (0) 20 3772 0021

 

Optiva Securities (Broker)

Daniel
Ingram
+44 (0) 20 3411 1882

 

 

About Altona Rare Earths Plc

Altona is a mining exploration company focused on the evaluation, development
and extraction of Rare Earth Element (REE) metals in Africa.  It owns a REE
mining project in Mozambique; the Monte Muambe Project, a significant Light
REE mining project in the northwest of the country, where exploration work
commenced on 1 October 2021. Resource Drilling concluded in November 2022 and
it will publish a maiden Resource Estimate in Q1 2023. The Company is in the
process of investigating other Light and Heavy REE opportunities in Africa.

 

 

CHIEF EXECUTIVE'S STATEMENT

 

Overview of the Year

 

The past 12 months have been transformative for Altona and its shareholders,
being the Company's first full financial year in the rare earths sector,
seeing the completion of our initial exploration programme and the
commencement of the second phase of resource drilling, which has already shown
significant potential for the project.

 

We made our primary acquisition in the rare earth elements ("REE") mining
sector on 25 June 2021, just before the start of the current reporting year
and have made substantial operational progress at this site in the subsequent
16 months. The asset, the Monte Muambe Rare Earths Project ("Monte Muambe"),
which is based in northwest Mozambique, has quickly shown its potential as a
viable REE mining project, reporting a potential high tonnage of rare earth
metals and crucially, higher than average grades (measured in Total Rare
Earths Oxide - "TREO") at the end of Phase 1 drilling programme.

 

Monte Muambe is a carbonatite complex of approximately 19km(2), with a
predominance of Light Rare Earth Elements ("LREE"), including high levels of
critical "magnet metals", Neodymium and Praseodymium (together often reported
as "NdPr"). These two metals, along with a number of other rare earth metals,
particularly the Heavy Rare Earth Elements ("HREE") Terbium and Dysprosium,
which have been found at potentially economic levels, are crucial in the
production of permanent magnets which are necessary in the manufacture of
electric vehicles ("EVs") and wind turbines, both fast growing sectors.

 

We commenced our initial Phase 1 drilling programme in late September 2021 and
completed it on 30 November 2021 for a total meterage of 3,131m over 43 holes.
Assay results, which were received in late April 2022, were significant enough
for the board to increase its holding in Monte Muambe Mining Lda, the current
owner of the exploration licence, to 20% (from an initial 1%) and proceed
directly into Phase 2 (resource definition and scoping study).

 

Phase 2 Drilling concluded on 29 November 2022, resulting in a total meterage
of 3,954m over 62 holes. The focus of Phase 2 was to assess the geometry and
grade of identified targets to produce a maiden Resource Estimate by the end
of Q1 2023 and a Scoping Study by the end of Q2 2023, in line with strategy.

 

Should the results of these key milestones be positive, which we expect them
to be based on early exploration analysis, we will endeavour to fast-track
Monte Muambe through its Feasibility Study and into production.

 

The Company raised a total of £1.75m during the year, undertaking two
placings at 14p (September 2021) and 8p (April 2022), to provide working
capital for its exploration and assay needs.

 

During the year under review, we also entered into two acquisition agreements
to investigate potential rare earth projects in Uganda and Malawi. Both
projects were subsequently disregarded at an early stage, as they did not meet
the Board's strict investment criteria. Only a minimum amount of capital and
resources were spent on each.

 

Post Balance Sheet Events

 

On 8 August 2022, Altona published a JORC Exploration Target estimate, a
significant milestone to help shareholders understand the future potential of
Monte Muambe. The independent report highlighted a number of key elements:

 

·    Estimated total tonnage of up to 56.6 million tonnes at 1.65% Total
Rare Earths Oxides ("TREO")

·    Including 11.5 million tonnes at 2.41% TREO, corresponding to a
well-defined high-grade zone

·    Geometry favourable to low strip ratio open pit mining

·    Monte Muambe is on track to become a significant, high value rare
earths project

 

In line with our planned Admission to the Standard segment of the London Stock
Exchange, the Company carried out a Placing on 19 August 2022, raising £1.1m
at a price of 8p per share, conditional on Admission to the LSE. These funds,
should Altona achieve a successful LSE listing, will be used to complete the
current spend commitment of the Monte Muambe Farm In Agreement to take the our
holding in the asset to 51% and provide a further 12 months working capital to
allow us to commence the pre-feasibility exploration phase.

 

Rare Earths - Rising Global Demand

 

In the EU's 2022 assessment for the supply risk of critical raw materials,
LREE and HREE held the top two positions, due to their widening usage in green
energy, defence and communication industries. Worryingly for the West, the
supply risk is also due to the fact that 90% of the processing of these metals
is being conducted in China, which controls the global supply chain.
Currently there is no processing alternative outside China, although rare
earth refineries are in the process of being built in the UK, US, Australia
and Europe.

 

There is a current global shortage of NdPr of approximately 3,000 tonnes per
year, which is predicted to rise to over 15,000 tonnes per year by 2030.
Bearing in mind that most countries have now set targets to remove internal
combustion engine vehicles from the production line by 2030 and switch to EV
or hybrid vehicles, this burden upon the rare earth mining sector is only set
to increase.

 

Altona believes it is able to be part of the solution to this major issue; our
long-term strategy is to work with the UK, EU and North American governments,
processors and manufacturers, through direct off-take agreements, ensuring a
constant and sustainable flow of critical metals to those industries which
would potentially fail without it.

CHIEF OPERATING OFFICER'S STATEMENT

 

Monte Muambe Project - Review and Future Potential

 

During the year ended 30 June 2022, the Company made significant strides
towards turning the Monte Muambe REE Project from what were previously known
to be a few isolated REE occurrences into what are now well-defined
mineralised zones that support the preparation of a JORC Exploration Target
based on a solid drilling data set.

 

When the Company acquired control of the asset Monte Muambe in August 2021,
the project had mostly seen exploration for the mineral fluorspar between the
1980s and 2010s including trenching, drilling and a helicopter-borne
geophysical survey. Out of 165 boreholes drilled in the course of fluorspar
exploration, only about a handful had significant REE intercepts. While the
intercept lengths were impressive (ranging from 30m to almost 100m, with
grades well above 2% TREO), there was no indication of what the lateral extent
and the size of REE mineralisation could be.

 

Altona's Phase 1 objectives were therefore focused on confirming known REE
intercepts, testing their lateral extent, obtaining a better understanding of
the geology and geometry of REE mineralisation, as well as testing a few
additional targets. This was achieved by drilling 5 diamond drilling holes and
36 Reverse Circulation ("RC") holes on 6 different targets, for a total of
over 3,100m. This work allowed us to confirm two previously known targets and
to discover two brand new target zones.

 

Additionally, it was determined that REE mineralisation at Monte Muambe is
primary, contained in part in bastnaesite, a mineral for which the REE
extraction process is well defined, and is hosted in different types of
carbonatites. Assay results showed impressive grades, with up to 7.24% TREO,
1.21% NdPr Oxide, as well as notable amounts of Dysprosium and Terbium.

 

In February 2022, to help define more precisely its resource drilling plan,
the Company embarked on a thorough soil sampling programme over the entire
carbonatite intrusion. Due to the thin nature of the soils at Monte Muambe,
this geochemical method is very efficient at pinpointing primary REE
mineralisation at sub-surface level. The survey allowed to delineate precisely
10 REE and Niobium target zones (including those previously discovered), and
to optimise the drilling programme.

 

Following the success of Phase 1, Phase 2 commenced in March 2022. By 30 June
2022, 40 RC holes totalling 1,765m had been drilled, with a strong focus on
Targets 1 and 4. An additional 15 holes totalling 1,378m were drilled between
July and September, with a further 811m (7 holes) drilled before we concluded
the drilling season on 29 November 2022.

 

The work done so far has shown that there are two types of REE mineralisation,
one with grades ranging from 0.5 to 1% TREO and containing Niobium, and one
with grades ranging from 1 to 7% TREO without Niobium. These two types of REE
mineralisation zones form large, consistent bodies, dipping at an angle into
the ground. The strike length of the Target 1 bodies is over 700m. The shape
of the bodies is extremely favourable to low strip-ratio open-pit mining, with
almost no waste interburden. The quality of the data produced has allowed the
Company to define a solid JORC Exploration Target estimate which was published
on 8 August 2022.

 

                      Tonnes (millions)  Tonnes (millions)  TREO%             TREO%
 Cut-off Grade TREO%  0.5% Grade Shell   1.0% Grade Shell   0.5% Grade Shell  1.0% Grade Shell
 1.0%                 56.6               21.7               1.65              1.78
 2.0%                 11.5               6.5                2.41              2.47

 

While the feasibility of a mining operation at Monte Muambe will ultimately
rest on a large number of key parameters, including metallurgy, the results of
the JORC Exploration Target show a potential resource of a size and grade that
could sustain a mining operation, and which are favourable compared to Monte
Muambe's peer group projects in Africa. Drawing on the mining experience of
its management, the Company integrates mining parameters in its exploration
programme right from the beginning, and focuses on the most favourable
targets, to ensure the delivery of an actually mineable project. Monte Muambe
is located in a stable part of Mozambique, in the middle of a larger regional
mining hub including Zambia, Zimbabwe and Malawi which is highly populated
with exploration and mining activity, qualified personnel, contractors,
infrastructure and hydroelectric power.

 

Sustainability is very much at heart of the Company's mission and among the
parameters that will be considered during technical studies are the
possibility to operate on or near a carbon neutral basis, as well as to
maximize in-country value addition through taking processing in Mozambique as
far downstream as the economic characteristics of the project will allow.

 

Within a year, Altona has been able to rapidly and efficiently put itself and
the Monte Muambe project on the map of possible future REE producers in
Africa. This success stems in great part from the outstanding work of the team
on the ground, consisting of 26 Mozambican geologists, technicians, field
assistants, admin and support personnel.

 

The Company places a lot of emphasis on developing the capacity of its
subsidiary Monte Muambe Mining Lda with equipment and training of local
personnel. Key to this was the acquisition of a Hitachi X-Met8000 pXRF
analyzer equipped with a 50kv anode and specific programmes to enable the
detection and quantification of Neodymium, Praseodymium, Lanthanum, Cerium and
Yttrium, as well as of light elements relevant to carbonatites such as
Potassium, Magnesium and Silicon. Used within the framework of a specially
developed QAQC system, this tool allows the analysis of soil and RC cuttings
samples on site, allowing a quasi-real-time assessment of soil sampling and
drilling results and a constant reorientation of the exploration plan, thus
saving time and resources. Monte Muambe Mining is also equipped to carry out
gamma-spectrometer geophysical surveys, as well as differential GPS (RTK)
topography surveys, the accuracy of which is suitable to use produced data for
resource modelling.

 

At the date of writing this report, the Company is assessing proposals from
consultants for the Mineral Resource Estimate and Scoping Study, which will
include results of mineralogical and metallurgical testing carried out in Q4
2022. Samples are being assayed at the laboratory, and others will be on the
road soon as we have wrapped up this year's drilling campaign in anticipation
of the rainy season. All is on track for the Company to deliver its maiden
Mineral Resource Estimate by Q1 2023 and Scoping Study by Q2 2023, as planned.

 

 

CORPORATE INFORMATION

 

Financial Review

 

Balance sheet - acquisitions, capital expenditure, equity placing and asset
growth

 

The Company acquired the asset Monte Muambe Mining Lda ("MMM") during the
year, which holds the operating licence of Monte Muambe, for a total
consideration of £167,000 which comprised £80,000 in cash and the remainder
in the issue of one million Company shares. Although ownership of this asset
only currently stands at 20%, the Company has consolidated the results of MMM
within its Group as it has established control over MMM as set out in the
Farm-In Agreement.

 

The Group's total assets have increased from £457,000 to £1.41 million
mainly due to the significant capital expenditure of £795,000 on this
licence.

 

During the year the Company completed two equity placings with a total issue
of just over fifteen million shares, raising £1.75 million (gross proceeds).
This helped the Company to proceed at a good pace with the above mentioned
acquisition, increasing its equity from 1% to 20% within a short timeframe.

 

As a result of these activities, the Group's net assets have increased from
£136,000 as at 30 June 2021 to £1.05 million as at 30 June 2022.

 

Income Statement

 

The loss for the year was £801,000 as compared with a £733,000 loss in the
prior year. During the year, the Group expensed £59,000 of exploration costs
(2021: £182,000) due to the decision not to continue with a project in
Malawi.

 

The Company is focused on controlling administration costs and aims to keep
these to a minimum.

 

Liquidity and Cash Flow

 

The Group monitors its cash position, cash forecasts and liquidity regularly.

 

Net cash used in operating activities increased from £528,000 to £832,000
representing the increased operations of the Group, mainly due to the
acquisition and operation work at Monte Muambe. This was also reflected in the
increase from £nil to £875,000 in cash used in investing activities.

 

During the year the Company paid back loans of £56,000 and at the end of the
year, the Group's cash balance was £283,000 (2021: £436,000).

 

Replacement Warrants

 

On the 26 June 2022, the Company replaced all 20 pence warrants issued during
the June 2021 and September 2021 placings with new warrants with an exercise
price of 12 pence per Ordinary Shares.  They all still retain their expiry
date of 31 March 2023.  This exercise was completed to recognise that
shareholders who had previously invested in the Company had been issued
warrants at a higher exercise price than the more recent placings.  An
equitable solution was sought by the Board and ultimately the Directors
believe that this decision would, in the medium term, create shareholder
value.

 

Board Appointments

 

Cédric Simonet was appointed as Chief Operating Officer on 14 July 2021,
having served as a Non-Executive Director since December 2020 and Consultant
Geologist since July 2020. Cedric's knowledge of the African mining landscape
and experience with running exploration programmes in remote locations is
second-to-none and his presence on the board has been transformative for
Altona.

 

Hilton Banda was appointed as a Non-Executive Director in November 2021, as
part of the acquisition of a Malawi ionic clay REE project, where he was a
director. As the Company decided against pursuing this project due to
environmental factors, Mr Banda stepped down from the board on 7 March 2022.

 

Simon Tucker resigned as a Non-Executive Director on 2 August 2022. A highly
experienced replacement has been selected and will be appointed when the
Company completes its Admission to the LSE.

 

London Stock Exchange Listing

 

The Company continues to work with its advisers and the Financial Conduct
Authority ("FCA") with the view that admission of its shares to the LSE
Standard will be forthcoming. At this time however, the board is unable to
provide a clearer time frame of events.

 

 

OUTLOOK

 

Altona continues to work diligently with its local partners in Mozambique and
within the rules of its operational jurisdiction. Our medium-term strategy is
to become part of the solution to the widening global deficit of rare earths,
particularly with respect to the magnet metals, and we are confident of
achieving this goal.

 

We believe the timing for our entry into the rare earths sector is impeccable,
as it is our goal to bring our assets into production around the time the
newly constructed European and US REE processing facilities come on-line.

 

It is our intention to create a portfolio of REE projects across different
African jurisdictions and differing geological formations, to reduce
shareholder risk and increase our opportunity to become revenue generating in
as short a time-frame as possible.

 

STATEMENT OF CONSOLIDATED PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2022

 

                                                                         2022     2021


                                                                         £'000    £'000

 Continuing operations:
 Administrative expenses                                                 (742)    (547)
 Exploration costs (not capitalised)                                     (59)     (182)
 Operating loss                                                          (801)    (729)
 Finance costs                                                           -        (4)
 Loss before taxation                                                    (801)    (733)
 Income tax                                                              -        -
 Loss for the year from continuing operations                            (801)    (733)

 Total loss for the year attributable to:
 Owners of Altona Rare Earths Plc                                        (774)    (733)
 Non-controlling interests                                               (27)     -
                                                                         (801)    (733)
 Other comprehensive income
 Items that may be reclassified subsequently to profit and loss:
 Exchange differences on translation of foreign operations               2        -
                                                                         (799)    (733)
 Total comprehensive loss attributable to:
 Owners of Altona Rare Earths Plc                                        (773)    (733)
 Non-controlling interests                                               (26)     -
                                                                         (799)    (733)

 Earnings per share (expressed in pence per share)
 - Total Basic and Diluted earnings per share                            (2.72)p  (7.73)p

 

 

 

All of the above operations during the year are continuing.

 

 

STATEMENT OF CONSOLIDATED FINANCIAL
POSITION

As at 30 June 2022

 

                              2022      2021

                              £'000     £'000
 ASSETS
 Non-current assets
 Intangible assets            866       -
 Tangible assets              173       -
 Total non-current assets     1,039     -

 Current assets
 Trade and other receivables  119       21
 Cash and cash equivalents    283       436
 Total current assets         402       457

 TOTAL ASSETS                 1,441     457

 LIABILITIES
 Current liabilities
 Trade and other payables     (314)     (321)
 Deferred tax liabilities     (77)      -
 Total current liabilities    (391)     (321)

 TOTAL LIABILITIES            (391)     (321)

 NET ASSETS                   1,050     136

 EQUITY
 Share capital                1,790     1,632
 Share premium                21,404    19,869
 Share-based payment reserve  14        -
 Foreign exchange reserve     1         -
 Retained deficit             (22,139)  (21,365)
                              1,070     136
 Non-controlling interest     (20)      -

 TOTAL EQUITY                 1,050     136

 

 

STATEMENT OF CONSOLIDATED CASH FLOWS

For the year ended 30 June 2022

 

                                                          2022     2021

                                                          £'000    £'000
 Cash flows from operating activities
 Loss for the year before taxation                        (801)    (733)
 Adjustments for:
 Interest paid                                            -        4
 Depreciation                                             5        -
 Shares issued for services                               10       306
 Foreign exchange movements                               2        -
 Operating cashflows before movements in working capital  (784)    (423)

 Increase in trade and other receivables                  (98)     (1)
 Increase/(decrease) in trade and other payables          50       (104)
                                                          (48)     (105)
 Net cash used in operating activities                    (832)    (528)

 Cash flows from investing activities
 Acquisition of subsidiary, net of cash acquired          (80)     -
 Purchases of property, plant and equipment               (178)    -
 Purchases on intangible assets                           (617)    -
 Net cash used in investing activities                    (875)    -

 Cash flows from financing activities
 Repayment of overdraft                                   -        (99)
 Repayment of Directors loans                             (31)     (25)
 (Repayment of)/ Proceeds from bank loan                  (25)     25
 Proceeds from issue of shares                            1,688    1,118
 Costs of issue                                           (78)     (51)
 Finance costs                                            -        (4)
 Net cash generated from financing activities             1,554    964

 Net (decrease)/ increase in cash and cash equivalents    (153)    436
 Cash and cash equivalents at beginning of the year       436      -
 Cash and cash equivalents at the end of the year         283      436

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 30 June 2022

 

                                                                         Share capital  Share     Merger reserve  Retained deficit                             Share-based payment reserve          Total equity

                                                                                        premium                                     Foreign exchange reserve

                                                                                                                                                                                            NCI
                                                                         £'000          £'000     £'000           £'000             £'000                      £'000                        £'000   £'000

 Balance at 30 June 2020                                                 1,431          18,697    2,001           (23,856)          1,223                      -                            -       (504)
 Comprehensive income
 Loss for the year                                                       -              -         -               (733)             -                          -                            -       (733)
 Total comprehensive income

                                                                         -              -         -               (733)             -                          -                            -       (733)
 Transactions with owners recognised directly in equity
 Issue of shares                                                         201            1,223     -               -                 -                          -                            -       1,424
 Cost of share issue                                                     -              (51)      -               -                 -                          -                            -       (51)
 Realisation of foreign exchange reserve on dissolution of subsidiaries

                                                                         -              -         -               1,223             (1,223)                    -                            -       -
 Derecognition of merger reserve

                                                                         -              -         (2,001)         2,001             -                          -                            -       -
 Total transactions with owners recognised directly in equity

                                                                         201            1,172     (2,001)         3,224             (1,223)                    -                            -       1,373
 Balance at 30 June 2021                                                 1,632          19,869    -               (21,365)          -                          -                            -       136
 Comprehensive income
 Loss for the year                                                       -              -         -               (774)             -                          -                            (27)    (801)
 Currency translation                                                    -              -         -               -                 2                          -                            -       2
 NCI share in translation difference

                                                                         -              -         -               -                 (1)                        -                            1       -
 Total comprehensive income

                                                                         -              -         -               (774)             1                          -                            (26)    (799)
 Transactions with owners recognised directly in equity
 Issue of shares                                                         158            1,627     -               -                 -                          -                            -       1,785
 Cost of shares issued                                                   -              (92)      -               -                 -                          14                           -       (78)
 Additional transactions with NCI

                                                                         -              -         -               -                 -                          -                            6       6
 Total transactions with owners recognised directly in equity

                                                                         158            1,535     -               -                 -                          14                           6       1,713
 Balance at 30 June 2022                                                 1,790          21,404    -               (22,139)          1                          14                           (20)    1,050

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

ACCOUNTING POLICIES

 

GENERAL INFORMATION

Altona Rare Earths Plc (the "Company") is a public company listed on the AQUIS
Stock Exchange ("AQSE"). The Company is incorporated and domiciled in England
& Wales, with registered number 05350512.

 

The financial information set out above does not constitute statutory accounts
for the purpose of Section 434 of the Companies Act 2006.The financial
information has been extracted from the statutory accounts of Altona Rare
Earths Plc and is presented using the same accounting policies, which have not
yet been filed with the Registrar of Companies, and on which the auditors gave
an unqualified opinion on 14 December 2022.

 

The principal activity of the Company and its subsidiaries (the "Group") is
Rare Earths exploration, development and extraction, focusing on opportunities
in Africa.

 

 

BASIS OF PREPARATION

The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards and the requirements of the
Companies Act 2006.

 

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 main
subsidiary is Mozambique Meticals (MTN) as this is the currency that mainly
influences labour, material and other costs of providing services. 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.

 

GOING CONCERN

The Company raises money for exploration and capital projects as and when
required. There can be no assurance that the Company's projects will be fully
developed in accordance with current plans or completed on time or to budget.
Future work on the development of these projects, the levels of production and
financial returns arising therefrom, may be adversely affected by factors
outside the control of the Company.

 

An operating loss is expected in the 12 months subsequent to the date of these
financial statements. As a result the Group will need to raise funding to
provide additional working capital within the next 12 months. The ability of
the Group to meet its projected expenditure is dependent on these further
equity injections and / or the raising of cash through bank loans or other
debt instruments. These conditions necessarily indicate that a material
uncertainty exists that may cast significant doubt over the Group's ability to
continue as a going concern and therefore their ability to realise their
assets and discharge their liabilities in the normal course of business.
Whilst acknowledging this material uncertainty, the directors remain confident
of raising finance and therefore, the directors consider it appropriate to
prepare the consolidated financial statements on a going concern basis. The
consolidated financial statements do not include the adjustments that would
result if the Group were unable to continue as a going concern.

The auditors have made reference to going concern by way of a material
uncertainty within the financial statements.

 

 

POST REPORTING DATE EVENTS

The Company entered into a short-term loan facility on 8 November 2022,
enabling it to drawdown up to £150,000 in two tranches in November, from
Align Research Investments Ltd ("Align").  The loan has a repayment date of
the earlier of either Admission or 31 January 2023 and carries a fixed
interest rate of 15%.  Align will also receive 12 pence warrants equal to
150% of the loan value, with a three year expiration date from drawdown.

 

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