REG - Ironveld PLC - Final Results for the year ended 30 June 2022
29/12/2022 07:00
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RNS Number : 1287L Ironveld PLC 29 December 2022
Ironveld Plc
("Ironveld" or the "Company")
Final Results for the year ended 30 June 2022
Ironveld plc, the owner of a High Purity Iron ("HPI"), Vanadium and Titanium
project located on the Northern Limb of the Bushveld Complex in Limpopo
Province, South Africa (the "Project") announces its final results for the 12
months ended 30 June 2022 ("the Period"). Hard copies of these results will be
posted to shareholders by 31 December 2022.
Operational and Financial Highlights
· Acquisition and refurbishment of Rustenburg smelter, funded by a
£4.5 million Placing post Period end, will enable Ironveld to mine and
process ore for the first time;
· Mining activities commenced December 2022; and
· First furnace close to production at Rustenburg smelter.
Outlook
· 2023 expected to see production and sales increase rapidly as the
smelter moves to full capacity production.
For further information, please contact:
Ironveld plc c/o BlytheRay
Giles Clarke, Chairman +44 20 7138 3204
Martin Eales, Chief Executive Officer
+44 20 7220 0500
finnCap (Nomad and Broker)
Christopher Raggett / Charlie Beeson
Turner Pope (Joint Broker) +44 20 3657 0050
Andrew Thacker / James Pope
BlytheRay +44 20 7138 3204
Tim Blythe / Megan Ray
NOTES TO EDITORS
Ironveld (IRON.LN) is the owner of Mining Rights over approximately 28
kilometres of outcropping Bushveld magnetite with a SAMREC compliant ore
resource of some 56 million tons of ore grading 1,12% V2O5, 68,6% Fe2O3 and
14,7% TiO2.
In 2022 Ironveld agreed to acquire and refurbish a smelter facility in
Rustenburg, South Africa, in which it can process its magnetite ore into the
marketable products of high purity iron, titanium slag and vanadium slag.
Ironveld is an AIM traded company. For further information on Ironveld please
refer to www.ironveld.com (http://www.ironveld.com) .
CHAIRMAN'S STATEMENT
Dear Shareholder,
I am pleased to present the Annual Report and the Financial Statements for the
year to 30 June 2022.
During the Period, we continued to undertake various activities focused on
realising the value of the Company's assets, with the most significant events
having taken place post Period end.
In March 2021 the Company had announced that it was in discussions with a
strategic partner seeking to take a substantial equity stake at the listed
company level and this was confirmed in October 2021 with the announcement of
an agreed Subscription by Grosvenor Resources (Pty) Limited ("Grosvenor") for
561,505,950 new ordinary shares at 1 pence per share, being a substantial
premium over the prevailing share price. Shareholder approval for the
transaction was granted at a General Meeting in November 2021, however due to
delays in Grosvenor securing its own funding for the investment the
transaction had not closed as at the period end and as at today's date
Grosvenor is still in advanced negotiations to fund and proceed with an
investment in Ironveld, but the Directors remain hopeful that a meaningful
advance will soon be made.
In May 2021 the Company announced that it had agreed terms with a business
rescue practitioner and a sole creditor to acquire an existing smelter in
Rustenburg, South Africa for a total of ZAR 115 million (approximately £5.75
million), payable ZAR 15 million (approximately £750,000) on completion with
the balance of ZAR 100 million (approximately £5.0 million) repayable from
smelter cashflows over 10 years. The Company then completed a Placing to
raise gross proceeds of £4.5 million in August 2022.
The acquisition of the Rustenburg smelter is a moment of huge significance for
the Company as it provides the first opportunity to economically mine and
process the Company's magnetite ore into marketable products: high purity
iron, vanadium in slag and titanium in slag.
Following a rapid and efficient refurbishment project at the smelter and
establishment of all necessary infrastructure at the mine, the Company was
able to announce in early December 2022 that mining activities had commenced
and that the smelter's first furnace (of three) would be in operation within
weeks, materially ahead of schedule.
We remain committed to operating responsibly, working closely with
stakeholders and local communities at grassroots level to improve standards of
living. Our local communities have been fully involved in the process to
establish the mining area and have provided all necessary consents. As part
of our Social Labour Plan (approved by the Department of Mineral Resources
("DMR") in South Africa) we have undertaken to implement water supply schemes,
electrification upgrades and roads and stormwater infrastructure to the
municipalities of our mining communities. In addition Ironveld has committed
to provide training, bursaries and employment to the members of the various
host communities.
Giles Clarke
Chairman
28 December 2022
STRATEGIC REPORT
Financial
The Group recorded a loss before tax of £0.8 million (2021: £0.5 million) in
the Period. The Company does not plan to pay a dividend for the year ended 30
June 2022.
Going concern
The Subscription proceeds due from Grosvenor Resources had not been received
as at the date of these Financial Statements, however the Directors have
received reasonable assurances that progress is being made between Grosvenor
and its potential funders and is hopeful that an investment by Grosvenor will
be completed early in 2023. In addition the Company expects to rapidly
increase production and revenues as all three furnaces at the smelter reach
full production in the first half of 2023, which will see the business
operating on a positive cash flow basis.
Taking receipt of the funds referred to above and the planned increase in
production into account, these Financial Statements have been prepared on a
Going Concern basis.
Outlook
With the Company seeing increasing production from the smelter during the
first half of 2023 the outlook is extremely positive.
We would like to thank all of our shareholders for their continuing support
for both the Company and the project and we look forward to providing further
updates in the near future.
Principal risks and uncertainties
The Directors consider the following risks to be the most material or
significant for the management of the business. These issues do not purport to
be a complete list or explanation of all the risks facing the Group. In
particular the Group's performance may be affected by changes in market and/or
economic conditions, changes in legal, regulatory or tax requirement
legislation.
The Board of Directors monitors these risks and the Group's performance on a
regular basis
Operational risks - The production of the Company's range of metals involves a
series of processes, from the mining of the ore at the mine site, to the
smelting of material at the Rustenburg smelter. Mining operations are subject
to a number of risks, including mechanical outages, supply issues (e.g. fuel),
interruptions due to weather and soil conditions, among many others.
Availability of finance - Expansion of current activities or further
development and production from the ore resources requires significant further
capital expenditure and the Group will need to raise further finance. The
terms on which future funds can be raised may not be on terms which the
Directors consider acceptable. The Group is listed on the public markets which
greatly assists in the raising of additional finance.
Governance and Compliance - There are multiple governance based risks which
may have an impact on the business. The Group operates within a complex
regulatory environment which focuses on accountability. Failure to comply with
regulations, including applicable licences required for continuous operations,
or failure to follow expected social and business conduct could cause
potential interruption or stoppage of operations, potential financial loss and
reputational damage.
Health and Safety - Mining and Smelting operations by their very nature are
dangerous working environments which, if not managed, could lead to serious
injuries and a loss of life.
Commodity Markets - A significant decrease in commodity prices for high purity
iron, vanadium or titanium would negatively impact Group revenues.
STRATEGIC REPORT (continued)
Principal risks and uncertainties (continued)
Inflation - The Group's cost base is highly susceptible to inflationary
pressures. In cycles of high commodity prices, input costs, such as wages,
consumables, diesel and energy often increase at a rate higher than that of
general inflation. Rising costs, which could be triggered by and therefore
offset by higher commodity prices, have a direct impact on the Group's
profitability. In addition, inflationary pressures have an impact on capital
expenditure.
Political and Country risk - Substantially all of the Groups business and
operations are conducted in South Africa and the political, economic, legal
and social situation in South Africa introduces a certain degree of risk with
respect to the Group's activities.
s172 Statement - Director's statement in performance of their statutory duties
in accordance with s172 (1) Companies Act 2006
During the year ended 30 June 2022 the Board of Directors consider that they
have acted in a way that would be most likely to promote the success of the
company for the benefit of its members (having regard to the stakeholders and
the matters set out in s172(1)(a)-(f) of the Companies Act 2006).
The Board has elected to apply the Quoted Company Alliance Corporate
Governance Code as part of its commitment to high standards of corporate
governance in all of its activities and complies with its requirements as far
as is practicable and appropriate for a company of its nature and size.
The Directors are aware of their responsibilities to take into consideration
the interests of all stakeholders in their decision making process and to
promote the success of the Company in accordance with s172. The Directors
continue to pay full regard to the interests of the stakeholders.
The requirements of s172 are for the Directors to:
• Consider the likely consequences of any decision in the long term,
• Act fairly between the members of the Company,
• Maintain a reputation for high standards of business conduct,
• Consider the interests of the Company's employees,
• Foster the Company's relationships with suppliers, customers and others,
and
• Consider the impact of the Company's operations on the community and the
environment.
The Company is quoted on AIM and its members will be fully aware, through
detailed announcements, shareholder meetings and financial communications,
updated on the website, of the Board's broad and specific intentions and the
rationale for its decisions. When making decision, the Board of Directors,
issues such as the impact on the community and the environment have actively
been taken into consideration. The Company pays its employees and creditors
promptly and keeps its costs to a minimum to protect shareholders funds. The
Company recognises workers' representation unions and complies with all local
employment legislation.
The key decisions made in the year to promote this success are explained in
the Strategic Report above.
This report was approved by the Board on 28 December 2022 and signed on its
behalf by:
Giles Clarke
Chairman
28 December 2022
CONSOLIDATED INCOME STATEMENT
2022
2021
Note
£000
£000
Administrative
expenses
(798)
(783)
(
) Operating
loss
4
(798)
(783)
Other gains and losses
6
-
323
Investment
revenues
7
4
3
Finance
costs
8
(17)
(8)
Loss before
tax
(811)
(465)
Tax
9
-
-
Loss for the
year
(811)
(465)
( )
Attributable to:
Owners of the
Company
(806)
(460)
Non-controlling interests
(5)
(5)
(811)
(465)
Loss per share - Basic and diluted
10
(0.06p)
(0.05p)
(
)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2022
2021
£000
£000
Loss for the
period
(811)
(465)
Exchange difference on translation of foreign operations
(199)
1,692
(
) Total comprehensive (loss)/income for the year
(1,010)
1,227
(
)
Attributable to
Owners of the
Company
(974)
956
Non-controlling interests
(36)
271
(1,010)
1,227 (
) Amounts charged/credited to other comprehensive income may be reclassified
to the income statement in future periods.(
)
CONSOLIDATED BALANCE SHEET
2022
2021
Note £000
£000
Non-current assets
Intangible
assets
12
26,350
26,191
Property, plant and
equipment
13
2
2
Investments
14
-
-
Other
receivables
15
3
3
(
) 26,355
26,196
Current assets
Trade and other
receivables
15
198
177
Cash and cash
equivalents
22
17
270
( )
( )
215
447
(
) Total assets
26,570
26,643
(
) Current liabilities
Trade and other
payables
16 (619)
(272)
Borrowings
17
(499)
-
(
)
(1,118)
(272)
Non-current liabilities
Deferred tax
liabilities
18
(4,730)
(4,774)
( )
( )
Total liabilities
(5,848)
(5,046)
Net assets
20,722
21,597
(
) Equity
Share
capital
20
10,453
10,436
Share
premium
21
21,379
21,261
Other reserve
21
12
15
Retained earnings
21
(8,421)
(7,618)
Foreign currency translation reserve
21
(6,045)
(5,877)
(
) Equity attributable to owners of the
Company
17,378
18,217
Non-controlling interests
25
3,344
3,380
(
) Total equity
20,722
21,597
These financial statements were approved by the Board and authorised for issue
on 28 December 2022.
Signed on behalf of the Board
M Eales
Director
Company Registration No:
04095614
PARENT COMPANY BALANCE SHEET
2022
2021
Note
£000
£000
Non-current assets
Investments
14
26,017
25,502
Current assets
Trade and other
receivables
15
60
49
Cash and cash
equivalents
22 12
255
72 304
Total
assets
26,089
25,806
(
)
Current liabilities
Trade and other
payables
16 (606)
(264)
Borrowings
17
(499)
-
Total
liabilities
(1,105)
(264)
Net
assets
24,984
25,542
Equity
Share
capital
20
10,453
10,436
Share
premium
21
21,379
21,261
Other
reserve
21
12
15
Retained
earnings
21 (6,860)
(6,170)
Total
equity
24,984
25,542
(Attributable to owners of the
Company)
(
)
The loss for the financial year dealt with in the financial statements of the
parent Company was £693,000 (2021 - loss £815,000).
These financial statements were approved by the Board and authorised for issue
on 28 December 2022
Signed on behalf of the Board
M Eales
Director
Company Registration No: 04095614
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to owners of the Company:
Foreign
Share Share Other
currency Retained
Capital Premium Reserve translation
Earnings Total
£000 £000 £000
£000 £000 £000
At 1 July
2020
9,774 19,691 189
(7,293) (7,187) 15,174
Loss for the
year
- -
- -
(460) (460)
Exchange difference on
translation of foreign operations
- -
- 1,416
- 1,416
Reclassification to
liability
- - (189)
-
- (189)
Credit for equity-settled
share based payments
-
-
- -
29 29
Issue of share
capital
662 1,570 -
- -
2,232
Issue of share options and warrants -
- 15
-
- 15
(
) At 30 June
2021
10,436 21,261
15 (5,877) (7,618) 18,217
( )
Loss for the
year
- -
- -
(806) (806)
Exchange difference on
translation of foreign operations
- -
- (168)
- (168)
Issue of share
capital
17 118
- -
- 135
Exercise of share
warrants
- -
(3) -
3 -
(
) At 30 June
2022
10,453 21,379
12 (6,045) (8,421) 17,378
( )
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Total equity:
Owners of Non-controlling Total
the Company Interest Equity
£000
£000 £000
At 1 July
2020
15,174
3,109 18,283
Loss for the year
(460)
(5) (465)
Exchange difference
on
translation of foreign
operations
1,416 276
1,692
Reclassification to
liability
(189)
- (189)
Credit for equity-settled share based payments
29 -
29
Issue of share capital
2,232
- 2,232
Issue of share option and
warrants
15
- 15
( )
At 30 June
2021
18,217
3,380 21,597
Loss for the
year
(806)
(5) (811)
Exchange difference on
translation of foreign operations
(168)
(31) (199)
Issue of share
capital
135
- 135
(
) At 30 June
2022
17,378 3,344
20,722
( )
COMPANY STATEMENT OF CHANGES IN EQUITY
Equity attributable to the equity holders of the Company:
Share Share
Other Retained Total
Capital Premium Reserve
Earnings Equity
£000 £000
£000
£000 £000
At 1 July 2020
9,774
19,691 189
(5,384) 24,270
Loss for the year
-
- -
(815) (815)
Reclassification to
liability
- -
(189)
- (189)
Credit for equity-settled
share based payments
-
-
-
29 29
Issue of share
capital
662 1,570
-
- 2,232
Issue of share options and warrants
-
-
15
- 15
(
)
At 30 June 2021
10,436
21,261 15
(6,170) 25,542( )
Loss for the
year
-
- -
(693) (693)
Issue of share
capital
17 118
-
- 135
Exercise of share
warrants
-
-
(3)
3 -
(
) At 30 June
2022
10,453 21,379
12 (6,860) 24,984
(
)
CONSOLIDATED CASH FLOW STATEMENT
2022
2021
Note
£000
£000
Net cash used in operating activities
22
(337)
(642)
Investing activities
Purchases of property, plant and
equipment
(1)
(1)
Purchase of exploration and evaluation
assets
(396)
(492)
Interest received
4
3
Net cash used in investing
activities
(393)
(490)
Financing activities
Proceeds on issue of equity (net of costs)
-
1,134
Proceeds from new loans
482
363
Repayment of loans
-
(109)
(
) Net cash generated by financing
activities
482
1,388
Net (decrease)/increase in cash and cash
equivalents
(248)
256
Cash and cash equivalents at beginning
of
year
22
270
28
Effects of foreign exchange rates
(5)
(14)
Cash and cash equivalents at end of year 22
17
270
( )
(
)
COMPANY CASH FLOW STATEMENT
2022
2021
Note
£000
£000
Net cash used in operating activities
22
(230)
(507)
Investing activities
Payments to acquire investments -
loans
(495)
(384)
Investments repaid - loans
-
81
(
) Net cash used in investing
activities
(495)
(303)
Financing activities
Proceeds on issue of equity (net of costs)
-
1,134
Proceeds from new loans
482
25
Repayment of loans
-
(109)
(
) Net cash generated by financing activities
482
1,050
Net (decrease)/increase in cash and cash equivalents
(243)
240
Cash and cash equivalents
at
beginning of
year
22
255
15
(
) Cash and cash equivalents at end of year 22
12
255
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Ironveld Plc is a public company incorporated and domiciled in England and
Wales under the Companies Act 2006 whose shares are listed on the Alternative
Investment Market of the London Stock Exchange. The address of the registered
office is given on page 2. The nature of the Group's operations and its
principal activities are set out in note 3 and in the Directors Report on page
6.
Adoption of new and revised Standards
In the current year, the Group has applied new or amended standard for the
first time which are mandatory for accounting periods commencing on or after 1
July 2021. None of the standards adopted had a material impact on the
financial statements. The significant new and amended standards adopted were
as follows:-
Amendments to IFRS 4, IFRS 7, IFRS 9 and IFRS 16 in respect of the IBOR
reform.
At the date of authorisation of these financial statements, amendments to
existing standards and interpretations, applicable to the group, are not yet
effective and have not been adopted early by the Group. The adoption of these
standards, amendments and interpretations is not expected to have a material
impact on the Group and Company's results or equity.
2.1 Significant accounting policies
The financial statements are based on the following policies which have been
consistently applied:
Basis of preparation
The financial statements of the Group and Parent Company have been prepared in
accordance with UK-adopted international accounting standards (IFRSs) in
conformity with the requirements of the Companies Act 2006.
The financial statements have been prepared on the historical cost basis. The
financial statements are presented in pounds sterling because that is
considered to be the currency of the primary economic environment.
The principal accounting policies are set out below:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and all entities controlled by the Company (its subsidiaries) made
up to the year-end. Control is achieved where the Company has power to govern
the financial and operating policies of an investee entity so as to obtain
benefits from its activities.
Subsidiaries are consolidated from the date of their acquisition, being the
date on which the Company obtains control and ceases when the Company loses
control of 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.
Non-controlling interests in subsidiaries are identified separately from the
Group's equity therein. Those interests of non-controlling shareholders are
initially measured at their proportionate share of the fair value of the
acquiree's identifiable net assets. Subsequent to acquisition, the carrying
value of the non-controlling interests is the amount of initial recognition
plus the non-controlling interests' share of the subsequent changes in equity.
Changes in the Group's interests in subsidiaries that do not result in a loss
of control are accounted for as equity transactions. The carrying amount of
the Group's interests and the non-controlling interests are adjusted to
reflect the changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to the owners of the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Significant accounting policies (continued)
Business combinations
Acquisitions of subsidiaries are accounted for using acquisition accounting.
The consideration for each acquisition is measured at the fair value of assets
given, liabilities incurred or assumed and equity instruments issued by the
Group in exchange for control in the acquiree. Acquisition-related costs are
recognised in the income statement as incurred.
Exploration and evaluation
Costs incurred prior to acquiring the rights to explore are charged directly
to the income statement.
Licence acquisition costs and all other costs incurred after the rights to
explore an area have been obtained, such as the direct costs of exploration
and appraisal (including geological, drilling, trenching, sampling, technical
feasibility and commercial viability activities) are accumulated and
capitalised as intangible exploration and evaluation ("E&E") assets,
pending determination. Amounts charged to project partners in respect of costs
previously capitalised are deducted as contributions received in determining
the accumulated cost of E&E assets.
E&E assets are not amortised prior to the conclusion of the appraisal
activities. At completion of appraisal activities, if financial and technical
feasibility is demonstrated and commercial reserves are discovered then,
following development sanctions, the carrying value of the relevant E&E
asset will be reclassified as a development and production asset in intangible
assets after the carrying value has been assessed for impairment and, where
appropriate adjusted. If after completion of the appraisal of the area it is
not possible to determine technical and commercial feasibility or if the legal
rights have expired or if the Group decide to not continue activities in the
area, then the cost of unsuccessful exploration and evaluation are written off
to the income statement in the relevant period.
The Group's definition of commercial reserves for such purposes is proved and
probable reserves on an entitlement basis. Proved and probable reserves are
the estimated quantities of minerals which geological, geophysical and
engineering data demonstrate with a specified degree of certainty to be
recoverable in future years from the known reserves and which are considered
to be commercially producible.
Such reserves are considered commercially producible if management has the
intention of developing and producing them and such intention is based upon:
- a reasonable expectation that there is a
market for substantially all of the expected production;
- a reasonable assessment of the future
economics of such production;
- evidence that the necessary production,
transmission and transportation facilities are available or
can be made available; and
- agreement of appropriate funding; and
- the making of the final investment
decision.
On an annual basis a review for impairment indicators is performed. If an
indicator of impairment exists an impairment review is performed. The
recoverable amount is then considered to be the higher of the fair value less
costs of sale or its value in use. Any identified impairment is written off to
the income statement in the period identified.
Research and development
Research expenditure is recognised as an expense in the period in which it is
incurred.
An internally-generated asset arising from any development is recognised only
if all of the following conditions are met:
- an asset is created that can be
identified;
- it is probable that the asset created will
generate future economic benefits; and
- the development cost of the asset can be
measured reliably.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Significant accounting policies (continued)
Taxation
The tax expense represents the sum of the tax payable and deferred tax.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of assets and liabilities in the financial
statements and the corresponding tax base used in the calculation of the
taxable profit and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognised on all appropriate taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which the
deductible timing differences can be utilised. The carrying amount of deferred
tax assets is reviewed at each balance sheet date.
Deferred tax is calculated at the tax rates that are expected to be applicable
in the period when the liability or asset is realised and is based on tax laws
and rates substantially enacted at the balance sheet date. Deferred tax is
charged in the income statement except where it relates to items
charged/credited in other comprehensive income, in which case the tax is also
dealt with in other comprehensive income.
Leases
The Group assesses whether a contract is or contains a lease, at inception of
the contract. The Group recognises a right-of-use asset and a corresponding
lease liability with respect to all lease arrangements in which it is the
lessee, except for short-term leases (defined as leases with a lease term of
12 months or less) and leases of low value assets (such as tablets and
personal computers, small items of office furniture and telephones). For these
leases, the Group recognises the lease payments as an operating expense on a
straight-line basis over the term of the lease unless another systematic basis
is more representative of the time pattern in which economic benefits from the
leased assets are consumed. All of the Groups leases has a lease term of 12
months or less.
Property, plant and equipment
Tangible fixed assets are stated at cost less depreciation. Depreciation is
provided at rates calculated to write off the cost less the estimated residual
value of each asset over its expected useful life, as follows:
Plant and machinery
10% - 25% straight line basis or reducing balance basis
Foreign currencies
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purposes of the consolidated financial
statements, the results and financial position of each group company are
expressed in pounds sterling, which is the functional currency of the Company,
and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency are
recognised at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet 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 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 the income statement in the period in which they
arise.
When presenting the consolidated financial statements, the assets and
liabilities of the Group's foreign operations are translated at the exchange
rates prevailing at the balance sheet date. Income and expense items are
translated at average exchange rates for the period, unless exchange rates
have fluctuated significantly in which case the rates at the date of the
transactions are used. Exchange differences arising are recognised in other
comprehensive income and accumulated in equity (attributed to non-controlling
interests where appropriate).
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 using the closing rate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Significant accounting policies (continued)
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Other receivables
Other receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method except for short-term receivables when recognition of interest would be
immaterial. The Group recognises appropriate allowances for expected credit
losses in the income statement based on a historical credit loss experience,
adjusted for factors that are specific to the debtors and general economic
conditions.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of change in value.
Financial liability and equity
Interest bearing bank and other loans and bank overdrafts are recorded at the
proceeds received, net of direct issue costs. Finance charges, including
premiums payable on settlement or redemption and direct issue costs, are
accounted for on an accrual basis in the income statement using the effective
interest rate method and are added to the carrying amount of the instrument to
the extent that they are not settled in the period in which they arise.
The Group classifies financial instruments, or their component parts, on
initial recognition as a financial asset, financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Financial instruments are initially recognised at fair value and are
subsequently amortised using the effective interest method. Fair value is
estimated from available market data and reference to other instruments
considered to be substantially the same.
Trade and other payables
Trade payables and other financial liabilities are initially measured at fair
value, and are subsequently measured at amortised cost, using the effective
interest rate method.
The Group's activities expose it primarily to the financial risks of changes
in interest rates on borrowings and foreign exchange risk.
Investments
Investments in subsidiaries are stated at cost less any provision for
impairment.
Share-based payments
The Group issues equity-settled share-based payments to certain employees and
other parties. Equity settled share-based payments are measured at fair value
at the date of grant. In respect of employee related share based payments, the
fair value determined at the grant date is expensed on a straight-line basis
over the vesting period, based on the Group's estimate of shares that will
eventually vest. In respect of other share based payments, the fair value is
determined at the date of grant and recognised when the associated goods or
services are received.
Operating segments
The Group considers itself to have one operating segment in the year and
further information is provided in note 3.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.1 Significant accounting policies (continued)
Going concern
The Directors have, at the time of approving the financial statements, a
reasonable expectation that the Company and the Group has adequate resources
to continue in operating existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in preparing the
financial statements. Further details are provided in the note 2.2 and in the
Strategic Report on pages 4 to 5. The financial statements therefore do not
include the adjustments that would result if the Group and Company were unable
to continue as a going concern.
2.2 Critical accounting estimates and judgements
The Group makes estimates and assumptions regarding the future. Estimates and
judgements are continually evaluated based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may
differ from these estimates and assumptions. The estimates and assumptions
that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed
below.
Going concern
As at the date of approval of these Financial Statements the Company has now
commenced mining activities and the newly acquired smelter will shortly be
processing ore following refurbishment of the first of what will be three
operating furnaces. The majority of the capital expenditure for the entire
Rustenburg smelter project has now been spent, however there is still further
work to complete before the smelter is operating at planned full capacity in
mid-2023 and the Group will need to carefully balance its cashflow consumed in
operations against sales revenues received in order to complete this planned
work.
In particular, should a decision be made to invest in equipment necessary for
production of higher value iron powder products, the Group will need to secure
further funding of approximately £1.5 - 2.0 million. At present the Group has
no commitments or obligations to purchase this equipment.
First revenues for the Group's products are expected in early 2023 and these
revenues are expected to increase during 2023 as the smelter approaches full
capacity.
As at the date of approval of these financial statements the Company had not
received the agreed subscription proceeds from Grosvenor due to delays in
Grosvenor finalising its own facilities with lenders. The Company is in
regular contact with Grosvenor and has received reasonable assurances that it
has made good progress with a funding entity and will remit the subscription
funds as soon as possible.
Taking into account existing cash resources, and the assumed receipts of
funding detailed above the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future, being twelve months from the date of the approval of the
financial statements. For this reason, the Board continues to adopt the going
concern basis in the preparation of these financial statements.
Should the agreed subscription proceeds be further delayed the Company will
seek alternative funding arrangements and those arrangements are not yet
committed. This represents a material uncertainty in relation to the Company's
funding arrangements.
Exploration and evaluation assets
The Group has adopted a policy of capitalising the costs of exploration and
evaluation and carrying the amount without impairment assessment until
impairment indicators exist (as permitted by IFRS 6). The directors consider
that as at the Period end the Group remained in the exploration and evaluation
phase and therefore, under IFRS 6, the directors have to make judgements as to
whether any indicators of impairment exist and the future activities of the
Group. No such indicators of impairment were identified and therefore, in
accordance with IFRS 6, no impairment review has been carried out. The
Directors remain committed to development of the asset.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.2 Critical accounting estimates and judgements (continued)
Investment impairment indicators
The Company balance sheet includes an investment in subsidiary companies of
£26,017,000 which is underpinned and reflects the underlying subsidiary
exploration and evaluation assets discussed above. As no indicators of
impairment have been identified in the exploration and evaluation asset then
subsequently no indicators or impairment in the investment in subsidiary have
been identified and as is consistent with the exploration and evaluation
assets, no impairment review has been carried out in the period.
Deferred tax assets
The directors must judge whether the future profitability of the Group is
likely in making the decision whether or not to recognise a deferred tax asset
in respect of taxation losses. No deferred tax assets have been recognised in
the year.
3. Business and geographical segments
Information reported to the Group Directors for the purposes of resource
allocation and assessment of segment performance is focused on the activity of
each segment and its geographical location. The directors consider that there
is only one business segment, which is the activity of prospecting,
exploration and mining based in South Africa.
4. Operating
loss
2022 2021
Operating loss for the year is shown after
charging:
£000 £000
Depreciation on tangible
assets
1 2
Short term payments under
leases
14 26
Share based payment
charge
- 29
Foreign exchange
gain
(2) (54)
( )
Auditors' remuneration
Fees payable to the auditors for the audit of the Company's
accounts
38 35
( )
5. Staff costs
Group
2022 2021
£000 £000
Wages and
salaries
377 355
Social security
costs
22 34
Pension
costs
14 14
Share based
payments
- 29
Directors other
fees
74 169
(
)
487 601
(
)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
5. Staff costs (continued)
The average monthly number of employees, including Directors,
during
2022 2021
the period was as follows:
Number Number
Administration and
management
12 11
( )
2022 2021
£000
£000
Directors remuneration and other fees
339 434
Pension
14
14
Share based payments
- 29
( )
( )
353
477
(
)
2022 2021
£000
£000
The aggregate remuneration and fees paid to the highest paid Director was
175 175
Pension
14
14
Share based payments
- 29
( )
( )
( )
189
218
( )
( )
Further details of the Directors' remuneration are given in the Directors'
Remuneration Report on page 11.
Company
2022 2021
£000 £000
Wages and salaries - directors
265 265
Social security
costs
21 33
Share based payments
- 28
Pension costs
14 14
(
)
300 340
(
)
The average monthly number of employees, including Directors, during
2022 2021
the period was as
follows:
Number Number
Directors
4 4
( )
( )
6. Other gains and losses
2022 2021
£000 £000
Gain on settlement of financial liabilities with equity
-
335
Fair value loss on derivative instruments
- (12)
-
323
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. Investment revenues
2022 2021
£000 £000
Interest on financial
deposits
4 3
( )
( )
8. Finance costs
2022 2021
£000 £000
Loan interest and similar charges
17 8( )
( )
9. Tax
2022 2021
a) Tax charge for the period
£000 £000
Corporation tax:
Current
period
- -
Deferred tax (note
18)
- -
(
)
- -
( )
b) Factors affecting the tax charge for the period
Loss on ordinary activities for the period before taxation
(811)
(465)
(
) Loss on ordinary activities for the period before taxation multiplied by
effective rate of corporation tax in the UK of 19% (2021 - 19%)
(154)
(88)
Effects of:
Expenses not deductible for tax purposes
5
-
Tax losses not
recognised
149 88
(
) Tax expense for the period
- -
( )
c) Factors that may affect future tax charges - The Group has estimated
unutilised tax losses amounting to £5,148,658 (2021 - £4,455,087) the values
of which are not recognised in the balance sheet. The losses represent a
potential deferred taxation asset of £1,287,000 (2021 - £847,000) based on
the enacted future tax rate of 25%, which would be recoverable should the
Group make sufficient suitable taxable profits in the future.
In addition, the Group has pooled exploration costs incurred of £8,901,000
(2021 - £8,578,000) which are expected to be deductible against future
trading profits of the Group.
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. Loss per share (continued)
2022 2021
£000 £000
Loss attributable to the owners of the Company
(811)
(465) ( )
Loss per share - Basic and diluted
Continuing
operations
(0.06p) (0.05p)
( )
( )
The calculation of basic earnings per share is based on 1,322,831,729 (2021 -
1,008,492,369) ordinary shares, being the weighted average number of ordinary
shares in issue during the year. Where the Group reports a loss for the
current period, then in accordance with IAS 33, the share options are not
considered dilutive. Details of such instruments which could potentially
dilute basic earnings per share in the future are included in note 20.
11. Loss attributable to owners of the parent Company
As permitted by Section 408 of the Companies Act 2006, the profit and loss
account of the parent Company is not presented as part of these accounts. The
parent Company's loss for the financial year amounted to £693,000 (2021 -
£815,000).
12. Intangible assets
Exploration
and
evaluation
assets
£000
Group
Cost:
At 1 July 2020
23,574
Additions
492
Exchange differences
2,125
(
) At 30 June 2021
26,191
( )
Additions
396
Exchange differences
(237)
(
) At 30 June 2022
26,350 (
) Impairment and amortisation:
At 1 July 2020, 30 June 2021 and at 30 June 2022
- (
)
Net book value at 30 June 2022
26,350(
)
Net book value at 30 June 2021
26,191
(
)
The Group's exploration and evaluation assets all relate to South Africa.
In respect of the exploration and evaluation assets which remain in the
appraisal phase, the Group has performed a review for impairment indicators,
as required by IFRS 6 and in the absence of such indicators no impairment
review was carried out.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
13. Property, plant and
equipment
Plant and
machinery
Group
£000
Cost:
At 1 July 2021
39
Additions
1
(
) At 30 June 2022
40(
) Depreciation:
At 1 July 2021
37
Charge for the period
1
(
) At 30 June 2022
38(
) Net book value at 30 June 2022
2( )
( )
Net book value at 30 June 2021
2
Plant and machinery
£000
Cost:
At 1 July 2020
34
Additions
1
Exchange differences
4
(
) At 30 June 2021
39 (
) Depreciation:
At 1 July 2020
32
Charge for the period
2
Exchange differences
3
(
) At 30 June 2021
37(
) Net book value at 30 June
2021
2( )
( )
Net book value at 30 June
2020
2
All non-current assets in 2022, 2021 and 2020 were located in South Africa.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Investments
Group - Loans to other entities
2022 2021
£000 £000
Cost:
At 1
July
355 326
Exchange differences
(3) 29
( )
At 30
June
352 355
( )
Impairment:
At 1 July
355 326
Exchange differences
(3) 29
( )
At 30
June
352 355
( )
Book value at 30
June
- -
( )
The investment represented the Rand 7million refundable deposit to Siyanda
Smelting and Refining Proprietary Limited which the Group paid in exchange for
a period of exclusivity to conclude a potential acquisition of the company.
The period of exclusivity expired in 2017. The deposit is interest free and
becomes refundable should the acquisition not proceed. The investment was
fully impaired as at 30 June 2022 whilst the directors pursued other
alternative opportunities.
Company - Subsidiary undertakings
Loans Equity Total
£000
£000 £000
Cost:
At 1 July
2020
4,320 20,334 24,654
Additions
848
- 848(
)
At 30 June 2021
5,168
20,334 25,502
( )
Additions
515
- 515
( )
At 30 June
2022
5,683 20,334 26,017
( )
Net book value at 30 June
2022
5,683 20,334 26,017
( )
( )
Net book value at 30 June
2021
5,168 20,334 25,502
( )
( )
The loans represent loans to Ironveld Holdings (Propriety) Limited of
£5,525,000 (2021 - £5,031,000) which incur interest at a rate not exceeding
the base lending rate applicable in England and Wales. Under the initial terms
of the loan, £2,500,000 is repayable 31 December 2019 with the remainder due
31 December 2020 however further agreement has extended the loan period until
project finance is agreed. Also included in loans are working capital loans to
Ironveld Mauritius Limited of £158,000 (2021 - £137,000) which are interest
free.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
14. Investments (continued)
The Company has investments in the following subsidiaries. To avoid a
statement of excessive length, details of the investments which are not
significant have been omitted:
Proportion of Nature
of
Name of
company
Shares voting
rights business
and shares held
Subsidiary undertakings
Ironveld (Mauritius)
Ordinary
*100% Holding
Company
Ironveld Holdings (Proprietary) Limited
Ordinary
100% Holding
Company
Ironveld Mining (Proprietary) Limited
Ordinary
100% Mining and exploration
Ironveld Middelburg (Proprietary) Limited
Ordinary 100%
Ore processing and smelting
Ironveld Smelting (Proprietary) Limited
Ordinary 74%
Ore processing and smelting
HW Iron (Proprietary) Limited
Ordinary
68% Prospecting and mining
Lapon Mining (Proprietary) Limited
Ordinary
74% Prospecting and mining
Luge Prospecting and
Mining (Proprietary) Limited
Ordinary
74% Prospecting and mining
* Held directly by Ironveld Plc all other holdings are indirect.
All subsidiary undertakings are incorporated and domiciled in South Africa,
other than Ironveld Mauritius Limited, which is incorporated and domiciled in
Mauritius.
The registered office of all subsidiaries with the exception of Ironveld
(Mauritius) was Gartner House, 33 Wessel Road, Rivonia 2128, South Africa.
The registered office of Ironveld (Mauritius) is - C/o Rogers Capital
Corporate Services Limited, 3(rd) Floor, Rogers House, No. 5 President John
Kennedy Street, Port Louis, Republic of Mauritius.
Further details of non-wholly owned subsidiaries of the Group are provided in
note 25.
15. Trade and other
receivables
Group
Company
2022 2021
2022 2021
£000 £000
£000 £000
Other
receivables
134
128
2 -
Amounts owed by related
parties
3
3
- 4
Prepayments
64
49 58 45
201
180 60 49
Due within 12 months
(198) (177)
(60) (49)
(
) Due after more than 12
months
3
3
- -
Amounts owed by related parties represent expenses paid on behalf of the
non-controlling interest shareholders by the company and are expected to be
recovered in more than 12 months. The amounts are unsecured and interest free.
Credit risk
The Group's principal financial assets are bank balances, cash balances, and
other receivables. The Group's credit risk is primarily attributable to its
other receivables of which £107,000 (2021 - £105,000) is due from a third
party financial institution and further information is provided in note 19.
The remaining receivable relates to recoverable VAT. The amounts presented in
the balance sheet are net of allowances for doubtful receivables.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. Trade and other
payables
Group
Company
2022 2021
2022 2021
£000 £000
£000 £000
Trade
payables
132 25
132 25
Taxation and social security
costs
4
5 3
5
Other
payables
5
5 5
5
Accruals
478
237 466 229
619 272
606 264
Due within 12 months
(619) (272)
(606) (264)
(
) Due after more than 12
months
-
-
- -
( )
17. Borrowings
Group
Company
2022 2021
2022 2021
£000 £000
£000 £000
Other
loans
499
- 499 -
( )
( )
Due within 12
months
499
- 499 -
(
) Due after more than 12
months
-
-
- -
Further details on loans is provided in note 19.
18. Deferred tax
Group
2022 2021
£000 £000
Balance at 1
July
4,774 4,384
Exchange
differences
(44) 390
( )
Balance at 30
June
4,730 4,774
(
)
The Group has unrelieved tax losses carried forward which represent a deferred
tax asset of £1,287,000 (2021 - £847,000) based on current tax rates. This
asset is not recognised in these financial statements.
The deferred tax liability is made up as follows:
Group
2022 2021
£000 £000
Fair value
adjustments
4,730 4,774
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Financial instruments
The Group's policies as regards derivatives and financial instruments are set
out in the accounting policies in note 2. The Group does not trade in
financial instruments.
Capital risk management
The Group manages its capital to ensure that they will be able to continue as
a going concern whilst maximising the return to stakeholders through the
optimisation of the debt and equity balance. The Group's overall strategy
remains unchanged from 2021.
The capital structure of the Group consist of equity attributable to equity
holders of the parent Company.
The Group is not subject to any externally imposed capital requirements.
Interest rate risk profile
The Group is exposed to interest rate risk because the Group borrows funds for
working capital at fixed and variable rates. The Group exposure to interest
rates on financial assets and liabilities are detailed in the liquidity risk
management section of this note.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Company. The Group
has adopted a policy of only dealing with creditworthy counterparties as a
means of mitigating the risk of financial loss from defaults. The Group's
exposure and the credit ratings of its counterparties are continuously
monitored and the aggregate value of the transactions concluded is spread
where possible.
Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of
Directors, which has established an appropriate liquidity risk management
framework for the management of the Group's short, medium and long term
funding and liquidity management requirements. The Group manages liquidity
risk by assessing required reserves and banking facilities by continuously
monitoring forecast and actual cash flows, and by matching the maturity
profiles of financial assets and liabilities. Details of additional undrawn
bank facilities that the Group has at its disposal to manage liquidity are set
out below.
Financial facilities
The Group did not have any secured bank loan or overdraft facilities during
the current or comparative period.
Financial assets
The Group has no financial assets, other than short-term receivables and cash
deposits of £17,000 (2021 - £270,000). The cash deposits attract variable
rates of interest. At the year end the effective rate was 0.35% (2021 -
0.08%). The cash deposits held were as follows:-
2022 2021
£000 £000
Sterling - United Kingdom
banks
12 251
USD - United Kingdom banks
- 3
USD - Mauritius banks
1 3
South African Rand - United Kingdom
banks
- 1
South African Rand - South African
banks
4 12
( )
17 270
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
19. Financial instruments (continued)
Financial liabilities
Other loans
Other loans represents the Group's interest bearing financial liabilities. The
others loans are due to a consortium
of high net worth investors and existing shareholders with whom facilities of
£500,000 were agreed. The loans mature 6 months after draw down and attract a
fixed interest rate of between 7% and 8% per annum. The loan agreements
required share warrants over 13,000,000 shares with a subscription price of 1p
per share to the certain lenders, adjustable to the placing price (if lower)
for any placing undertaken during the loan term. These warrants have a three
year life and the lenders may use the outstanding balances under the loan
facilities to exercise the warrants.
At 30 June 2022, the Group had undrawn loan facilities of £1,500.
Currency exposures
The Group undertakes transactions denominated in foreign currencies and is
consequently exposed to fluctuations in exchange rates. The carrying amounts
of the Group's foreign currency denominated monetary assets and monetary
liabilities were as follows:-
As at 30 June
2022
Assets Liabilities
£000 £000
British Pound Sterling
(£)
12 1,102
USD ($)
1 10
South African Rand
(R)
119 2
132
1,114
As at 30 June
2021
Assets Liabilities
£000 £000
British Pound Sterling
(£)
251 265
USD ($)
6 8
South African Rand
(R)
124 2
381
275
Financial commitments and guarantee
Rehabilitation guarantees of £2,012,000 (R 40,043,396) have been issued to
the Department of Mineral Resources for three subsidiaries, HW Iron
Proprietary Limited, Lapon Mining Proprietary Limited and Luge Prospecting and
Mining Company Proprietary Limited in order to comply with Section 41 of the
Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002). Under
this agreement the Group will pay deposits to a third-party financial
institution to be held pending discharge of any potential claim on this
guarantee. At 30 June 2022 £107,000 (R 2,123,000) (2021 - £105,000 (R
2,068,000)) had been deposited in respect of this agreement and is included in
other receivables. This receivable represents a concentration of credit risk
and the Group is exposed to currency risk on these amounts. As the project had
not yet commenced then no liability is considered to have arisen under this
guarantee at the reporting date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20. Share capital
Group and Company
2022 2021
£000 £000
Allotted, called up and fully paid
1,333,668,130 (2021 - 1,316,440,372) Ordinary shares of 0.1p each
1,333 1,316
322,447,158 (2021 - 322,447,158) deferred shares of 1p each
3,224 3,224
5,894,917,569 (2021 - 5,894,917,569) deferred shares of 0.1p each
5,896 5,896
( )
10,453 10,436
On 9 February 2022, a further 10,351,405 shares were issued and admitted to
trading in exchange for professional services. Further, on 23 February 2022, a
further 6,876,353 shares were issued and admitted to trading to settle in
exchange for professional services.
Unlike ordinary shares, the deferred shares have no voting rights, no dividend
rights and on a return of capital or winding up are entitled to a return of
amounts credited as paid. The deferred shares are not transferrable and
beneficial interests in the deferred shares can be transferred to such persons
as the Directors may determine as custodian for no consideration without
sanction of the holder. For this reason the deferred shares are excluded from
any Earnings per share calculations.
Further information on the issue of shares after the period end is provided in
note 27.
Share options
The Company has a share option scheme for certain employees and former
employees of the Group. The share options in issue during the year were as
follows:
As at
As at
Date
Exercise 1 July
Granted Exercised Lapsed/
30 June
granted
price 2021
in year in year
Cancelled 2022
No. No.
No. No. No.
16 August 2012
1p 4,283,682
-
- - 4,283,682
14 November 2012 1p
6,663,505
-
- - 6,663,505
16 April 2013
1p
33,334
-
- - 33,334
7 November 2013 1p
2,086,667
-
- - 2,086,667
1 May 2014
1p
200,000
-
- - 200,000(
) 1 October 2015
1p
2,500,000
-
- - 2,500,000
10 January 2020 1p 27,400,000
- -
- 27,400,000
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
20. Share capital (continued)
At the year-end, 42,167,188 options were exercisable (2021 - 42,167,188) as
follows.
As at
As at
Date
Exercise 30 June
Granted Exercised Lapsed/
30 June
granted
price 2021
in year in year
Cancelled 2022
No. No.
No. No. No.
16 August 2012
1p 4,283,682
-
- - 4,283,682
14 November 2012 1p
6,663,505
-
- - 6,663,505
16 April 2013
1p
33,334
-
- - 33,334
7 November 2013 1p
2,086,667
-
- - 2,086,667
1 May 2014
1p
200,000
-
- - 200,000(
) 1 October 2015
1p
1,500,000
-
- - 1,500,000
10 January 2020 1p 27,400,000
- -
- 27,400,000
( )
The exercise period of the options is as follows:
Date
granted Expiry date
Exercise period
16 August 2012 16 August 2022
14 November 2012 14 November 2022 The options are
exercisable 1/3 on the first anniversary
16 April 2013 16 April
2023 of grant, 1/3 on the second anniversary of
grant and the
7 November 2013 7 November 2023 final 1/3 on the third
anniversary of grant
1 May 2014 1 May 2024
1 October 2015 1 October 2025
27 January 2016 27 January 2026
10 January 2020 9 January 2030 ½ on grant and
the remaining ½ one year after the grant date.
Of the options granted on 1 October 2015, 1,000,000 are exercisable following
first commercial production from the proposed 15 MW smelter.
The Group recognised a share based payment expense of £nil (2021 - £29,000)
in the year. No options were exercised in the year.
Share warrants
Pursuant to the share placing on 14 December 2020 Turner Pope were appointed
as joint broker to the Placing and in addition to 3,333,333 ordinary shares
were issued with 95,833,333 broker warrants, exercisable at 0.3p (the placing
price) for a period of 36 months from the date of admission. The broker
warrants were transferrable and on 4 March 2021 17,500,000 warrants were
exercised for £52,500. At the year-end, there were 78,333,333 broker warrants
in issue.
Pursuant to the loan facilities agreement, dated 19 May 2022, the Company
issued share warrants to the lenders over 13,000,000 shares at 1 pence per
share. The warrants had a 3 years life and the lender was able to use the
outstanding balances under the loan facilities to exercise the warrants. The
loans were repaid after the year end and at the year-end and in accordance
with the agreement, the price was adjusted downwards to the subsequent placing
price of 0.3p per share. At the year end, there were 13,000,000 lender
warrants in issue.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. Reserves
(
) Group and Company
Other reserves represent the equity component of share options and share
warrants issued in the year.
The balance classified as share premium is the premium on the issue of the
Group's equity share capital, less any costs of issuing the shares.
The foreign currency translation reserve accumulates the foreign currency
gains and losses on the translation of foreign operations.
Retained earnings is made up of cumulative profits and losses to date, share
based payments, adjustments arising from changes in non-controlling interests
and exchange differences on translation of foreign operations.
22. Cash generated from operations
Group
2022
2021
£000
£000
Operating loss
(798) (783)
Depreciation on property, plant and
equipment
1 2
Share based payment charge
100 90
Foreign exchange
- (54)
(
) Operating cash flows before movements in working
capital
(697) (745)
Movement in receivables
(8) (59)
Movement in payables
368 162( )
Net cash used in
operations
(337) (642)
( )
(
) Cash and cash
equivalents
2022 2021
£000 £000
Cash and bank
balances
17 270
( )
Company
2022 2021
£000
£000
Operating
loss
(696) (745)
Share based payment
charge
100 90
Foreign exchange
adjustments
- (5)
Operating cash flows before movements in working capital
(596)
(660)
Movement in
receivables
(1) 17
Movement in
payables
367 136
Net cash used in operations
(230) (507)
( )
Cash and cash equivalents
2022 2021
£000 £000
Cash and bank
balances
12 255
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
23. Significant non-cash transactions
The company settled liabilities and paid for services by the issue of shares.
The value of the shares issued was as follows:-
2022 2021
£000 £000
Loan
repayments
- 785,211
Accrued directors
fees
- 229,569
Services
provided
135,000 97,000
24. Related party transactions
Group
During the year the Group incurred £74,000 (2021 - £101,000) for consultancy
services to Goldline Global Consulting (Pty) Limited, a company in which P Cox
is materially interested. At 30 June 2022, £Nil (2021 - £Nil) remained
unpaid in accruals.
Group and Company
The key management personnel of the Group are the directors. Directors'
remuneration is disclosed in Note 5.
During the year the Company paid £48,000 (2021 - £48,000) for accounting
services to Westleigh Investments Limited, a company in which G Clarke and N
Harrison are materially interested.
Included in other loans at 30 June 2022 was a short term loan due to G Clarke
of £100,000 and accrued interest of £2,827. The loan attracted interest at
7% per annum and a loan arrangement fee of 2.5% of the facility amount.
Included in other loans at 30 June 2022 was a short term loan due to N
Harrison of £100,000 and accrued interest of £2,827. The loan attracted
interest at 7% per annum and a loan arrangement fee of 2.5% of the facility
amount.
Included in other loans at 30 June 2022 was a short term loan due to M Eales
of £38,500 and accrued interest of £667. The loan attracted interest at 7%
per annum and a loan arrangement fee of 2.5% of the facility amount.
Further directors' remuneration of £344,936 (2021 - £151,804) was unpaid at
the year-end along with £Nil (2021 - £7,536) pension cost and is included in
accruals. During the year £nil (2021 - £90,000) of director's fees were
settled by the issue of shares.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
25. Financial commitments
At the year end the Group had no financial commitments under operating leases
(2021 - £Nil).
On 24 May 2022, the Group announced that it had signed Heads of Terms to
acquired 100% of the share capital of Ferrochrome Furnaces (Pty) Limited
("FCF") which will provide the Group with an existing smelting facility and
the opportunity to commence mining and processing in the short term. The share
capital was to be acquired for a nominal fee but debt was to be acquired of
R115m (approximately £5.75m) repayable over a 10 year period. At the year end
the acquisition remained subject to contract. The Group had indicated plans to
refurbish the smelter costing between R40m to R65m (£2m to £3.2m).
26. Non-controlling interest
2022 2021
£000 £000
(
) At 1
July
3,380 3,109
Exchange adjustments
(31) 276
Share of loss for the period
(5) (5)
At 30 June
3,344 3,380
The table below shows details of non-wholly owned subsidiaries of the Group
that have material non-controlling interests:
Profit/ (loss)
Proportion of allocated to
Accumulated
voting rights
non-controlling non-controlling
and shares held
interests
interests
2022 (2021) 2022
2021 2022
2021
£000 £000
£000 £000
HW Iron (Proprietary) Limited (32%) (32%)
- (3) 1,067
1,077
Lapon Mining (Proprietary) Limited (26%) (26%) -
(1) 2,291
2,313
Other non-controlling interests
(5) (1)
(14) (10)
(
)
(5) (5)
3,344 3,380
(
)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. Non-controlling interest (continued)
Summarised financial information in respect of each of the Group's
subsidiaries that have material non-controlling interests is set out below.
The summarised financial information below represents amounts before
intragroup eliminations. The accounts of the subsidiaries have been translated
from their presentational currency of South African Rand (R) using the R: GBP
exchange rate prevailing at 30 June 2022 of 19.896 (2021 - 19.711).
HW Iron (Proprietary) Limited
2022 2021
£000 £000
Non-current assets
6,913 6,765
Current
assets
- 3
Current
liabilities
- -
Non-current liabilities
(3,579) (3,402)
3,334 3,366
Equity attributable to owners of the
Company
2,267 2,289
Non-controlling
interest
1,067 1,077
( )
Revenue
- -
Expenses
(1) (10)
Loss for the
year
(1) (10)
Attributable to the owners of the Company
(1)
(7)
Attributable to the non-controlling interests
- (3)
( )
Net cash inflow from operating
activities
2 -
Net cash outflow from investing
activities
(99) (13)
Net cash inflow from financing
activities
97 13
Net cash inflow
- -
Net cash flow - Attributable to the non-controlling interests
-
-
( )
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26. Non-controlling interest (continued)
Lapon Mining (Proprietary) Limited
(
)
2022 2021
£000 £000
Non-current assets
14,158 14,093
Current
assets
- 4
Current
liabilities
- -
Non-current liabilities
(5,347) (5,202)
8,811
8,895
Equity attributable to owners of the
Company
6,520 6,582
Non-controlling
interest
2,291 2,313
( )
Revenue
- -
Expenses
(1) (2)
Loss for the
year
(1) (2)
Attributable to the owners of the Company
(1)
(1)
Attributable to the non-controlling interests
- (1)
( )
Net cash inflow from operating
activities
3 (6)
Net cash outflow from investing activities
(85)
(10)
Net cash inflow from financing
activities
82 13
Net cash flow
- (3)
Net cash flow - Attributable to the non-controlling interests
-
(1)
( )
27. Events arising after the reporting period
On 15 July 2022, the Company announced an equity fund raising of £4m
representing a placing of 1,333,333,333 ordinary shares at a price of 0.3
pence. In addition a Broker option raised an additional £0.5m by the issue of
166,666,666 shares at the placing price of 0.3 pence. Net of expenses, the
shares issues raised approximately £4.2m. Under the fee arrangements with the
broker (Turner Pope), the Company issued Broker Warrants to subscribe for
375,000,000 ordinary shares at the placing price for a period of 36 months
from Admission. The share proceeds were raised to allow the acquisition and
refurbishment of the smelter referred to in note 26.
Along with the placing, a further 59,460,725 ordinary shares were issued to
Giles Clarke, Nick Harrison and Martin Eales in lieu of loans, deferred salary
and deferred fees.
On 11 August 2022 the Group announced that contractors had commenced work on
the refurbishment of the FCF smelter site whilst contract negotiations
progressed. The Share purchase agreement to acquire 100% of the share capital
of FCF for approximately £50 was subsequently signed on 31 August 2022 and
the Debt Purchase Agreement was signed 1 November 2022.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
27. Control
The Directors consider that there is no overall controlling party.
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