REG - Kefi Gold and Copper - Interim Results

KEFI Gold and CopperAnnouncement

22/09/2020 07:01

RNS Number : 6464Z
  
Kefi Gold and Copper PLC
  
22 September 2020
  
 

22 September 2020
 
KEFI Gold and Copper plc
 
("KEFI" or the "Company")
 
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2020
 
KEFI Gold and Copper plc (AIM: KEFI), the gold exploration and development company with projects in the Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, is pleased to announce its unaudited interim results for the six months ended 30 June 2020.
 
The statement below encompasses the activities of the Company's subsidiary, KEFI Minerals (Ethiopia) Limited ("KME"), in Ethiopia, and KEFI's joint venture, Gold & Minerals Limited ("G&M"), in the Kingdom of Saudi Arabia.
 
Overview
 
The current climate of increased gold and copper prices means that the project economics for the Company's Tulu Kapi gold project in Ethiopia ("Tulu Kapi" or the "Project") have become even more attractive, as have the potential values of our discoveries in Saudi Arabia, with maiden resources now reported mainly for copper/gold at Hawiah, as well as for zinc/silver and also for gold at Jibal Qutman. 
 
The Company has continued to advance its projects in the highly prospective Arabian Nubian Shield notwithstanding the logistical restrictions imposed to protect personnel and the wider community due to COVID-19.
 
As reported post period end in July 2020 Tulu Kapi project company Tulu Kapi Gold Mines Share Company ("TKGM") is in detailed discussions with specialist mining financiers to complete the Project finance consortium alongside the mandated senior bank lenders to the Project. TKGM is working closely with all these parties to refine the detailed terms and to complete their reviews of the recently completed independent technical expert reports. The focus remains on continuing offsite development activities, the closing of the full Project funding package in October 2020, resettlement  commencing in Q4 2020, site construction in early 2021 and for gold production to commence in 2022, in line with recent guidance.
 
It is notable that both Ethiopia and Saudi Arabia have prioritised development of the mining sector and both countries are implementing reforms to further develop and open up their economies. 
 
The company continues to receive the support of its shareholders and welcomes to its investor base RAB Capital who now hold 12% of the issued capital of the Company and have Board representation. 
 
Tulu Kapi Gold Project, Ethiopia
 
As previously reported, despite COVID-19, the implementation of the Project development activities during the first half has continued as planned: 
·      Infrastructure for connection of roads & power and security upgrade: This long-lead activity is on schedule, so that it does not hold up on-site construction over the next two years when new roads and electricity will be required;
·      A road now has been built into new host lands for Tulu Kapi residents to be resettled; 
·      Security has been significantly expanded in the Mine License Area and surrounding district; and 
·      Infrastructure for ore processing: Process plant Front-End-Engineering-and-Design was completed by principal contractors Lycopodium Limited, after updating pricing from the plant fabricators and integrating the results of recent geotechnical drilling into final designs of foundations for plant and dams.
 
Gold & Minerals Limited Joint Venture (G&M), Saudi Arabia
 
As announced post period end on 19 August 2020, a maiden resource at Hawiah has been delineated: 
·      Maiden Hawiah Inferred Mineral Resource Estimate ("MRE") of 19.3 million tonnes ("Mt") at 0.9% copper, 0.8% zinc, 0.6 g/t gold and 10.3g/t silver; 
·      Mineralisation remains open at depth; and
·      High grade zones outside of current Mineral Resource, expected to be targeted in next drilling phase.
 
The Hawiah Internal Preliminary Economic Assessment ("PEA") has also been announced today.
 
KEFI welcomed the approval by the Saudi Arabian Cabinet in June 2020 of a new Mining Investment Law which is aimed at boosting the country's mining industry and is part of Saudi Arabia's plan to diversify its economy away from hydrocarbons. The Company also welcomes the expanded role of the Saudi Investment Development Fund specifically to support mining project finance, which may be pertinent to the Hawiah Project once prepared for development. 
 
This new regulatory impetus is expected to also help clarify the path forward to unlock value from KEFI's Saudi gold discovery at Jibal Qutman, which has been on hold awaiting Mining Licence tenure confirmation. An Internal Preliminary Economic Assessment in 2015 suggesting estimated operating costs of c. US$600/oz and estimated capital expenditure of US$30 million demonstrates that Jibal Qutman's Mineral Resources, totalling 733,000 ounces of near-surface gold, should be highly profitable in the current gold price environment.
 
Financial
 
During the period the Company raised gross proceeds of £5.6 million through two placings. The placing completed on 6 January 2020 raised gross proceeds of £1.9 million to reduce creditors and the placing completed on 28 May 2020 provided additional funding to the Company of £3.7 million (gross) to continue the Tulu Kapi preparations, notwithstanding the challenges created by COVID-19.
 
In order to reduce short term expenditure whilst project preparations continued, KEFI initiated a number of changes during the period: 
·      adjusting parts of the TKGM budget, whilst preserving key business targets;
·      ongoing salary reductions by senior management of 25% pending progress reviews; and
·      one-time dilution of Saudi joint-venture interest from 40% to 34% by not contributing pro rata share of expenses to G&M in the two years to 30 June 2020. It should be noted that KEFI expects to fund its pro rata share going forward.
The Company continues to consider a range of financing options to provide and maintain appropriate levels of working capital and funding for the long term development of the Tulu Kapi Gold project and the advancement of the Saudi initiatives.(see also "Note 2" to the financial statements)
 
Corporate - post period end
·    Mr Adam Taylor was appointed as a Non-executive Director on 20 July 2020 following the investment by international investment company RAB Capital, a specialist in the mining sector. RAB Capital's welcome involvement is viewed as a long-term participation and they now hold approximately 12% of KEFI's issued share capital. 
·      On 18 August 2020 the company changed its name to KEFI Gold and Copper plc to better characterise and communicate its objectives and activities, reflecting its now established significant position in gold and copper. 
 
Commenting, Mr Harry Anagnostaras-Adams, Executive Chairman of KEFI said, "During the first half and subsequently, the Company has continued to advance and is now extremely well positioned. The value-enhancing milestones ahead bode well for the Company's prospects and we seem fortunate that this coincides with a rising gold and copper prices in particular and aggressively pro-development Government initiatives in our host countries, Ethiopia and Saudi Arabia. The remainder of 2020 is expected to be a very exciting period for the Company and we look forward to providing regular updates as matters progress." 
 
 




Investor Webinar
 




·  The Company will host its live quarterly webinar at 2pm London time on Monday 26 October 2020 which will be accessed via: www.brrmedia.co.uk




·   Listeners are encouraged to submit questions by emailing: questions@brrmedia.co.uk. The webinar will subsequently be available on the Company's website at http://www.kefi-minerals.com/news/webcasts.
 




 
Market Abuse Regulation (MAR) Disclosure
 
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
 
Enquiries
 




KEFI Gold and Copper plc


 




Harry Anagnostaras-Adams (Executive Chairman)


+357 99457843




John Leach (Finance Director)


+357 99208130




 


 




SP Angel Corporate Finance LLP (Nominated Adviser and Joint Broker)


+44 20 3470 0470




Jeff Keating, Soltan Tagiev


 




 


 




Brandon Hill Capital Ltd (Joint Broker)


+44 20 7936 5200




Oliver Stansfield, Jonathan Evans


 




 


 




IFC Advisory Ltd (Financial PR and IR)


+44 20 3934 6630




Tim Metcalfe, Florence Chandler 


 




 




 




 
 
 
Condensed interim consolidated statements of comprehensive income 
(unaudited) (All amounts in GBP thousands unless otherwise stated)
 
 




 
 


 
 
 
 
Notes


 


Six months ended               30 June 2020
Unaudited


 


Six months ended               30 June 2019
Unaudited




 


 


 


 


 


 




Revenue


 


 


-


 


-




Exploration expenses


 


 


(18)


 


(21)




Gross loss


 


 


(18)


 


(21)




Administration expenses


 


 


(1,580)


 


(1,066)




Share-based payments


 


 


(76)


 


(73)




Share of loss from jointly controlled entity


 


 


(587)


 


(186)




Gain from dilution of equity interest in joint venture


11


 


1,037


 


-




Operating loss


 


 


(1,224)


 


(1,346)




Foreign exchange loss


 


 


362


 


(4)




Finance expense


 


 


(192)


 


(345)




Loss before tax


 


 


(1,054)


 


(1,695)




Tax


 


 


-


 


-




Loss for the period


 


 


(1,054)


 


(1,695)




 


 


 


 


 


 




 


 


 


 


 


 




 


 


 


 


 


 




Loss for the period


 


 


(1,054)


 


(1,695)




Other comprehensive loss:


 


 


 


 


 




Exchange differences on translating foreign operations


 


 


(-)


 


(7)




Total comprehensive loss for the period


 


 


(1,054)


 


(1,702)




 


 


 


 


 


 




 




Basic loss per share (pence)


4


         (0.08)


 


       (0.27)




Basic diluted loss per share (pence)


4


         (0.07)


 


        (0.26)




 
 
The notes are an integral part of these unaudited condensed interim consolidated financial statements.
 
 
 
 
 
Condensed interim consolidated statements of financial position 
(unaudited) (All amounts in GBP thousands unless otherwise stated)
 
 
 




 


 
Notes


 


Unaudited
30 June 2020


 


Audited
31 Dec 2019




ASSETS


 


 


 


 


 




Non-current assets


 


 


 


 


 




Property, plant and equipment


 


 


41


 


39




Intangible assets


6


 


22,978


 


21,200




Investments in JV


 


 


-


 


-




Receivables


 


 


-


 


-




 


 


 


23,019


 


21,239




Current assets


 


 


 


 


 




Financial assets at fair value through OCI


 


 


67


 


70




Trade and other receivables


5


 


310


 


1,234




Deferred financing expenses


 


 


-


 


-




Cash and cash equivalents


 


 


2,135


 


150




 


 


 


2,512


 


1,454




 


 


 


 


 


 




Total assets


 


 


25,531


 


22,693




 


 


 


 


 


 




EQUITY AND LIABILITIES


 


 


 


 


 




Issued capital and reserves attributable to owners of the parent


 


 


 


 


 




Share capital 


7


 


1,868


 


1,149




Deferred Shares


7


 


23,328


 


23,328




Share premium


7


 


29,448


 


25,452




Share options reserve


8


 


1,250


 


1,118




Foreign exchange reserve


 


 


-


 


-




Accumulated losses


 


 


(35,167)


 


(34,640)




 


 


 


20,727


 


16,407




Non-controlling interest


 


 


1,154


 


1,075




Total equity


 


 


21,881


 


17,482




 


 


 


 


 


 




Current liabilities


 


 


 


 


 




Trade and other payables


9


 


3,650


 


4,247




Loans and borrowings


10


 


-


 


964




 


 


 


3,650


 


5,211




 


 


 


 


 


 




Total liabilities


 


 


3,650


 


5,211




 


 


 


 


 


 




Total equity and liabilities


 


 


25,531


 


22,693




 


 


 


 


 


 




 
The notes are an integral part of these unaudited condensed interim consolidated financial statements. 
 
 
On 21 September 2020, the Board of Directors of KEFI Gold and Copper Plc authorised these unaudited condensed interim financial statements for issue.
 
John Leach
Finance Director
 
 
Condensed interim consolidated statement of changes in equity 
(unaudited) (All amounts in GBP thousands unless otherwise stated)
 
Attributable to the equity holders of parent




 


Share
capital


Deferred shares


Share premium


Share options and warrants reserve


Foreign exchange reserve


Accumulated losses 


Total


NCI


Total equity




At 1 January 2019 (Note 2)


9,719


12,436


21,581


1,032


(215)


(30,276)


14,277


1,075


15,352




Loss for the period


-


-


-


-


-


(1,695)


(1,695)


-


(1,695)




Other comprehensive income


-


-


-


-


(7)


-


(7)


-


(7)




Total Comprehensive Income


-


-


-


-


(7)


(1,695)


(1,702)


-
 


(1,702)




Recognition of share based payments


-


-


-


73


-


-


73


-


73




Cancellation & Expiry of options/warrants


-


-


-


(42)


-


42


-


-


-




Issue of share capital


1,855


-


129


-


-


-


1,984


-


1,984




Share issue costs


-


-


(92)


-


-


-


(92)


-


(92)




Non-controlling interest


-


-


-


-


-


1


1


(1)


-




At 30 June 2019 (Note 2 Prior year adjustment)


11,574


12,436


21,618


1,063


(222)


(31,928)


14,541


1,074


15,615




Loss for the period


 - 


 - 


 - 


 - 


 - 


  (3,878)


   (3,878)


 


 (3,878)




Other comprehensive income


 - 


 - 


 - 


 - 


222 


 - 


222


- 


222




Total Comprehensive Income


 - 


 - 


 - 


 - 


222


  (3,878)


   (3,656)


- 


 (3,656)




Recognition of share based payments


 - 


 - 


 - 


     177 


 - 


 - 


        177 


 


       177 




Cancellation & Expiry of options/warrants


 - 


 - 


 - 


    (122)


 - 


       122 


             -   


 


           -   




Issue of share capital


       467 


 - 


     3,927 


 - 


 - 


     1,045 


    5,439 


 


    5,439 




Deferred Shares


(10,892)


  10,892 


-


-


-


- 


            -   


 


           -   




Share issue costs


 - 


 - 


        (93)


 - 


 - 


 - 


       (93)


 


      (93)




Non-controlling interest


 - 


 - 


 - 


 - 


 - 


         (1)


         (1)


         1 


           -   




At 1 January 2020 Audited


    1,149 


  23,328 


  25,452


  1,118 


              -   


(34,640)


   16,407 


  1,075 


  17,482 




Loss for the period


 


 


 


 


 


 


 


 


 




Other comprehensive income


 - 


 - 


 - 


 - 


 - 


   (1,054)


  (1,054)


 - 


 (1,054)




Total Comprehensive Income


 - 


 - 


 - 


 - 


 - 


 - 


 - 


 - 


            -   




Recognition of share based payments


 - 


 - 


 - 


336 


 - 


 - 


336 


 - 


     336 




Cancellation & Expiry of options/warrants


 - 


 - 


 - 


  (606)


 - 


       606 


-


 - 


-




Issue of share capital and warrants


       719 


 - 


     4,441 


402 


 - 


 - 


      5,562 


 - 


    5,562 




Share issue costs


-


- 


     (445)


 - 


 - 


 - 


(445)


 


   (445)




Non-controlling interest


 - 


 - 


 - 


 - 


 - 


        (79)


(79)


79 


           -   




At 30 June 2020 Unaudited


1,868


23,328


29,448


1,250


-


(35,167)


20,727


1,154


21,881




 
The following describes the nature and purpose of each reserve within owner's equity:




Reserve


Description and purpose




Share capital


amount subscribed for share capital at nominal value.




Deferred shares


under the restructuring of share capital, ordinary shares of in the capital of the Company were sub-divided into deferred share.




Share premium


amount subscribed for share capital in excess of nominal value, net of issue costs. 




Share options and warrants reserve


reserve for share options and warrants granted but not exercised or lapsed.




Foreign exchange reserve


cumulative foreign exchange net gains and losses recognized on consolidation.




Accumulated losses


cumulative net gains and losses recognized in the statement of comprehensive income, excluding foreign exchange gains within other comprehensive income.




NCI (Non-controlling interest)


the portion of equity ownership in a subsidiary not attributable to the parent company.




 
The notes are an integral part of these unaudited condensed interim consolidated financial statements.
 
 
Condensed interim consolidated statements of cash flows
(unaudited) (All amounts in GBP thousands unless otherwise stated)
 
 




 


 
Notes


 


Six months ended  30 June 2020


 


Six months ended 30 June 2019




Cash flows from operating activities


 


 


 


 


 




Loss before tax


 


 


(1,054)


 


(1,695)




Adjustments for:


 


 


 


 


 




Share-based benefits 


 


 


76


 


73




Share-based payments


 


 


-


 


7




Issue of warrants


 


 


-


 


-




Fair value loss to derivative financial asset


 


 


3


 


-




Gain from dilution of equity interest in joint venture


11


 


(1,037)


 


-




Share of loss in joint venture


 


 


587


 


186




Depreciation


 


 


1


 


1




Finance expense


 


 


192


 


345




Realised Loss on derivative financial asset


 


 


-


 


-




Foreign exchange losses on financing activities


 


 


(380)


 


35




Foreign exchange gains on operating activities 


 


 


11


 


-




Cash outflows from operating activities before working capital changes


 


 


(1, 601)


 


(1,048)




 


 


 


 


 


 




Interest paid


 


 


(192)


 


(76)




 


 


 


 


 


 




Changes in working capital:


 


 


 


 


 




Trade and other receivables


 


 


(216)


 


(5)




Trade and other payables


 


 


1,337


 


566




 


 


 


 


 


 




Net cash used in operating activities


 


 


(480)


 


(563)




 


 


 


 


 


 




Cash flows from investing activities


 


 


 


 


 




Purchases of plant and equipment


 


 


(3)


 


-




Deferred exploration costs


 


 


-


 


(493)




Project evaluation costs


6


 


(1,778)


 


(433)




Advances to joint venture


 


 


(207)


 


(159)




Net cash used in investing activities


 


 


(1,988)


 


(1,085)




 


 


 


 


 


 




Cash flows from financing activities


 


 


 


 


 




Proceeds from issue of share capital


7


 


4,841


 


969




Listing and issue costs


7


 


(185)


 


(92)




Financing transaction costs paid


 


 


(192)


 


-




Proceeds from convertible notes


 


 


-


 


525




Proceeds from bridge loans


 


 


-


 


587




Repayment short term working capital bridging finance 


 


 


-


 


(270)




Net cash from financing activities


 


 


4,464


 


1,719




 


 


 


 


 


 




Net increase in cash and cash equivalents


 


 


1,996


 


71




 


 


 


 


 


 




Cash and cash equivalents:


 


 


 


 


 




At beginning of period


 


 


150


 


88




Exchange differences


 


 


(11)


 


1




At end of period


 


 


2,135


 


160




 
 
The notes are an integral part of these unaudited condensed interim consolidated financial statements


Notes to the condensed interim consolidated financial statements
For the six months to 30 June 2020(unaudited) and 2019 (All amounts in GBP thousands unless otherwise stated)
 
1.   Incorporation and principal activities
Country of incorporation
The Company was incorporated in United Kingdom as a public limited company on 24 October 2006.  Its registered office is at 27/28 Eastcastle Street, London W1W 8DH.
 
Principal activities
The principal activities of the Group for the period are:
·      To explore for mineral deposits of precious and base metals and other minerals that appear capable of commercial exploitation, including topographical, geological, geochemical and geophysical studies and exploratory drilling.
·      To evaluate mineral deposits determining the technical feasibility and commercial viability of development, including the determination of the volume and grade of the deposit, examination of extraction methods, infrastructure requirements and market and finance studies.
·      To develop, operate mineral deposits and market the metals produced.
2.   Summary of significant accounting policies
The principal accounting policies applied in the preparation of these condensed interim consolidated financial statements are set out below. These policies have been applied consistently throughout the period presented in these condensed interim consolidated financial statements unless otherwise stated.
Basis of preparation and consolidation
The condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standards (IFRS).
These condensed interim consolidated financial statements ('the statements") are unaudited and include the financial statements of the Company and its subsidiary undertakings. They have been prepared using accounting bases and policies consistent with those used in the preparation of the financial statements of the Company and the Group for the year ended 31 December 2019. These statements do not include all of the disclosures required for annual financial statements, and accordingly, should be read in conjunction with the financial statements and other information set out in the Company's 31 December 2019 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.
Going concern 
The assessment of the Group's ability to continue as a going concern involves judgment regarding future funding available for the development of the Tulu Kapi Gold project, exploration of the Saudi Arabia exploration properties and for working capital requirements. In considering the Group's ability to continue as a Going Concern, management have considered funds on hand at the date of approval of the financial statements, planned expenditures covering a period of at least 12 months from the date of approving these financial statements and the Group's strategic objectives as part of this assessment. The Group has also considered the potential impact of COVID 19 in respect of its forecasts.  
 
The ability of the Company to carry out its planned business objectives is dependent on its ability to continue to raise adequate financing from lenders, shareholders and other investors to meet its working capital and other funding requirements. Financing will also be required to continue the development of the Tulu Kapi Gold Project through to production.
 
The Company is in discussions with a number of fund providers to the mining industry who have an interest in the full range of financing instruments from conventional equity to debt to quasi equity.  In addition, the company enlists the help of external professionals such as stock brokers and specialist financial advisors to assist in identifying and successfully concluding investment arrangements with third parties.
 
The Group is currently evaluating a number of proposed sources of financing for the Tulu Kapi Gold Project, the main focus of which is securing and optimising the full project funding package of c. US221 million comprising senior debt and a combination of pure equity and offtake-linked subordinated debt. The Ethiopian Government is in the process of contributing project equity of no less than US$20 million (Ethiopian Birr equivalent) and KEFI wholly-owned subsidiary KEFI Minerals (Ethiopia) Limited (formerly Nyota Minerals (Ethiopia) Limited up until its acquisition in 2013) has invested over US$60 million to date. 
 
Furthermore, the Group has mandated two African based banks to provide long term project financing to the project subject to the completion of the bank's due diligence processes. 
 
It should be noted that there are currently no unconditional, binding agreements in place in respect of any additional funding and there is no guarantee that any course of funding will proceed. Also, COVID-19 has had a significant negative impact on the global economy which may mean it is harder to secure additional funding than has historically been the case. Notwithstanding this as a result of historical and ongoing proactive discussions with stakeholders, the Board has a reasonable expectation that the Group will be able to raise further funds in order to meet its obligations. Subject to the above, the Directors have concluded that it is appropriate to prepare the financial statements on a going concern basis. 
 
Prior year adjustment
 
In 2017 and 2018 amounts of £1,340,000 and £938,000 relating to the issue of shares were, respectively, transferred from share premium to accumulated losses. In accordance with the UK Companies Act 2006, the share premium should not have included these adjustments and accordingly they have been restated in the opening balance sheet and the prior year comparatives. The impact of the adjustment is to increase share premium by £1,340,000 and decrease accumulated losses by the same amount at 1 January 2018, and to increase share premium by a further £938,000 and decrease accumulated losses by the same amount in the prior year. The adjustment has no impact on losses or assets or liabilities in any year
New and amended standards adopted by the Company
The same accounting policies, presentation and methods of computation are followed in the interim consolidated financial information as were applied in the Group's latest annual audited financial statements except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2020, and will be adopted in the 2020 annual financial statements. The following new standards and interpretations became effective on 1 January 2020 and have been adopted by the Group. None of these amendments are considered to have had a material effect in the Period.
 
 · IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)
 · IFRS 3 Business Combinations (Amendment - Definition of Business)
 · IBOR Reform and its Effects on Financial Reporting - Phase 1
 ·  Revised Conceptual Framework for Financial Reporting
 
3.   Operating segments
The Group has only one distinct operating segment, being that of mineral exploration. The Group's exploration activities are located in Ethiopia, Saudi Arabia through the jointly controlled entity and its administration and management is based in Cyprus. 




Unaudited Six months ended 30 June 2020


Cyprus


Ethiopia


Saudi Arabia
 


 


Total




 


£'000


£'000


£'000


 


£'000




Operating loss (Excluding loss from jointly controlled entity)


(1,666)


(8)


-


 


(1,674)




Interest paid


-


-


-


 


-




Other finance costs


(192)


-


-


 


(192)




Foreign exchange profit


259


103


-


 


362




Share of loss from jointly controlled entity


-


-


(587)


 


(587)




Gain from dilution of equity interest in joint venture


1,037


-


-


 


1,037




Loss before tax


(562)


95


(587)


 


(1,054)




Tax


 


 


 


 


-




Loss for the period


 


 


 


 


(1,054)




 


 


 


 


 


 




Total assets


5,404


14,770


-


 


20,174




Total liabilities


(3,340)


(231)


(43)


 


(3,614)




Depreciation of property, plant and equipment


-


(1)


-


 


(1)




 
 




Unaudited Six months ended 30 June 2019


Cyprus


Ethiopia


Saudi Arabia
 


 


Total




 


£'000


£'000


£'000


 


£'000




Operating loss (Excluding loss from jointly controlled entity)


(1,154)


(6)


-


 


(1,160)




Interest paid


(244)


-


-


 


(244)




Other finance costs


(101)


-


-


 


(101)




Foreign exchange loss


(4)


-


-


 


(4)




Share of loss from jointly controlled entity


 


 


(186)


 


(186)




Loss before tax


(1,503)


(6)


(186)


 


(1,695)




Tax


 


 


 


 


-




Loss for the period


 


 


 


 


(1,695)




 


 


 


 


 


 




Total assets


7,344


12,830


-


 


20,174




Total liabilities


(3,985)


(422)


(152)


 


(4,559)




Depreciation of property, plant and equipment


-


(1)


-


 


(1)




 
4.   Loss per share      
The calculation of the basic and fully diluted loss per share attributable to the ordinary equity holders of the parent is based on the following data:




 


Six months ended 30 June 2020


 


Six months ended 30 June 2019


 




Unaudited


Unaudited


 




£'000


£'000


 




Net loss attributable to equity shareholders


(1,054)


 


(1,695)


 




Net loss for basic and diluted loss attributable to equity shareholders


(1,054)


 


(1,695)


 




Weighted average number of ordinary shares for basic loss per share (000's)


1,401,656


 


620,691


 




Weighted average number of ordinary shares for diluted loss per share (000's)


1,462,687


 


653,297


 




Loss per share:


 


 


 




Basic loss per share (pence)


      (0.08)


 


           (0.27)


 




Basic diluted loss per share (pence)


      (0.07)


 


           (0.26)


 



 
 
 
 
 
 
 
 



The effect of share options and warrants on the loss per share is anti-dilutive.
5.   Trade and other receivables




 


 


 


30 June 2020


 


31 Dec 2019




 


 


 


Unaudited


 


Audited




 


 


 


£'000


 


£'000




Share Placement
Other receivables


 


 


14
8


 


1,154
-




VAT


 


 


82


 


80




Advance to Gold and Minerals


 


 


206


 


-




 


 


 


 
310


 


 
1,234
 




6.   Intangible assets




  


 


 


 


 


 


 


 


 


 
Total exploration and project evaluation costs
£ '000




Cost 


 


 


 


 


 


 


 


 


 




At 1 January 2019 (Audited)


 


 


 


 


 


 


 


 


19,023




Additions


 


 


 


 


 


 


 


 


1,020




At 30 June 2019 (Unaudited)


 


 


 


 


 


 


 


 


20,043




Additions 


 


 


 


 


 


 


 


 


1,423




At 31 December 2019 (Audited)


 


 


 


 


 


 


 


 


21,466




Additions 


 


 


 


 


 


 


 


 


1,778




At 30 June 2020 (Unaudited)


 


 


 


 


 


 


 


 


23,244




 


 


 


 


 


 


 


 


 


 




Accumulated Impairment


 


 


 


 


 


 


 


 


 




At 1 January 2019 (Audited)


 


 


 


 


 


 


 


 


(266)




Impairment charge for the period


 


 


 


 


 


 


 


 


-




At 30 June 2019 (Unaudited)


 


 


 


 


 


 


 


 


(266)




Impairment charge for the period


 


 


 


 


 


 


 


 


-




At 31 December 2019 (Audited)


 


 


 


 


 


 


 


 


(266)




Impairment charge for the period


 


 


 


 


 


 


 


 


-




At 30 June 2020 (Unaudited)


 


 


 


 


 


 


 


 


(266)




 


 


 


 


 


 


 


 


 


 




Net Book Value at 30 June 2020 (Unaudited)


 


 


 


 


 


 


 


 


22,978




Net Book Value at 31 December 2019 (Audited)


 


 


 


 


 


 


 


 


21,200




 
 
7.   Share capital
 




 


Number of shares 
000's


 


Share 
Capital
£'000


Deferred shares
 £'000


Share premium
£'000


 
Total
£'000




Issued and fully paid


 


 


 


 


 


 




At 1 January 2020 (Audited)


1,148,874


 


1,149


23,328


25,452


49,929




Share Equity Placement 10 Jan 2020


149,000


 


149


-


1,714


1,863




Share Equity Placement 14 May 2020


113,846


 


114


-


626


740




Share Equity Placement 28 May 2020


455,385


 


456


-


2,503


2,959




Share issue costs


-


 


-


-


(185)


(185)




Broker warrants: issue costs


-


 


-


-


(260)


(260)




Warrants: fair value split of warrants issued to shareholders.


 


 


 


 


(402)


(402)




At 30 June 2020 (Unaudited)


1,867,105


 


1,868


23,328


29,448


54,644




 
Issued capital
 
During January 2020, the Company completed a £1,862,500 placing by issuing 149,000,000 new ordinary shares of 0.1p each in the capital of the Company at a price of 1.25p per share. 
 
During May 2020, the Company raised a further £3.7 million via a placing of 569,230,761 new Ordinary Shares of 0.1p each in two tranches at an issue price of 0.65 pence per share. Brandon Hill Capital Ltd acted as broker for the placing. The first 113,845,837 share tranche was conditional only upon admission of the shares to AIM, while the second tranche of 455,384,924 shares required shareholder approval at a General Meeting held on the 28 May 2020.  The Company finalised this placing of £3,700,000 and issued 569,230,761 new ordinary shares of 0.1p each in the capital of the Company. All Shares rank pari passu in all respects with the existing ordinary shares of the Company.
 
8.   Share Based Payments 
 
8.1.    Warrants
 
Details of warrants outstanding as at 30 June 2020:




Grant date


Expiry date


Exercise price


 


Unaudited Number of warrants*




 


 


 


 


000's




 


 


 


 


 




19 Sep 2018


20 Sep 2023


2.5p


 


2,000




02 Aug 2019


02 Aug 2022


2.5p


 


19,500




         10 Jan 2020


10 Jan 2020


1.25p


 


7,450




14 May 2020


   14 May 2023


0.65p


 


5,692




29 May 2020


    29 May 2023


0.65p


 


22,770




 


 


 


 


 




 


 


 


 


57,412




 
 




 


Weighted average ex. price


Unaudited Number of warrants*
000's




 


 


 




Outstanding warrants at 1 January 2020


2.50p


21,500




- granted


1.76p


¹184,912




- cancelled/expired/forfeited


2.00p


²(149,000)




Outstanding warrants at 30 June 2020


1.42p


57,412




These warrants were issued to advisers and shareholders of the Group.
¹&² The Company issued 149,000,000 short term warrants to subscribe for new ordinary shares of 0.1p each at 2p per share in accordance with the December 2019 and January 2020 share placement and as approved by shareholders on 6 January 2020. The warrants expired on 30 April 2020. The Company performed a fair value split by fair valuing the warrants using Black Scholes and assumed that this value is the residual share amount.  
¹On 16 December 2019, the Company issued 7,450,000 warrants to subscribe for new ordinary shares of 0.1p each at 2p per share. to Brandon Hill pursuant to the Placing Agreement. The warrants expire 2 years from the date of issue (10 January 2020).
¹During May 2020, the Company issued 28,461,538 broker warrants to subscribe for new ordinary shares of 0.1p each at 0.65p per share to Brandon Hill pursuant to the Placing Agreement. The warrants expire within three years of the date of First Admission.
8.2   Share options reserve       
Details of share options outstanding as at 30 June 2020:




Grant date


Expiry date


Exercise price


 


Unaudited
Number of shares* 000's




12-Sep-14


11-Sep-20


29.92p


 


132




20-Mar-15


19-Mar-21


22.44p


 


1,529




16-Jun-15


15-Jun-21


22.44p


 


382




12-Jan-16


11-Jan-22


7.14p


 


4,088




23-Feb-16


22-Feb-22


12.58p


 


176




05-Aug-16


05-Aug-22


10.20p


 


1,471




21-Mar-17


20-Mar-23


7.50p


 


7,907




01-Feb-18


31-Jan-24


4.50p


 


11,400




 


 


 


 


27,085




 


 


 


 


 


 


 


 




 


 


 


 


30 June 2020


 


31 Dec 2019




 


 


 


 


Unaudited


 


Audited




 


Opening amount


 


 


1,118


 


1,032




 


Warrants issued costs


 


 


662


 


94




 


Share options issued to employees


 


 


33


 


34




 


Share options issued to directors and key management


 


 


43


 


122




 


Forfeited Options


 


 


-


 


-




 


Expired Options


 


 


(204)


 


-




 


Expired Warrants


 


 


(402)


 


(164)




 


 


 


 


1,250


 


1,118



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 




 


Weighted average ex. price


Unaudited
Number of shares*
 000's




 


 
 


 




Outstanding options at 1 January 2020


8.95p


28,365




-  granted


-


-




-  cancelled/expired/forfeited


39.07


(1,280)




Outstanding options at 30 June 2020


7.52p


27,085




 
 
8.3.    Share Payments for services rendered.
 
January 2020 placement of 149,000,000 shares
 
On 6 January 2020, following approval by shareholders, the Company issued 49,419,600 new ordinary shares ("Remuneration Shares") and 99,580,400 new ordinary shares ("Settlement Shares") of 0.1p each in the capital of the Company at an issue price of 1.25p. The Remuneration Shares representing an aggregate value of £617,750 were granted to certain directors and management of the Company to satisfy accrued fees and salaries. The Settlement Shares were issued to Project contractors and other third parties in settlement of outstanding invoices and debt and represented an aggregate value of £1,244,750. During January 2020, the Company completed finalised this placing of £1,862,500 by issuing 149,000,000 new ordinary shares of 0.1p each in the capital of the Company. All Shares rank pari passu in all respects with the existing ordinary shares of the Company.
 
The Remuneration Shares, Settlement Shares and Placing Shares approved on the 6 January 2020 carried a short-term warrant entitlement of one warrant for every two such shares (the "Warrants"). The Warrants had an exercise price of 2p per Ordinary Share and expired on 30 April 2020. 
 
The January 2020 placement provided working capital to the Company, allowed repayment and cancellation of existing debt and reduced other current obligations thus strengthening the financial position and capability of the Company. 
 
All Remuneration Shares, Settlement Shares and Placing Shares were issued at a value of 1.25 pence per share. The net raise amounted to £1,862,500, with liabilities and other obligations listed below settled in shares.
Amount in settlement of outstanding obligations:
 
The total shares issued during period for services rendered was as follows:
 




Name


 


Number of Remuneration and Settlement Shares


 


Amount




 


 


000


 


£'000




H Anagnostaras-Adams


 


11,812 


 


                 148 




J Leach


 


8,924 


 


                 112 




Norman Arthur Ling


 


2,000 


 


                   25 




Mark Tyler


 


2,000


 


                   25 




Richard Lewin Robinson


 


1,000 


 


                   13 




Other employees and PDMRs


 


23,685 


 


                 296 




Amount to settle other Obligations


 


22,450 


 


                 281 




Amount to settle loans:


 


 


 


 




Unsecured Convertible loan facility 


 


6,000 


 


                   75 




Unsecured working capital bridging finance


 


71,130 


 


                 889 




 


 


149,001


 


1,864




 
 
9    Trade and other payables




         
         


 


 


30 June 2020
Unaudited


 


31 Dec 2019
Audited




 


 


 


£'000


 


£'000




Accruals and other payables 


 


 


1,606


 


1,829




Other loans


 


 


156


 


169




Payable to joint venture partner (Note 11 and Note 12.3)


 


 


247


 


456




Payable to Key Management and Shareholder (Note 12.3)


 


 


1,641


 


1,793




 


 


 


3,650


 


4,247




 
10  Loans and Borrowings
10.1.1 Short Term Working Capital Bridging Finance 




 


 
Currency


 
Interest


 
Maturity


 
Repayment




Unsecured working capital bridging finance


GBP


See Table below


On Demand


See Table below




 
The Group has the option to access working capital from certain existing stakeholders for up to GBP £1.5 million. This unsecured working capital bridging finance is short‐term debt which is unsecured and ranked below other loans. In the event the Group was unable to pay this finance it would be repaid after other debt securities have been paid, if any. Management expects that the company would meets its contractual obligation on any such bridging finance on a timely basis going forward. 
 
 




Unsecured working capital bridging finance


Balance 1 Jan 2020
Audited


Drawdown Amount
Unaudited


Transaction Costs
Unaudited


Interest
 
Unaudited


Repayment
Shares
Unaudited


Repayment
Cash
Unaudited


Period Ended
30 June 2020
Unaudited


 




 


£'000


£'000


£'000


£'000


£'000


£'000


£'000




Repayable in cash in less than a year


889


-


-


-


(889)


-


-


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



10.1.2 Reconciliation of liabilities arising from financing activities




 


 


Cash Flows


 


 




 


Balance 1 Jan 2020


Inflow


(Outflow)


Finance Costs


Shares


Balance 30 June 2020




 


Audited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited




 


£'000


£'000


£'000


£'000


£'000


£'000




Unsecured working capital bridging finance


 


 


 


 


 


 




Short term loans


                         889 


   - 


               -


-


            (889)


                  - 




 


      889 


- 


-


-


            (889)


- 




Convertible notes


 


 


 


 


 


 




Sanderson unsecured convertible loan facility 


75


-


-


-


(75)


-




 


75


-


-


-


(75)


-




 


 


 


 


 


 


 




 


964


-


-


-


(964)


-



 
 
 
 
 
 
 
 
 
 
 



 
11  Joint venture agreements 
 
KEFI is the operating partner with a 34% shareholding in G&M with ARTAR holding the other 66%. KEFI provides G&M with technical advice and assistance, including personnel to manage and supervise all exploration and technical studies. ARTAR provides administrative advice and assistance to ensure that G&M remains in compliance with all governmental and other procedures. G&M has five Directors, of whom two are nominated by KEFI However, decisions about the relevant activities of G&M require the unanimous consent of the five directors. G&M is treated as a jointly controlled entity and has been equity accounted and has reconciled its share in G&M's losses.
 
During the period, the Company has diluted its interest in the Saudi joint-venture company Gold and Minerals from 40% to 34% by not contributing its pro rata share of expenses to G&M. Given that the carrying value of the G&M assets in the Company accounts at the date of dilution was nil because the Company's has a policy of expensing all the costs related to G&M to date.  By diluting its interest to G&M to 34% the Company was released from this liability. This resulted in a gain of £1,037,000. In accordance with the group's accounting policy gain of £1,037,000 was reported in the profit or loss during the period.




 


Six months ended 30 June 2020




 


Unaudited
 £'000




 


 




Consideration for dilution: Value of the liability extinguished


1,037




Carrying value of the G&M Assets


-




Gain from dilution of equity interest in joint venture recognised in income statement


1,037




 
A loss of £587,000 was recognized by the Group for the period ended 30 June 2020 (2019: £186,000) representing the Group's share of losses for the period. As at 30 June 2020, KEFI owed ARTAR an amount of £247,000 (2019: £456,000). Shortly after 30 June 2020 KEFI transferred cash advance to Gold and Minerals of £204,000.
 
12  Related party transactions
 
The following transactions were carried out with related parties:
 
12.1  Compensation of key management personnel
 
The total remuneration of the Directors and other key management personnel was as follows:




 


Six months ended 30 June 2020


 


Six months ended 30 June 2019


 




 


Unaudited £'000


 


Unaudited £'000


 




Directors' fees


212


 


253


 




Directors' other benefits


26


 


23


 




Share-based benefits to directors


35


 


35


 




Directors bonus 


106


 


-


 




Key management fees


481


 


417


 




Key management other benefits


11


 


21


 




Share-based benefits to key management


22


 


22


 




Key management bonus paid in shares


-


 


-


 




 


893


 


771


 




 
Share-based benefits
The Company has issued share options to directors and key management.  On 27 March 2014, the Board approved a new share option scheme ("the Scheme") for directors, senior managers and employees. The Scheme formalised the existing policy that options may be granted over ordinary shares representing up to a maximum of 10 per cent of the Group's issued share capital.. 
 
12.2 Transactions with shareholders and related parties
 




 


 


 


Transaction to period end 
30 June 2020


 


Transaction to period end 
30 June 2019




 


 


 


Unaudited


 


Unaudited




Name


Nature of transactions


Relationship


£'000


 


£'000




 


 


 


 


 


 




 


 


 


 


 


 




Winchombe Venture Limited                


Receiving of management and other professional services


Key Management and Shareholder


323


 


268




Members of International Mining Performance


Interest paid on loans advanced


Key Management and Shareholder


-


 


 
15




Nanancito Limited 


Receiving of management and other professional services


Key Management and Shareholder


169


 


100




 


 


 


492


 


888




 




12.3 Payable to related parties
 


 


 


 


 


 




The Group


 


 


30 June 2020


 


30 Dec 2019




 


 


 


Unaudited


 


Audited




Name


Nature of transactions


Relationship


£'000


 


£'000




Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR")


Finance


Jointly controlled entity partner


247


 


456




Winchombe Ventures Limited                


Fees for services


Key Management and Shareholder


613


 


632




Nanancito Limited


Fees for services


Key Management and Shareholder


877


 


720




Directors


Fees for services


Key Management and Shareholder


151


 


441




 


 


 


 


 


 




 


 


 


1,888


 


2,249




 
 
13  Capital commitments








 


 


30 June 2020
Unaudited
¹£'000


 


31 Dec 2019
Audited
£'000
 




 
Tulu Kapi Project costs
 


 


 
1,440


 


 
895
 




 
Saudi Arabia Exploration costs committed to field work that has been recommenced


 


 
1,216


 


1,264




 
Summary of estimated future but not yet contractually committed project development cost:
Once the Company and its partners in Tulu Kapi Gold Mine Share Company Limited start development at the Tulu Kapi Gold Project (the "Project") the Company will have project capital commitments. The following table summarizes the 24-month development Project estimated future capital commitments shown on an undiscounted basis.
 




 


 




 


 


30 June 2020


 


30 June 2020


 




 


 


Unaudited
£'000


 


Unaudited
USD'000


 




On site Infrastructure


 


88,709


 


110,000


 




Mining


 


21,775


 


27,000


 




Off-site Infrastructure


 


16,129


 


20,000


 




Owner's Costs (community, working capital, management, spares, contingency reserves)


 


36,290


 


45,000


 




Interest during grace and other finance effects


 


15,322


 


19,000


 




¹Total of not Contracted Project Capital Costs


 


178,225


 


221,000


 



 
 
 
 
 
 
 



¹The disclosed project capital costs above are based on estimates available at the date of the report. These estimated project capital costs are subject to change.
 




 
14  Events after the reporting date 
 
Change of Name
With effect from 18 August 2020, the name of the Company was changed from KEFI Minerals plc to KEFI Gold and Copper plc.
 
 

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