REG - Kefi Gold and Copper - Interim Results

KEFI Gold and CopperAnnouncement

30/09/2021 07:00

RNS Number : 4489N
  
Kefi Gold and Copper PLC
  
30 September 2021
  
 

30 September 2021
 
KEFI Gold and Copper plc
 
("KEFI" or the "Company")
 
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021
 
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 2021.
 
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.
 
During the period, the Company 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.
 
Tulu Kapi Gold Project, Ethiopia
 
KEFI continued to oversee the physical preparations for full development to be triggered at financial closing, such as:
 




·    


Clearing of new host lands for community members to be resettled;




·    


Overseeing the early works programme of detailed engineering and procurement, by principal construction contractor Lycopodium;




·    


Supporting the planning and procurement programmes of mining services contractor Corica;




·    


Overseeing the 'new access road' and 'electricity connection' works contracts; under which surveys and procurement has been completed;




·    


Triggering compensation procedures for the first re-settlers at the Tulu Kapi electrical substation site; and




·    


Recruitment of further key personnel for the next stage of the Project.




 
Project Funding
The signing of detailed binding documentation and the launch of full Project development is expected during Q4 2021.  All equity and debt funding would be committed and binding upon signing, and subject only to normal conditions for such a transaction.  Debt disbursement would follow after subscription of equity-risk capital, as is normal in such projects, and the timing of receipt will be structured to meet Project requirements.
Upon financial completion and any remaining conditions precedent being satisfied, it is expected KEFI will have achieved the following:
 




·    


Fully-funded the development of Project company Tulu Kapi Gold Mines Share Company's ("TKGM") open-pit gold mine for start of production in mid-2023;
 




·    


Have reserves set aside for cost-overruns for production start-up or, if not needed, available to trigger initial stages of development of Tulu Kapi underground mine from late 2023;




·    


Retained ownership of c.70% of TKGM, versus originally estimated 45% ownership; and




·    


Successfully minimised ownership dilution at the KEFI level by (a) maximising subsidiary-level finance, and (b) arranging for KEFI-subsidiary-level financing with conversion rights into KEFI shares to be based on the VWAP at the time of production (which the Company believes will be materially higher than at current levels), if not repaid beforehand.




 
It is expected that the non-KEFI shareholding in TKGM, of c.30%, will comprise Ethiopian Government and non-Government local organisations and these relationships will strongly reinforce the Project's very deliberate efforts to align at community and district levels and with government at all levels.
Advanced conditional approvals, which have already been received, account for c.63% of the US$356 million aggregated funding sources and the remaining c.37% (c.US$131 million) is expected to come from existing identified parties working alongside those who have already resolved their conditional approval.  All parties have agreed to enter into binding documentation at the same time.
Contracts were issued and work started last year with the Ethiopian Electric Power Corporation and Ethiopian Roads Authority for Project offsite works.  In respect of on-site works, the principal on-site contractors, Lycopodium Limited and Corica Mining Services Share Company, each the largest in Africa in their respective specialised contracting areas, have signed letters of intent and produced all-but agreed final forms of detailed documentation for execution at financial completion.
 
Gold & Minerals Limited Joint Venture (G&M), Saudi Arabia
 
KEFI's operations in Saudi Arabia are conducted through its 34% owned joint-venture company, Gold & Minerals Ltd ("G&M"), where KEFI is the operating partner. G&M has finished the Phase 4 drilling programme to support the goal of reporting an expanded and upgraded Mineral Resource.
 
The Preliminary Feasibility Study for the potential start of development of the Hawiah deposit in 2023 continues, and other recent activities have included the following:
·      Completion of the Environmental and Social Baseline Study;
·      Metallurgical testing progressing with reasonable recoveries so far being indicated for all principal metals, copper, gold, zinc and silver; and
·      The 30 man base camp at Hawiah is now fully operational and plans are underway to increase camp capacity.
·      Geo-hydrogeological studies are also in progress and a consultancy group are performing pump testing on a number of existing boreholes ahead of targeted pump testing and groundwater modelling.
 
 
Post Period End
 
On 29 September 2021 the Company reported that the preparations for the launch of the development phase of the Company's Tulu Kapi Gold project have identified a number of security concerns that have led KEFI and TKGM to temporarily delay the Project until these are satisfactorily addressed.  The Ethiopian Ministry of Mines has been notified as have the other Government agencies, the Company's financing partners and the local community.  All parties respect the need to ensure the security situation is completely ready for the Project construction to proceed and all continue to prepare for launch as soon as appropriate during Q4 2021.
 
In the meantime, the Company's Hawiah Copper-Gold Project ("Hawiah") in Saudi Arabia continues its fast-track programme to produce an expanded and upgraded Mineral Resource Estimate and Preliminary Feasibility Study for development.
 
Commenting, Mr Harry Anagnostaras-Adams, Executive Chairman of KEFI said, "During the first half of 2021 we made significant progress with both our Tulu Kapi and Hawiah projects despite the logistical restrictions imposed to protect personnel and the wider community due to COVID-19.  Whilst it is disappointing that our Tulu Kapi Gold Project is temporarily paused whilst security concerns are addressed, we remain cautiously optimistic that detailed binding Project financing documentation can be signed, and Project development triggered during Q4 2021.  In Saudi Arabia, our Hawiah Copper/Gold project continues its fast-track programme to produce an expanded and upgraded Mineral Resource Estimate and Preliminary Feasibility Study for development.
 
"KEFI has made significant advances with its projects in the highly prospective Arabian Nubian Shield during the first half of 2021 and despite recent challenges remains very well positioned to bring two significant projects into production."
 
 
Quarterly Webinar
 
The Company will host its quarterly investor webinar at 4.30pm London time on Wednesday 13 October 2021 which can be accessed via:
 
https://webcasting.brrmedia.co.uk/broadcast/6153493e19e5bc59de7bb6ce
 
Shareholders 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
 
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.
 
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, Adam Cowl


 




 


 




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 2021
Unaudited


 


Six months ended

30 June 2020
Unaudited




 


 


 


 


 


 




Revenue


 


 


-


 


-




Exploration expenses


 


 


(21)


 


(18)




Gross loss


 


 


(21)


 


(18)




Administration expenses


 


 


(1,191)


 


(1,580)




Share-based payments


 


 


(484)


 


(76)




Share of loss from jointly controlled entity


11


 


(618)


 


(587)




Reversal of impairment loss in jointly controlled entity


11


 


567


 


-




Gain from dilution of equity interest in joint venture


11


 


-


 


1,037




Operating loss


 


 


(1,747)


 


(1,224)




Foreign exchange (loss)/gain


 


 


(57)


 


362




Finance expense


 


 


(419)


 


(192)




Loss before tax


 


 


(2,223)


 


(1,054)




Tax


 


 


-


 


-




Loss for the period


 


 


(2,223)


 


(1,054)




 


 


 


 


 


 




 


 


 


 


 


 




 


 


 


 


 


 




Loss for the period


 


 


(2,223)


 


(1,054)




Other comprehensive loss:


 


 


 


 


 




Exchange differences on translating foreign operations


 


 


-


 


-




Total comprehensive loss for the period


 


 


(2,223)


 


(1,054)




 


 


 


 


 


 




 




Basic loss per share (pence)


4


         (0.10)


 


       (0.08)




 


 


 


 


 




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 2021


 


Audited
31 Dec 2020




ASSETS


 


 


 


 


 




Non-current assets


 


 


 


 


 




Property, plant and equipment


 


 


102


 


35




Intangible assets


6


 


26,353


 


24,510




Investments in JV


 


 


-


 


-




 


 


 


26,455


 


24,545




Current assets


 


 


 


 


 




Financial assets at fair value through OCI


 


 


-


 


54




Trade and other receivables


5


 


226


 


448




Cash and cash equivalents


 


 


948


 


1,315




 


 


 


1,174


 


1,817




 


 


 


 


 


 




Total assets


 


 


27,629


 


26,362




 


 


 


 


 


 




EQUITY AND LIABILITIES


 


 


 


 


 




Issued capital and reserves attributable to owners of the parent


 


 


 


 


 




Share capital


7


 


2,153


 


2,138




Deferred Shares


7


 


23,328


 


23,328




Share premium


7


 


33,201


 


33,118




Share options reserve


8


 


1,565


 


1,273




Accumulated losses


 


 


(39,967)


 


(37,824)




 


 


 


20,280


 


22,033




Non-controlling interest


 


 


1,316


 


1,204




Total equity


 


 


21,596


 


23,237




 


 


 


 


 


 




Current liabilities


 


 


 


 


 




Trade and other payables


9


 


3,770


 


3,125




Loans and borrowings


10


 


2,263


 


-




 


 


 


6,033


 


3,125




 


 


 


 


 


 




Total liabilities


 


 


6,033


 


3,125




 


 


 


 


 


 




Total equity and liabilities


 


 


27,629


 


26,362




 


 


 


 


 


 




The notes are an integral part of these unaudited condensed interim consolidated financial statements.
 
 
On 30 September 2021, 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


Accumulated losses 


Total


NCI


Total equity




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


  -  


  -  


  -  


  -  


      (1,054) 


(1,054) 


- 


(1,054) 




Other comprehensive income


  -  


  -  


  -  


  -  


  -  


  -  


  -  


  -  




Total Comprehensive Income


                -   


                -   


                -   


                -   


      (1,054) 


  (1,054) 


      - 


(1,054) 




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 




Loss for the year


 - 


 - 


 - 


 - 


        (2,666) 


  (2,666) 


 


 (2,666) 




Other comprehensive income


 - 


 - 


 - 


 - 


 - 


 - 


 - 


 - 




Total Comprehensive Income


 - 


 - 


 - 


 - 


        (2,666) 


  (2,666) 


 


 (2,666) 




Recognition of share-based payments


 - 


 - 


 - 


(283) 


 - 


      (283) 


 - 


    (283) 




Expired warrants


 - 


 - 


 - 


(59) 


               59 


 - 


 - 


 - 




Issue of share capital and warrants


            270 


 


          3,615 


            
365 


 
-


         4,250 


 
-


          4,250 




Share issue costs


 - 


 -  


     55 


  -  


  -  


   55 


 -


55




Non-controlling interest


 - 


 - 


 - 


 - 


              (50) 


        (50)


      50 


 - 




At 1 January 2021 Audited


    2,138


  23,328 


33,118


1,273


(37,824)


22,033


1,204


23,237




Loss for the period


 - 


 - 


 - 


 - 


(2,223)


(2,223)


-


(2,223)




Other comprehensive income


 - 


 - 


 - 


 - 


-


-


-


-




Total Comprehensive Income


 - 


 - 


 - 


 - 


(2,223) 


(2,223) 


 - 


(2,223)   




Recognition of share based payments


 - 


 -


 -


484 


 - 


484 


 - 


   484 




Cancellation & Expiry of options/warrants


 - 


 -


 -


  (192)


    192 


-


 - 


-




Issue of share capital and warrants


       15 


 - 


  83 


- 


 - 


      98 


 - 


98




Non-controlling interest


 - 


 - 


 - 


 - 


(112)


(112)


112 


           -   




At 30 June 2021 Unaudited


2,153


23,328


33,201


1,565


(39,967)


20,280


1,316


21,596




 
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 2021


 


Six months ended 30 June 2020




Cash flows from operating activities


 


 


 


 


 




Loss before tax


 


 


(2,223)


 


(1,054)




Adjustments for:


 


 


 


 


 




Share-based benefits


 


 


484


 


76




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


 


 


618


 


587




Reversal of impairment loss in joint venture


 


 


(567)


 


-




Depreciation


 


 


7


 


1




Finance expense


 


 


390


 


192




Foreign exchange gains/(losses) on financing activities


 


 


200


 


(380)




Foreign exchange (losses)/gains on operating activities


 


 


11


 


11




Cash outflows from operating activities before working capital changes


 


 


(1,080)


 


(1,601)




 


 


 


 


 


 




Interest paid


 


 


-


 


-




 


 


 


 


 


 




Changes in working capital:


 


 


 


 


 




Trade and other receivables


 


 


50


 


(216)




Trade and other payables


 


 


135


 


1,337




 


 


 


 


 


 




Net cash used in operating activities


 


 


(895)


 


(480)




 


 


 


 


 


 




Cash flows from investing activities


 


 


 


 


 




Purchases of plant and equipment


 


 


(74)


 


(3)




Proceeds from repayment of financial asset


 


 


54


 


-




Project evaluation costs


6


 


(1,408)


 


(1,778)




Advances to joint venture


 


 


(251)


 


(207)




Net cash used in investing activities


 


 


(1,679)


 


(1,988)




 


 


 


 


 


 




Cash flows from financing activities


 


 


 


 


 




Proceeds from issue of share capital


7


 


345


 


4,841




Listing and issue costs


7


 


-


 


(185)




Financing transaction costs paid


 


 


-


 


(192)




Proceeds short term working capital bridging finance


 


 


1,873


 


-




Net cash from financing activities


 


 


2,218


 


4,464




 


 


 


 


 


 




Net increase in cash and cash equivalents


 


 


 (356)


 


1,996




 


 


 


 


 


 




Cash and cash equivalents:


 


 


 


 


 




At beginning of period


 


 


1,315


 


150




Exchange differences


 


 


(11)


 


(11)




At end of period


 


 


948


 


2,135




 
 
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 2021 (unaudited) and 2020 (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
 
On 31 December 2020, IFRS as adopted by the European Union at that date was brought into UK law and became International Financial Reporting Standards ("IFRS") as adopted by the United Kingdom ("UK-adopted IFRS"), with future changes being subject to endorsement by the UK Endorsement Board. The Group transitioned to UK-adopted IFRS in its consolidated financial statements from 1 January 2021. There was no impact on the Group from this transition, nor any changes in accounting policy. These condensed consolidated financial statements have been prepared in accordance with UK-adopted 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 2020. 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 2020 Annual Report. The accounting policies are unchanged from those disclosed in the annual consolidated financial statements.
 
Going concern 
The financial report has been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
 
The annual financial statements of Kefi Gold and Copper Plc for the year ended 31 December 2020 were prepared in accordance with International accounting standards in conformity with the requirements of the Companies Act 2006. The Independent Auditors' Report on the Group's 2020 Annual Report was unqualified and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. The Independent Auditors' Report contained a material uncertainty related to going concern."
 
We draw attention to the financial statements, which indicate that the Group incurred a net loss of £2,223,000 (2020: loss of £1,054,000 during the period ended 30 June 2021 and, as of that date, the Group's current liabilities exceeded its current assets by £4,859,000. As stated in this note events or conditions, along with other matters as set forth in this, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a 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. 
As at the date of approval of the financial statements, the Group expects to be able to obtain short-term bridging finance to fund activities until financial close. The Group has in the past arranged funding facility options that it has been able to drawdown and use when funding has been necessary.  The Group has successfully used this type of funding in the past. The Group is managing payables through continuing negotiation with its management and suppliers, with the support of its Corporate Broker whilst it focuses on completing the project financing at Tulu Kapi. Financing will also be required to continue the development of the Tulu Kapi Gold Project through to production.
The Group's ability to continue as a going concern is contingent on raising additional capital and/or the successful exploration and subsequent exploitation of its areas of interest through sale or development. If sufficient additional capital is not raised, the going concern basis of accounting may not be appropriate, and the Group may have to realise its assets and extinguish its liabilities other than in the ordinary course of business and at amounts different from those stated in the financial report. No allowance for such circumstances has been made in the financial report.
 
The Board are cognisant of the potential impacts of COVID-19 on the Group. To date, there has been little impact of COVID-19 on the Group's operations and, whilst the potential future impacts are unknown, the Board has considered the operational disruption that could be caused by factors such as illness amongst our workforce and potential disruptions to supply chain, factoring in these potential impacts and reasonably mitigating actions to forecasts and sensitivity scenarios.
 
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.
 
New and amended standards adopted by the Company
The following new standards and interpretations became effective on 1 January 2021 and have been adopted by the Group. 
 
·      Amendments to Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
 
These amendments had no impact on the interim condensed consolidated financial statements of the Group. The Group intends to use the practical expedients in future periods if they become applicable
 
 
 
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 2021


Cyprus


Ethiopia


Saudi Arabia
 


 


Total




 


£'000


£'000


£'000


 


£'000




Operating loss (Excluding loss from jointly controlled entity)


(1,660)


(36)


-


 


(1,696)




Other finance costs


(419)


-


-


 


(419)




Foreign exchange profit


(204)


147


-


 


(57)




Share of loss from jointly controlled entity


-


-


(618)


 


(618)




Reversal of impairment loss in joint venture


-


-


567


 


567




Loss before tax


(2,283)


111


(51)


 


(2,223)




Tax


 


 


 


 


-




Loss for the period


 


 


 


 


(2,223)




 


 


 


 


 


 




Total assets


828


26,801


-


 


27,629




Total liabilities


(5,372)


(578)


(80)


 


(6,030)




Depreciation of property, plant and equipment


-


(7)


-


 


(7)




 
 
 
 
 
 




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)




Other finance costs


(192)


-


-


 


(192)




Foreign exchange loss


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)




 
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 2021


 


Six months ended 30 June 2020


 




Unaudited


Unaudited


 




£'000


£'000


 




Net loss attributable to equity shareholders


(2,223)


 


(1,054)


 




Net loss for basic and diluted loss attributable to equity shareholders


(2,223)


 


(1,054)


 




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


  2,145,425 


 


1,401,656


 




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


  2,283,973 


 


1,462,687


 




Loss per share:


 


 


 




Basic loss per share (pence)


      (0.10)


 


           (0.08)




 


 


 


 



 
 
 
 
 
 
 



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




 


 


 


30 June 2021


 


31 Dec 2020




 


 


 


Unaudited


 


Audited




 


 


 


£'000


 


£'000




Share Placement
Other receivables


 


 


-
19


 


232
38




VAT


 


 


207


 


178




 


 


 


 


 


 




 


 


 


 
226


 


 
448
 




6.     Intangible assets




  


 


 


 


 


 


 


 


 


 
Total exploration and project evaluation costs
£ '000




Cost


 


 


 


 


 


 


 


 


 




At 1 January 2020 (Audited)


 


 


 


 


 


 


 


 


24,776




Additions


 


 


 


 


 


 


 


 


1,843




At 30 June 2021 (Unaudited)


 


 


 


 


 


 


 


 


26,619




 


 


 


 


 


 


 


 


 


 




Accumulated Impairment


 


 


 


 


 


 


 


 


 




At 1 January 2021 (Audited)


 


 


 


 


 


 


 


 


(266)




At 30 June 2021 (Unaudited)


 


 


 


 


 


 


 


 


(266)




 


 


 


 


 


 


 


 


 


 




Net Book Value at 30 June 2021 (Unaudited)


 


 


 


 


 


 


 


 


26,353




Net Book Value at 31 December 2020 (Audited)


 


 


 


 


 


 


 


 


24,510




 
 
 
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 2021 (Audited)


2,137,927


 


2,138


23,328


33,118


58,584




Share Equity Placement 12 April 2021


15,000


 


15


-


83


98




 


 


 


 


 


 


 




 


 


 


 


 


 


 




At 30 June 2021 (Unaudited)


2,152,927


 


2,153


23,328


33,201


58,682




 
Issued capital
 
During April 2021, the Company issued 15,000,000 new ordinary shares of 0.1p each in the capital of the Company at a price of 0.65p per share. Company received notice from a warrant holder to exercise warrants over a total of 15,000,000 new Ordinary Shares.
 
 
8.     Share Based Payments 
 
8.1.    Warrants
 
Details of warrants outstanding as at 30 June 2021:




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




6 Jan 2020


06 Jan 2023


1.25p


 


7,450




29 May 2020


    29 May 2023


0.65p


 


5,000




20 Nov 2020


20 Nov 2023


1.60p


 


11,175




 


 


 


 


45,125




 




 


Weighted average ex. price


Unaudited Number of warrants*
000's




 


 


 




Outstanding warrants at 1 January 2021


1,56p


60,125




- granted


 


-




- exercised


1.60p


(15,000)




- cancelled/expired/forfeited


 


-




Outstanding warrants at 30 June 2021


1.86p


45,125




These warrants were issued to advisers and shareholders of the Group.
 
8.1.    Share options reserve        
 
Details of share options outstanding as at 30 June 2021:




Grant date


Expiry date


Exercise price


 


Unaudited
Number of shares* 000's




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


 


883




21-Mar-17


20-Mar-23


7.50p


 


7.024




01-Feb-18


31-Jan-24


4.50p


 


11,400




17-Mar-21


16-Mar-25


2.55p


 


119,747




 


 


 


 


143,318




 


 


 


 


 


 


 


 




 


 


 


 


30 June 2021


 


31 Dec 2020




 


 


 


 


Unaudited


 


Audited




 


Opening amount


 


 


1,273


 


1,118




 


Warrants issued costs


 


 


-


 


769




 


Share options issued to employees


 


 


136


 


21




 


Share options issued to directors and key management


 


 


348


 


30




 


Forfeited Options


 


 


-


 


-




 


Expired Options


 


 


(192)


 


-




 


Expired Warrants


 


 


-


 


(665)




 


 


 


 


1,565


 


1,273



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 
 




 


Weighted average ex. price


Unaudited
Number of shares*
 000's




 


 
 


 




Outstanding options at 1 January 2021


7.35p


25,482




-  granted


2.50p


119,747




-  cancelled/expired/forfeited


22.44p


(1,911)




Outstanding options at 30 June 2021


2.91p


143,318




 
 
The Company has issued share options to directors, employees and advisers to the Group.
On 17 March 2021, 119,747,339 options were issued. The Options expire after 4 years and, in normal circumstances, vest in three equal instalments, the first after one year, the second after two years and the third after three years from the date of grant.
The option agreements contain provisions adjusting the exercise price in certain circumstances including the allotment of fully paid Ordinary shares by way of a capitalisation of the Company's reserves, a subdivision or consolidation of the Ordinary shares, a reduction of share capital and offers or invitations (whether by way of rights issue or otherwise) to the holders of Ordinary shares. 
The estimated fair values of the options were calculated using the Black Scholes option pricing model. The inputs into the model and the results are as follows:
 




Date
 
 


Closing share price at issue date


Exercise price


Expected volatility


Expected life


Risk free rate


Expected dividend yield


Discount factor


Estimated fair value




17-Mar-21


2.05p


2.55p


89.27%


4yrs


0.281%


Nil


0%


1.21p




 
 
9.     Trade and other payables




        
        


 


 


30 June 2021
Unaudited


 


31 Dec 2020
Audited




 


 


 


£'000


 


£'000




Accruals and other payables


 


 


1,539


 


1,510




Other loans


 


 


125


 


134




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


 


 


80


 


-




Payable to Key Management and Shareholder (Note 12.3)


 


 


2,026


 


1,481




 


 


 


3,770


 


3,125




 
10.   Loans and Borrowings
10.1 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. Bridging Finance facilities bear a fixed interest rate of 25% and are repayable at the earlier of a capital raise or 30 November 2021. 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 meet its contractual obligation on any such bridging finance on a timely basis going forward.
 
 




Unsecured working capital bridging finance


Balance 1 Jan 2021
Audited


Drawdown Amount
Unaudited


Transaction Costs
Unaudited


Interest
 
Unaudited


Repayment
Shares
Unaudited


Repayment
Cash
Unaudited


Period Ended
30 June 2021
Unaudited


 




 


£'000


£'000


£'000


£'000


£'000


£'000


£'000




Repayable in cash in less than a year


-


1,873


-


390


-


-


2,263


 



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



10.2 Reconciliation of liabilities arising from financing activities




 


 


Cash Flows


 


 




 


Balance 1 Jan 2021


Inflow


(Outflow)


Finance Costs


Shares


Balance 30 June 2021




 


Audited


Unaudited


Unaudited


Unaudited


Unaudited


Unaudited




 


£'000


£'000


£'000


£'000


£'000


£'000




Unsecured working capital bridging finance


 


 


 


 


 


 




Short term loans


                         -


 


1,873            


390


            -


2,263




 


 


 


 


 


 


 




 


 


 


 


 


 


 




 


-


-


1,873


390


-


2,263



 
 
 
 
 
 
 
 
 
 
 



 
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 2019, 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 six month period ended 30 June 2020.
A loss of £618,000 was recognized by the Group for the period ended 30 June 2021 (2020: £587,000) representing the Group's share of losses for the period. As at 30 June 2021, KEFI owed ARTAR an amount of £80,000 (2020: £247,000). Shortly after 30 June 2021 KEFI transferred cash advance to Gold and Minerals of £185,000.
 
 




 


Period Ended
30 June 2021
Unaudited




Opening Balance


-




Cash advanced during the period


251




FX Loss on advances made to G&M


(200)




Share of loss in joint venture


(618)




Reversal of an impairment loss 


567




Closing Balance


-




 
 
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 2021


 


Six months ended 30 June 2020


 




 


Unaudited £'000


 


Unaudited £'000


 




Directors' fees


240


 


212


 




Directors' other benefits


17


 


26


 




Share-based benefits to directors


211


 


35


 




Directors bonus


-


 


106


 




Key management fees


491


 


481


 




Key management other benefits


6


 


11


 




Share-based benefits to key management


137


 


22


 




Key management bonus paid in shares


-


 


-


 




 


1,102


 


893


 




 
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.
Executive Bonus Plan
On 7 June 2021 the Company entered into a related party transaction with executive directors Harry Anagnostaras-Adams and John Leach whereby certain cash bonuses will be paid on the achievement of defined and specific milestones in relation to the Tulu Kapi project.  
 
12.2 Transactions with shareholders and related parties
 




 


 


 


Transaction to period end
30 June 2021


 


Transaction to period end
30 June 2020




 


 


 


Unaudited


 


Unaudited




Name


Nature of transactions


Relationship


£'000


 


£'000




 


 


 


 


 


 




 


 


 


 


 


 




Winchcombe Venture Limited               


Receiving of management and other professional services


Key Management and Shareholder


377


 


323




Nanancito Limited/Mr.Nicoletto               


Receiving of management and other professional services


Key Management and Shareholder


257


 


169




 


 


 


634


 


492




 
 




12.3 Payable to related parties
 


 


 


 


 


 




The Group


 


 


30 June 2021


 


30 Dec 2020




 


 


 


Unaudited


 


Audited




Name


Nature of transactions


Relationship


£'000


 


£'000




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


Finance


Jointly controlled entity partner


80


 


-




Winchcombe Ventures Limited               


Fees for services


Key Management and Shareholder


547


 


280




Nanancito Limited


Fees for services


Key Management and Shareholder


1,201


 


1,073




Directors


Fees for services


Key Management and Shareholder


278


 


128




 


 


 


 


 


 




 


 


 


2,106


 


1,481




 
 
13.  Capital commitments








 


 


30 June 2021
Unaudited
¹£'000


 


31 Dec 2020
Audited
£'000
 




 
Tulu Kapi Project costs
 


 


 
951


 


 
558
 




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


 


 
1,184


 


1,406




 
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 2021
Unaudited
¹ˊ²£'000


 


30 June 2021
Unaudited
¹$'000




On site Infrastructure


 


102,920


 


141,000




Mining


 


21,168


 


29,000




Off-site Infrastructure


 


14,599


 


20,000




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


 


48,175


 


66,000




Interest during grace and other finance effects


 


21,168


 


29,000




Mine capex paid per tonne in cash


 


40,876


 


56,000




Cost overrun facility


 


10,949


 


15,000




¹Total of not Contracted Project Capital Costs


 


259,854


 


356,000




 
 
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.
²USD/GBP rate used 1.37




 
 
14.  Events after the reporting date 
 
On 29 September 2021 the Company reported that the preparations for the launch of the development phase of the Company's Tulu Kapi Gold project have identified a number of security concerns that have led KEFI and TKGM to temporarily delay the Project until these are satisfactorily addressed.  The Ethiopian Ministry of Mines has been notified as have the other Government agencies, the Company's financing partners and the local community.  All parties respect the need to ensure the security situation is completely ready for the Project construction to proceed and all continue to prepare for launch as soon as appropriate during Q4 2021.
 
In the meantime, the Company's Hawiah Copper-Gold Project ("Hawiah") in Saudi Arabia continues its fast-track programme to produce an expanded and upgraded Mineral Resource Estimate and Preliminary Feasibility Study for development.
 

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