REG - Kefi Gold and Copper - Interim Results
28/09/2022 07:00
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RNS Number : 9093A Kefi Gold and Copper PLC 28 September 2022
28 September 2022
KEFI Gold and Copper plc
("KEFI", or the "Company", or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2022
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 2022.
The interim results for the Group encompass the activities of KEFI Minerals
(Ethiopia) Ltd ("KME") and Tulu Kapi Gold Mines Share Company ("TKGM") in
Ethiopia, and Gold & Minerals Ltd ("G&M") in Saudi Arabia.
The Tulu Kapi Gold Project ("Tulu Kapi") is under TKGM (planned to be c.70%
owned by KEFI). The Hawiah Copper-Gold Project ("Hawiah"), the Jibal Qutman
Gold Project ("Jibal Qutman") and other Saudi projects are under G&M
(planned to be c.30% owned by KEFI). Both TKGM and G&M are technically
and financially supported by KEFI so that each operating company can build a
local organisation that is suitable to manage long term production activities,
further exploration activities and exploit future development opportunities.
Executive Chairman's Statement
Overview
The improvement in the local working environment in both Ethiopia (security)
and Saudi Arabia (regulatory) since late 2021 has allowed KEFI to make rapid
progress during the period in both jurisdictions. KEFI now has a
much-improved position as an early-mover in both countries and with a more
balanced portfolio of advancing projects.
The Company now has three advanced projects in two countries which places it
in a lower risk position than in prior years. KEFI has also de-risked its
balance sheet by raising £8 million of equity in April 2022 to repay all
outstanding liabilities and reinforce the momentum of its projects.
Tulu Kapi Gold Project, Ethiopia
No other mining project of this scale in Ethiopia has been brought to Tulu
Kapi's stage of advancement in recent years and it will be the first
industrial scale mine development in the country in over 30 years. It has
taken some years to complete an extensive technical re-design of the project,
overhaul financial policies by the Ethiopian authorities which hindered mining
project finance and the patient and cautious traversing by the Company of
recent well-publicised events within the country. The project has imposed
many demands on a regulatory system which the Ethiopian Government continues
to upgrade, determined to build a modern minerals sector.
During the first half of 2022 TKGM continued its project launch preparations
and has regularly formally advised the Ethiopian Ministry of Mines of its
progress and of the tasks outstanding to ensure joint collaborative focus. The
focus has been maintained on full project launch later this year,
pre-conditioned on the security situation being independently assessed as
project-ready and the few remaining regulatory administrative tasks being
completed.
In collaboration with the regulatory agencies at all four levels of the
Ethiopian Government, notable progress during the period included:
· triggered detailed engineering - minimising procurement and
construction time;
· undertaking regular security monitoring;
· initial community youth employment programmes being established which
support the project, such as those covering road maintenance and expansion of
revegetation nurseries;
· the Ministry of Mines has now audited and endorsed the historical
project costs incurred up to 2020 of c.US$80 million and can now report this
to the Ethiopian central bank; and
· the central bank has now permitted that both development banks be
allowed to lend on the same terms and formal ratification is awaited from the
Government of remaining detail.
On the 30 June 2022 the TKGM project finance syndicate signed a funding
'Umbrella Agreement'. The Umbrella Agreement sets out the role and
contribution of each finance syndicate member in relation to the Tulu Kapi
Gold Project and, whilst reflecting the conditionality of the plan and
intended flexibility within the syndicate, it sets out a full funding package,
covering historical and budgeted future expenditure.
Tulu Kapi District Exploration
KEFI remains keen to re-commence its exploration of the additional prospects
it has successfully identified within the Tulu Kapi district exploration area
from within which the mining licence was duly excised because of the
successful discovery of the Tulu Kapi deposit. Whilst most historical
drilling was naturally of the Tulu Kapi deposit, there was significant work
done on many further prospects which await follow-up.
Whilst awaiting regulatory permission to re-activate the Company's Ethiopian
exploration, which is critical for long term planning for all stakeholders in
the community as well as the Company, the exploration focus has been
successfully switched to Saudi Arabia.
G&M, Saudi Arabia
G&M, rapidly becoming a leading explorer/developer/producer in the
fast-emerging Saudi minerals sector, has built the largest exploration team in
the country and has two major projects advancing towards development, one in
Preliminary Feasibility Study stage and one in Definitive Feasibility Study
stage. This has coincided with the Saudi Government's widely publicised
recent initiatives to welcome international expertise and fast-track the
development of its mining sector. G&M is focused on the development of
the Hawiah Copper-Gold Project, with an existing JORC resource of 24.9Mt at
0.9% copper, 0.85% zinc, 0.62 g/t gold and 9.81 g/t silver, and Jibal Qutman,
where the initially contemplated development project has been enlarged and is
now seen as a + 500,000 oz production plan for extraction over 10 years based
on a conventional open pit/CIL (Carbon-in-Leach process).
Exploration teams are also mobilising to the recently awarded exploration
projects, namely the Jabal Hillit and Qunnah 'Al Qassim' exploration licences
(straddling the prospective Ad Dawadimi and Afif terranes in the eastern
portion of the Arabian Shield in Saudi Arabia), and the Jadib Al Qahtanah
exploration licence, 45km east of the Mahad Ad Dahab mine, the principal
historic Saudi gold and silver mine.
Going forward the Company's Saudi assets are expected to have shorter
approval, financing and development schedules given there is no need to
resettle communities, less restrictive security protocols and established
capital markets and funding options.
Hawiah
Hawiah was discovered in September 2019 and now ranks in the:
· top three base metal projects in Saudi Arabia; and
· top 15% VMS projects worldwide.
A three-year 42,000m drilling programme has delineated a Mineral Resource of
24.9 million tonnes at 0.90% copper, 0.85% zinc, 0.62g/t gold and 9.8g/t
silver.
Work at the Hawiah Project (including its adjacent recently granted Al Godeyer
exploration licences) continued during the first half of 2022, focusing on
providing inputs across all required fronts for the updated Mineral Resource
Estimate and Hawiah Preliminary Feasibility Study ("PFS"), also scheduled for
completion by end of 2022.
The ongoing drilling at Hawiah is expected to yield increased resources and
its mineral resources, in gold-equivalent terms, are already approximately
those of Tulu Kapi and Jibal Qutman combined before any further resource
uplift.
Jibal Qutman
G&M has received formal notification from the Saudi Arabian Ministry of
Industry and Mineral Resources ("MIM") that land access issues which halted
the mine development application in 2016 are now resolved, clearing the way
for the re-issuance of exploration licences ("ELs") as a precursor to the
granting of the Jibal Qutman mining licence. Two of the three ELs have already
been received post period end. The DFS is being prepared on production of c.
500,000 oz over 10 years as compared with the original Preliminary Economic
Assessmen based on c. 200,000 oz.
Additional Licences
G&M's exploration areas are being expanded in Saudi Arabia where the newly
overhauled regulatory regime is speeding up progress. Two further exploration
licences have now been awarded to G&M on an initial five-year term,
bringing the total number of exploration licence issued to nine covering a
total area of 634km(2).
Summary
The first half of 2022 was one of considerable progress for the Company and
its projects, progress that has continued post period end. We are on track
to achieve the following milestones in Q4 2022: in Ethiopia for financial
close and the launch of construction of our Tulu Kapi Gold Project and in
Saudi Arabia our larger Hawiah Copper-Gold Project to deliver its PFS. We
are also expecting progress to continue at Jibal Qutman in Saudi Arabia, where
the DFS, mining licence and financing work is being fast-tracked ahead of
planned launch in 2023. Finally, we have been granted two new promising gold
exploration licenses to add to our portfolio.
KEFI is now better positioned than it has ever been with the improvement in
the local working environment in both Ethiopia and Saudi Arabia allowing us to
focus on our goals. The successful launch of Tulu Kapi and then Jibal Qutman
within the following six months or so, should see first gold pour for both at
the end of 2024. These two projects, plus the Hawiah project lined up for
sequential construction schedules is intended to lead to combined production
of c.400,000 oz gold or gold-equivalent per annum by 2026. This ignores
upside from exploration results adding to the resource position at the end of
2021. In addition, we have exciting earlier-stage exploration projects which
can be addressed concurrently.
We are at the beginning of an exciting chapter for both our joint-venture
partnerships.
Executive Chairman
Harry Anagnostaras-Adams
28 September 2022
Finance Director's Review
During the period under review KEFI has de-risked its balance sheet by raising
£8 million in equity funding to repay all outstanding liabilities as at the
end of the last financial year and provide additional working capital for its
projects.
In June 2022, an umbrella financing agreement and its associated documentation
for the Tulu Kapi project was signed by all project participants. This
agreement has successfully guided activities since and is now leading to the
syndicate commitment of the full project finance package at the end of October
2022, with planned escalation of activities and unconditional financial
commitments as the remaining conditions precedent are satisfied over
subsequent weeks - which is normal practice for a transaction of this nature.
In parallel, the recent grant of two of the three exploration licences for
the Jibal Qutman in Saudi Arabia has led us to upscale the DFS-completion and
financing sequence in Saudi. We want these two gold projects in production
by the end of 2024.
KEFI has funded all its past activities with approximately £72 million equity
capital raised at then prevailing share market prices. This avoided the
superimposing of debt-repayment risk onto the risks of exploration, permitting
and other challenges that always exist during the early phases of project
exploration and development in frontier markets. We do, however, avail
ourselves of unsecured advances from time to time as arranged by our Corporate
Broker to provide working capital pending the achievement of a short-term
business milestone.
We also continue our conservative accounting policy of writing off most
expenditure - 100% of expenditure in Saudi Arabia and much of Ethiopia.
KEFI's carrying value of the investment in KME, which holds the Company's
share of Tulu Kapi, is only £14.3 million as at 31 December 2021.
Measuring the Company's underlying assets on an NPV basis, has resulted in the
indicative NPV of its three main assets of £306 Million¹. The basis for
these estimates is consensus long-term price forecasts and other explanations
provided in the footnotes below. KEFI's planned beneficial interest in the
underlying valuation of our Saudi Arabia projects (carried at Nil in our
accounts) is now approaching that of the Ethiopian Tulu Kapi Gold Project
($140 million being 73% of $193 million).
¹The NPV calculations are based on Long term analysts' consensus forecasts is
sourced from CIBC Global Mining Group Analyst Consensus Long Term Commodity
Price Forecasts 6 September 2022 as applied to our inhouse modelling: The
Metal prices are US$1,650/ounce for gold, $7,898/tonne for copper,
$2,508/tonne for zinc and $21.4/ounce for silver; and 8% discount rate applied
against net cash flow to equity, after debt service and after tax. KEFI NPV is
based on a c.70% planned interest in Tulu Kapi open pit and underground and
30% interest in Hawiah and Jibal Qutman open pit and underground where
applicable. Significant updates are expected for all projects as resources and
feasibility studies are updated.
The balance sheet at full closing of all project funding for the different
projects will start to scale-up as we will then capitalise the development
expenditures
John Leach
Finance Director
28 September 2022
Quarterly Webinar
The Company will host its next quarterly investor webinar in London in late
October 2022, the details of which will be announced in due course.
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 (Managing Director) +357 99457843
John Leach (Finance Director) +357 99208130
SP Angel Corporate Finance LLP (Nominated Adviser) +44 (0) 20 3470 0470
Jeff Keating, Adam Cowl
Tavira Securities Limited (Lead Broker) +44 (0) 20 7100 5100
Oliver Stansfield, Jonathan Evans
WH Ireland Limited (Joint Broker) +44 (0) 20 7220 1666
Katy Mitchell, Andrew de Andrade
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
Condensed interim consolidated statements of comprehensive income
(unaudited) (All amounts in GBP thousands unless otherwise stated)
Six months ended 30 June 2022 Six months ended 30 June 2021
Unaudited Unaudited
Notes
Revenue - -
Exploration expenses - (21)
Gross loss - (21)
Administration expenses (1,282) (1,191)
Share-based payments (182) (484)
Share of loss from jointly controlled entity 11 (898) (618)
Impairment/(Reversal) in jointly controlled entity 11 (332) 567
Gain from dilution of equity interest in joint venture 11 286 -
Operating loss (2,408) (1,747)
Foreign exchange (loss)/gain (16) (57)
Finance expense (470) (419)
Loss before tax (2,894) (2,223)
Tax - -
Loss for the period (2,894) (2,223)
Loss for the period (2,894) (2,223)
Other comprehensive loss:
Exchange differences on translating foreign operations - -
Total comprehensive loss for the period (2,894) (2,223)
Basic loss per share (pence) 4 (0.09) (0.10)
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)
Unaudited Audited
Notes 30 June 2022 31 Dec 2021
ASSETS
Non-current assets
Property, plant and equipment 58 63
Intangible assets 6 29,679 28,361
Investments in JV - -
29,737 28,424
Current assets
Financial assets at fair value through OCI - -
Trade and other receivables 5 361 291
Cash and cash equivalents 2,313 394
2,674 685
Total assets 32,411 29,109
EQUITY AND LIABILITIES
Issued capital and reserves attributable to owners of the parent
Share capital 7 3,939 2,567
Deferred Shares 7 23,328 23,328
Share premium 7 43,187 35,884
Share options reserve 8 3,772 1,891
Accumulated losses (45,415) (42,731)
28,811 20,939
Non-controlling interest 1,450 1,379
Total equity 30,261 22,318
Current liabilities
Trade and other payables 9 2,150 5,556
Loans and borrowings 10 - 1,235
2,150 6,791
Total liabilities 2,150 6,791
Total equity and liabilities 32,411 29,109
The notes are an integral part of these unaudited condensed interim
consolidated financial statements.
On 28 September 2022, 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 Deferred shares Share premium Share options and warrants reserve Accumulated losses Total NCI Total equity
capital
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
Share issue costs - - - - - - - -
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
Loss for the year - - - - (2,701) (2,701) - (2,701)
Other comprehensive income - - - - - - - -
Total Comprehensive Income - - - - (2,701) (2,701) - (2,701)
Recognition of share-based payments - - - 326 - 326 - 326
Expired warrants - - - - - - - -
Issue of share capital and warrants 414 2,902 - 3,316 3,316
- -
Share issue costs - - (219) - - (219) - (219)
Non-controlling interest - - - - (63) (63) 63 -
At 1 January 2022 Audited 2,567 23,328 35,884 1,891 (42,731) 20,939 1,379 22,318
Loss for the period - - - - (2,894) (2,894) - (2,894)
Other comprehensive income - - - - - - - -
Total Comprehensive Income - - - - (2,894) (2,894) - (2,894)
Recognition of share based payments - - - 184 - 184 - 184
Cancellation & Expiry of options/warrants - - - (281) 281 - - -
Issue of share capital and warrants 1,372 - 7,747 1978 - 11,097 11,097
Share issue costs - - (444) - - (444) - (444)
Non-controlling interest - - - - (71) (71) 71 -
At 30 June 2022 Unaudited 3,939 23,328 43,187 3,772 (45,415) 28,811 1,450 30,261
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)
Six months ended 30 June 2022 Six months ended 30 June 2021
Notes
Cash flows from operating activities
Loss before tax (2,894) (2,223)
Adjustments for:
Share-based benefits 183 484
Fair value loss to derivative financial asset - -
Gain from dilution of equity interest in joint venture 11 286 -
Share of loss in joint venture 898 618
Impairment/(Reversal of impairment) loss in joint venture 332 (567)
Depreciation 9 7
Finance expense 470 390
Foreign exchange gains/(losses) on financing activities (66) 200
Foreign exchange (losses)/gains on operating activities (16) 11
Cash outflows from operating activities before working capital changes (798) (1,080)
Interest paid - -
Changes in working capital:
Trade and other receivables (70) 50
Trade and other payables (1,141) 135
Net cash used in operating activities (2,009) (895)
Cash flows from investing activities
Purchases of plant and equipment (4) (74)
Proceeds from repayment of financial asset - 54
Project evaluation costs 6 (2,041) (1,408)
Advances to joint venture (1,167) (251)
Net cash used in investing activities (3,212) (1,679)
Cash flows from financing activities
Proceeds from issue of share capital 7 8,000 345
Listing and issue costs 7 (444) -
Financing transaction costs paid (193) -
Repayment short-term working capital bridging finance 10.2 (1,140) -
Proceeds short-term working capital bridging finance 900 1,873
Net cash from financing activities 7,123 2,218
Net increase in cash and cash equivalents 1,902 (356)
Cash and cash equivalents:
At beginning of period 394 1,315
Exchange differences 17 (11)
At end of period 2,313 948
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 2022 (unaudited) and 2021
(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 2021.
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 2021 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 2021 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 2021 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.
2. Summary of significant accounting policies (continued)
Going concern continued
We draw attention to the financial statements, which indicate that the Group
incurred a net loss of £2,894,000 (2021: loss of £2,223,000) during the
period ended 30 June 2022 and, as of that date, the Group's current assets
exceeded its current liabilities. As stated in this note events or conditions,
along with other matters as set forth in this note, 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 bridging short-term financing to fund activities until
financial close of the Tulu Kapi project. The Group has previously been
successful in arranging such funding when required and. expects to be able to
continue to do so. 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.
Notwithstanding this because 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.
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 2022 Cyprus Ethiopia Saudi Arabia Total
£'000 £'000 £'000 £'000
Operating loss (Excluding loss from jointly controlled entity) (1,129) (48) - (1,177)
Other finance costs (470) - - (470)
Foreign exchange profit 365 (382) - (17)
Share of loss from jointly controlled entity - - (898) (898)
Reversal of impairment loss in joint venture - - (332) (332)
Loss before tax (1,234) (430) (1,230) (2,894)
Tax -
Loss for the period (2,894)
Total assets 1,949 30,462 - 32,411
Total liabilities (957) (1,193) - (2,150)
Depreciation of property, plant and equipment - (9) - (9)
3. Operating segments
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)
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 2022 Six months ended 30 June 2021
Unaudited Unaudited
£'000 £'000
Net loss attributable to equity shareholders (2,894) (2,223)
Net loss for basic and diluted loss attributable to equity shareholders (2,894) (2,223)
Weighted average number of ordinary shares for basic loss per share (000's) 3,206,359 2,145,425
Weighted average number of ordinary shares for diluted loss per share (000's) 3,851,590 2,283,973
Loss per share:
Basic loss per share (pence) (0.09) (0.10)
The effect of share options and warrants on the loss per share is
anti-dilutive.
5. Trade and other receivables
30 June 2022 31 Dec
2021
Unaudited Audited
£'000 £'000
Other receivables 74 36
VAT 287 255
361 291
6. Intangible assets
Total exploration and project evaluation costs
£ '000
Cost
At 1 January 2021 (Audited) 28,627
Additions 1,318
At 30 June 2022 (Unaudited) 29,945
Accumulated Impairment
At 1 January 2022 (Audited) (266)
At 30 June 2022 (Unaudited) (266)
Net Book Value at 30 June 2022 (Unaudited) 29,679
Net Book Value at 31 December 2021 (Audited) 28,361
7. Share capital
Number of shares Share Deferred shares Share premium
000's Capital £'000 £'000 Total
£'000 £'000
Issued and fully paid
At 1 January 2022 (Audited) 2,567,305 2,567 23,328 35,884 61,779
Share Equity Placement 17 January 2022 371,818 372 - 2,725 3,097
Share Equity Placement 25 April 2022 550,000 550 - 3,850 4,400
Share Equity Placement 18 May 2022 450,000 450 - 3,150 3,600
Share issue costs - - - (444) (444)
Warrants: fair value split of warrants issued to shareholders. - - - (1,663) (1,663)
Broker warrants: issue costs (315) (315)
At 30 June 2022 (Unaudited) 3,939,123 3,939 23,328 43,187 70,454
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.
On the 13 January 2022 the Company admitted 371,817,944 new ordinary shares of
the Company at a placing price of 0.8 pence per Ordinary Share.
The Company raised £8.0 million through the issue of 1,000,000,000 new
Ordinary Shares at a placing price of 0.8 pence per Ordinary Share. These new
Ordinary Shares were admitted in two tranches, 550,000,000 on 25 April 2022
and 450,000,000 on 18 May 2022, following shareholder approval of the
conditional placement at a General Meeting of the Company.
8. Share Based Payments
8.1. Warrants
8.1.1. Shareholder Warrants
The Company issued 393,096,865 short term warrants to subscribe for new
ordinary shares of 0.1p each at 1.6p per share in accordance with the January
2022 share placement and as approved by shareholders. The Warrants will become
exercisable if, during a two-year period following the date of Second
Admission, the Warrant Trigger Event occurs. If the Warrant Trigger Event
occurs then (i) the holders of the Warrants must exercise the Warrants within
30 days from the occurrence of the Warrant Trigger Event; and (ii) the
Warrants will expire following the end of the 30 day period referenced above
if not exercised. If the Warrant Trigger Event has not occurred within two
years following the date of Second Admission, then the Warrants shall lapse
and will no longer be capable of being exercised.
The Company issued 500,000,000 shareholders warrants to subscribe for new
ordinary shares of 0.1p each at 1.6p per share in accordance with the April
2022 and May 2022 share placement and as approved by shareholders on 17 May
2022. the Company granted one warrant per two Placing Shares at an exercise
price of 1.6 pence (the "Placing Warrants") exercisable for a period of two
years from Admission of the Conditional Placing Shares. The Company has
elected that the Placing Warrants will become exercisable if, during a
two-year period following the date of Admission of the Conditional Placing
Shares, the on-market share closing price of the Ordinary Shares for five
consecutive days reaches or exceeds 2.4 pence (being a 50% premium on the
Placing Warrant exercise price) (the "Warrant Trigger Event"). If the Warrant
Trigger Event occurs then: (i) the holders of the Placing Warrants must
exercise the Placing Warrants within 30 days from the occurrence of the
Warrant Trigger Event; and (ii) the Placing Warrants will expire following
the end of the 30-day period referenced above if not exercised. If the
Warrant Trigger Event has not occurred within two years following the date of
Admission of the Conditional Placing Shares, then the Placing Warrants shall
lapse and will no longer be capable of being exercised.
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
8. Share Based Payments (continued)
8.1.2. Broker Warrants
During May 2022, the Company issued 75,000,000 broker warrants to subscribe
for new ordinary shares of 0.1p each at 0.8p per share to Tavira Securities
Limited pursuant to the Placing Agreement. The warrants expire within three
years of the date of Second Admission.
Details of warrants outstanding as at 30 June 2022:
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
06 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
13 Jan 2022 13 Jan 2024 1.60p 393,097
18 May 2022 17 May 2024 1.60p 500,000
18 May 2022 17 May 2025 0.80p 75,000
1,013,222
The estimated fair values of the warrants 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
13 Jan 2022 0.77p 1.60p 89.37% 2yrs 0.835% Nil 0% 0.22p
18 May 2022 0.71p 1.60p 81.079% 2yrs 1.459% Nil 0% 0.16p
18 May 2022 0.71p 0.80p 99.72% 3yrs 1.475% Nil 0% 0.42p
Weighted average ex. price Unaudited Number of warrants*
000's
Outstanding warrants at 1 January 2022 1,87p 45,125
- granted 1,54p 968,097
- cancelled/expired/forfeited - -
- exercised
Outstanding warrants at 30 June 2022 1.55p 1,013,222
These warrants were issued to advisers and shareholders of the Group.
8. Share Based Payments (continued)
8.2. Share options reserve
Details of share options outstanding as at 30 June 2022:
Grant date Expiry date Exercise price Unaudited
Number of shares* 000's
05-Aug-16 05-Aug-22 10.20p 883
22-Mar-17 21-Mar-23 7.50p 6,750
01-Feb-18 31-Jan-24 4.50p 9,600
17-Mar-21 16-Mar-25 2.55p 92,249
109,482
30 June 2022 31 Dec
2021
Unaudited Audited
Opening amount 1,891 1,273
Warrants issued costs 1,978 -
Share options charges relating to employees 55 148
Share options issued to directors and key management (Note 12.1) 129 662
Forfeited options (124) -
Exercised warrants - -
Expired warrants - -
Expired options (157) (192)
Closing Amount 3,772 1,891
Weighted average ex. price Unaudited
Number of shares*
000's
Outstanding options at 1 January 2022 3.21p 127,610
- granted - -
- forfeited 2.90p (13,863)
- cancelled/expired 7.37p (4,265)
Outstanding options at 30 June 2022 2.91p 109,482
The Company has not issued share options to directors, employees and advisers
to the Group during the period.
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.
9. Trade and other payables
30 June 2022 31 Dec 2021
Unaudited Audited
£'000 £'000
Accruals and other payables 964 2,499
Other loans 112 97
Payable to joint venture partner (Note 11 and Note 12.3) - 285
Payable to Key Management and Shareholder (Note 12.3) 1,074 2,675
2,150 5,556
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. 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 and were set off in shares by the
lenders participation in the Company placements. In the event the Group was
unable to pay this finance it would be repaid after other debt securities have
been paid, if any.
Unsecured working capital bridging finance Balance 1 Jan 2022 Drawdown Amount Transaction Costs Interest Repayment Repayment² Period Ended
Audited Unaudited Unaudited Shares¹ Cash 30 June 2022
Unaudited Unaudited Unaudited Unaudited
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Repayable in cash in less than a year 1,235 900 - 236 (1,231) (1,140) -
10.2. Reconciliation of liabilities arising from financing
activities
Cash Flows
Balance Inflow (Outflow)² Finance Costs Shares¹ Balance
1 Jan 30 June 2022
2022
Audited Unaudited Unaudited Unaudited Unaudited Unaudited
£'000 £'000 £'000 £'000 £'000 £'000
Unsecured working capital bridging finance
Short term loans 1,235 236 (1,231) -
900 (1,140)
1,235 236 (1,231) -
900 (1,140)
¹The lenders agreed to set off their short term loans owed by Company
against amounts owed by the lenders as a result of their participation in the
Company share placements during the year.
²The lenders and the Company entered into a net settlement agreement of
£1,136,000 to offset amounts owed between the parties.
11. Joint venture agreements
KEFI is the operating partner with a 30% shareholding in G&M with ARTAR
holding the other 70%. 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 2022, the Company has diluted its interest in the Saudi joint-venture
company Gold and Minerals from 31.21% to 30%% by not contributing its full 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 30% the Company was released
from this liability. This resulted in a gain of £285,897. In accordance with
the group's accounting policy gain of £285,897 was reported in the profit or
loss during the six-month period ended 30 June 2021.
A loss of £1,230,000 was recognized by the Group for the period ended 30 June
2022 (2021: £618,000) representing the Group's share of losses for the
period. As at 30 June 2022, KEFI owed ARTAR an amount of £nil (2021:
£80,000).
Period Ended
30 June 2022
Unaudited
Opening Balance -
Cash advanced during the period 1,167
FX Gain on advances made to G&M 63
Share of loss in joint venture (898)
Additional impairment loss (332)
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 2022 Six months ended 30
June 2021
Unaudited £'000 Unaudited
£'000
Directors' fees 265 240
Directors' other benefits 20 17
Share-based benefits to directors 96 211
Directors bonus - -
Key management fees 84 491
Key management other benefits - 6
Share-based benefits to key management 33 137
Key management bonus paid in shares - -
498 1,102
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. Related party transactions (continued)
12.2. Transactions with shareholders and related parties
Transaction to period end Transaction to period end
30 June 2022 30 June 2021
Unaudited Unaudited
Name Nature of transactions Relationship £'000 £'000
Winchombe Venture Limited Receiving of management and other professional services Key Management and Shareholder - 377
GPR Dehler Receiving of management and other professional services Key Management and Shareholder 84 -
Nanancito Limited/Mr. Nicoletto Receiving of management and other professional services Shareholder 97 257
181 634
12.3. Payable to related parties
The Group 30 June 2022 30 Dec 2021
Unaudited Audited
Name Nature of transactions Relationship £'000 £'000
Abdul Rahman Saad Al-Rashid & Sons Company Limited ("ARTAR") Finance Jointly controlled entity partner - 285
Winchombe Ventures Limited Fees for services Key Management and Shareholder - 834
GPR Dehler Fees for services Key Management and Shareholder 34 -
Nanancito Limited Fees for services Shareholder 941 1,350
Directors Fees for services Key Management and Shareholder 99 491
1,074 2,960
13. Capital commitments
30 June 2022 31 Dec 2021
Unaudited Audited
¹£'000 £'000
Tulu Kapi Project costs¹ 487 452
Saudi Arabia Exploration costs committed to field work that has been
recommenced
1,551 732
¹Once 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.
¹Once 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.
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