REG - Kefi Gold and Copper - Interim Results
30/09/2024 07:00
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RNS Number : 1263G Kefi Gold and Copper PLC 30 September 2024
30 September 2024
KEFI Gold and Copper plc
("KEFI", or the "Company", or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024
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 2024.
The interim results for the Group encompass the activities of KEFI Minerals
(Ethiopia) Ltd ("KME"), Tulu Kapi Gold Mines Share Company ("TKGM") in
Ethiopia, and Gold & Minerals Ltd ("GMCO") in Saudi Arabia.
The Tulu Kapi Gold Project ("Tulu Kapi") is currently 95% beneficially owned
by KEFI through KEFI's wholly owned subsidiary KME. The Hawiah Copper-Gold
Project ("Hawiah"), the Jibal Qutman Gold Project ("Jibal Qutman") and other
Saudi projects are held by GMCO in which KEFI currently has a 24.75%
interest.
Both TKGM and GMCO are being developed by KEFI and its partners as separate
operating companies so that each can build a local organisation capable of
developing and managing long-term production and exploration activities, as
well as fully exploit future development opportunities.
Highlights
KEFI is swiftly advancing its Early Works at Tulu Kapi in Ethiopia, benefiting
from the overtly supportive local community. The lack of legacy social or
environmental issues at Tulu Kapi, such as those often associated with
artisanal mining found in other mining regions, has simplified the task at
hand for our Company. The general country environment has also become
increasingly development-focused and pro-mining in particular, with
significant site activities commencing over the past two months due to the
deployment of extensive safety-protection forces. During this time, Ethiopia
has introduced national pro-development reforms, positioning the country once
again among the top 10 globally for growth, a status it held for nearly two
decades.
Recent reforms in Ethiopia include the floating of the currency, the launch of
the first IPO on the new Ethiopian Stock Exchange, the opening of the local
financial sector to foreign investment, the rescheduling of international
debt, and the implementation of a significant IMF financial support package.
Recent reforms for the mining industry spearheaded by KEFI include exemption
from exchange and capital controls, capital ratios of up to 80:20 for mining,
market-based interest rates and specialised security deployment for strategic
mining projects. KEFI is positioned to launch the first Ethiopian listed
securities in the Ethiopian mining sector.
In Saudi Arabia, the joint venture has made two core discoveries, which
continue to grow in size, as well as several satellite discoveries. To support
the next phase of GMCO's development, the local leadership team has been
expanded and feasibility studies for the Jibal Qutman Gold and Hawiah
Copper-Gold projects are being refined and re-focused, while GMCO's regional
exploration efforts are being further elevated.
As previously reported this quarter, we remain on track with our high-grade
Tulu Kapi project in Ethiopia, our flagship and most advanced venture. Thanks
to the Ethiopian Government's substantial efforts to ensure safe and
internationally compliant development, the Tulu Kapi funding package can now
progress towards project launch. The Early Works programme was launched in
Q2-2024 to demonstrate readiness for Major Works and the next steps are to
finalise second bank credit approval, sign the definitive detailed financing
agreements, drawdown the equity funding and then launch Major Works - all
targeted within Q4-2024.
Other than completing the Early Works programme generally, the current focus
is particularly on:
· Reinforcing our social licence to operate at site via an intense
consultative process to demonstrate our readiness on the ground for Major
Works;
· the co lender's credit approval which now includes a discussion
in respect increasing the financing amounts on offer;
· the book build for the issuance of the Equity Risk Notes to local
subsidiaries of multinational corporations and local sophisticated investor;
and
· preparing for possible additional stock exchange listing of KEFI
or regional listing of the Ethiopian subsidiary, to follow the launch of Major
Works at Tulu Kapi.
Our patient work with the local and regional finance community is working well
in mitigating against an over-reliance on development support from what has
been a cyclically weak stock market for the junior mining sector during much
of the past decade. The current record gold prices could begin to put the
investment spotlight onto our sector.
Working Capital
The Company successfully raised gross proceeds of approximately £5.0 million,
comprising £4.5 million from the placing and £495,916 from the retail offer
in March 2024. Additionally, the Company issued remuneration shares to certain
KEFI directors valued at £500,000 in lieu of cash for accrued fees and,
during May 2024, the Company issued shares totalling £1.4 million to key
advisers in recognition of their services in supporting various
value-enhancing initiatives following the launch of the Early Works programme
at the Company's Tulu Kapi Gold Project.
Board and Management Team
After appointing in 2023 independent Non-executive Director of the Company Dr
Alistair Clark, a world-recognised social and environmental expert, the
Company also recently appointed Mr Addis Alemayehou as an independent
Non-executive Director of the Company with effect from the closing of the
Company's Annual General Meeting ("AGM") held on 22 July 2024. Addis is a
senior figure in the Ethiopian business community, including a prominent role
advising major international corporations with long-standing operations
therein.
Mark Tyler, a non-executive director of the Company, retired from the Company
at the conclusion of the AGM.
The senior project planning and finance teams are unchanged, the project
management team in Ethiopia has been expanded with Early Works and most
recruitment will trigger with the launch of Major Works.
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
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe, Florence Chandler
3PPB LLC International (Non-UK IR)
Patrick Chidley +1 (917) 991 7701
Paul Durham +1 (203) 940 2538
Condensed interim consolidated statements of comprehensive income
(unaudited) (All amounts in GBP thousands unless otherwise stated)
Six months ended 30 June 2024 Six months ended 30 June 2023
Unaudited Unaudited
£'000 £'000
Notes
Revenue - -
Exploration expenses - -
Gross loss - -
Administration expenses (3,283) (1,512)
Share-based payments - (62)
Share of loss from jointly controlled entity 11 (2,239) (2,368)
Reversal of impairment/(Impairment) in jointly controlled entity 11 64 (203)
Gain from dilution of equity interest in joint venture 11 833 1,169
Operating loss (4,625) (2,976)
Foreign exchange (loss)/gain (4) 12
Finance expense (1,470) (452)
Loss before tax (6,099) (3,416)
Tax - -
Loss for the period (6,099) (3,416)
Loss for the period (6,099) (3,416)
Other comprehensive loss:
Exchange differences on translating foreign operations - -
Total comprehensive loss for the period (6,099) (3,416)
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)
Unaudited Audited
Notes 30 June 2024 31 Dec
2023
ASSETS £'000 £'000
Non-current assets
Property, plant and equipment 142 100
Intangible assets 6 36,264 34,716
Investments in JV 11 - -
36,406 34,816
Current assets
Financial assets at fair value through OCI - -
Trade and other receivables 5 1,155 528
Cash and cash equivalents 982 192
2,137 720
Total assets 38,543 35,536
EQUITY AND LIABILITIES
Issued capital and reserves attributable to owners of the parent
Share capital 7 6,059 4,965
Deferred Shares 7 23,328 23,328
Share premium 7 54,169 48,922
Share options reserve 8 1,989 3,675
Accumulated losses (60,839) (56,483)
24,706 24,407
Non-controlling interest 1,832 1,709
Total equity 26,538 26,116
Current liabilities
Trade and other payables 9 9,029 7,307
Loans and borrowings 10 2,976 2,113
12,005 9,420
Total liabilities 12,005 9,420
Total equity and liabilities 38,543 35,536
The notes are an integral part of these unaudited condensed interim
consolidated financial statements.
On 29 September 2024, 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
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 Audited 3,939 23,328 43,187 3,747 (48,781) 25,420 1,562 26,982
Loss for the period - - - - (3,416) (3,416) - (3,416)
Other comprehensive income - - - - - - - -
Total Comprehensive Income - - - - (3,416) (3,416) - (3,416)
Recognition of share-based payments - - - 62 - 62 - 62
Cancellation & Expiry of options/warrants - - - (200) 200 - - -
Issue of share capital and warrants 919 - 5,513 - - 6,432 - 6,432
Share issue costs - - (311) - - (311) - (311)
Warrants issued fair value - - (141) 141 - - -
Non-controlling interest - - - - (59) (59) 59 -
At 30 June 2023 Unaudited 4,858 23,328 48,389 3,468 (51,915) 28,128 1,621 29,749
Loss for the year - - - - (4,480) (4,480) - (4,480)
Other comprehensive income - - - - - - - -
Total Comprehensive Income - - - - (4,480) (4,480) - (4,480)
Recognition of share-based payments - - - 207 - 207 - 207
Issue of share capital and warrants 107 - 643 - - 750 - 750
Share issue costs - - (110) - - (110) - (110)
Non-controlling interest - - - - (88) (88) 88 -
At 1 January 2024 Audited 4,965 23,328 48,922 3,675 (56,483) 24,407 1,709 26,116
Loss for the period - - - - (6,099) (6,099) - (6,099)
Other comprehensive income - - - - - - - -
Total Comprehensive Income - - - - (6,099) (6,099) - (6,099)
Recognition of share-based payments - - - - - - -
Cancellation & Expiry of options/warrants - - - (1,866) 1,866 - - -
Issue of share capital and warrants 1,094 - 5,760 - - 6,854 - 6,854
Share issue costs - - (333) - - (333) - (333)
Warrants issued fair value (180) 180 - - -
Non-controlling interest - - - - (123) (123) 123 -
At 30 June 2024 Unaudited 6,059 23,328 54,169 1,989 (60,839) 24,706 1,832 26,538
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 2024 Six months ended 30 June 2023
Notes
£'000 £'000
Cash flows from operating activities:
Loss before tax (6,099) (3,416)
Adjustments for:
Share-based benefits - 62
Gain from dilution of equity interest in joint venture 11 (833) (1,169)
Share of loss in jointly controlled entity 2,239 2,368
Impairment loss in jointly controlled entity (64) 203
Depreciation 9 15
Finance expense 1,304 417
Exchange differences 5 2
Cash outflows from operating activities before working capital changes (3,439) (1,511)
Interest paid (746) -
Changes in working capital:
Trade and other receivables (627) 40
Trade and other payables 2,540 1,122
Net cash used in operating activities (2,272) (349)
Cash flows from investing activities:
Purchases of plant and equipment (51) (3)
Proceeds from repayment of financial asset - -
Project exploration and evaluation costs 6 (1,625) (1,567)
Advances to jointly controlled entity - (795)
Net cash used in investing activities (1,676) (2,365)
Cash flows from financing activities:
Proceeds from issue of share capital 7 2,654 2,228
Listing and issue costs 7 (334) (311)
Bank short term loan 413 -
Repayment short-term working capital bridging finance 10.2 (1,595) (167)
Proceeds short-term working capital bridging finance 10.2 3,600 1,140
Net cash from financing activities 4,738 2,890
Net increase in cash and cash equivalents 790 176
Cash and cash equivalents:
At beginning of period 192 220
At end of period 982 389
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 2024 (unaudited) and 2023
(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
These condensed interim financial statements are unaudited.
The unaudited interim condensed consolidated financial statements for the
period ended 30 June 2024 have been prepared in accordance with International
Accounting Standard 34: Interim Financial Reporting. IFRS comprise the
standard issued by the International Accounting Standard Board ("IASB"), and
IFRS Interpretations Committee ("IFRICs") as issued by the IASB as adopted for
use in the UK.
These unaudited interim condensed consolidated financial statements 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 consolidated financial statements of the
Company and the Group for the year ended 31 December 2023. These unaudited
interim condensed consolidated financial statements do not include all the
disclosures required for annual financial statements, and accordingly, should
be read in conjunction with the consolidated financial statements and other
information set out in the Group's annual report for the year ended 31
December 2023.
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 2023 were prepared in accordance with UK adopted international
accounting standards in conformity with the requirements of the Companies Act
2006. The Independent Auditors' Report on the Group's 2023 Annual Report was
an unqualified audit opinion with a material uncertainty relating to going
concern noted.
We draw attention to the interim financial statements, which indicate that the
Group incurred a net loss of £6,099,000 (2023: loss of £3,416,000) during
the period ended 30 June 2024 and, as of that date, the Group's current
liabilities exceeded its current assets. 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 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 as set out in a company announcement 'Tulu Kapi
Operational Update' dated 20 August 2024.
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 the existence of material uncertainty that may cast
significant doubt over the Group and Company's ability to continue as a going
concern based on historical experience and ongoing proactive discussions with
stakeholders, the Board has a reasonable expectation that the Group will be
able to raise further funds 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 two distinct operating segments, being that of mineral
exploration and development and corporate activities. The Group's exploration
and development activities are in Ethiopia and Saudi Arabia held through
jointly controlled entities in each jurisdiction with KEFI administration and
corporate activities based in Cyprus.
Unaudited Six months ended 30 June 2024 Corporate Ethiopia Saudi Arabia Total
£'000 £'000 £'000 £'000
Operating loss (Excluding loss from jointly controlled entity) (3,212) (71) - (3,283)
Other finance costs (1,470) - - (1,470)
Foreign exchange (loss)/profit (232) 228 - (4)
Gain on dilution of joint venture 833 833
Share of (loss)/Profit from jointly controlled entity - - (2,239) (2,239)
Reversal of impairment loss in jointly controlled entity - - 64 64
Loss before tax (4,914) 157 (1,342) (6,099)
Tax -
Loss for the period (6.099)
Total assets 1,268 37,275 - 38,543
Total liabilities (10,964) (1,041) - (12,005)
Unaudited Six months ended 30 June 2023 Cyprus Ethiopia Saudi Arabia Total
£'000 £'000 £'000 £'000
Operating loss (Excluding loss from jointly controlled entity) (1,528) (46) - (1,574)
Other finance costs (452) - - (452)
Foreign exchange profit (772) 784 - 12
Gain on dilution of jointly controlled entity - 1,169 1,169
Share of loss from jointly controlled entity - - (2,368) (2,368)
Reversal of impairment loss in jointly controlled entity - - (203) (203)
Loss before tax (2,752) 738 (1,402) (3,416)
Tax -
Loss for the period (3,416)
Total assets 974 33,490 - 34,464
Total liabilities (4,066) (649) - (4,715)
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 2024 Six months ended 30 June 2023
Unaudited U
n
a
u
d
i
t
e
d
£'000 £
'
0
0
0
Net loss attributable to equity shareholders (6,099) (3,416)
Net loss for basic and diluted loss attributable to equity shareholders (6,099) (3,416)
Weighted average number of ordinary shares for basic loss per share (000's) 5,561,263 4,044,481
Weighted average number of ordinary shares for diluted loss per share (000's) 5,825,698 5,169,887
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 2024 31 Dec
2023
Unaudited Audited
£'000 £'000
Upfront Service Fee 665 -
Other receivables 35 124
VAT 455 404
1,155 528
6. Intangible assets
Total exploration and project evaluation costs
£ '000
Cost
At 1 January 2024 (Audited) 34,982
Additions 1,548
At 30 June 2024 (Unaudited) 36,530
Accumulated Impairment
At 1 January 2024 (Audited) 266
At 30 June 2024 (Unaudited) 266
Net Book Value at 30 June 2024 (Unaudited) 36,264
Net Book Value at 31 December 2023 (Audited)
34,716
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 2024 (Audited) 4,965,125 4,965 23,328 48,922 77,215
Share Equity Placement 8 March 2024 750,000 750 - 3,750 4,500
Share Equity Placement 26 March 2024 165,986 166 - 830 996
Share Equity Placement 28 May 2024 177,982 178 1,180 1,358
Share issue costs - - - (333) (333)
Warrants issue fair value cost - - - (180) (180)
At 30 June 2024 (Unaudited) 6,059,093 6,059 23,328 54,169 83,556
Issued capital
On the 8 March 2024 the Company admitted 750,000,000 new ordinary shares of
the Company at a placing price of 0.6 pence per Ordinary Share.
On the 26 March 2024 the Company admitted 165,986,055 new ordinary shares of
the Company at a placing price of 0.6 pence per Ordinary Share. Shares valued
at £495,916 were placed with retail investors, while £500,000 worth of
shares were issued to settle remuneration.
On the 28 May 2024 the Company admitted 177,981,851 new ordinary shares of
0.1p each at a price of 0.763p per share. These shares were issued to
certain key advisers to the Company in consideration for their services.
8. Share Based Payments
Warrants
Pursuant to shareholder approval at the AGM, certain placement Broker
commissions and advisory services were satisfied through the grant of
49,900,000 warrants. Each Warrant entitles the Broker and Adviser to
subscribe for one new Ordinary Share at a price of 0.6 pence per share,
exercisable for a period of three years from 26 March 2024.
Details of warrants outstanding as at 30 June 2024:
Grant date Expiry date Exercise price Unaudited Number of warrants*
000's
18 May 2022 17 May 2025 0.80p 75,000
30 June 2023 02 July 2026 0.70p 39,286
26 March 2024 26 March 2027 0.60p 49,900
164,186
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
26 March 2024 0.57p 0.60p 90% 3yrs 5.5% Nil 0% 0.36p
Weighted average ex. price Unaudited Number of warrants*
000's
Outstanding warrants at 1 January 2024 1,51p 1,007,383
- granted 0.60p 49,900
- cancelled/expired/forfeited 1.60p (893,097)
- exercised -
Outstanding warrants at 30 June 2024 0.72p 164,186
These warrants were issued to advisers and shareholders of the Group.
Share options reserve
Details of share options outstanding as at 30 June 2024:
Grant date Expiry date Exercise price Unaudited
Number of shares* 000's
17-Mar-21 16-Mar-25 2.55p 92,249
12-Sep-23 11-Sep-30 0.60p 8,000
100,249
30 June 2024 31 Dec
2023
Unaudited Audited
Opening amount 3,675 3,747
Warrants issued costs 180 110
Share options charges relating to employees - 42
Share options issued to directors and key management (Note 12.1) - 81
Forfeited options - 36
Exercised warrants - -
Expired warrants (1,664) (178)
Expired options (202) (163)
Closing Amount 1,989 3,675
Weighted average ex. price Unaudited
Number of shares*
000's
Outstanding options at 1 January 2024 2.58p 109,849
- granted - -
- forfeited - -
- cancelled/expired 4.50p (9,600)
Outstanding options at 30 June 2024 2.49p 100,249
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 2024 31 Dec 2023
Unaudited Audited
£'000 £'000
Accruals and other payables 3,301 2,877
Other loans 99 100
Payable to jointly controlled entity (Note 11 and Note 12.3) 5,071 3,728
Payable to Key Management and Shareholder (Note 12.3) 558 602
9,029 7,307
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
Ethiopian Bank Short term Loan ETB 20% March 2025 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. If the Group is unable to
repay this financing, it will only be repaid after any other debt securities
have been settled, if applicable.
Unsecured working capital bridging finance Balance 1 Jan 2024 Drawdown Amount Transaction Costs Interest Repayment Repayment Period Ended
Audited Unaudited Unaudited Unaudited Shares/Payment Netting¹ Cash 30 June 2024
Unaudited Unaudited Unaudited
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Repayable in cash in less than a year 2,113 3,600 - 1,304 (2,113) (2,341) 2,563
Ethiopian Bank Loan - 413 - - - - 413
Total 2,113 4,013 - 1,304 (2,113) (2,341) 2,976
10.2. Reconciliation of liabilities arising from financing
activities
Cash Flows
Unsecured working capital bridging finance Balance Inflow Unaudited (Outflow) Unaudited Finance Costs Unaudited Shares/Payment Balance
1 Jan Netting¹ Unaudited 30 June 2024 Unaudited
2024 Audited
£'000 £'000 £'000 £'000 £'000 £'000
Short term loans 2,113 1,304
4,013 (2,341) (2,113) 2,976
2,113 4,013 (2,341) 1,304 (2,113) 2,976
¹ The 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. The payment netting procedure was
utilized to streamline the cash settlement process for participating in share
placement and repaying bridging finance.
11. Joint venture agreements
KEFI is the technical partner with a 24.75% shareholding in GMCO with ARTAR
holding the other 75.25%. KEFI provides GMCO 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 GMCO remains in compliance with all governmental and other
procedures. GMCO has five Directors, of whom two are nominated by KEFI. GMCO
is treated as a jointly controlled entity and has been equity accounted. KEFI
has reconciled its share in GMCO's losses.
During the current year, all relevant activities of GMCO required the
unanimous consent of its five directors. Under terms of the original GMCO
shareholders agreement, if a shareholder's ownership stake falls below 25%,
the remaining shareholder has the right, but not the obligation, to acquire
the interest at fair value. "Fair value" is determined as an estimate of the
price the transferring party would have received if it had sold all its shares
in GMCO in an arm's length exchange, driven by typical business
considerations.
Amendments to the shareholders' agreement provide flexibility in the event a
shareholder stake falls below the 25% threshold. These amendments include
adjustments to the composition of GMCO's board based on shareholding
percentages and amendment to the process for nominating and appointing the
Managing Director/Chief Executive Officer. In addition, indemnification and
reimbursement clauses were added for parties undertaking sole risk projects,
with guidelines for compensating GMCO for costs incurred in such endeavours,
as well as a framework for continuing projects independently.
The Company elected not to contribute its pro rata share of joint venture
expenditure during the period (KEFI share being £832,983) and thus KEFI's
interest reduced from 26.8% to 24.75% under the dilution provisions of the
joint venture agreement. The carrying value of GMCO in the accounts of KEFI is
nil (due to KEFI's conservative policy of expensing GMCO costs when incurred)
and this release from liability resulted in a gain of £832,983 in the profit
and loss statement.
Management conducted a review to determine whether it still retained
significant influence over GMCO and concluded that this remained the case.
GMCO is still a jointly controlled entity of KEFI, supported by factors
including KEFI's continued significant shareholding, representation on the
Board of Directors, active involvement in policy-making processes, and other
relevant considerations.
A loss of £2,239,000 was recognized by the Group for the period ended 30 June
2024 (2023: £2,571,000) representing the Group's share of losses for the
period. As at 30 June 2024, KEFI owed ARTAR an amount of £ 5,070,000 (2023:
£1,776,000).
Period Ended
30 June 2024
Unaudited
Opening Balance -
Additional Investment during the period 1,342
FX Gain on advances made to GMCO -
Profit on Dilution 833
Share of loss in jointly controlled entity (2,239)
Additional impairment loss 64
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 2024 Six months ended 30
June 2023
Unaudited £'000 Unaudited
£'000
Directors' fees 272 258
Directors' other benefits 22 18
Share-based benefits to directors - 34
Director's bonus 285 -
Key management fees 174 163
Key management other benefits - -
Share-based benefits to key management - 6
Key management bonus 50 -
803 479
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 Transaction to period
end end
30 June 2024 30 June 2023
Unaudited Unaudited
Name Nature of transactions Relationship £'000 £'000
GPR Dehler Receiving of management and other professional services Key Management and Shareholder 224 163
Nanancito Limited/Mr. Nicoletto Receiving of management and other professional services Shareholder - 141
224 304
12.3. Payable to related parties
The Group 30 June 2024 31 Dec 2023
Unaudited Audited
Name Nature of transactions Relationship £'000 £'000
Payable to Key Management and Shareholders Fees for services Key Management and Shareholders 558 602
558 602
13. Capital commitments
30-Jun-24 31-Dec-23
Unaudited Audited
¹£'000 £'000
Tulu Kapi Project costs¹ 1,237 776
Saudi Arabia Exploration costs committed to field work that has been 4,867 5,113
recommenced
¹ 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.
14. Contingent Liability
14.1 Performance-Based Short-Term Incentive Plan (STI)
The Company has implemented a performance-based short-term incentive plan
(STI) approved by the Remuneration Committee and the Board. This plan is
designed to align with the Company's strategic objectives and to appropriately
recognise and reward employee contributions as the Company and its projects
advance. The STI plan supersedes any previously communicated incentives and is
contingent upon the achievement of specified milestones related to the
Company's projects.
STI Bonuses
The STI plan outlines three specific bonuses, each contingent upon the
successful achievement of key milestones associated with the Tulu Kapi Gold
Project. The bonuses are allocated as follows:
Directors and Key Management Personnel¹ STI Bonus 1¹ STI Bonus 2¹ STI Bonus 3¹
£'000 £'000 £'000 Total
Executive Chairman² 400 400 400 1,200
Finance Director² 400 200 200 800
PDMR and Other Managers 500 750 800 2,050
Total 1,300 1,350 1,400 4,050
· STI Bonus 1: Payable upon the granting of credit approvals by the
lenders to the Tulu Kapi Gold Project¹.
· STI Bonus 2: Payable upon project finance lenders permitting debt
disbursement to commence for Tulu Kapi, and no earlier than 12 months after
STI Bonus 1 has been earned¹.
· STI Bonus 3: Payable upon the commencement of production at Tulu
Kapi, and no earlier than 12 months after STI Bonus 2 has been earned¹.
¹ Recipients may elect to receive the STI Bonus in either shares or cash. If
taken in shares, the issue price will be based on the VWAP (Volume Weighted
Average Price) for the month following the achievement of the relevant
milestone. If taken in cash, the timing of the payment is subject to cash
availability as determined by the Board, but in any event, no later than 6
months after the relevant milestone is achieved.
² Except in cases of change of control or cessation of employment in the
designated role, the payment of STI Bonuses 1, 2, and 3 is also contingent on
the Company's share price meeting specific conditions:
· STI Bonus 1: The closing mid-price of the Company's shares must
be above 1.5p for five consecutive trading days.
· STI Bonus 2: Additionally, the closing mid-price of the Company's
shares must be above 2.5p for five consecutive trading days.
· STI Bonus 3: Additionally, the closing mid-price of the Company's
shares must be above 3.0p for five consecutive trading days.
Any shares issued as payment for the STI Bonus, except in cases of change of
control or cessation of employment in the designated role, will be subject to
a 12-month lock-in period. Any cash-paid STI bonus must be covered by the Tulu
Kapi project finance package.
The STI plan represents a contingent liability as defined under IFRS, where
the obligation is dependent on the occurrence of uncertain future events
related to the Company's performance and project milestones. These potential
obligations are recognised only if and when the specified milestones are
achieved, and the respective conditions are met. At this stage, the Company
has no present obligation, and thus no provisions have been recognised in the
financial statements. The contingent liabilities will be reassessed regularly,
and any changes will be disclosed accordingly.
¹ 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.
14. Contingent Liability
14.1 Performance-Based Short-Term Incentive Plan (STI)
The Company has implemented a performance-based short-term incentive plan
(STI) approved by the Remuneration Committee and the Board. This plan is
designed to align with the Company's strategic objectives and to appropriately
recognise and reward employee contributions as the Company and its projects
advance. The STI plan supersedes any previously communicated incentives and is
contingent upon the achievement of specified milestones related to the
Company's projects.
STI Bonuses
The STI plan outlines three specific bonuses, each contingent upon the
successful achievement of key milestones associated with the Tulu Kapi Gold
Project. The bonuses are allocated as follows:
Directors and Key Management Personnel¹ STI Bonus 1¹ STI Bonus 2¹ STI Bonus 3¹
£'000 £'000 £'000 Total
Executive Chairman² 400 400 400 1,200
Finance Director² 400 200 200 800
PDMR and Other Managers 500 750 800 2,050
Total 1,300 1,350 1,400 4,050
· STI Bonus 1: Payable upon the granting of credit approvals by the
lenders to the Tulu Kapi Gold Project¹.
· STI Bonus 2: Payable upon project finance lenders permitting debt
disbursement to commence for Tulu Kapi, and no earlier than 12 months after
STI Bonus 1 has been earned¹.
· STI Bonus 3: Payable upon the commencement of production at Tulu
Kapi, and no earlier than 12 months after STI Bonus 2 has been earned¹.
¹ Recipients may elect to receive the STI Bonus in either shares or cash. If
taken in shares, the issue price will be based on the VWAP (Volume Weighted
Average Price) for the month following the achievement of the relevant
milestone. If taken in cash, the timing of the payment is subject to cash
availability as determined by the Board, but in any event, no later than 6
months after the relevant milestone is achieved.
² Except in cases of change of control or cessation of employment in the
designated role, the payment of STI Bonuses 1, 2, and 3 is also contingent on
the Company's share price meeting specific conditions:
· STI Bonus 1: The closing mid-price of the Company's shares must
be above 1.5p for five consecutive trading days.
· STI Bonus 2: Additionally, the closing mid-price of the Company's
shares must be above 2.5p for five consecutive trading days.
· STI Bonus 3: Additionally, the closing mid-price of the Company's
shares must be above 3.0p for five consecutive trading days.
Any shares issued as payment for the STI Bonus, except in cases of change of
control or cessation of employment in the designated role, will be subject to
a 12-month lock-in period. Any cash-paid STI bonus must be covered by the Tulu
Kapi project finance package.
The STI plan represents a contingent liability as defined under IFRS, where
the obligation is dependent on the occurrence of uncertain future events
related to the Company's performance and project milestones. These potential
obligations are recognised only if and when the specified milestones are
achieved, and the respective conditions are met. At this stage, the Company
has no present obligation, and thus no provisions have been recognised in the
financial statements. The contingent liabilities will be reassessed regularly,
and any changes will be disclosed accordingly.
15. Events after the reporting date
During July and August 2024, after the end of the reporting period, the
Ethiopian Birr experienced a major devaluation against all major foreign
currencies. This devaluation is considered a non-adjusting event as it
reflects conditions that arose after the reporting period.
The Group's subsidiary in Ethiopia holds assets and liabilities denominated in
Ethiopian Birr, and the devaluation may have an impact on the subsidiary's
financial position and results. As of the reporting date, management is in the
process of assessing the financial implications, including the potential
impact on the Group's consolidated financial statements. The full extent of
the impact is not yet quantifiable, and appropriate measures are being
considered to mitigate any adverse effects.
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