REG - Keras Resources PLC - Final Results
27/06/2024 07:00
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RNS Number : 0493U Keras Resources PLC 27 June 2024
27 June 2024
Keras Resources plc ('Keras' or the 'Company')
Final Results
Keras Resources plc (AIM: KRS) announces its final results for the year ended
31 December 2023.
Highlights
Utah - Falcon Isle Resources Corp ("FIR") - the preeminent high grade organic
phosphate producer in the US, a fully owned and integrated mine to market
asset
· 3,000 tons of rock phosphate were mined and delivered to the
laydown area at Diamond Creek in 2023 to add to the 9,700t in inventory as at
31 Dec 2022
· Total sales of 4,606 tons for the year to 31 December 2023, a
7.7% increase on 2022 (4,276t)
· Negotiated the PhoSul Utah JV with PhoSul LLC, an Idaho based
organic fertiliser producer facilitating the construction of FIR's granulator
plant and the use of FIR's PhosAgri product as an 80% constituent in the
PhoSul® product
· Post period in January 2024 acquired the 8.4acre Delta property
accommodating three warehouses totalling 77,000 square feet (7,150m(2)) in
preparation for the move of the high pressure grinding rolls mill ("HPGR") and
granulator plants from Spanish Fork and reconstruction at the Delta property
· Key product developments for the balance of 2024 will be
optimising and ramping up production at the integrated granulator plant in
Delta to produce PhoSul® granulates; 2024 summer mining season to commence in
July
· 100% held subsidiary Falcon Isle Resources LLC ("Falcon Isle") is
currently operating profitably at the company level and has commenced repaying
loans made to it by Keras
Corporate
· Keras signed an agreement with the Republic of Togo (the
"State") relating to the Nayéga Manganese project ("Nayéga"), under which
Keras agreed to transfer all its intellectual knowledge on Nayéga to the
State and provide advisory and brokerage services to expedite the development
of Nayéga. In July 2023, the State paid Keras cash consideration
of $1,700,000 and the Company will be paid brokerage and advisory fees on
gross revenue generated from the Nayéga mine.
· Keras paid Tranche 2 of 4 equal payments to the previous CEO of
FIR incorporating a principal payment of $800,000 for the acquisition of the
outstanding 49% in FIR as well as $240,000 in unpaid salary and severance
payments;
· Post period in January 2024 raised GBP300,000 in Convertible Loan
Notes ("CLN") and $350,000 in Promissory Notes for the acquisition of the 8.4
acre Delta Property to house the Integrated Granulator Plant; and
· Post period in June 2024 raised GBP1,038,808 for the payment of
Tranche 3 of payments to the previous CEO as noted above - an $800,000
principal payment and a final $100,000 in unpaid salary and severance payments
Graham Stacey, Keras Resources Chief Executive Officer, commented, "2023
began with a challenging start due to an unusually late spring impacting on
the timing of the spring planting season in our key markets. In addition, the
late and swift snow melt caused a landslide impacting the upper haul road to
the mine which required an engineered repair and Forest Service approval prior
to the commencement of the summer mining season.
"In a year of consolidation post the acquisition of the outstanding 49% in FIR
during 2022 we continued to establish ourselves in the organic fertilizer
space in the US increasing our sales 7.7% to 4,606t which, given the late
winter and continued high inflationary operating environment impacting the
buying patterns of farmers and distributors, we were not unhappy with FIR's
performance for the year. An important step forward during the final quarter
of the year was the negotiation of the PhoSul Utah LLC JV with Idaho based
organic fertiliser specialist PhoSul LLC. Understanding the need to expand our
product portfolio to include tested finished product and to bring our
granulator plant into production. The decision to move our operations from
Spanish Fork to Delta was equally important giving us longevity without the
pressures of rapidly expanding residential developments. The rapid move from
Spanish Fork and construction of the integrated granulator plant at our newly
acquired property in Delta has also been particularly pleasing and we look
forward to reporting on developments in Delta as we optimise the granulator
plant and continue to grow sales of our own dry milled products."
Posting of Annual Report
Copies of the Company's full Annual Report and Financial Statements (the
"Annual Report") will be made available to download from the
Company's website today at https://kerasplc.com/results-and-reports/
(https://kerasplc.com/results-and-reports/) and will also be posted to
shareholders who elected to receive a hard copy on 27 June 2024.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under Article 7 of the Market
Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the
domestic law of the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018 (as amended). Upon the publication of this announcement
via the Regulatory Information Service, this inside information is now
considered to be in the public domain.
**ENDS**
For further information please visit www.kerasplc.com
(http://www.kerasplc.com/) , follow us on Twitter @kerasplc or contact the
following:
Graham Stacey Keras Resources plc info@kerasplc.com
Nominated Adviser & Joint Broker SP Angel Corporate Finance LLP +44 (0) 20 3470 0470
Ewan Leggat / Caroline Rowe
Joint Broker
Damon Heath / Erik Woolgar
Shard Capital Partners LLP +44 (0) 207 186 9900
Notes:
Keras Resources (AIM: KRS) wholly owns the Diamond Creek organic phosphate
mine in Utah, US. Diamond Creek is one of the highest-grade organic
phosphate deposits in the US and is a fully integrated mine to market
operation with in-house mining and processing facilities. The operation
produces a variety of organic phosphate products that can be tailored to
customer organic fertiliser requirements.
The Company is focused on continuing to build market share in the
fast-growing US organic fertiliser market and build Diamond Creek into the
premier organic phosphate producer in the USI am pleased to provide an update
on our progress since the last report and to set out our outlook for the
business going forward.
CHAIRMAN'S STATEMENT
I am pleased to provide an update on our progress since the last report and to
set out our outlook for the business going forward.
2023 proved to be a year of consolidation for Keras post the 2022 acquisition
of the outstanding 49% in Falcon Isle Resources Corp and Falcon Isle Holdings
LLC (together "Falcon Isle") which owns the company's high-grade organic
phosphate business in Utah, USA. The consolidation was underpinned by the
cooperation agreement with the Republic of Togo (the "State") on 17 May 2023
when Keras agreed to waive its rights to the Nayéga Manganese mine
("Nayéga") in Northern Togo in return for a US$1.7m (one million seven
hundred thousand United States dollars) cash consideration ("Consideration")
and for ongoing advisory and brokerage fees described below.
The cooperation agreement marked the start of the Company's transition into a
fully focussed North American business targeting the robust organic fertiliser
market. The timing of the transaction was key with the Consideration funding
the second US$800,000 tranche due on the acquisition of Falcon Isle in July
2023. Going forward and with operations now recommencing at Nayéga I believe
the advisory and brokerage fees will provide significant support to the
cashflow being generated from the Utah operations.
The 2023 consolidation was promptly followed by the conclusion of the PhoSul
Utah LLC joint venture ("JV") and the acquisition of the property in
Sutherland, 8 miles north of the town of Delta, Utah ("Delta Facility") on
22 January 2024 which now houses the Company's 100% owned processing hub with
the new Integrated Granulator Plant ("Granulator Plant"). The JV agreement
comprises a five year 50:50 JV between the Company's wholly owned subsidiary,
Falcon Isle Resources Corp ("FIR") and PhoSul LLC ("PhoSul"), a specialised
organic soil enhancement fertilizer company with granulator operations in
Idaho, United States ("US"). PhoSul will fund the construction and
commissioning of the Granulator Plant and the JV will produce a PhoSul®
granulate comprising 80% of FIR's high grade organic rock phosphate from its
Diamond Creek mine.
PhoSul® is currently being produced at the PhoSul LLC's processing facility
in Sugar City, Idaho. Current demand for the product outweighs PhoSul's
Idaho processing capacity so the JV's product will be delivering into an
established market with significant scope for growth in the south western
states.
I believe this transaction will prove to be one of the key inflection points
in the Company's trajectory to becoming the premier, high grade, organic
phosphate producer in North America.
Falcon Isle - Diamond Creek Phosphate Mine
Falcon Isle owns the fully permitted Diamond Creek phosphate mine ("Diamond
Creek") located on an 840-acre Federal Lease located approximately 75 miles
north-east of the recently acquired processing facility located in the
farming town of Sutherland, 8 miles north of the town of Delta ("Delta
Facility"), Utah.
On 3 June 2024 the Company announced that dry commissioning of the Granulator
Plant had commenced. Given the scale of what was required to transition from
an outsourced production and ownership model operating from three rental
facilities to the Company's wholly owned, fully integrated production facility
at Delta in just four months has been an outstanding achievement by the
project team as well as the Company's supportive funding partners.
FIR continues to produce organically certified 10 mesh and 50 mesh dry sized
products with total sales for Q1 2024 of 1,969 tons, a 109% increase relative
to the 941 tons sold during the same period in 2023 (Q1 2022: 829t), and
demonstrates evidence of the increased traction that the Company's high grade
certified products are attracting in the organic market. It's key to note
that at full production, the JV is expected to increase FIR's quarterly sales
of 50 mesh by approximately 2,280 tons per quarter (a further 115% increase on
the Q1 2024 sales -i.e. traditional sales plus sales to the JV), with 100% of
the revenue from the sales to the JV attributable to FIR while also sharing
50% in of the profit from the PhoSul® product produced from this material.
Wet commissioning under load conditions with granulator binder fluids ("C2")
which will initially comprise test granulation of Falcon Isle's rock phosphate
before introducing the additional constituents of the PhoSul® final product
is nearing completion and I look forward to reporting on the commencement of
commercial production at the Delta Facility in the coming weeks. In
addition, in July2024 we expect to commence our mining season at Diamond Creek
which takes place during the summer season from July to November 2024, while
the mine site is free of snow.
Nayéga Manganese Mine / Togo
On 9 May 2024 the Company announced that activities have recommenced at
Nayéga and the Republic of Togo (the "State"), through its 100% owned
investment company Société Togolaise de Manganèse ("STM") is currently
managing a public-private partnership award procedure ("Tender") to appoint a
contractor to manage all activities at Nayéga. The State has already
mobilised personnel at Nayéga to ensure that the infrastructure, including
water pipelines and access roads are in operational condition to ensure
timeous re-establishment of operations at Nayéga.
The services expected from the successful bidder include the management of all
mining and processing activities at Nayéga and a total logistics solution
from mine to port. The tender process closed on 7 June 2024.
The progress at Nayéga is very positive for Keras from an additional cashflow
perspective and will underpin what has been a hugely productive 6 months at
the Company's flagship operation in Utah, USA. The Company continues to keep
in close contact with the Togo Ministry of Mines in its advisory role it
agreed with the State in May 2023 and we look forward to updating shareholders
on progress in the near future.
Financial review
The Consolidated Statement of Comprehensive Income for the year shows a loss
of £446,000 (2022 - loss £997,000).
In January 2024 and May 2024 the Company issued convertible loans of £300,000
(at a conversion price of £0.04) and £597,805 (at a conversion price
£0.0275) respectively. On the same dates Falcon Isle issued Promissory
Notes of $350,000 (at a 7% per annum interest rate) and £597,805 (at an 8%
per annum interest rate) respectively.
The cash for the January funding was from the Diane H. Grosso Credit Shelter
Trust , an associate of 17% shareholder Chris Grosso and the cash for the May
funding was from the Diane H. Grosso Credit Shelter Trust , Chris Grosso and
an associate of his. Graham Stacey and I capitalised US$100,000 (GBP78,401)
of outstanding fees each due from the Company on the same basis (50% in the
form of Convertible Loans and 50% in the form of Promissory Notes).
The Directors of the Company have the authority to issue shares for cash up to
a maximum nominal value of £165,000. The total nominal value required for
the restructuring, including interest is £254,308, therefore the funding is
being completed in 2 tranches. Tranche 1, using existing authorities requires
a nominal value of £156,801 and for Tranche 2 the Company will propose a
resolution at the 2024 AGM, to be held on 26 July 2024, authorising the
Directors to issue shares for cash up to a maximum nominal value of £97,507
(which includes £36,924 for interest accrued over the 4 year tenure).
The proceeds of the January funding were used to acquire the 8.4-acre Delta
Facility, now the hub of the US operations and the proceeds of the May funding
will be used to pay the third tranche of US$800,000 of the cost of acquiring
the former minority interest in Falcon Isle plus $100,000 of the final
severance payment payable to the previous CEO of Falcon Isle, and for general
working capital.
The restructuring of the Company's short-term liabilities reduced the impact
of a pure equity raise and ensures that the Company can meet its current
obligations without negatively impacting the long-term growth profile at the
high-grade organic phosphate business in Utah, USA.
Outlook
As discussed above, 2023 was very much a year of consolidation and
transformation into a 100% owned, fully funded and excellently positioned
business to deliver into the growing North American organic agricultural
sector. This sector is underpinned by the macro-economic tailwinds of the
global fertiliser markets, and we remain bullish on our premium phosphate
product and our position as we continue to build market share.
Falcon Isle has broadened its product mix through the incorporation of the
PhoSul Utah LLC JV which will produce the PhoSul® granulate comprising 80% of
FIR's high grade organic rock phosphate from its Diamond Creek mine whilst
still producing the traditional dry sized products. The growth in year to year
sales of these traditional products has increased significantly as seen by the
Q1 2024 sales but we expect a step change not only through the "internal"
sales to the JV but the knock on effects from the sale of the PhoSul®
granulate comprising 80% of our high grade organic PhosAgri #50 mesh product.
The Directors are confident that Falcon Isle will be an increasingly
profitable and valuable asset for the Group, and we look forward to updating
our shareholders on our progress as we continue to ramp up production and
build our position and market share of the fast-growing US organic phosphate
market. With this envisaged growth, the Company is actively looking at new
projects both in Utah and surrounding states to augment the 23,500 tons per
year capacity from the Diamond Creek mine.
Finally, I would like to take this opportunity to thank my colleagues on the
Board and our management team for their hard work, and shareholders for their
continuing support.
Russell Lamming
Chairman
26 June 2024
STRATEGIC REPORT
Our stated objective is to become the premier producer of organic rock
phosphate fertilizer products in the United States ("US"). This remains our
firm objective having Increased our ownership of Falcon Isle to 100% on 30
March 2022, putting us in sole control of how we achieve our objective in the
rock phosphate sector of the organic fertilizer market in the US. 2023 was a
challenging year, with an unusually long winter leading to a late spring
planting season impacting our primary markets in the western states of the US
specifically the Central Valley of California. Mining operations were also
impacted as the Diamond Creek Mine remained covered in snow into June. Despite
this slow start to the year we were pleased to grow our sales from 4,276t
during 2022 to 4,606t during 2023, a marginal improvement, however given the
conditions we were not unhappy with that outcome.
From a strategic point of view, relying on sales growth of our milled dry
products alone would not deliver the material sales and profitability growth
goals set by the Company. The longstanding commitment to deliver our
granulator plant remained a key objective to grow sales volumes and diversify
our product range and as previously noted we've been in discussions with two
organic fertilizer blending customers to produce a granulate with our rock
phosphate being the key ingredient. After receiving consistent orders from
PhoSul LLC ("PhoSul"), a specialist organic fertilizer producer based out of
Sugar City Idaho, during Q4 of 2023, we commenced negotiating agreements
towards the formation of a joint venture ("JV") to produce PhoSul(®), a
trademarked organic granulated fertilizer blend with extensive laboratory and
field tests demonstrating the growth and yield benefits of the product by
enhancing the availability of P(2)O(5) which has typically been a challenge in
the organic fertilizer space. PhoSul is a subsidiary of Propeat LLC which
produces a range of potash/peat based products through its pan granulator
plant in Idaho. Given the demand for Propeat granulates, plant capacity
constraints led PhoSul to search for a strategic partner which initiated
discussions with Falcon Isle knowing that we possessed an as-yet unconstructed
granulator plant, as well as high-grade rock phosphate ore, an 80% constituent
of the PhoSul® product.
In the course of finalising the PhoSul Utah LLC ("PhoSul Utah") JV agreements
it became clear to us that there was a risk that the Spanish Fork property may
be rezoned to residential/commercial status and at some point in the future
potentially putting a 5 year JV agreement at risk. This catalysed our need to
find a new property without these limitations and we succeeded in finding a
property outside of the town of Delta which provided for all the requirements
of the PhoSul Utah JV as well as for our own crushing & milling
operations, and with space for expansion of the business in the future. The JV
and Delta property acquisition were announced on 22 January 2024, involving
the dismantling of FIR's Spanish Fork high pressure grinding rolls ("HPGR")
milling plant and transport and reconstruction of both the HPGR milling plant
and the granulator plant ("Integrated Plant") to the new Delta facility which
commenced end-January 2024. Construction of the Integrated Plant commenced
immediately with commissioning in June, and production of material for sale by
the JV has now commenced.
FIR expects to supply the JV with a steadily increasing tonnage of Diamond
Creek's high grade, 50 mesh organic PhosAgri product during the course of 2024
and into 2025 as we expand operations at the Integrated Plant to continuous
operations to an estimated 10,500 tons of PhosAgri annually when the JV is
expected to be fully operational in Q1 2025, which will be priced at a
marginal discount to FIR's normal selling price. Post commissioning, 2024 will
remain a building phase as we refine the production of PhoSul(®), however the
specific intention of entering into the PhoSul Utah LLC JV is to more than
double FIR's annual turnover at steady-state operations, and in addition FIR
will be entitled to 50% of the profits of the JV.
Our short- to medium-term strategy is therefore to continue milling our
crushed run of mine ("ROM") ore through the mobile Prosizer horizontal impact
milling and screening unit, and more importantly to optimise the operation of
the Integrated Plant at our new Delta facility. Falcon Isle will retain the
marketing & logistics functions of our own dry milled products (10, 50,
and 350 mesh), with marketing of the PhoSul® product being handled by PhoSul
LLC with our assistance on the logistics fronts.
In addition, we will continue to pursue the potential presented by liquid
products, through the solubilising and/or microbial/bacterial digestion of our
finer 100 mesh or 350 mesh products for use in liquid blends in fertigation
(drip fed irrigation) and hydroponic applications. The application of liquid
organic products at higher available phosphate (P(2)O(5)) (results from
testwork conducted with industry experts Agrothrive LLC suggests potential for
>20% available P(2)O(5)from our micronized 350 mesh product) ensures
quicker absorption, provides for tighter quality control, reduces losses in
the application processes and provides us with access to a rapidly growing
indoor controlled environment agricultural ('CEA') sector.
In addition to organic expansion we are actively pursuing new phosphate leases
which will enable capacity growth in the organic space but also the potential
production of purified phosphoric acid ("PPA") for downstream application in
the production of lithium iron phosphate ("LFP") battery cathodes. Energy
intensive extraction methods used to date are being replaced with
significantly lower energy consumption processes to produce equivalent grade
PPA. LFP batteries are very much part of the carbon-neutral drive of our
planet and phosphorous will play an important role in developments in this
space.
Togo
As previously announced, we disposed of our intellectual knowledge including
all exploration and feasibility work completed on the project, as well as the
detailed results of the 10,000 tonne bulk sample completed from the Nayéga
Project in June 2019 to the Togolese State. Under the disposal agreement Keras
will be paid a 1.5% advisory services fee for a 3-year period from first
sales, as well as a 6% brokerage services on gross revenue generated from the
Nayéga Mine for the lesser of 3.5 years or 900,000 (nine hundred thousand)
tonnes of beneficiated manganese ore produced and sold from Nayéga. As set
out in the Chairman's Statement, steps have now been taken to commence the
re-commissioning of the mine, and we expect to see cash flows from the
advisory and brokerage services provided to the newly established Société
Togolaise de Manganèse ("STM"), the State owned entity which will operate the
Nayéga Mine.
In the interim, the Group disposed of its 85% shareholding in Société
Général des Mines ("SGM") for a nominal consideration prior to the close of
FY2023, so that Keras no longer holds any assets in Togo other than through
the advisory and brokerage fee agreements referred to above.
From the Company's point of view, disposing of our interest in SGM allows us
to concentrate our efforts in the US.
Mining projects
United States
Keras acquired a 51% interest in Falcon Isle, holder of the Diamond Creek
phosphate mine and associated processing facilities, in December 2020 and
subsequently acquired the outstanding 49% in March 2022. The mine is situated
approximately 80km SSE of Salt Lake City, Utah. Diamond Creek is a fully
permitted, high-grade direct shipping ore ('DSO'), low capex organic phosphate
mine, which has significant historical estimated in-situ tonnage (these
estimates have not been classified according to modern International Reporting
Standards but have been based on sampling of surface outcrops) with sufficient
phosphate ore exposed in-situ to provide for the 2024 mining season before any
overburden stripping is required. The phosphate mineralisation is concentrated
in the sedimentary shale beds at the base of the Meade Peak Member of the
Phosphoria Formation. The mineralised zone is approximately 2.5m thick and
averages 23% total P(2)O(5)with guaranteed available P(2)O(5)of 12%. Historic
reports vary with "surface mineable resources" ranging from 3.10Mt to 4.60Mt.
At an internally estimated peak production rate of 23.5ktpa, the opencast
resources alone represent a significant mine life.
The 2023 mining campaign was completed in October 2023 with a total of 3,000
ore tons extracted from the pit. Primary crushing during the reporting period
was undertaken using a contractor-operated mobile jaw crusher at the mine
laydown site, with downstream processing conducted through a combination of
contractor toll-milling (Prosizer producing 10mesh and -50mesh products) and
Falcon Isle owned HPGR milling plant comprising front-end feed, primary crush,
milling, ultra-fine dust extraction, 50lb and 1ton bagging circuits to produce
-100 mesh and -350 mesh powders. As noted previously FIR's granulation plant
has now been relocated to our newly acquired Delta Processing Facility where
construction is nearing completion in collaboration with our JV partner
PhoSul.
It was our initial intention to construct the granulator plant in a building
adjacent to our former milling plant in Spanish Fork, however as we've
established ourselves in the organic agricultural sector it became apparent
that we could extract greater value from a blended granulate incorporating
additional critical elements proven to improve growth and yields across a
range of agricultural crops. The PhoSul® product is trademarked and has been
subjected to extensive laboratory and field trials to demonstrate its efficacy
at improving the availability of P(2)O(5) from Falcon Isle's rock phosphate.
Our internal rock phosphate products have received Organic Certification by
all three key certification agencies in the USA - California ('CDFA'),
Washington State ('WSDA') and the federal Organic Materials Review Institute
('OMRI'), as well as Registration in Oregon. As a Direct Shipping Ore ('DSO')
it requires no chemical/synthetic upgrade processes which is the basis for our
organic certification. Our rock phosphate contains acceptable heavy metal
impurities, significantly higher available P(2)O(5)than any other organic rock
phosphate in North America, and a calcium content of >25%. PhoSul(®),
which we will commence producing during Q2 of 2024 is similarly being
certified through the key state and federal agencies to enable organic sales
country-wide.
Sustainability
Keras is committed to responsible mining and upholding ESG best practice
across our business. We are similarly committed to our stakeholders and are
focused on looking to create value and benefits for all whilst seeking to
manage and mitigate the potential impacts that our operations may have. We are
focussed on mining an essential resource that can contribute to a more
sustainable future and importantly sustainable and regenerative agriculture.
With the Diamond Creek mine, we are now moving towards running a more
lucrative operation including production of granulated fertilizer through the
PhoSul Utah JV. Our own business model involving only crushing & milling
remains relatively straightforward and we remain focused on meeting our
commitments across the ESG space and will continue to be proactive in this
area as we look to develop and sustain a positive legacy.
Risk Management
The Board regularly reviews the risks to which the Group is exposed and
ensures through its meetings and regular reporting that these risks are
minimised as far as possible. The principal risks and uncertainties facing the
Group at this stage in its development are:
Market Risk
Unlike marketing globally traded, indexed commodities into international
markets, growing market share within the niche organic fertiliser market
within North America presents risk in terms of pricing and volume.
The business has a broad range of existing customers, three of which are
anchor clients having provided commitments to purchase a pleasing base load of
our planned annual production. Our marketing strategy rollout will include
presence at industry trade exhibitions and conferences, as well as regular
regional direct contact visits with a comprehensive schedule of contacts
within the wholesale and distribution segments of the organic fertiliser
market. Our business model will largely be driven by uptake from co-operative
clients with wide distribution networks, rather than selling directly to
farmers themselves.
Exploration Risk
The Group's business has been primarily mineral exploration and evaluation
which are speculative activities and whilst the Directors are satisfied that
good progress is being made, there is no certainty that the Group will be
successful in the definition of economic mineral resources, nor that it will
proceed to the development of any of its projects or otherwise realise their
value.
The Group aims to mitigate this risk when evaluating new business
opportunities by targeting areas of potential where there is at least some
reliable historical sampling, drilling or more detailed geological data
available.
Resource Risk
All mineral projects carry risk associated with defined grade and continuity.
Mineral resources and reserves are calculated by the Group in accordance with
accepted industry standards and codes but are always subject to uncertainties
in the underlying assumptions which include geological projection and
commodity price assumptions. The Group reports exploration targets, mineral
resources and ore reserves in accordance with internationally approved codes
where our operations/projects are located, which set minimum standards for
public reporting of mineral exploration results, mineral resources and ore
reserves.
Development Risk
Delays in permitting, financing and commissioning a project may result in
delays to the Group meeting development and/or production targets. Changes in
commodity prices can affect the economic viability of mining projects and
affect decisions on continuing exploration activity.
Mining and Processing Technical Risk
Notwithstanding the completion of metallurgical testwork, trial mining and
pilot studies indicating the technical viability of a mining operation,
variations in mineralogy, mineral continuity, ground stability, ground water
conditions and other geological conditions may still render a mining and
processing operation economically or technically non-viable. The Group has a
small team of mining professionals experienced in geological evaluation,
exploration, financing and development of mining projects. To mitigate
development risk, the Group supplements this from time to time with engagement
of external expert consultants and contractors.
Environmental Risk
Exploration and development of a project can be adversely affected by
environmental legislation and the unforeseen results of environmental studies
carried out during evaluation of a project. Once a project is in production
unforeseen events can give rise to environmental liabilities.
As Keras undertakes mining operations, any disturbance to the environment
during this phase is required to be rehabilitated, with specific requirements
for closure and closure funding in accordance with prevailing regulations of
the countries in which we operate as well as to international best-practice.
Given the Group's size and scale it is not considered practical or cost
effective to collect and report data on carbon emissions.
Financing & Liquidity Risk
The Group has had an ongoing requirement to fund its activities through the
equity markets and may in future need obtain finance for further project
development. There is no certainty such funds will be available when needed.
To date, Keras has managed to raise funds through both debt and equity
placements despite the very difficult markets that currently exist for raising
funding in the junior mining industry.
Political Risk
All countries carry political risk that can lead to interruption of activity.
Politically stable countries can have enhanced environmental and social
permitting risks, risks of strikes and changes to taxation whereas less
developed countries can have, in addition, risks associated with changes to
the legal framework, civil unrest and government expropriation of assets.
Partner Risk
Whilst there has been no past evidence of this, the Group can be adversely
affected if joint venture or equity partners are unable or unwilling to
perform their obligations or fund their share of future developments. Keras
currently operates PhoSul Utah LLC as a 50/50 joint venture with PhoSul LLC
which we regard as mutually beneficial.
Bribery Risk
The Group has adopted an anti-corruption and bribery policy and whistle
blowing policy under the Bribery Act 2010. Notwithstanding this, the Group may
be held liable for offences under that Act committed by its employees or
subcontractors, whether or not the Group or the Directors had knowledge of the
commission of such offences.
Financial Instruments
Details of risks associated with the Group's financial instruments are given
in Note 29 to the financial statements. Keras does not utilise any complex or
derivative financial instruments.
COVID-19
Travel and shipping restrictions in place globally during 2021 had a direct
impact on timing and cost of delivery of plant and equipment to the USA.
However, given recent developments the Directors do not believe that Covid 19
will have a material effect on the Company or its operations going forward.
Insurance Coverage
The Group maintains a suite of insurance coverage that is appropriate for the
Group and Company. This is arranged via a specialist mining insurance broker
and coverage includes public and products liability, travel, property and
medical coverage and assistance while Group employees and consultants are
travelling on Group business. This is reviewed at least annually and adapted
as the Group's scale and nature of activities changes. Keras also has
Directors and Officers insurance in place.
Internal Controls and Risk Management
The Directors are responsible for the Group's system of internal financial
control. Although no system of internal financial control can provide absolute
assurance against material misstatement or loss, the Group's system is
designed to provide reasonable assurance that problems are identified on a
timely basis and dealt with appropriately. In carrying out their
responsibilities, the Directors have put in place a framework of controls to
ensure as far as possible that ongoing financial performance is monitored in a
timely manner, that corrective action is taken and that risk is identified as
early as practically possible. The Directors review the effectiveness of
internal financial control at least annually.
The Board, subject to delegated authority, reviews capital investment,
property sales and purchases, additional borrowing facilities, guarantees and
insurance arrangements.
The Board takes account of the significance of social, environmental and
ethical matters affecting the business of the Group. At this stage in the
Group's development the Board has not adopted a specific policy on Corporate
Social Responsibility as it has a limited pool of stakeholders other than its
shareholders. Rather, the Board seeks to protect the interests of Keras'
stakeholders through individual policies and through ethical and transparent
actions. The Group has adopted an anti-corruption and bribery policy and a
whistle blowing policy as stated previously.
Shareholders
The Directors are always prepared, where practicable and subject to
confidentiality under the AIM Rules, to enter into dialogue with shareholders
to promote a mutual understanding of objectives. The Annual General Meeting
provides the Board with an opportunity to informally meet and communicate
directly with investors.
Employees
The Group operates primarily through contractors. Notwithstanding this, the
Group engages its contract employees to understand all aspects of the Group's
business and seeks to remunerate them fairly, being flexible where
practicable. The Group gives full and fair consideration to applications for
employment received regardless of age, gender, colour, ethnicity, disability,
nationality, religious beliefs, transgender status or sexual orientation. The
Group takes account of employees' interests when making decisions and welcomes
suggestions from employees aimed at improving the Group's performance.
The Group currently operates exclusively in the USA but with agreements with
the Togolese State to provide advisory and brokerage services in Togo. It
recruits locally as many of its employees and contractors as practicable. The
Company has four directors, three male and one female.
Suppliers and Contractors
The Group recognises that the goodwill of its contractors, consultants and
suppliers is important to its business success and seeks to build and maintain
this goodwill through fair dealings. The Group has a prompt payment policy and
seeks to settle all agreed liabilities within the terms agreed with suppliers.
Contractors are appointed based on a detailed assessment of their
capabilities, capacity and track record. Over time, as the Company grows its
understanding of the various aspects of its operations in-sourcing of certain
operational components may be considered as a means to reduce costs.
Health and Safety
The Board recognises that it has a responsibility to provide strategic
leadership and direction in the development of the Group's health and safety
strategy in order to protect all of its stakeholders. The Group does not have
a formal health and safety policy at this time. This is re-evaluated as and
when the Group's nature and scale of activities expand.
Section 172 statement
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of S172 are for the Directors to:
• Consider the likely consequences of any decision in the long-term;
• Act fairly between the members of the Company;
• Maintain a reputation for high standards of business conduct;
• Consider the interests of the Company's employees;
• Foster the Company's relationships with suppliers, customers and
others; and
• Consider the impact of the Company's operations on the community
and the environment.
The Company's operations and strategic aims are set out throughout the
Strategic Report and in the Chairman's Statement, and relationships with
stakeholders are also dealt with in the Corporate Governance Statement.
Graham Stacey
Director
This Strategic Report was approved by the Board of Directors on 26 June 2024.
THE BOARD
RUSSELL LAMMING
Non-Executive Chairman
Russell Lamming is a qualified geologist with an honours degree in geology
from the University of the Witwatersrand and a Bachelor of Commerce in
Economics from the University of Natal. Russell has a broad range of
experience including directorship of a South African mining consultancy and
precious metals analyst for a leading international broker and was the CEO of
AIM listed Chromex Mining and Goldplat Plc. He has strong relationships in
London and internationally and has raised considerable funds for resource
companies over the years.
GRAHAM STACEY
Chief Executive Officer
Graham holds an honours degree in Mining Engineering from WITS University in
Johannesburg (1995), and an MBA from the WITS Business School (2004) and a
Mine Manager's Certificate of Competency (2001). Graham has over 25 years'
experience across a range of commodities in the resources sector, including
direct operational management in the coal, PGE and chrome businesses in South
Africa, manganese in Togo and rock phosphate in the USA, as well in a
technical consulting role (2004-2008). He is a Competent Person and Competent
Valuator as a longstanding member of the South African Institute of Mining and
Metallurgy ("SAIMM"), and has wide ranging experience in mine design, project
execution, operations and mineral resource management. He was previously a
director of AIM listed Chromex Mining PLC. Following the acquisition of 100%
of Falcon Isle he has been appointed as CEO of that company.
BRIAN MORITZ
Non-Executive Director
Brian is a Chartered Accountant and former Senior Partner of Grant Thornton,
London. He formed Grant Thornton's Capital Markets Team which floated over 100
companies on AIM under his chairmanship. In 2004 he retired from Grant
Thornton to concentrate on bringing new companies to the market as a director.
He concentrates on mining companies, primarily in Africa, and was formerly
chairman of African Platinum PLC ("Afplats") and Metal Bulletin PLC as well as
currently being a director of several junior mining companies.
CLAIRE PARRY
Non-Executive Director
Claire is a Chartered Accountant and the managing partner in the Canterbury
office of Azets, a top 10 UK accounting firm. With over 20 years in the
accountancy profession, she also specialises in the application of IFRS and
accounting and financial control generally for smaller quoted companies,
primarily in the natural resources sector.
CORPORATE GOVERNANCE STATEMENT
To the extent applicable, and to the extent able (given the current size and
structure of the Company and the Board), the Company has adopted the Quoted
Companies Alliance Corporate Governance Code. Details of how the Company
complies with the principles contained in the Code are set out below. The
Company intends to comply with the newly revised Code in due course.
No key governance matters have arisen since the publication of the last Annual
Report.
Taking account of the Company's size and nature, the Board considers that the
current Board is a cost effective and practical method of directing and
managing the Company. As the Company's activities develop in size, nature
and scope, the size of the Board and the implementation of additional
corporate governance policies and structures will be reviewed. Further
disclosures under the Code are included on the Company's website.
Principle 1: Establish a strategy and business model which promote long term
value for shareholders.
The Company's strategy is to identify mining projects which can be developed
to create value and income for shareholders. In June 2017 this strategy was
successfully demonstrated when the Company's Australian gold exploration
assets were floated on the Australian Securities Exchange (ASX) with the name
Calidus Resources Limited. In November 2019 the Company's shares in Calidus
were demerged and transferred to the Company's shareholders by way of a
capital reduction.
The demerger permitted the Board to examine other projects, and in particular
the Diamond Creek phosphate mine in Utah, USA, where the Company completed the
staged acquisition of 100% equity interest in March 2022. This is now the
Group's main project. A joint venture with PhoSul LLC, a specialised organic
soil enhancement fertilizer company with granulator operations
in Idaho, United States, is expected to hasten expansion in the USA.
The Company had, for some years, been seeking to convert the Research Permits
held by its 85% owned subsidiary, Société Générale de Mines SA, over the
Nayéga manganese project in Togo, to an Exploitation Permit. Since 31
December 2022 the Company has sold its intellectual property and other assets
relating to Nayéga to a newly formed parastatal company, so that it no longer
operates in Togo, but will continue to provide advisory and brokerage services
to the Togolese State relating to the Nayéga Mine.
Principle 4: Embed effective risk management, considering both opportunities
and threats, throughout the organisation.
The risks facing the Company are detailed in the Strategic Report. The Board
seeks to mitigate such risks so far as it is able to do, but certain important
risks cannot be controlled by the Board.
In particular, products the Company is seeking to identify and mine are traded
globally at prices reflecting supply and demand rather than the cost of
production. So far as the Company is concerned, the substantial decline in the
price of iron ore rendered two previous projects non-viable, both of which had
previously appeared to have substantial value on a discounted cash flow basis,
and they were abandoned.
The Company will only invest in exploration projects where there is a legal
right to convert an initial exploration licence to a mining licence.
Principle 5: Maintain the Board as well-functioning, balanced team led by the
chair.
Graham Stacey, the CEO, works full time for the Company, with primary
responsibility for the Diamond Creek phosphate mine in Utah, USA. The other
directors, Russell Lamming, the chairman, Brian Moritz and Claire Parry are
non-executive directors, of whom Claire Parry is independent. As Utah is in a
time zone 7 hours different from the UK, Board meetings are normally conducted
by video conference or by telephone, supplemented by physical meeting when
Graham Stacey is in the UK.
The CEO is in regular touch with the Directors. He also holds frequent
informal discussions with other directors. Throughout the year such
discussions average approximately two per week.
Non-executive directors are committed to devote 24 days per annum to the
Company, but they are likely to exceed that required time commitment. Standard
director's fees are currently £48,000 per annum for the Chairman, who has
additional responsibilities relating to Togo, and £24,000 per annum for each
non-executive director, below the median for AIM companies. Brian Moritz also
acts as Company Secretary and has board responsibility for accounting matters
and receives an extra £12,000 per annum in respect of those responsibilities.
No further amounts are paid for serving on Board committees.
There were 9 board meetings held in 2023. All directors were present at 6 of
those meetings. At one other meeting Russell Lamming was unable to be present
as he was travelling in a time zone not compatible with his attendance. The
other 2 meetings were held to formally ratify decisions previously agreed by
all board members. They were attended by Brian Moritz and Claire Parry.
Principle 6: Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities.
Brief CVs of the directors are disclosed elsewhere in this Annual Report.
Each of the directors maintains up to date skills by a combination of
technical journals, courses, conferences and trade shows.
As an exploration and mining Company the Board requires skills in the area of
geology and mining. Russell Lamming is a qualified geologist and Graham
Stacey is a qualified mining engineer. Each has a long history of achievement
in this area. Importantly, each of them has been in charge of the construction
and operation of mines.
Brian Moritz and Claire Parry are Chartered Accountants. In addition to his
financial skills, Brian Moritz has previously been registered as a Nominated
Adviser and has wide experience of corporate transactions.
The advice of Azets, a top 10 UK accounting firm in which Claire Parry is a
partner, is sought on technical accounting matters, in particular in relation
to compliance with IFRS.
Principle 7: Evaluate Board performance based on clear and relevant
objectives, seeking continuous improvement.
The Board has successfully achieved a major objective by acquiring a phosphate
mine in Utah, USA, constructing a processing plant and commencing production.
The next stage for this mine is to expand its product range and client base.,
which it expects to achieve through the joint venture with PhoSul LLC.
The Board will concentrate on achieving profitable production and positive
cash flow from its existing project while continuing to seek other projects.
Given the current state of the Company's development the directors believe
that the Board operates efficiently and cost effectively and that the cost of
an external review process is not justified.
Principle 8: Promote a corporate culture that is based on ethical values and
behaviours.
So far as possible the Company recruits locally for staff and sub-contractors.
In Utah, the Group's product is a natural organic fertilizer which plays its
part in reducing reliance on synthetically manufactured fertilizers, which
have a high carbon footprint.
The Company has adopted a comprehensive anti-corruption and whistle blowing
policy and an ethical policy which is strictly applied.
Principle 10: Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders.
The Board communicates with its stakeholders through social media and
webcasts, as well as by announcements on RNS. It welcomes the ability to meet
and engage with shareholders at general meetings.
The audit committee normally meets twice per annum, on its own to consider and
approve the interim results, and with the auditors to consider the annual
report and matters raised by the auditors based on their audit. So far as
possible recommendations by the auditors are immediately implemented. As the
CEO is also present as an observer at such meetings, no further report is
submitted to the Board.
The remuneration committee meets on an ad hoc basis when required. No meeting
was required or held in 2023, and no formal report was issued. Fees paid to
the non-executive directors are settled by the Chief Executive Officer.
Russell Lamming
Chairman
DIRECTORS' REPORT
The Directors present their report together with the audited financial
statements of the Group for the year ended 31 December 2023.
The Group's projects are set out in the Strategic Report.
Review of business and financial performance
Further details on the financial position and development of the Group are set
out in the Chairman's Statement, the Strategic Report and the annexed
financial statements.
Strategic Report
In accordance with Companies Act, s414C(11), the Company has chosen to set out
in the Company's strategic report information required by Large and
Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, s7,
to be contained in the directors' report. It has done so in respect of the
review and analysis of the business during the current year.
Results
The Group reports a loss for the year of £446,000 (2022 - loss £997,000).
Major events after the balance sheet date
Subsequent events are detailed in note 30.
Dividends
The Directors do not recommend payment of a dividend for the year ended 31
December 2023 (2022 - £nil).
Political donations
There were no political donations during the year (2022 - £nil).
Energy and carbon report
The Group is classified as "a low energy user" under these regulations
therefore is exempt from reporting on its emissions, energy consumption or
energy efficiency activities.
Going concern
The Directors continue to adopt the going concern basis in preparing the
financial statements as further explained in Note 2 to the financial
statements.
Directors' indemnities
The Group maintains Directors and Officers liability insurance providing
appropriate cover for any legal action brought against its Directors and/or
officers.
Audit Committee
The Audit Committee, which currently comprises B Moritz and C Parry, and is
chaired by B Moritz, is responsible for ensuring the financial performance,
position and prospects of the Group are properly monitored and reported on and
for meeting the auditors and reviewing their reports relating to accounts and
internal controls. Meetings of the Audit Committee are held at least twice a
year, at appropriate times in the reporting and audit cycle. The Audit
Committee reports to the Board on its proceedings after each meeting on all
matters for which it has responsibility. The members of the Audit Committee
are subject to annual re-election by the Board.
Remuneration Committee
The Remuneration Committee, which comprises B Moritz and C Parry and which is
chaired by B Moritz, reviews the performance of the executive directors and
sets their remuneration, determines the payment of bonuses to executive
directors and considers the future allocation of share options and other
equity incentives pursuant to any share option scheme or equity incentive
scheme in operation from time to time to Directors and employees. Meetings of
the Remuneration Committee are held on an ad hoc basis as required. The
Remuneration Committee reports to the Board on its proceedings on all matters
for which it has responsibility. The members of the Remuneration Committee
are subject to annual re-election by the Board.
Directors
The following Directors held office throughout the year:
B Moritz
R Lamming
G Stacey
C Parry
Directors' interests
The beneficial interests of the Directors holding office on 31 December 2023
in the issued share capital of the Company, including spouses of Directors,
were as follows:
2023 2022
Percentage Percentage of issued ordinary share capital
Number of Ordinary Shares of issued ordinary share Number of Ordinary Shares
capital
R Lamming 4,611,845 5.76% 4,611,845 5.78%
G Stacey 437,390 0.55% 437,390 0.59%
B Moritz 2,125,821 2.65% 2,125,821 2.67%
C Parry - - - -
Since 31 December 2023 there have been no changes in these shareholdings.
Directors' remuneration and service contracts
Details of remuneration payable to Directors as disclosed in note 11 to these
financial statements:
Remuneration Share-based payments 2023 2022
£'000 Total Total
£'000 £'000 £'000
B Moritz 36 - 36 40
D Reeves - - - 10
C Parry 24 - 24 8
R Lamming 127 - 127 122
G Stacey 142 - 142 114
329 - 329 294
Statement of Directors' responsibilities
The Directors are responsible for preparing the strategic report, the
directors' report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have elected to prepare the
Group financial statements in accordance with UK-adopted International
Accounting Standards ("UK-adopted IAS") in conformity with the requirements
of the Companies Act 2006 and the company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards, comprising FRS 101 "Reduced Disclosure Framework", and
applicable law).
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Parent Company and of the profit or loss of the Group
and Parent Company for that period.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then
apply them consistently;
· make judgements and estimates that are reasonable
and prudent;
· state whether the consolidated financial
statements comply with UK-adopted IAS and the parent company financial
statements are prepared in accordance with UK GAAP/FRS 101 in conformity with
the requirements of the Companies Act 2006, subject to any material departures
disclosed and explained in the financial statements; and
· prepare the financial statements on the going
concern basis unless it is inappropriate to presume that the Group and Company
will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Company and the Group and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The Company is compliant with AIM Rule 26 regarding the Company's website.
Statement of disclosure to auditor
Each Director at the date of approval of this report confirms that;
So far as they are aware,
· there is no relevant audit information of which
the Company's auditor is unaware; and
· they have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information and to
establish that the auditor is aware of that information.
Auditor
MAH, Chartered accountants were appointed as auditor and in accordance with
section 485 of the Companies Act 2006, a resolution proposing that they be
re-appointed will be put at a General Meeting.
By order of the Board
Russell Lamming
Director
26 June 2024
INDEPENDENT AUDITOR'S REPORT
Opinion
We have audited the financial statements of Keras Resources Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31 December
2023 which comprise the Consolidated Statement of Comprehensive Income, the
Consolidated and Parent Company Statement of Financial Position, the
Consolidated and Parent Company Statements of Changes in Equity, the
Consolidated Statement of Cash Flows and Notes to the Consolidated Financial
Statements, including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and
UK-adopted international accounting standards. The financial reporting
framework that has been applied in the preparation of the parent company
financial statements is United Kingdom Accounting Standards, including FRS 101
Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting
Practice) and as applied in accordance with the provisions of the Companies
Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state
of the group's and of the parent company's affairs as at 31 December 2023 and
of the group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted Accounting
Practice and as applied in accordance with the provisions of the Companies Act
2006; and
· the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and parent company's ability to continue to adopt
the going concern basis of accounting included reviewing cashflow forecasts
covering a period of 12 months from the date of approval of these financial
statements, considering the levels of discretionary and non-discretionary
expenditure forecasted, challenging and conducting sensitivity analysis using
the key inputs and assumptions underpinning said forecasts, ascertaining the
group and parent company's current cash position and reviewing the group and
parent company's performance since the period end.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group's or parent company's
ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements are free from
material misstatement, we define materiality as the magnitude of misstatement
that makes it probable that the economic decisions of a reasonably
knowledgeable person, relying on the financial statements, would be changed,
or influenced. We also determine a level of performance materiality which we
use to assess the extent of testing needed to reduce to an appropriately low
level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
Materiality for the group financial statements as a whole was set as £95,000.
This was calculated based upon 2% of gross assets due to the group's
significant capitalised exploration costs being key balances of interest
within the financial statements and the fact that though generating revenues,
the group is not yet profit generating.
Materiality for the parent company financial statements as a whole was set as
£94,000.
We also agreed to report to the audit committee any other audit misstatements
below the triviality thresholds established above which we believe warranted
reporting on qualitative grounds.
Our approach to the audit
The scope of our audit was influenced by our application of materiality. The
quantitative and qualitative thresholds for materiality determine the scope of
our audit and the nature, timing, and extent of our audit procedures.
In designing our audit, we considered areas involving significant accounting
estimates and judgements by the directors as well as future events that are
inherently uncertain. These included the recoverable value of the group's
capitalise exploration expenditure, the recoverable value of the parent
company's investment in its subsidiary and the amounts due to the parent
company by its subsidiaries. We also addressed the risk of management override
of internal controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material misstatement
due to fraud.
We performed full scope audits of the financial information of the components
within the Group which were individually financially significant and material.
We also performed specified audit procedures over certain account balances and
transaction classes that we regarded as material to the Group, as well as
analytical procedures, for components which were not significant and not
material. The audit work and specified audit procedures covered the whole of
the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Going Concern
The group made a loss for the year and it had low cash reserves and net We obtained and reviewed Management's latest group and parent company cashflow
current liabilities at the year end. forecasts covering the going concern period; challenging the key assumptions,
reviewing the mathematical accuracy of the forecast and conducting sensitivity
There is a risk that the group may have uncertainty over going concern. analysis.
We ascertained the latest group cash position and performance post period end
and we also reviewed the post year end loan agreements.
Based on our procedures we concluded that the going concern basis of
preparation is appropriate and that there is no materiality uncertainty
relating to going concern.
Carrying value of intangible assets
As at 31 December 2023 the Group has intangible assets with a carrying value Our work in this area included but was not limited to:
of £3,404,000 which represents capitalised exploration and evaluation costs.
• Confirming that the group held good title to the underlying licenses and
Given the value of the balance and the significant estimates and judgements assessing whether any indicators of impairment exists.
required to be made by management when conducting their impairment
assessments, there is a risk that the exploration costs capitalised may be • Obtaining Management's impairment assessments in relation to intangible
materially misstated as they are impaired and/or costs capitalised in the year assets and supporting discounted cashflow forecasts. Reviewing their
have been inappropriately capitalised in accordance with the eligibility assessment and their supporting value in use calculates for reasonableness;
requirements of IFRS 6. considering whether any of the IAS 36 impairment indicators have been met and
considering if the recoverable value exceeds the carrying value.
We consider Management's assessment of impairment is reasonable in concluding
that no impairment is required to be recognised at the year end.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group and parent company financial
statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial period for which the financial statements are
prepared is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law
are not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group and the parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and parent company and the
sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management,
industry research and our cumulative audit knowledge and experience of the
sector.
· We determined the principal laws and regulations relevant to the
group and parent company in this regard to be those arising from UK Company
Law, rules applicable to issuers on AIM, UK and US employment law and local
mining, environmental and health and safety laws in the US.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
and parent company with those laws and regulations. These procedures included,
but were not limited to:
o Discussions with management regarding compliance with laws and regulations
by the parent company and the components;
o Review of board minutes; and
o Review of regulatory news announcements made throughout and post
period-end.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, we identified the potential for management bias was identified in
relation to the impairment of capitalised exploration expenditure l and we
addressed this by challenging the assumptions and judgements made by
management when auditing that significant accounting estimates and judgements.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; discussing with management as to
whether there were any instances or suspicions of fraud since 1 January 2023
within the parent company or components and evaluating the business rationale
of any significant transactions that are unusual or outside the normal course
of business.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
Mohammed Haque (Senior Statutory Auditor)
For and on behalf of
MAH, Chartered Accountants (Statutory
Auditor)
2(nd) Floor, 154 Bishopsgate,
London, EC2M 4LN
26 June 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER Continuing operations 2023 Discontinued operations 2023 Total Continuing operations 2022 Discontinued operations Total
2023
£'000 £'000 2023 £'000 2022 2022
Notes £'000 £'000 £'000
Revenue 7 916 - 916 994 - 994
Cost of sales (386) - (386) (263) - (263)
Gross profit 530 - 530 731 - 731
Profit on sale of intellectual property relating to Togo 22 - 121 121
Loss on disposal of a subsidiary 22 - (76) (76)
Administrative expenses (826) (16) (842) (1,414) (110) (1,524)
(Loss)/profit from operating activities (296) 29 (267) (683) (110) (793)
Finance costs 12 (173) - (173) (183) (21) (204)
Net finance costs (173) - (173) (183) (21) (204)
(Loss)/profit before taxation (469) 29 (440) (866) (131) (997)
Tax 13 (6) - (6) - - -
(Loss)/profit for the year (475) 29 (446) (866) (131) (997)
Other comprehensive income - items that may be subsequently reclassified to
profit or loss
Exchange translation on foreign operations (245) - (245) 115 35 150
Total comprehensive (loss)/profit for the year (720) 29 (691) (751) (96) (847)
(Loss)/profit attributable to:
Owners of the Company (475) - (475) (963) (113) (1,076)
Non-controlling interests - 29 29 97 (18) 79
(Loss)/profit for the year (475) 29 (446) (866) (131) (997)
Total comprehensive loss attributable to:
Owners of the Company (720) - (720) (824) (83) (907)
Non-controlling interests - 29 29 73 (13) 60
Total comprehensive loss for the year (720) 29 (691) (751) (96) (847)
Earnings per share
Basic and diluted loss per share (pence) 25 (0.863) (1.148)
The notes are an integral part of these consolidated financial
statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 2023 2022
£'000 £'000
Notes
Assets
Property, plant and equipment 14 346 381
Right of use asset 15 - 121
Intangible assets 16 3,404 3,558
Non-current assets 3,750 4,060
Inventory 20 621 668
Trade and other receivables 21 171 191
Assets held for sale 22 - 1,558
Cash and cash equivalents 185 207
Current assets 977 2,624
Total assets 4,727 6,684
Equity
Share capital 24 801 797
Share premium 24 5,849 5,838
Share option reserve 24, 26 104 102
Exchange reserve (106) 180
Retained (deficit)/earnings (3,465) (2,990)
Equity attributable to owners of the Company 3,183 3,927
Non-controlling interests - (146)
Total equity 3,183 3,781
Liabilities
Trade and other payables 27 1,013 1,158
Liabilities held for sale 22 - 471
Lease liabilities - current 18 - 126
Current liabilities 1,013 1,755
Trade and other payables 27 531 1,148
Non-current liabilities 531 1,148
Total liabilities 1,544 2,903
Total equity and liabilities 4,727 6,684
The financial statements were approved by the Board of Directors and
authorised for issue on 26 June 2024. They were signed on its behalf by:
Graham Stacey
Director
The notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2023
Attributable to owners of the Company
Notes Share Share premium Share Exchange reserve Retained earnings/(deficit) Total Non-controlling interests Total equity
capital option
/warrant reserve £'000 £'000
£'000 £'000 £'000 £'000
£'000 £'000
Balance at 1 January 2023 797 5,838 102 180 (2,990) 3,927 (146) 3,781
Loss for the year - - - - (475) (475) 29 (446)
Other comprehensive income - - - (245) - (245) - (245)
Total comprehensive (loss)/profit for the year - - - (245) (475) (720) 29 (691)
Issue of ordinary shares 24 4 11 - - - 15 - 15
Share option expense 26 - - 2 - - 2 - 2
Disposal of a subsidiary 22 - - - (41) - (41) 117 76
Transactions with owners, recognised directly in equity 4 11 2 - - (24) 117 93
Balance at 31 December 2023 801 5,849 104 (106) (3,465) 3,183 - 3,183
The notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2022
Attributable to owners of the Company
Notes Share Share premium Share Exchange reserve Retained earnings/(deficit) Total Non-controlling interests Total equity
capital option
/warrant reserve £'000 £'000
£'000 £'000 £'000 £'000
£'000 £'000
Balance at 1 January 2022 630 4,033 100 11 (1,721) 3,053 229 3,282
(Loss)/profit for the year - - - - (1,076) (1,076) 79 (997)
Other comprehensive income/(loss) - - - 169 - 169 (19) 150
Total comprehensive income/(loss) for the year - - - 169 (1,076) (907) 60 (847)
Issue of ordinary shares 24 167 1,845 - - - 2,012 - 2,012
Costs of share issue 24 - (40) - - - (40) - (40)
Share option expense 26 - - 9 - - 9 - 9
Share option forfeit 26 - - (7) - 7 - - -
Acquisition of non-controlling interest 17 - - - - (200) (200) (435) (635)
Transactions with owners, recognised directly in equity 167 1,805 2 - (193) 1,781 (435) 1,346
Balance at 31 December 2022 797 5,838 102 180 (2,990) 3,927 (146) 3,781
The notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 2023 2022
£'000 £'000
Notes
Cash flows from operating activities
Loss from operating activities (446) (997)
Adjustments for:
Depreciation and amortisation 14,15,16 139 179
Gain on sale of discontinued operations 22 (121) -
Loss on disposal of subsidiary 22 76 -
Expenses settled in shares - 109
Finance costs recognised 12 173 204
Equity-settled share-based payments 26 2 9
(177) (496)
Changes in:
- inventory 9 (395)
- trade and other receivables 10 (97)
- trade and other payables (392) 119
Cash generated by/(used in) operating activities (550) (869)
Finance costs (17) (52)
Net cash generated by/(used in) operating activities (567) (921)
Cash flows from investing activities
Proceeds on disposal of discontinued operations 1,279 -
Settlement of deferred consideration for purchase of minority interest in 17 (272) (286)
subsidiary*
Net cash used in investing activities 1,007 (286)
Cash flows from financing activities
Net proceeds from issue of share capital 24 15 1,641
Loans received - 100
Repayment of loans* 17 (357) (375)
Payment of lease obligations (126) (93)
Net cash flows from financing activities (468) 1,273
Net (decrease)/increase in cash and cash equivalents (28) 66
Cash and cash equivalents at beginning of year 207 166
Foreign exchange differences 6 (25)
Cash and cash equivalents at 31 December 185 207
Net (decrease)/increase in cash and cash equivalents
(28)
66
Cash and cash equivalents at beginning of year
207
166
Foreign exchange differences
6
(25)
Cash and cash equivalents at 31 December
185
207
The notes are an integral part of these consolidated financial statements.
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising form
financing activities, including both cash and non-cash changes. Liabilities
arising from financing activities for which cash flows were, or future cash
flows will be, classified in the Group's Consolidated Statement of Cash Flows
as cash flows from financing activities.
At 1 January 2023 Cashflows Acquired Non-cash movements At 31 December 2023
Lease liabilities 126 (126) - - -
At 1 January 2022 Cashflows Acquired Non-cash movements At 31 December 2022
Lease liabilities 219 (93) - - 126
*The deferred consideration payment in the year is split between two lines
being the element for the share investment and the element for the loans
novated as detailed in note 17.
The notes are an integral part of these consolidated financial statements.
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2023 2023 2022
£'000 £'000
Notes
Assets
Investments 17 2,594 2,594
Non-current assets 2,594 2,594
Loans 19 2,781 3,686
Trade and other receivables 21 102 45
Cash and cash equivalents 73 54
Current assets 2,956 3,785
Total assets 5,550 6,379
Equity
Share capital 24 801 797
Share premium 24 5,849 5,838
Other reserves 26 104 102
Retained earnings (2,553) (2,190)
Total equity attributable to owners of the Company 4,201 4,547
Liabilities
Trade and other payables 27 818 767
Current liabilities 818 767
Trade and other payables 27 531 1,065
Non-current liabilities 531 1,065
Total liabilities 1,349 1,832
Total equity and liabilities 5,550 6,379
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 from presenting the Parent Company profit and loss account.
The Parent Company loss for the year was £362,757 (2022: loss of
£1,467,879).
The financial statements of Keras Resources PLC, company number 07353748, were
approved by the Board of Directors and authorised for issue on 26 June 2024.
They were signed on its behalf by:
Graham Stacey
Director
The notes are an integral part of these consolidated financial statements.
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 Share Share premium Share option Retained deficit Total
capital /warrant reserve £'000 equity
£'000 £'000
£'000 £'000
Balance at 1 January 2022 630 4,033 100 (729) 4,034
Loss for the year - - - (1,468) (1,468)
Total comprehensive loss for the year - - - (1,468) (1,468)
Issue of ordinary shares 167 1,845 - - 2,012
Costs of share issue - (40) - - (40)
Share option expense - - 9 - 9
- - (7) 7 -
Transactions with owners, recognised directly in equity 167 1,805 2 7 1,981
Balance at 31 December 2022 797 5,838 102 (2,190) 4,547
Balance at 1 January 2023 797 5,838 102 (2,190) 4,547
Loss for the year - - - (363) (363)
Total comprehensive loss for the year - - - (363) (363)
Issue of ordinary shares 4 11 - - 15
Share option expense - - 2 - 2
Transactions with owners, recognised directly in equity 4 11 2 - 17
Balance at 31 December 2023 801 5,849 104 (2,553) 4,201
The notes are an integral part of these consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2023
1. Reporting entity
Keras Resources PLC is a company domiciled in England and Wales. The address
of the Company's registered office is Coveham House, Downside Bridge Road,
Cobham KT11 3EP. The Group currently operates as a miner of and explorer for
mineral resources.
The Group consists of Keras Resources Plc and all of its subsidiaries.
2. Going concern
The Directors have adopted the going concern basis in preparing the Group and
Company financial statements. The Group's and Company's business activities
together with the factors likely to affect its future development, performance
and position are set out in the Chairman's Statement and Strategic Report. In
addition, note 28 to the Financial Statements includes the Group's policies
and processes for managing its financial risk management objectives.
Falcon Isle is currently generating positive cash flow, which is forecast to
increase materially as a result of the Joint Venture Agreement between Falcon
Isle and PhoSul LLC. In addition, the agreement with the Republic of Togo for
the provision of advisory and brokerage services is expected to generate
substantial cash flow over the next three years.
Notwithstanding this, in order to meet the payment of $900,000 (including
$100,000 severance payment) due on 1 July 2024 to the vendor of Falcon Isle,
on 28 May 2024 the Company announced that it had raised a further
US$1,525,000 (£1,195,610) by way of a 4 year loan and a convertible loan,
comprising US$1,325,000 (£1,038,808) in new cash funds
and US$200,000 (£156,801) by the capitalisation of amounts owed to
Directors.
On this basis, the Directors have a reasonable expectation that the Group and
Company will have adequate resources to continue in operational existence for
the foreseeable future. As such, the Directors continue to adopt the going
concern basis of accounting.
3. Basis of preparation
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with the Companies
Act 2006("UK-adopted IAS"), and the Companies Act 2006 as applicable to
entities reporting in accordance with IFRS.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical
cost basis unless otherwise stated.
(c) Functional and presentation currency
These consolidated financial statements are presented in Pounds Sterling
('GBP' or '£'), which is the Group's functional currency and is considered by
the Directors to be the most appropriate presentation currency to assist the
users of the financial statements. All financial information presented in
GBP has been rounded to the nearest thousand, except when otherwise indicated.
(d) Basis of parent company preparation
The parent company meets the definition of a qualifying entity under FRS 101
Reduced Disclosure Framework.
As permitted by FRS 101, the Company has taken advantage of the following
disclosure exemptions from the requirements of IFRS:
(a) the requirements of IFRS 7 'Financial Instruments: Disclosure';
(b) the requirements within IAS 1 relating to the presentation of certain
comparative information;
(c) the requirements of IAS 7 'Statement of Cash Flows' to present a statement
of cash flows;
(d) Basis of parent company preparation (continued)
(d) paragraphs 30 and 31 of IAS 8 'Accounting policies, changes in accounting
estimates and errors' (requirement for the disclosure of information when an
entity has not applied a new IFRS that has been issued but it not yet
effective); and
(e) the requirements of IAS 24 'Related Party Disclosures' to disclose related
party transactions and balances between two or more members of a Group.
(e) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with
IFRS requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which
form the basis of making judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised if the revision affects only that period, or in the
period of revision and future periods of the revision if it affects both
current and future periods.
Critical estimates and assumptions that have the most significant effect on
the amounts recognised in the consolidated financial statements and/or have a
significant risk of resulting in a material adjustment within the next
financial year are as follows:
Deferred consideration and the loan payable to previous minority shareholder
The deferred consideration due in respect of the acquisition of the remaining
49% of Falcon Isle Resources LLC has been discounted at a rate of 12% (2022:
12%), being the rate at which interest will accrue in the event of a default.
Further details can be found in Note 17.
Carrying value of intangible assets
Intangible assets consists of prospecting and exploration rights. Those
acquired with subsidiaries are recognised at fair value at the date of
acquisition. Other rights acquired and evaluation expenditure are recognised
at cost. The directors assess the recoverable value at each year end and
review for any signs of impairment.
Impairment of intangible assets
Intangible assets have been assessed during the current year for any
impairment and it was concluded that they are fairly valued. The recoverable
amount from the cash generating unit (CGU), in the USA, was assessed by
performing a 10-year discounted cashflow (DCF) model and it was concluded that
the recoverable amounts exceeded the intangible asset value indicating no
impairment.
Key assumptions
The recoverable amount for the CGU is based on value-in-use which is derived
from discounted cash flow calculations. The key assumptions applied in
value-in-use calculations are those regarding forecast mine production, sales
per production, sales per product type, operating profit, phosphate prices and
discount rates.
Forecast operating profits
For the CGU, the Group prepared cash flow projections derived from the most
recent forecast for the year ending 31 December 2024, Forecast revenue, fixed
and variable costs are based on recent performance and expectations of future
changes in the market, operating model and cost base.
3. Basis of preparation (continued)
Growth rates
For the short term, sales are forecast to grow by approximately $1.5m in each
of 2024 and 2025, primarily due to the PhoSul Utah LLC JV as explained in the
Chairman's Statement and the Strategic Report. For the medium term, the
forecasts have taken a conservative approach and assumed that sales will not
grow any further and will remain at the same level from 2026 onwards.
Discount rates
A post-tax real discount rate used to assess the forecast free cashflows from
the CGU was derived from its weighted average cost of capital, taking into
account specific factors relating to the country
is operates in. These rates are reviewed annually and adjusted for the risks
specific to the business being assessed and the market in which the CGU
operates. The real post-tax discount rate used during the year for the USA was
10%.
Sensitivity analysis
A sensitivity analysis on the key model parameters has been performed and
management has concluded that no reasonably foreseeable change in the key
assumptions would result in an impairment of the intangible assets of the
Group's CGU.
Assets held for sale
On classification as held-for-sale, assets and disposal groups are measured at
the lower of the carrying amount and fair value less costs to sell, with any
adjustments taken to profit or loss (or other comprehensive income in the case
of a revalued asset).
Intercompany receivables (Company only)
All loans to subsidiaries are currently unsecured and interest free and
repayable on demand.
Fair value of share options and warrants
The determination of the fair values of the schemes issued have been made with
reference to the Black-Scholes model with the inputs set out in Note 26.
4. Significant accounting policies
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements and have been
applied consistently by Group entities.
(a) Basis of consolidation
(i) Business combinations
The Group accounts for business combinations using the acquisition method when
control is transferred to the Group. The consideration transferred in the
acquisition is generally measured at fair value, as are identifiable net
assets acquired. Any goodwill that arises is tested annually for impairment.
Any gain on a bargain purchase is recognised in profit or loss immediately.
Transaction costs are expensed as incurred, except if related to the issue of
debt or equity securities. The consideration transferred does not include
amounts related to the settlement of pre-existing relationships. Such
amounts generally are recognised in profit or loss.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an
entity when it is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that
control commences until the date that control ceases. On disposal of
subsidiaries, any amounts previously recognised in other comprehensive income
in respect of that entity are accounted for as if the Group had directly
disposed of the related assets or liabilities. This might mean that amounts
previously recognised in other comprehensive income are reclassified to profit
or loss.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the
consolidated financial statements.
(b) Foreign currency
Transactions in foreign currencies are translated into the respective
functional currencies of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the reporting
date.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value in a foreign currency are translated to the functional
currency at the exchange rate when the fair value was determined.
Non-monetary items that are measured based on historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
(i) Foreign operations
The assets and liabilities of foreign operations, including goodwill and the
fair value adjustments arising on acquisition, are translated to GBP at
exchange rates at the reporting date. The income and expenses of foreign
operations are translated to GBP at exchange rates at the dates of the
transactions.
Foreign currency differences are recognised in other comprehensive income and
accumulated in the translation reserve except to the extent that the
translation difference is allocated to non-controlling interests. When a
foreign operation is disposed of in its entirety or partially such that
control, significant influence or joint control is lost, the cumulative amount
in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. If the Group
disposes of part of its interest in a subsidiary but retains control, then the
relevant proportion of the cumulative amount is reattributed to
non-controlling interests. When the Group disposes of only part of an
associate or joint venture while retaining significant influence or joint
control, the relevant proportion of the cumulative amount is reclassified to
profit or loss.
(c) Financial instruments
(i) Financial assets
The Group's financial assets measured at amortised cost comprise trade and
other receivables, cash and cash equivalents and financial assets at fair
value through other comprehensive income in the consolidated statement of
financial position.
Trade receivables and intra group balances are initially recognised at fair
value. New impairment requirements use an expected credit loss model to
recognise an allowance. For receivables a simplified approach to measure
expected credit losses during a lifetime expected loss allowance is available
and has been adopted by the Group. During this process the probability of
non-payment of the receivables is assessed. This probability is then
multiplied by the amount of the expected loss arising from default to
determine the lifetime expected credit loss for the receivables. For trade
receivables, which are reported net, such provisions are recorded in a
separate provision account with the loss being reported within the
consolidated statement of comprehensive income. On confirmation that the
trade and intra group receivable will not be collectable, the gross carrying
value of the asset is written off against the provision.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated
liabilities on the date that they are originated. All other financial
liabilities are recognised initially on the trade date, which is the date that
the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations
are discharged, cancelled or expire. The Group classifies non-derivative
financial liabilities into the other financial liabilities category. Such
financial liabilities are recognised initially at fair value less any directly
attributable transaction costs. Subsequent to initial recognition, these
financial liabilities are measured at amortised cost using the effective
interest method. Other financial liabilities comprise trade and other
payables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognised as a deduction
from equity, net of any tax effects.
(d) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated
depreciation and any accumulated impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of
property, plant and equipment.
Any gain or loss on disposal of an item of property, plant and equipment
(calculated as the difference between the net proceeds from disposal and the
carrying amount of the item) is recognised in profit or loss.
(ii) Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
Ongoing repairs and maintenance is expensed as incurred.
(iii) Depreciation
Items of property, plant and equipment are depreciated on a straight-line
basis in the statement of comprehensive income over the estimated useful lives
of each component.
Items of property, plant and equipment are depreciated from the date that they
are installed and are ready for use, or in respect of internally constructed
assets, from the date that the asset is completed and ready for use.
The estimated useful lives of significant items of property, plant and
equipment are as follows:
· plant and
equipment 20 years
· office
equipment 2
years
· computer
equipment 2 years
· motor
vehicles
5 years
Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
(e) Intangible assets
(i) Prospecting and exploration rights
Rights acquired with subsidiaries are recognised at fair value at the date of
acquisition. Other rights acquired and evaluation expenditure are recognised
at cost.
(ii) Other intangible assets
Other intangible assets that are acquired by the Group and have finite useful
lives are measured at cost less accumulated amortisation and any accumulated
impairment losses.
(iii) Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future
economic benefits embodied in the specific asset to which it relates. All
other expenditure, including expenditure on internally generated goodwill and
brands, is recognised in profit or loss as incurred.
(iv) Amortisation
Intangible assets are amortised in profit or loss over their estimated useful
lives, from the date that they are available for use.
The estimated useful lives are as follows:
· Life of mine based on units of production
Amortisation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
Amortisation is included within administrative expenses in the statement of
comprehensive income.
(f) Impairment
(i) Non-derivative financial assets
A financial asset not classified as at fair value through profit or loss is
assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired if there is
objective evidence of impairment as a result of one or more events that
occurred after the initial recognition of the asset, and had an impact on the
estimated future cash flows from that asset that can be estimated reliably.
Objective evidence that financial assets are impaired includes default or
delinquency by a debtor, restructuring of an amount due to the Group on terms
that the Group would not consider otherwise, indications that a debtor or
issuer will enter bankruptcy, adverse changes in the payment status of
borrowers or issuers, economic conditions that correlate with defaults or the
disappearance of an active market for a security. In addition, for an
investment in an equity security, a significant or prolonged decline in its
fair value below its cost is objective evidence of impairment.
Financial assets measured at amortised cost
The Group considers evidence of impairment for financial assets measured at
amortised cost (loans and receivables) at both a specific asset and collective
level. All individually significant assets are assessed for specific
impairment. Those found not to be specifically impaired are then
collectively assessed for any impairment that has been incurred but not yet
identified. Assets that are not individually significant are collectively
assessed for impairment by grouping together assets with similar risk
characteristics.
4. Significant accounting policies (continued)
In assessing collective impairment, the Group uses historical trends of the
probability of default, the timing of recoveries and the amount of loss
incurred, adjusted for management's judgement as to whether current economic
and credit conditions are such that the actual losses are likely to be greater
or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount and the present
value of the estimated future cash flows discounted at the asset's original
effective interest rate. Losses are recognised in profit or loss and
reflected in an allowance against loans and receivables. Interest on the
impaired asset continues to be recognised. When an event occurring after the
impairment was recognised causes the amount of impairment loss to decrease,
the decrease in impairment loss is reversed through profit or loss.
Financial assets at fair value through other comprehensive income
Impairment losses on financial assets at FVOCI are recognised by reclassifying
the losses accumulated in the fair value reserve to profit or loss. The amount
reclassified is the difference between the acquisition cost (net of any
principal repayment and amortisation) and the current fair value, less any
impairment previously recognised in profit or loss. Impairment losses
recognised in profit or loss for an investment in an equity instrument
classified as FVOCI are not reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group's non-financial assets are reviewed at each
reporting date to determine whether there is any indication of impairment.
If any such indication exists, the asset's recoverable amount is estimated.
Indefinite-lived intangible assets are tested annually for impairment or when
there is an indication of impairment. An impairment loss is recognised if
the carrying amount of an asset or Cash Generating Unit ('CGU') exceeds its
recoverable amount.
The recoverable amount of an asset of CGU is the greater of its value in use
and its fair value less costs to sell. In assessing value in use, the
estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset or CGU. For the purpose of
impairment testing, assets are grouped together into the smallest group of
assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGUs. Subject to an
operating segment ceiling test, CGUs to which goodwill has been allocated are
aggregated so that the level at which impairment testing is performed reflects
the lowest level at which goodwill is monitored for internal reporting
purposes. Goodwill acquired in a business combination is allocated to groups
of CGUs that are expected to benefit from the synergies of the combination.
Impairment losses are recognised in profit or loss. Impairment losses
recognised in respect of CGUs are allocated first to reduce the carrying
amount of any goodwill allocated to the CGU (group of CGUs), and then to
reduce the carrying amounts of the other assets in the CGU (group of CGUs) on
a pro rata basis.
An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined,
net of depreciation or amortisation, if no impairment loss had been
recognised.
(g) Employee benefits
costs of short-term employee benefits are recognised as a liability and an
expense, unless those costs are required to be recognised as part of the cost
of stock or non-current assets The cost of any unused holiday entitlement is
recognised in the period in which the employee's services are received.
Termination benefits are recognised immediately as an expense when the company
is demonstrably committed to terminate the employment of an employee or to
provide termination benefits.
Share-based payments
The grant-date fair value of share-based payment awards granted to employees
is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the
awards. The amount recognised as an expense is adjusted to reflect the
number of awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of awards that meet the related service
and non-market performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant-date fair value of the
share-based payment is measured to reflect such conditions and there is no
adjustment for differences between expected and actual outcomes.
(h) Retirement benefits
A defined contribution plan is a post-employment benefit plan under which the
group pays fixed contributions into a separate entity and will have no legal
or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution pension plans are recognised as an
expense in the profit and loss account in the periods during which services
are rendered by employees.
(i) Revenue
Turnover represents the amounts (net of VAT and trade discounts) receivable
from the provisions of goods and services to the customer during the period.
The Group applies IFRS 15 'Revenue from contracts with customers'. Under IFRS
15, the Group applies the 5-step method to identify contracts with its
customers, determine performance obligations arising under those contracts,
set an expected transaction price, allocate that price to the performance
obligations, and then recognises revenues as and when those obligations are
satisfied.
Revenue from the sale of processed products is recognised when ownership of
the product passes to the purchaser in accordance with the relevant sales
contract. Ownership passes either upon delivery or once the product is
collected where customers arrange delivery.
IFRS 15 Revenue from contracts with customers
IFRS 15 establishes a comprehensive '5 step' framework for determining
whether, how much and when revenue is recognised. Under IFRS 15, revenue is
recognised when a customer obtains control of the goods or services.
Determining the timing of the transfer of control - at a point in time or over
time - requires judgement.
Under IFRS 15, sales are recognised when control of the products has
transferred, being when the products are delivered to the customer, the
customer has full discretion of the usage of the projects, and there are no
unfulfilled obligation which could affect the customers' acceptance of the
products and when the entity has a present right to payment for the asset.
Delivery occurs when the products are delivered to a specific location and
erected at that location, the risks have been transferred and the customer has
accepted the products in accordance with the sales agreement.
A receivable is recognised when control transfers as this is the point in time
that the consideration is unconditional because only the passage of time is
required before the payment is due.
No element of financing is deemed present as the sales are typically made with
a credit term of 30 days from invoice date, which is consistent with market
practice.
(j) Finance income and finance costs
Finance income comprises interest income on bank funds. Interest income is
recognised as it accrues in profit or loss, using the effective interest
method.
Finance costs comprise interest expense on borrowings. Borrowing costs are
recognised in profit or loss in the period in which they are incurred.
(k) Taxation
Tax expense comprises current and deferred tax. Current and deferred tax is
recognised in profit or loss except to the extent that it relates to a
business combination, or items recognised directly in equity or in other
comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantially enacted at the
reporting date, and any adjustment to tax payable
in respect of previous years. Current tax payable also includes any tax
liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised
for:
· temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
· temporary differences related to investments in subsidiaries and
jointly controlled entities to the extent that it is probable that they will
not reverse in the foreseeable future; and
· taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or
substantively enacted at the reporting date.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to taxes levied by the same tax authority on the same taxable entity,
or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will
be realised simultaneously.
Deferred tax assets are recognised for unused tax losses, unused tax credits
and deductible temporary differences to the extent that it is probable that
future taxable profits will be available against which they can be used.
Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of future taxable
profits improves.
(l) Leases
The Group leases certain property, plant and equipment. Leases of plant and
equipment where the Group has substantially all the risks and rewards of
ownership are classified as finance leases under IFRS 16. Finance leases are
capitalised on the lease's commencement at the lower of the fair value of the
leased assets and the present value of the minimum lease payments. Other
leases are either small in value or cover a period of less than 12 months.
4. Significant accounting policies (continued)
The lease liability is initially measured at the present value of the lease
payments that are not paid. Lease payments generally include fixed payments
less any lease incentives receivable. The lease liability is discounted using
the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. The Group estimates the
incremental borrowing rate based on the lease term, collateral assumptions,
and the economic environment in which the lease is denominated. The lease
liability is subsequently measured at amortized cost using the effective
interest method. The lease liability is remeasured when the expected lease
payments change as a result of new assessments of contractual options and
residual value guarantees.
The right-of-use asset is recognised at the present value of the liability at
the commencement date of the lease less any incentives received from the
lessor. Added to the right-of-use asset are initial direct costs, payments
made before the commencement date, and estimated restoration costs. The
right-of-use asset is subsequently depreciated on a straight-line basis from
the commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of
the lease term. The right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the lease
liability.
Each lease payment is allocated between the liability and finance charges. The
corresponding rental obligations, net of finance charges, are included in
lease liabilities, split between current and non-current depending on when the
liabilities are due. The interest element of the finance cost is charged to
the Statement of Profit and Loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. Assets obtained under finance leases are depreciated over
their useful lives. The lease liabilities are shown in Note 18.
(m) Inventories
Inventories for processed material and ore stockpiles are valued at the lower
of cost and net realisable value. Costs allocated to processed material are
based on average costs and include all costs of purchase, conversion and other
costs in bringing these inventories to their existing location and
condition. Costs allocated to ore stockpiles are based on average costs,
which include an appropriate share of direct mining costs, direct labour and
material costs, mine site overhead, depreciation and amortisation. If
carrying value exceeds net realisable amount, a write down is recognised.
The write down may be reversed in a subsequent period if the circumstances
which caused it no longer exist.
(n) Segment reporting
Segment results that are reported to management include
items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
(o) Equity reserves
Share premium includes any premiums received on issue of share capital. Any
transaction costs associated with the issue of shares are deducted from share
premium.
The share option/warrant reserve is used to recognise the fair value of
equity-settled share based payment transactions.
The exchange reserve is used to record exchange differences arising from the
translation of foreign subsidiaries into the presentation currency.
The financial assets at FVOCI reserve is used to record unrealised accumulated
changes in fair value on financial assets.
(p) Discontinued operation
A discontinued operation is a component of the Group's business, the
operations and cash flows of which can be clearly distinguished from the rest
of the Group and which:
· represents a separate major line of business or geographic area
of operations;
· is part of a single co‑ordinated plan to dispose of a separate
major line of business or geographic area of operations; or
· is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at
the earlier of disposal or when the operation meets the criteria to be
classified as held‑for‑sale.
When an operation is classified as a discontinued operation, the comparative
statement of profit or loss and OCI is re‑presented as if the operation had
been discontinued from the start of the comparative year.
5. New standards and interpretations
The current standards, amendments and interpretations have been adopted in the
year and have not had a material impact on the reported results in the
Company's financial statements:
· IFRS 17 'Insurance contracts' and subsequent withdrawal of IFRS 4
'Insurance Contracts' and amendments to IFRS 17
· Deferred tax related to Assets and Liabilities arising from a
single transaction (Amendments to IAS 12 Income Taxes)
· International Tax Reform - Pillar Two Model Rules (Amendments to
IAS 12)
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practive Statement 2)
· Definition of an Accounting Estimate (Amendments to IAS 8)
The adoption of the following mentioned standards, amendments and
interpretations in future years:
Effective date - period beginning on or after
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) 1 January 2024
Amendments to IAS 1 Presentation of Financial Statements 1 January 2024
• Non-current Liabilities with Covenants
• Deferral of Effective Date Amendment
• Classification of Liabilities as Current or Non-Current
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) 1 January 2024
Lack of Exchangeability (Amendments to IAS 1) 1 January 2025*
* These standards, amendments and interpretations have not yet been endorsed
by the UK and the dates shown are the expected dates.
The directors have undertaken a project to review the above standards,
amendments and interpretations. Management do not expect these standards to
materially impact the financial statements.
6. Determination of fair values
A number of the Group's accounting policies and disclosures require the
determination of fair value, for both financial and non-financial assets and
liabilities. Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When applicable further
information about the assumptions made in determining fair values is disclosed
in the notes specific to that asset or liability.
(i) Property, plant and equipment
The fair value of property, plant and equipment recognised as a result of a
business combination is the estimated amount for which a property could be
exchanged on the date of acquisition between a willing buyer and a willing
seller in an arm's length transaction after proper marketing wherein the
parties had each acted knowledgeably. The fair value of items of plant and
equipment is based on the market approach and cost approaches using quoted
market prices for similar items when available and depreciated replacement
cost when appropriate. Depreciated replacement cost reflects adjustments for
physical deterioration as well as functional and economic obsolescence.
(ii) Intangible assets
The fair value of other intangible assets is based on the discounted cash
flows expected to be derived from the use and eventual sale of the assets.
(iii) Trade and other receivables
The fair value of trade and other receivables is estimated at the present
value of future cash flows, discounted at the market rate of interest at the
reporting date. This fair value is determined for disclosure purposes or
when such assets are acquired in a business combination.
(iv) Share-based payments
The fair value of the employee share options is measured using the
Black-Scholes formula. Measurement inputs include the share price on the
measurement date, the exercise price of the instrument, expected volatility
(based on an evaluation of the Company's historic volatility, particularly
over the historic period commensurate with the expected term), expected term
of the instruments (based on historical experience and general option holder
behaviour), expected dividends, and the risk-free interest rate (based on
government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account
in determining fair value.
(v) Investments - other
When one is available, the Group measures the fair value of an instrument
using the quoted price in an active market for that instrument. A market is
regarded as active if transactions for the asset or liability take place with
sufficient frequency and volume to provide pricing information on an ongoing
basis. A discount is applied to the value of any Performance shares to reflect
the possibility that the milestones for conversion into ordinary shares may
not be met.
7. Revenue
Revenue comprises:
Group:
2023 2022
£'000 £'000
Sale of phosphate (USA) 916 994
916 994
8. Operating segments
The Group considers that it operated during the year in a single business
area, being that of phosphate mining in Utah, USA. In the previous year the
Group also operated in manganese exploration and development in West Africa.
These business areas formed the basis of the Group's operating segments. For
each segment, the Group's CEO (the chief operating decision maker) reviews
internal management reports on at least a quarterly basis.
Other operations relate to the Group's administrative functions conducted at
its head office and by its intermediate holding company together with
consolidation adjustments.
Information regarding the results of each reportable segment is included
below. Performance is measured based on segment result before tax, as
included in the internal management reports that are reviewed by the Group's
CEO. Segment results are used to measure performance as management believes
that such information is the most relevant in evaluating the performance of
certain segments relative to other entities that operate within the
exploration industry.
Information about reportable segments
31 December 2023
Other operations
Manganese Phosphate £'000 Total
£'000 £'000 £'000
External revenue - 916 - 916
Cost of sales - 386 - 386
Depreciation, amortisation and impairment - 139 - 139
(Loss)/profit before 29 (3) (466) (440)
Tax
Gross assets including non-current and current assets - 4,646 81 4,727
Exploration and capital expenditure - 3,404 - 3,404
Liabilities - 290 1,254 1,544
8. Operating segments (continued)
31 December 2022
Other operations
Manganese Phosphate £'000 Total
£'000 £'000 £'000
External revenue - 994 994
Cost of Sales - 263 - 263
Depreciation, amortisation and impairment 34 144 1 179
Share of associate loss to date of becoming a subsidiary - - - -
(Loss)/profit before tax (131) 68 (934) (997)
Gross assets including non-current and current assets 1,558 5,027 99 6,684
Exploration and capital expenditure - 3,558 - 3,558
Liabilities 471 601 1,831 2,903
Information about geographical segments
31 December 2023
West Africa US Other Total
£'000 £'000 £'000 £'000
External revenue - 916 - 916
Cost of sales - 386 - 386
Depreciation, amortisation and impairment - 139 - 139
(Loss)/profit before 29 (3) (466) (440)
tax
Gross assets including non-current and current assets - 4,646 81 4,727
Exploration and capital expenditure - 3,404 - 3,404
Liabilities - 290 1,254 1,544
8. Operating segments (continued)
31 December 2022
West
Africa US Other Total
£'000 £'000 £'000 £'000
External revenue - 994 - 994
Cost of Sales - 263 - 263
Interest expense - - - -
Depreciation, amortisation and impairment 34 144 1 179
Share of associate loss
(Loss)/profit before tax (131) 68 (934) (997)
Gross assets including non-current and current assets 1,558 5,027 99 6,684
Exploration and capital expenditure - 3,558 - 3,558
Liabilities 471 601 1,831 2,903
9. Expenses
2023 2022
Expenses include: £'000 £'000
Depreciation and amortisation expense 139 179
(Profit) on sale of intellectual property relating to Togo (121) -
Loss on disposal of subsidiary 76 -
Auditor's remuneration
- Audit fee 25 41
Foreign exchange differences (135) 13
Auditor's remuneration for the year in respect of the Company amounted to
£15,000 (2022: £15,000).
10. Personnel expenses
2023 2022
£'000 £'000
Wages and salaries 193 382
Social security costs 12 26
Pension costs 2 7
Fees 142 114
Equity-settled share-based payments (see note 26) 2 9
351 538
The average number of employees (including directors) during the year was:
2023 2022
Directors 4 4
Administrative staff 1 2
5 6
11. Directors' emoluments
Year ended 31 December 2023
Executive Non-executive
directors directors Total
£'000
£'000 £'000
Wages and salaries (incl. fees) 269 60 329
269 60 329
Year ended 31 December 2022
Executive Non-executive directors
directors £'000 Total
£'000 £'000
Wages and salaries (incl. fees) 232 58 290
232 58 290
Fees in respect of the services of D Reeves are payable to a third party,
Wilgus Investments (Pty) Limited.
These amounts are disclosed by director in the Directors' report.
Emoluments disclosed above include the following amounts payable to the
highest paid director:
2023
£'000 2022
£'000
Emoluments for qualifying services 142 118
12. Finance costs
Recognised in loss for year
2023 2022
£'000 £'000
Discount unwinding on deferred consideration and loan payable to previous
minority shareholder
156 152
Other 17 52
173 204
The Discount unwinding disclosed above relates to the
deferred consideration explained in note 17.
13. Taxation
Current tax
2023 2022
£'000 £'000
Tax recognised in profit or loss
Current tax
Current period 6 -
Deferred tax
Origination and reversal of temporary differences - -
Total tax 6 -
Reconciliation of effective tax rate
2023 2022
£'000 £'000
Loss before tax (continuing operations) (446) (997)
Tax using the Company's domestic tax rate of 19.0% (2022: 19.0%) (85) (189)
Effects of:
Expenses not deductible for tax purposes 32 29
Overseas (profits)/losses 6 10
Equity-settled share-based payments - 2
Tax losses carried forward not recognised as a deferred tax asset 53 148
6 -
The UK corporation tax rate was 19.00% until April 2023 when it increased to
25% for groups with taxable profits of over £250,000.
None of the components of other comprehensive income have a tax impact.
Factors that may affect future tax charges
At the year end, the Group had unused tax losses available for offset against
suitable future profits of approximately £8,186,000 (2022: £7,907,000). A
deferred tax asset has not been recognised in respect of such losses due to
uncertainty of future profit streams.
14. Property, plant and equipment
Group
Plant and equipment Office and computer equipment
£'000 Total
£'000
£'000
Cost
Balance at 1 January 2022 661 28 689
Transfers to assets held for sale (323) (16) (339)
Effect of movements in exchange rates 59 - 59
Balance at 31 December 2022 397 12 409
Balance at 1 January 2023 397 12 409
Effect of movements in exchange rates (22) - (22)
Balance at 31 December 2023 375 12 387
Depreciation and impairment provisions
Balance at 1 January 2022 109 26 135
Depreciation for the year 47 1 48
Transfers to assets held for sale (145) (16) (161)
Effect of movements in exchange rates 6 - 6
Balance at 31 December 2022 17 11 28
Balance at 1 January 2023 17 11 28
Depreciation for the year 13 1 14
Effect of movements in exchange rates (1) - (1)
Balance at 31 December 2023 29 12 41
Carrying amounts
At 31 December 2021 552 2 554
At 31 December 2022 380 1 381
At 31 December 2023 346 - 346
Depreciation is recognised within administrative expenses.
14. Property, plant and equipment (continued)
Company
Computer equipment
£'000
Cost
Balance at 1 January 2022 8
Transfers -
Balance at 31 December 2022 8
Balance at 1 January 2023 8
Additions -
Balance at 31 December 2023 8
Depreciation and impairment provisions
Balance at 1 January 2022 6
Depreciation for the year 2
Balance at 31 December 2022 8
Balance at 1 January 2023 8
Depreciation for the year -
Balance at 31 December 2023 8
Carrying amounts
At 31 December 2022 2
At 31 December 2023 -
15. Right of use assets
Group
Land and buildings
£'000
Cost
Balance at 1 January 2022 314
Effects of movements in exchange rates 39
Balance at 31 December 2022 353
Balance at 1 January 2023 353
Effect of movements in exchange rates (11)
Balance at 31 December 2023 342
Depreciation and impairment provisions
Balance at 1 January 2022 99
Depreciation for the year 118
Effects of movements in exchange rates 15
Balance at 31 December 2022 232
Balance at 1 January 2023 232
Depreciation for the year 117
Effect of movements in exchange rates (7)
Balance at 31 December 2023 342
Carrying amounts
At 31 December 2021 215
At 31 December 2022 121
At 31 December 2023 -
Depreciation is recognised within administrative expenses.
16. Intangible assets - Group
Prospecting and exploration rights
£'000
Cost
Balance at 1 January 2022 4,643
Effect of movement in exchange rates 349
Transfers to assets held for sale (1,379)
Balance at 31 December 2022 3,613
Balance at 1 January 2023 3,613
Effect of movements in exchange rates (149)
Balance at 31 December 2023 3,464
Amortisation and impairment losses
Balance at 1 January 2022 37
Amortisation 13
Effect of movements in exchange rates 5
Balance at 31 December 2022 55
Balance at 1 January 2023 55
Amortisation 8
Effect of movements in exchange rates (3)
Balance at 31 December 2023 60
Carrying amounts
At 31 December 2021 4,606
At 31 December 2022 3,558
At 31 December 2023 3,404
The carrying value of the prospecting and exploration rights is supported by
the estimated resource and current market values. The Group tests intangible
assets for impairment annually. There were no indicators of impairment at 31
December 2023.
Amortisation is recognised within administrative expenses.
17. Investments in subsidiaries and associates
Company - subsidiaries
2023 2022
£'000 £'000
Equity investments
Balance at beginning of year 2,594 1,959
Additions - Increased investment in Falcon Isle Resources LLC
- 635
Balance at 31 December: 2,594 2,594
Country of Ownership interest
Activity incorporation 2023 2022
Directly
Southern Iron Limited Investment Guernsey 100% 100%
Falcon Isle Resources LLC Mining USA 100% 100%
Keras US LLC Holding company USA 100% 100%
Indirectly
Société Générale des Mines SA Exploration Togo 0% 85%
Falcon Isle Holdings LLC Holding company USA 100% 100%
Registered offices of subsidiary companies are:
· Southern Iron Limited, 1st Floor, Elizabeth House, Les Ruettes
Brayes, St Peter Port, Guernsey
· Société Générale des Mines, Quartier Adidogome Apedokoe 02, BP
20022, Lome, Togo
· Falcon Isle Resources Corp, Falcon Isle Holdings LLC and Keras US
LLC, 50 West Broadway Suite 300, Salt Lake City, Utah 84101, USA
The interest in Falcon Isle was acquired for nominal consideration under a
binding heads of terms dated 28 July 2020. Under this agreement the Company
agreed to provide US$2.5m in loans to Falcon Isle payable in agreed
tranches. Falcon Isle is the 100% owner of the Diamond Creek phosphate
mine located in in Utah (USA) which is a fully permitted, high grade direct
shipping ore organic phosphate operating mine.
At 30 September 2020 the Company had advanced US$ 1.9m to Falcon Isle,
resulting in an equity interest of 40% and bringing the cost of the investment
in the associate to £1,626,000.
On 31 December 2020 the Company advanced the balance of $0.6m and its equity
interest has increased to a controlling interest of 51%.
The initial acquisitions were accounted for under the equity method of
accounting but upon achieving control on 31 December 2020, the acquisition
method of accounting has been applied.
The investment in associate was revalued prior to acquisition to fair value
based on the price paid to acquire the additional 11% shareholding. Under IFRS
3, on acquisition of the controlling stake, the Group remeasured its original
40% investment in Falcon Isle. This led to a loss on change of ownership of
£363,000 being recognised in the Consolidated Statement of Comprehensive
Income.
On acquisition the non-controlling interest, valued based upon net assets at
acquisition, was valued at £645,000. No goodwill has arisen from the
acquisition.
17. Investments in subsidiaries and associates (continued)
On 29 March 2022, the Company agreed to acquire the outstanding 49% equity
interest in Falcon Isle for consideration of $1,383,473 and loans totalling
$1,816,527 made by the vendor to Falcon Isle, for total consideration of $3.2
million, payable in four annual tranches of $800,000 commencing on 1July 2022
and as such the deferred consideration and loan due to the vendor has been
discounted at 12% with the discount being applied against the investment in
full. As a result the non-controlling interest has been eliminated against
the consideration with the remaining balance of £199,311 transferred to
retained earnings.
The cashflow impact of this acquisition for year ended 31 December 2023, would
be the second instalment of $800,000 offset against a proportion of the total
loans, translated at the date of the second instalment which equates to a cash
outflow of £272,037.
On 29 December 2023, the group disposed of all its 85% shareholding in
Société Générale des Mines, as detailed in note 22.
18. Lease liabilities
The following lease liabilities arose in respect of the recognition of right
of use assets with a net book value of £nil (2022 - £121k).
Maturity analysis 2023 2022
£'000 £'000
Within one year - 129
In two to five years - -
Total undiscounted liabilities - 129
Future finance charges - (3)
Lease liabilities in the financial statements - 126
Current liabilities - Within one year - 126
Non-current liabilities - In two to five years - -
- 126
The Group held one property lease that it accounts for under IFRS 16 which
expired in the year. The group still occupied the property at the year end and
vacated post year end. The entities in the group were not party to any other
leases as at 31 December 2023 and 31 December 2022.
19. Loans
Company - current
2023 2022
£'000 £'000
Balance at beginning of year 3,686 2,081
Funds advanced to subsidiaries 195 756
Impairment of loans (1,100) (534)
Purchase of subsidiary loans - 1,383
Balance at 31 December 2,781 3,686
All loans to subsidiaries are currently unsecured and interest free and
repayable on demand.
20. Inventories
2023 2022
£'000 £'000
Phosphate, including processed material held for sale
621 668
621 668
21. Trade and other receivables
Group
2023 2022
£'000 £'000
Trade receivables 91 69
Other receivables 71 85
Prepayments 9 37
171 191
Company
2023 2022
£'000 £'000
Trade 95 -
receivables
- 8
Other receivables
Prepayments 7 37
102 45
Other receivables are stated at their nominal value less allowances for
non-recoverability.
The Group and Company's exposure to credit and currency risk is disclosed in
note 28. Trade receivables are net of a provision for bad debts of £nil
(2022: £nil). No bad debt expense has been recognised in the current or prior
years.
22. Discontinued operations
Through its 100% owned, Guernsey incorporated
subsidiary, Southern Iron Ltd, Keras held an 85% interest in Société
Générale des Mines SA ("SGM") which holds research permits for the Nayéga
manganese project in northern Togo ("Nayéga"). The research permits are
effectively the equivalent of a mining exploration licences and cover a 19,903
ha area in northern Togo.
During the year, Keras sold all the Group's
intellectual property relating to Nayéga, comprising reports, feasibility
studies etc, to a newly formed mining company set up by the Republic of Togo,
for cash consideration of $1.7m, generating a profit on disposal of follows:
2023
£'000
Proceeds ($1.7m) 1,339
Less: Commission (132)
Less: Carrying value of assets held for sale (1,086)
121
22. Discontinued operations (continued)
Subsequent to the sale of intellectual property, on 29 December 2023, the
group disposed of all its 85% shareholding in Société Générale des Mines
for a cash proceeds of £1. Accordingly, non-controlling interest and cumulate
translation reserves related to subsidiary are derecognised on disposal.
2023
£'000
Proceeds (£1) -
Net assets at disposal -
Non-controlling interest at disposal (117)
Cumulative translation reserve 41
Loss on disposal of subsidiary (76)
23. Retirement benefit schemes
2023 2022
Defined contribution schemes £'000 £'000
Charge to profit or loss in respect of defined contribution schemes 2 7
The Group operates a defined contribution pension
scheme for all qualifying employees. The assets of the scheme are held
separately from those of the Group in an independently administered fund.
At the year end, an amount of £1,919 (2022 - £2,042)
was held in trade and other payables in respect of accrued unpaid pension
contributions.
24. Capital and reserves
Share capital
Number of ordinary shares
2023 2022
In issue at beginning of year Shares of 1p each Shares of 1p each
Issued for cash
79,735,731 62,960,731
361,446 16,775,000
2023
Shares of 1p each
79,735,731
361,446
2022
Shares of 1p each
62,960,731
16,775,000
In issue at 31 December - fully paid 80,097,177 79,735,731
All ordinary shares rank equally with regard to the Company's residual assets.
The holders of ordinary shares are entitled to receive dividends as declared
from time to time, and are entitled to one vote per share at general meetings
of the Company.
Issues of ordinary shares
On 6 July 2023 361,446 ordinary shares of 1p each were issued for a total cash
consideration of £15,000; accordingly a premium of £11,386 has been
recognised on this issue which represents cash proceeds received in excess of
the nominal value of these shares.
Subsequent to the year end, 400,000 ordinary shares were issued to settle a
payable of £15k.
24. Capital and reserves (continued)
Warrants
2023 2022
Average exercise price Number Average exercise price Number
In issue at beginning of year 18p 16,775,000 18p 4,347,856
Issued in year 18p - 18p 16,775,000
Lapsed 18p - 18p (4,347,856)
In issue at 31 December 18p 16,775,000 18p 16,775,000
On 16 April 2022 1,000,000,000 warrants were agreed to be issued to
subscribers for the Ordinary Shares agreed to be issued for cash on 16 April
2022 on the basis of 1 warrant for every 2 shares subscribed. The warrants
are exercisable at price of 0.18p at any time up to 31 May 2024.
On 18 May 2022 677,500,000 warrants were agreed to be issued to subscribers
for the Ordinary Shares agreed to be issued for cash on 18 May 2022 on the
basis of 1 warrant for every 2 shares subscribed. The warrants are
exercisable at price of 0.18p at any time up to 31 May 2024.
The warrants had a fair value of £nil at the balance sheet date.
The weighted average remaining contractual life of the warrants outstanding is
152 days.
Other reserves
Share option/warrant reserve
The share option/warrant reserve comprises the cumulative entries made to the
consolidated statement of comprehensive income in respect of equity-settled
share-based payments as adjusted for share options cancelled.
Exchange reserve
The exchange reserve comprises all foreign currency differences arising from
the translation of the financial statements of foreign operations.
25. Earnings per share
Basic and diluted earnings/(loss) per share
The calculation of basic earnings/(loss) per share at 31 December 2023 is
based on the following (loss)/profit attributable to ordinary shareholders and
a weighted average number of ordinary shares in issue.
Loss attributable to ordinary shareholders (£)
2023 2022
Continuing operations (720,000) (751,000)
Discontinued operations 29,000 (96,000)
Loss attributable to ordinary shareholders (691,000) (847,000)
Basic weighted average number of ordinary shares
2023 2022
Issued ordinary shares at beginning of year 73,768,128 62,960,731
Effect of shares issued 6,143,869 10,807,397
Weighted average number of ordinary shares 79,911,997 73,768,128
Diluted weighted average number of shares
2023
Basic weighted average number 79,911,997
Effect of share options in issue 1,245,174
Effect of warrants in issue 15,980,395
Weighted average number of ordinary shares 97,137,566
As a result of the group being loss making the earning per share is presented
on a basic weighted average number of shares basis and not diluted.
26. Share-based payments
Number of share options Average exercise price
2023 2022 2023 2022
pence pence
Outstanding at 1 January 2023 1,300,000 1,450,000 16 16
Forfeited in the year - (150,000) 16 12
Outstanding at 31 December 2023 1,300,000 1,300,000 16 16
Exercisable at 31 December 2023 1,266,667 1,033,333 16 16
The Company established an Enterprise Management Incentive Scheme to
incentivise Directors and senior executives. On 17 January 2020, 1,200,000
options were granted at £0.1639 with 100,000 vesting immediately, 300,000
vesting on 9 March 2020, 300,000 vesting on 17 January 2021, 300,000 vesting
on 17 January 2022 and 200,000 vesting on 17 January 2023. The options lapse
if not exercised within 5 years. Of the total, 900,000 options were granted to
R Lamming, a Director.
26. Share-based payments (continued)
The Black Scholes pricing model was used to calculate the share based payment
charge incorporating an annual volatility rate of 55%, expected life of
between 2 and 5 years and risk free investment rate of between 0.23% and
0.39%. The charge for the year ended 31 December 2023 for these rights which
was included in administrative and exploration expenses amounted to £186
(2022 - £4,485).
On 7 April 2021, 100,000 options were granted at £0.1183 with 33,333 vesting
on 1 April 2022, 33,333 vesting on 1 April 2023 and 33,334 vesting on 1 April
2024. The options lapse if not exercised within 5 years. The Black Scholes
pricing model was used to calculate the share based payment charge
incorporating an annual volatility rate of 57%, expected life of between 4 and
6 years and risk free investment rate of between 0.6% and 0.93%. The charge
for the year ended 31 December 2023 for these rights which was included in
administrative and exploration expenses amounted to £1,841 (2022 -
£4,370).
27. Trade and other payables
Group - Current
2023 2022
£'000 £'000
Trade payables 238 262
Accrued expenses 176 59
Other payables 6 209
Deferred consideration and loans to previous minority shareholders
593 628
1,013 1,158
Group - Non-Current
2023 2022
£'000 £'000
Other payables - 83
Deferred consideration and loans to previous minority shareholders
531 1,065
531 1,148
Company - Current
2023 2022
£'000 £'000
Trade payables 43 68
Accrued expenses 176 60
Other payables 6 11
Deferred consideration and loans to previous minority shareholders 593 628
818 767
Company - Non-Current
2023 2022
£'000 £'000
Deferred consideration and loans to previous minority shareholders 531 1,065
531 1,065
27. Trade and other payables (continued)
There is no material difference between the fair value of trade and other
payables and accruals and their book value. The Group's and Company's
exposure to currency and liquidity risk related to trade and other payables is
disclosed in Note 28.
Deferred consideration and loans to previous minority shareholders relates to
the acquisition of the outstanding 49% equity interest in Falcon Isle and
loans totalling $1,816,527 made by the vendor to Falcon Isle, for total
consideration of $3.2 million, payable in four annual tranches of $800,000
commencing on 1 July 2022 and as such the deferred consideration and loans to
previous minority shareholders has been discounted at 12%. During the year,
unwinding of £156,000 has been recognised as a finance cost in the statement
of profit or loss.
28. Financial instruments
Financial risk management
The Group's operations expose it to a variety of financial risks that include
liquidity risk. The Group has in place a risk management programme that
seeks to limit the adverse effect of such risks on its financial performance.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was as
follows.
Group
Financial assets at amortised cost
Carrying amount
Credit risk 2023 2022
£'000 £'000
Trade and other receivables 171 191
Cash and cash equivalents 185 207
356 398
Expected credit loss assessment
Balance Expected loss rate % Loss allowance
Trade receivables £'000 £'000
Current 47 - -
1-30 days overdue 15 - -
31-60 days overdue 12 - -
61-90 days overdue 13 - -
Over 90 days overdue 4 - -
91 -
The director considers that the carrying amount of trade and other receivables
is approximately equal to their fair value.
28. Financial instruments (continued)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset.
The Group reviews its facilities regularly to ensure it has adequate funds for
operations and expansion plans.
The following are the contractual maturities of financial liabilities,
including estimated interest payments and excluding the impact of netting
agreements.
Group
2023
Carrying amount Contractual cash flows 3 months 3-12 months 2-5 years
£'000 £'000 or less £'000 £'000
£'000
Non-derivative financial assets
Inventory 621 621 621 - -
Trade and other receivables 163 163 163 - -
Cash and cash equivalents 185 185 185 - -
969 969 969 - -
Non-derivative financial liabilities
Trade and other payables 1,544 1,677 421 628 628
1,544 1,677 421 628 628
Liquidity gap (575) (708) 548 (628) (628)
Group
2022
Carrying amount Contractual cash flows 2 months 2-12 months 2-5 years
£'000 £'000 or less £'000 £'000
£'000
Non-derivative financial assets
Inventory 668 668 668 - -
Trade and other receivables 191 191 191 - -
Assets held for sale 1,558 1,558 1,558 - -
Cash and cash equivalents 207 207 207 - -
2,624 2,624 2,624 - -
Non-derivative financial liabilities
Trade and other payables 2,306 2,306 331 828 1,147
Liabilities held for sale 471 471 471 - -
Lease liabilities 126 126 31 95 -
2,903 2,903 833 923 1,147
Liquidity gap (279) (279) 1,791 (923) (1,147)
28. Financial instruments (continued)
Market risk
Market risk is the risk that changes in market prices, such as foreign
exchange rates, interest rates and equity prices will affect the Group's
income or the value of its holdings of financial instruments. The objective
of market risk management is to manage and control market risk exposures
within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to foreign currency risk on purchases that are
denominated in currencies other than GBP. The currencies giving rise to this
risk are primarily the CFA Franc and the US dollar.
The carrying amounts of the group's foreign currency denominated monetary
assets and liabilities at the reporting date are as follows:
GBP USD CFA
£'000 £'000 £'000
Cash and cash equivalents 73 112 -
Trade and other receivables 9 162 -
Trade and other payables (224) (1,320) -
(142) (1,046) -
Fair values
The fair values of financial instruments such as trade and other
receivables/payables are substantially equivalent to carrying amounts
reflected in the balance sheet.
Capital management
The Group's objective when managing capital is to safeguard its accumulated
capital in order to provide an adequate return to shareholders by maintaining
a sufficient level of funds, in order to support continued operations.
The Group considers its capital to be total shareholders' equity which at 31
December 2023 for the Group totalled £3,183,000 (2022: £3,927,000) and for
the Company totalled £4,201,000 (2022: £4,547,000).
29. Related parties
The Group's related parties include its key management personnel and others as
described below.
No guarantees have been given or received and all outstanding balances are
usually settled in cash.
Other related party transactions
Transactions with Group companies
The Company had the following related party balances from financing
activities:
2023 2022
£'000 £'000
Southern Iron Limited
- Loans and receivables (interest free) 11 1,100
Falcon Isle Resources LLC
- Loans and receivables (interest free) 2,769 2,586
2,769
2,586
Southern Iron Limited had the following related party balances from financing
activities:
Société Générale des Mines SA
- Loans and receivables (interest free) - 1,100
30. Subsequent events
On 22 January 2024 the Company announced the acquisition by Falcon Isle of an
8.4-acre property in the vicinity of Delta, Utah, USA for a total
consideration of USD700,000. The property includes 3 warehouse buildings with
a combined area of 77,000 square feet.
The acquisition was funded by loans comprising:-
· Keras. A 4-year convertible loan of £300,000, at 7% per annum
interest, convertible into Ordinary Shares of £0.01p at a conversion price of
£0.04 ("Convertible Loan"). The Convertible Loan may be converted at any
time by notice given by the holder, interest will be rolled up and included
with the amount being converted, or paid at the end of the 4-year loan period
if not converted; and
· Falcon Isle. A secured 4-year Promissory Note of $350,000 at 7%
per annum interest payable annually. Falcon Isle has the right to repay the
Promissory Note, without penalty, after 2 years.
On 28 May 2024 the Company announced that it had raised further funding of
US$1,525,000 (£1,195,610), comprising US$1,325,000 (£1,038,808) in new cash
funds and US$200,000 (£156,801) by the capitalisation of amounts owed to
Directors, by way of:
· 4 year convertible loan notes totalling £597,805 (US$762,500),
at a 4% per annum interest rate and conversion price £0.0275 issued by Keras
("Convertible Loans"). After 12 months, if the 30 day volume weighted Keras
share price is £0.09 or greater, Keras has the option to call the conversion
of the Convertible Loans. The Convertible Loans are being made to Keras and
may be converted at any time by notice given by the holders; interest will be
compounded annually and included with the amount being converted, or paid at
the end of the 4 year loan period if not converted; and
30. Subsequent events (continued)
· 4 year Promissory Notes totalling US$762,500 (£597,805) at an 8%
per annum interest rate repayable after 4 years. The Promissory Notes are
being made to Falcon Isle which has the right to repay them, without penalty,
after 2 years. Interest is payable annually.
On 23 February 2024 the Company awarded Graham Stacey 600,000 options over
600,000 ordinary shares of the company.
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