REG - Kodal Minerals PLC - Final Results & Notice of AGM
06/09/2023 07:00
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RNS Number : 4802L Kodal Minerals PLC 06 September 2023
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the UK Market Abuse
Regulations
Kodal Minerals Plc / Index: AIM / Epic: KOD / Sector: Mining
Kodal Minerals plc
("Kodal" or the "Company" and together with its subsidiaries, the "Group")
Final Results & Notice of Annual General Meeting
Kodal Minerals, the mineral exploration, and development company focused on
lithium and gold assets in West Africa, announces its final results for the
year ended 31 March 2023.
The Company's Annual Report and Accounts will be made available on the
Company's website www.kodalminerals.com (http://www.kodalminerals.com/)
shortly. The Company's annual general meeting ("AGM") will be held
at 11:00am on 29 September 2023 at Fieldfisher LLP, 9th Floor, Riverbank
House, 2 Swan Lane, London EC4R 3TT.
Operational Highlights
Bougouni Lithium Project, Mali ("Bougouni" or the Project")
· US$117.75 million funding package agreed with Hainan Mining Co.
Limited ("Hainan") a subsidiary of Fosun International Limited ("Fosun") and
its industrial platform for mining and resources:
o US$65 million reserved to fully fund the cost of the Dense Media
Separation (DMS) Project targeting delivery of first production within 12
months of receipt of funds.
o Additional funds will be deployed to:
§ increase the Bougouni Lithium Project's JORC compliant resource inventory
currently at 21Mt @ 1.11% Li2O and extend the mine life; and
§ Support the development of the flotation plant expansion project which has
the potential to increase spodumene production from ~125,000 to over
300,000tpa and deliver life of mine (8.5 years) revenue exceeding US $2.15bn.
· DMS Project development scenario presented:
o Low capital development cost estimated at US$65 million;
o Payback of two months from commencement of operations;
o NPV(7%) of approximately US$420 million post tax;
o Over 130,000tpa production of spodumene concentrate with an initial 4-year
mine life;
o DMS operation revenue exceeds US$1.05bn in less than four years based on
broker consensus pricing averaging US$2,080 per tonnes.
· Bougouni is fully permitted for development and construction once
funding package is completed - long stop date for funding package is 30
September 2023.
Gold Portfolio
· Progress towards establishing a maiden resource at Niéllé, in
northern Côte d'Ivoire, based on an identified anomalous trend extending over
4.5km and which remains open along strike.
· Intercepts from Niéllé include: 26m @ 1.95 g/t Au from 32m, and 26m
@1.79g/t Au from 108m.
· Further resource definition activities at Fatou, in southern Mali,
which has a historical resource estimate of ~350 koz Au.
· Recent drill intercepts from Fatou include 23m @ 1.63 g/t Au from
82m, and 6m @ 1.49 g/t Au from 40m.
Financial and Corporate Highlights
· Group loss before other comprehensive income for the year of
£1,461,000 (2022: £903,000).
· 27% increase in exploration and evaluation expenditure of £3,227,000
(2022: £2,547,000).
· 37% increase in the value of the gold projects in Mali and Cote
d'Ivoire to £3,306,000 (2022: £2,411,000).
· 24% increase in value of the lithium projects in Mali to £11,216,000
(2022: £9,031,000).
· Cash balance of £545,000 as at 31 March 2023 (2022: £1,046,000).
· Post period end, in August 2023, a conditional prepayment of
US$3,500,000 was received as part of the funding package with Hainan.
· Cash balance of £1,984,000as at 31 August 2023
Commenting on the results, Bernard Aylward, CEO of Kodal Minerals said:
"We are now on the final furlong with our pre-construction activities at
Bougouni and are well positioned to break ground and start building our mine
once our funding transaction with Hainan has been finalised in the coming
weeks. We have been working extremely closely with the teams at Hainan and
Fosun over recent months, and we are grateful for their continued support as
we look to close out the final conditions precedent of our joint agreement.
All parties are eager to start construction work and we are confident that
this can now be expected in short order, as we look to deliver first
production from our DMS plant in 2024.
"The coming weeks and months are set to be extremely active for us and I look
forward to keeping shareholders updated as we begin our transition from
developer to lithium producer."
For further information, please visit www.kodalminerals
(http://www.kodalminerals) .com or contact the following:
Kodal Minerals plc
Bernard Aylward, CEO Tel: +61 418 943 345
Allenby Capital Limited, Nominated Adviser
Jeremy Porter/Vivek Bhardwaj/Nick Harriss Tel: 020 3328 5656
SP Angel Corporate Finance LLP, Financial Adviser & Joint Broker
John Mackay/Adam Cowl Tel: 020 3470 0470
Canaccord Genuity UK LLP, Joint Broker
James Asensio/Gordon Hamilton Tel: 020 7523 4680
St Brides Partners Ltd, Financial PR Tel: 020 7236 1177
Susie Geliher/Ana Ribeiro
CHAIRMAN'S STATEMENT
I am pleased to present the Annual Report of Kodal Minerals plc ("Kodal" or
the "Company" and together with its subsidiaries, the "Group") for the year
ended 31 March 2023.
We had two main pillars to our strategy during the year - firstly, to
demonstrate that our Bougouni Lithium Project ("Bougouni Project", "Bougouni"
or the "Project") is a high-quality asset with the requisite operational and
commercial attributes to bring to production, and secondly, to agree a
financing package to bring that to realisation. I am very proud to say that
our team has succeeded on both counts. The Company had many parties
interested in negotiating for participation in the future of the Bougouni
Lithium Project. We are very pleased to have secured an excellent agreement
that provides full funding for the development of a mining operation and
additional support for the ongoing exploration and development of our highly
prospective and extensive land position in southern Mali. The final piece of
the agreement is a direct investment into Kodal Minerals Plc that provides
funding for the Company to undertake significant growth and assessment of
additional opportunities.
Since the acquisition in 2016 of Kodal's most advanced asset, the Bougouni
Lithium Project in southern Mali, the Kodal team has worked determinedly to
prove up a sizeable resource, undertake test work to confirm an attractive
spodumene product for offtake partners, and position itself to be one of the
first West African lithium producers by securing key permits early in the
development process. This committed and multi-stranded work programme has
ensured that Kodal has remained at the front of the pack.
Our ambition of becoming a lithium producer in the near-term is now a reality
thanks to the US$117.75 million financing agreement between the Company, Kodal
Mining UK Limited ("KMUK") and Hainan Mining Co. Limited ("Hainan") and its
wholly owned UK-incorporated subsidiary Xinmao Investment Co. Limited
("Xinmao", and together the "Hainan Group") announced on 19 January 2023.
Hainan is a subsidiary of Fosun International Limited ("Fosun") and is the
industrial platform for mining and resources within Fosun. Kodal has
welcomed the Hainan Group our partners for the development of the Bougouni
Lithium Project and we are continuing to work together to ensure conditions
precedent can be satisfied. Together the parties are fully committed to the
completion of the funding transaction as soon as possible.
Kodal and the Hainan Group have spent a lot of time working together and
finalising plans for the development of the project with activities including
additional metallurgical testwork, engineering planning and review and
finalisation planning for the proposed Dense Media Separation ("DMS")
development. This team development will stand the project in good stead when
financing is complete and the actual groundwork commences on site.
As shareholders will be aware, countries and major end users around the world
are seeking to diversify lithium supply chains given the critical role the
mineral plays in the energy transition. Research suggests that in Europe
alone, 38 new gigafactories are being developed which could total ~400-700 GWh
of annual battery manufacturing capacity by the middle of this decade. To meet
this ambitious target, new sources of lithium are absolutely critical.
Set against this dramatic demand backdrop, lithium prices have surged over the
past two years, rising tenfold, then correcting in the first half of 2023.
The lithium spot price has retracted from the very rapid highs and some
analyst and reporting headlines may have certainly concerned investors.
Whilst a lithium price of over $6,000/t of spodumene concentrate containing up
to 6% Lithium Oxide ("Li2O") would make Bougouni even more profitable, it
should be reassuring to shareholders that the Kodal team took a conservative
approach to its pricing forecasts, factoring a life of mine average
concentrate price for the DMS development scenario of US$2,080/t, which still
delivers payback within three months. The significant upside to this should
be clearly evident, particularly when, at the date of writing, the 6% Li2O
spodumene concentrate price of US$3,600/t FOB is reported.
It is into this strong market, which analysts believe will continue to tighten
over the mid- to long-term as demand outstrips new supply, we look to bring
the Bougouni Lithium Project into production. We have an ambitious schedule
for production, targeting commissioning and first production in 2024.
The economic fundamentals of the initial DMS development that define the phase
1 development of the project are highly compelling. However it is also
important to recognise the future value uplift driven firstly by the
development of the larger phase 2 spodumene flotation plant that significantly
expands the spodumene concentrate production, and secondly by the focused,
well-funded, exploration and expansion drilling that is supported by the
financing package.
Kodal is fully focused on achieving first production through our DMS operation
at Bougouni. Kodal will be in a great position following completion of the
financing package with our partners the Hainan Group and the Board has
longer-term growth plans for the Company leveraging our West African
knowledge, our technical expertise and our ability to acquire, explore and
develop new exploration projects.
I would like to take this opportunity to thank our shareholders for their
long-term support and interest in the Company, and also to the Kodal team for
their diligence, commitment and tenacity in achieving our goals.
Robert Wooldridge
Non-executive Chairman
5 September 2023
OPERATIONAL REVIEW
Kodal has developed a portfolio of exploration and development assets in West
Africa, including its most advanced asset, the Bougouni Lithium Project in
southern Mali, and a number of gold exploration assets in Mali and Côte
d'Ivoire. Kodal's management has continued to ensure that all government
compliance, reporting and fees are kept up to date and all concessions are
retained in good standing.
Mining Licence and Exploration Concession Review
Kodal's most advanced asset, the Bougouni Lithium Project, is located in
southern Mali. Kodal was granted the Foulaboula Permis d'Exploitation number
No2021-0774/PM-RM ("Mining Licence") in November 2021. This covered the
proposed open-pit mining and processing operation at Bougouni, making the
Project fully permitted for development and construction.
The Mining Licence is valid for an initial 12-year term and renewable in
ten-year blocks until all resources are depleted. The Mining Licence is
granted under the 2019 Mining Code and extends over a 97.2 square km area that
will be a focus for Kodal's exploration programme to delineate further
resources to prolong the Bougouni Lithium Project mine life.
Bougouni Lithium Project - Mining Licence details:
Tenements Country Kodal Economic Ownership Project / Joint Venture Validity
Foulaboula Mali 100% ownership (prior to Mali State's participation) / 10% free carried + up Bougouni Lithium Project Mining Licence N°2021-0774/PM-RM of November 5 2021. Permit is valid for an
to 10% contributing interest initial 12 years, renewable in periods of 10 years until depletion of the
resources
As detailed above, Kodal announced the financing package with the Hainan Group
on 19 January 2023. At completion of the financing package, the Hainan Group
will acquire a 51% shareholding in Kodal's newly incorporated UK subsidiary,
Kodal Mining UK Limited ("KMUK"), the company formed to be the developer of
the Bougouni Lithium mine through its 100% owned Malian subsidiary mining
company Les Mines de Lithium de Bougouni ("LMLB").
On completion of the financing package with the Hainan Group, Kodal will have
economic interest of 49% of the Foulaboula mining licence prior to Mali
State's participation.
Table of Concessions - Kodal Lithium Concessions in Mali:
Tenements Country Kodal Economic Ownership Project / Joint Venture Validity
Dogobala Mali 100% economic interest Bougouni Lithium Project Licence valid and in good standing. Arrêté number 2018-1115 granted on 13
April 2018 for initial 3-year period, with option for 2 extensions of 2 years
validity each
Application for first renewal has been lodged and all fees paid.
Renewal approval pending
Sogola Nord Mali 100% economic interest Bougouni Lithium Project Licence valid and in good standing. Arrêté number 2020-0072 granted 22
January 2020 for an initial 3-year period, with option for 2 extensions of 2
years validity each. Application for first renewal has been lodged,
renewal approval is pending.
Licence area modified during 2020 to account for the future Foulaboula Mining
Licence.
Fariédélé Mali 100% economic interest Bougouni Lithium Project Licence valid and in good standing. Arrêté number 2020-0073 granted 22
January 2020 for an initial 3-year period, with option for 2 extensions of 2
years validity each. Application for first renewal has been lodged,
renewal approval is pending.
Licence area modified during 2020 to account for the future Foulaboula Mining
Licence.
Mafélé Ouest Mali 1.4% gross royalty from future revenue and right to be issued an equity Bougouni West Lithium Transaction with Leo Lithium Completed
carried interest of 15% in any exploitation company set up for the Concession.
N'Kéméné Ouest Mali 100% Economic interest Bougouni West Lithium Final transaction with Leo Lithium pending renewal of N'Kéméné Ouest
concession by Mali Government
On completion of Bougouni West transaction retained interest will be:
1.4% gross royalty from future revenue and right to be issued an equity
carried interest of 15% in any exploitation company set up for the Concession.
The Bougouni Lithium Project concessions surround the Foulaboula mining
licence and will be explored for additional pegmatite hosted resources that
can be added to the mining inventory. The concessions are all in good
standing, and exploration completed to date by Kodal has indicated priority
sites for additional exploration within the concessions.
Kodal reached an agreement post period end to sell its Bougouni West
concessions, which do not form part of the main Bougouni Project, to ASX
listed Leo Lithium Ltd ("Leo Lithium") for a total cash consideration of £2.5
million subject to all agreements being executed, with Kodal to receive £2.0
million and the original concession holder Bambara Resources SARL ("Bambara")
to receive £0.5 million.
Table of Concessions - Kodal Gold Concessions in West Africa:
Tenements Country Kodal Economic Ownership Project / Joint Venture Validity
Boundiali Côte d'Ivoire 100% direct ownership (under application) Gold Exploration Licence application submitted and in process. Application updated during
2020 and application remains in good standing.
Korhogo Côte d'Ivoire 100% direct ownership Gold Exploration Licence valid and in good standing. Renewal granted on 31 March 2020 for a 3
year-term. Application for extension has been lodged.
Dabakala Côte d'Ivoire 100% direct ownership Gold Exploration Licence valid and in good standing. Renewal granted on 31 March 2020 for a 3
year-term. Application for extension has been lodged.
Niéllé Côte d'Ivoire 100% direct ownership Gold Exploration Licence valid and in good standing. Initial licence expired on 7 January
2017, and Renewal decree received on the 28 February 2018 for a 3 year-
period. Second Renewal decree received 18 December 2020 for a 3 year-period.
Tiebissou Côte d'Ivoire 100% direct ownership Gold Exploration Licence valid and in good standing. Initial term expired 30 September
2018. An application for renewal has been lodged, fees paid and approved.
Renewal decree is pending signature.
M'Bahiakro Côte d'Ivoire 100% direct ownership Gold Exploration Licence application submitted and in process.
(under application) Application updated during 2020 and application remains in good standing.
Djelibani Sud Mali 100% direct ownership Gold Exploration Licence valid and in good standing. Arrêté number 2021-5133/MMEE-SG
granted on 28 December 2021 for an initial 3 year-period, with option for 2
extensions of 3 years validity each. All taxes have been paid.
Nangalasso Mali 100% direct ownership following completion of option payments Nangalasso Project Nangalasso arrêté completed second renewal on 4 February 2021. A new
Convention application covering the same permit has been lodged with the DNGM
Gold Exploration and is awaiting approval.
Sotian Mali Completed option agreement and is 100% beneficial owner of concession. Nangalasso Project Arrêté number 2018-1925 granted on 12 June 2018 for initial 3 years period,
with option for 2 extensions of 3 years validity each
Gold Exploration
First renewal has been approved
Tiedougoubougou Mali Kodal completed option agreement and is 100% beneficial owner of concession Nangalasso Project Arrêté number 2018-3319 granted on 4 September 2018 for initial 3 years
period, with option for 2 extensions of 3 years validity each.
Gold Exploration
Application for first renewal has been lodged and all fees paid. Renewal
approval pending
Fininko Mali Held through option agreement giving right to acquire 100% ownership Fatou Project Licence in good standing. First renewal granted by Arrêté number
2021-2876/MMEE-SG of 6 August 2021 for a period of 3 years.
Gold Exploration
Foutiere Mali Held through option agreement giving right to acquire 100% ownership Fatou Project Licence in good standing. Arrêté number 2017-0170/MM-SG of 2 February 2017.
Gold Exploration Application for second three-year renewal has been lodged and all fees and
taxes have been paid.
Renewal approval pending.
Bougouni Lithium Project Development Status
The Bougouni Project is now approaching construction readiness following the
granting of an Environmental Permit in November 2019, a large-scale Mining
Licence in November 2021 and securing a financing package (as announced on 19
January 2023).
The Company is implementing a two-phase approach at Bougouni; the first
comprising a DMS plant and the second, a larger flotation plant.
The DMS development scenario, announced in September 2022, demonstrated
highlights including:
• Capital development cost for the DMS plant and all
associated infrastructure and commencement of mining is estimated at US$65
million;
• Estimated NPV@7% of approximately US$557 million
(US$420 million post-tax);
• A payback period of three months (based on full
equity financing) from commencement of operations.
The DMS option is based on:
• Processing material from the Ngoualana deposit
feeding 1Mtpa of lithium ore to a DMS processing plant;
• Utilising a conventional circuit to maximise
spodumene recovery of over 130,000 tonnes per annum of spodumene concentrate;
and
• An initial four-year mine life.
The DMS operation has a revenue forecast expected to exceed US$1.05 billion in
less than four years, based on prevailing broker consensus pricing averaging
US$2,080 per tonne (FOB basis). The DMS operation targets production of a
5.5% Li2O spodumene concentrate product which is consistent with other
producers currently active in the market.
The future expansion of Bougouni is expected to continue with the construction
and commissioning of a down-stream flotation plant expected to be supported by
utilising the DMS plant cashflows in order to exploit the resources at
Sogola-Baoulé and Boumou, as well as longer term exploration prospects.
The updated Feasibility Study for the flotation plant, announced in June 2022,
confirmed a very robust project with key metric highlights including:
• NPV@7% of US$760M (US$567M post-tax) compared to
US$293M (US$201M post tax) in the original Feasibility Study.
• Life of mine (8.5 years) revenue exceeding
US$2.145 billion based on an average sell price of US$1,060 per tonne (FOB
basis).
• C1* cash costs of US$362 per tonne of 6% Li2O
spodumene concentrate ("SC6"), and costs of US$474 per tonne including
transportation and other selling costs.
• Total production of 2,024,000 tonnes with an
annual average production of 238,000 tonnes.
• Capital cost of US$154 million.
* C1 cash cost includes all mining, processing and all general and
administration costs per tonne sold, and additional to that the costs of
transport to port and associated selling costs
Bougouni Lithium Project Resource Expansion
In March 2023, the Company launched a drilling campaign across the Boumou,
Bougouni South and Ngoualana prospects with the objective of enhancing the
current JORC Resource inventory and further extending the mine life of the
asset.
Post period end, the Company reported assay results from the drilling
programme which confirmed the identification of further high-grade
mineralisation and the extension of wide high-grade pegmatite zones.
Highlights included the confirmation of further wide, high-grade extensions at
the Boumou prospect with significant results including 24m at 1.13% Li2O from
55m (including 8m at 1.37% Li2O from 55m). The Boumou prospect has been
declared as a high priority target for further drilling to extend and define
the pegmatite bodies to allow a new resource estimate to be completed.
Results from the Bougouni South target drilling programme also returned
significant lithium mineralised intersections including 11m at 1.14% Li2O from
71m and 6m at 1.48% Li2O from 101m. This drilling confirmed extensive
pegmatite veins at Bougouni South that require additional exploration
including diamond drilling to determine structural controls and extent of
mineralisation.
At the Ngoualana prospect, diamond drill holes were completed along the strike
of the orebody to obtain variability test samples and returned wide high-grade
intersections up to 37m at 2.17% Li2O from 3m to end of hole in drill hole
MT004.
Off-take Arrangements
Kodal agreed a binding term sheet with Suay Chin in March 2017 which
contemplates that the parties will negotiate an extended off-take agreement
for between 80% and 100% of the spodumene product produced at Bougouni for a
period of three years. The off-take term sheet sets out certain agreed
off-take principles that are to be included in the off-take agreement
including the parties agreeing to buy and sell the contract quantity as well
as the formal agreement including a right to match any third party off-take
terms agreed for a period of three years following the expiry of the formal
agreement. Whilst a formal agreement has not been entered into, Suay Chin
retains the first right of refusal for a period of three years from first
production of product from Bougouni whereby Kodal may not enter into any
agreement with a third party to sell more than 20% of future production from
Bougouni without having first offered to sell the production to Suay Chin on
the terms offered by the third party.
As part of the financing package announced on 19 January 2023, the Company has
agreed a 12-month exclusivity period during which Kodal and the Hainan Group
will seek to negotiate an off-take agreement over that portion of spodumene
production from Bougouni which KMUK is able to sell without breaching its
prior agreement with Suay Chin or triggering any existing rights of first
refusal.
Gold Exploration Projects
The primary focus during the year under review has been advancing the
technical and corporate aspects of project development at the Bougouni Lithium
Project, however the Company remains committed to the future exploration and
resource development of its gold properties.
In particular, the Board will focus on the progression towards establishing a
maiden resource in the near-term for Niéllé, in northern Côte d'Ivoire,
where we have identified an anomalous trend extending over 4.5km and which
remains open along strike. Intercepts from previous drilling include: 26m @
1.95 g/t Au from 32m, and 26m @1.79 g/t Au from 108m. Of equal importance is
Fatou, in southern Mali, which has a historical resource estimate of ~350 koz
Au. Recent drill intercepts from Fatou include 23m @ 1.63 g/t Au from 82m, and
6m @ 1.49 g/t Au from 40m.
Importantly, Kodal will be well funded to advance these gold properties
without further dilution to shareholders following Hainan's subscription for
new shares in Kodal, which will deliver US$17.75 million in new capital.
Some of these funds will be directed towards a comprehensive exploration
programme across our priority targets in Côte d'Ivoire and Mali, as well as
the assessment of new exploration and development opportunities in West
Africa.
A draft budget has been prepared to undertake a major exploration campaign at
Fatou, Nielle and Dabakala with the aim of defining significant new gold
resources. The exploration programmes will include detailed geological
review, geochemical sampling, geophysical surveys, and extensive drilling
campaigns.
Bernard Aylward
Chief Executive Officer
5 September 2023
FINANCE REVIEW
Results of operations
For the year ended 31 March 2023, the Group reported a loss before other
comprehensive income for the year of £1,461,000, including share-based
payment costs of £517,000 (2022: £343,000), compared to a loss of £903,000
in the previous year. Administrative expenses have increased compared to
last year as corporate activity has increased with negotiations surrounding
the future of the Bougouni Project. The Group has continued to run the
offices in Mali and Côte d'Ivoire and significant additional exploration
activity for both gold and lithium was undertaken during the year. Further
information is provided in the Operational Review above.
During the year, the Group invested £3,227,000 (2022: £2,547,000) in
exploration and evaluation expenditure on its various projects and £513,000
of expenditure on the Bougouni West project was reclassified as held for sale.
As a result, the carrying value of the Group's capitalised exploration and
evaluation expenditure increased from £11,442,000 to £14,522,000 after
taking account of the effects of foreign exchange. At 31 March 2023, after
taking account of the effects of foreign exchange, the carrying value of the
gold projects in Mali and Côte d'Ivoire was £3,306,000 (2022: £2,411,000)
and of the lithium projects in Mali was £11,216,000 (2022: £9,031,000).
Cash balances as at 31 March 2023 were £545,000, a decrease of £501,000 on
the previous year's level of £1,046,000. Net assets of the Group at the
year-end were £14,883,000 (2022: £12,091,000).
Financing
On 4 May 2022 the Company announced that it raised £3,000,000 (before
expenses) via a subscription for 130,142,857 shares and an oversubscribed
placing of 941,285,712 shares at a price of 0.28 pence per Placing Share (the
'Placing'). The funds raised supported Kodal in the continuing development
and preparation for financing and construction of its flagship Bougouni
Lithium Project in Mali.
On 3 August 2023, the Company announced the prepayment of US$3,500,000 of the
subscription agreement entered into as part of the funding package with
Hainan. The prepayment is repayable or convertible into new ordinary shares
of the Company should the funding package not proceed. The Company has sole
discretion over the use of the funds including for general working capital.
Going concern and funding
The Group has not earned revenue during the year to 31 March 2023 as it is
still in the exploration and development phases of its business. The
operations of the Group are currently being financed from funds which the
Company has raised from the issue of new ordinary shares. On 31 August 2023
the group has cash at bank amounting to £1,984,000.
In January 2023 the Group signed binding agreements with Hainan to enter into
a joint venture to develop the Bougouni Lithium Project. Under these
agreements, Hainan will subscribe for equity in the joint venture vehicle
amounting US$100 million; they will also subscribe for equity of US$17.75m in
the ordinary shares of Kodal Minerals Plc, plus the immediate repayment to the
Company for historical development expenses amounting to US$5.66m, the
agreements together being the Financing Transaction.
Completion of the Financing Transaction is subject to meeting various
conditions precedent including Hainan receiving formal Government approval for
the investment and Kodal completing a restructure of its Mali subsidiary
holdings. At the date of this report, it is noted that Hainan has received
all necessary approvals from the Chinese Government authorities to allow it to
complete its funding and investment including "Overseas Project Investment
Filing Certificates" from the Hainan Province National Development and Reform
Commission ("NDRC") and Company Overseas Investment Certificate from the
Department of Commerce of Hainan Province.
Kodal has continued with the restructuring of its subsidiary companies and
confirms that the new mining company Les Mines de Lithium de Bougouni has been
fully registered and the Mali DNGM notified that this new company will be the
owner and operator of the mining licence. In addition, the Company has
completed the restructure of Future Minerals SARL such that all of Kodal's
lithium assets in Mali are now 100% owned by Kodal Mining UK Limited (the
joint venture vehicle for Kodal and Hainan to develop the Bougouni Lithium
project). Kodal is continuing to work with the relevant authorities to
finalise all regulatory matters to allow completion of the Financing
Transaction.
Both Hainan and the Company remain committed to the Financing Transaction and
Hainan has recently advanced to the Company a US$3.5m prepayment on its
subscription for ordinary shares in the Company. The long stop date for
finalising the conditions precedent has been extended several times by mutual
consent and the parties continue to work together to expedite the completion
of the Financing Transaction at the earliest opportunity.
The Group has prepared cash flow forecasts for the period ending 30 September
2024 under several scenarios, including on the basis that the Hainan
transaction completion is delayed for several more months and also that the
Hainan transaction does not proceed. Under both of these scenarios the Group
will require further funding within the foreseeable future.
The directors are confident of raising sufficient funding to cover ongoing
expenditure and overheads, based on indications from Hainan that they would
make further prepayments available, and/or the Group will be able to raise
further equity given the quality of the Bougouni lithium project, continuing
interest from potential investors and finance providers, and forecasts showing
continuing strong demand and pricing for spodumene and lithium. Although the
Group has been successful in the past obtaining additional funding, there is
no assurance that it will be able to do so in the future or that such
arrangements will be on terms advantageous to the Group.
These conditions indicate the existence of a material uncertainty that may
cast doubt on the Group's ability to continue as a going concern. The
consolidated statements for the year ended 31 March 2023 have been prepared on
a going concern basis as the Board is of the opinion that the group will be
successful in completing the Hainan transaction in the near future and/or
securing further funding in order to meet its liabilities as they fall due for
at least 12 months from the date of signing these accounts. Accordingly, these
consolidated financial statements do not include any adjustments to the
recoverability and classification of recorded assets and liabilities and
related expenses that might be necessary should the Group be unable to
continue as a going concern.
Utilising key performance indicators ("KPIs")
The following KPIs are used by the Group to assist it in monitoring its cash
position and assessing costs and exploration and development activities:
KPI 31 March 2023 31 March 2022
Cash and cash equivalents (a) £545,000 £1,046,000
Administrative expense (b) £944,000 £541,000
Exploration and evaluation expenditure (c) £3,227,000 £2,547,000
The directors have provided more information on the state of the Group's
financing and operational activity above.
a) 'Cash and cash equivalents' is used to measure the Group's financial
liquidity. Cash and cash equivalents have decreased by £0.5 million in the
year as the Group has incurred a higher level of exploration and evaluation
expenditure than in prior year.
b) 'Administrative expenses' is used to measure the Group's
administrative costs and operating results. Administrative expenses for the
year were £0.9 million, an increase of £0.4 million compared to the previous
year. Group corporate activity has increased this year with negotiations
surrounding the future of the Bougouni Project. The Group has also continued
to run the offices in Mali and Côte d'Ivoire.
c) 'Exploration and evaluation expenditure' is used to measure
expenditure on the Group's gold and lithium projects. Exploration and
evaluation expenditure in the year was £0.4 million higher than prior year as
additional exploration activity for both gold and lithium was undertaken
during the year.
Financial risk management objectives and policies
The Group's principal financial instruments comprise cash and trade and other
payables. It is, and has been throughout the year under review, the Group's
policy that no trading in financial instruments shall be undertaken. The main
risks arising from the Group's financial instruments are liquidity risk, price
risk and foreign exchange risk. The Board reviews and agrees policies for
managing each of these risks and they are summarised below.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash reserves
to fund the Group's exploration and operating activities. Management prepares
and monitors forecasts of the Group's cash flows and cash balances monthly and
ensures that the Group maintains sufficient liquid funds to meet its expected
future liabilities. The Group intends to raise funds in discrete tranches to
provide sufficient cash resources to manage the activities through to revenue
generation.
Price risk
The Group is exposed to fluctuating prices of commodities, including gold and
lithium, and the existence and quality of these commodities within the licence
and project areas. The Directors will continue to review the prices of
relevant commodities as development of the projects continues and will
consider how this risk can be mitigated closer to the commencement of mining.
Foreign exchange risk
The Group operates in a number of overseas jurisdictions and carries out
transactions in a number of currencies including Sterling, CFA Franc, US
dollars and Australian dollars. The Group does not have a policy of using
hedging instruments but will continue to keep this under review. The Group
operates foreign currency bank accounts to help mitigate the foreign currency
risk.
PRINCIPAL RISKS AND UNCERTAINTIES
The Group is exposed to a number of risks which it seeks to mitigate as set
out in the table below:
Risk Comment and Mitigating Actions
Exploration and Development Risk
The Group is a mineral exploration company and the success of the Company is There is no assurance that the Group's exploration and potential future
dependent on the discovery and/or acquisition of Mineral Reserves and Mineral development activities will be successful, and statistically few properties
Resources and the successful development of mines therefrom. Significant risk that are explored are ultimately developed into profitable producing mines.
exists within technical, legal and financial aspects of the exploration for
and the development of mines, which may have an adverse effect on the Group's The Group ensures that there is regular review of projects, expenditure and
business. exploration activity to maintain focus on targets and ensure best possible
information in the decision-making process to focus resources and expenditure
upon key exploration and development targets.
Reliability of Mineral Resources and Mineral Reserves
The Group has reported Mineral Resources for its Bougouni Lithium project in
West Africa. Any estimates will be based on a range of assumptions,
including geological, metallurgical and technical factors; there can be no The Mineral Resource estimates are prepared by third party consultants who
assurance that the anticipated tonnages or grades will be achieved. have considerable experience and are certified by appropriate bodies.
Mineral Resources are reported as general indicators and should not be
interpreted as assurances of minerals or the profitability of current or
future operations.
Licensing and Title Risk
The Group's exploration and future development opportunities are dependent The Group complies with existing laws and regulations.
upon maintaining clear tenure and access to licences as well as ensuring the
relevant operation licences, permits and regulatory consents are valid. The
licences and regulatory permits may be withdrawn or made subject to
limitations. The Group ensures that the regulatory reporting and the government compliance
requirements for each licence are met.
The granting of licences and permits are a practical matter subject to the
discretion of the applicable government or government office. The There is a risk that negotiations with a government in relation to the grant,
interpretations, amendments to existing laws and regulations, or more renewal or extension of a licence may not result in the grant, renewal or
stringent enforcement of existing laws and regulations could have a material extension taking effect prior to the expiry of the previous licence period,
adverse impact on the Group's results of operations and financial condition. and there can be no assurance of the terms of any extension, renewal or grant.
A new Mining Code has passed before the Republic of Mali Assemblie The Group regularly monitors the good standing of its licences.
Nationale. The Company's licences have been granted under the previous
Mining Code (June 21 2012 (modified)) and remain subject to these
conditions. In addition, future Mining Licence applications will remain
subject to the 2012 Mining code unless the Company specifically request a
variation to the new code.
Political Risk .
The Group has significant activities in Mali and Cȏte d'Ivoire in West
Africa. The success of the Group will be influenced by the legal, political
and economic situation in Mali, Cȏte d'Ivoire and the wider African region. The Transition Government installed following the military coup of 24 May 2021
Countries in the region have experienced political instability and economic has continued to confirm proposed election timelines of February 2024 to
uncertainty in the past. return Mali to a democratically elected Government. A referendum held in
June 2023 allowed for changes to the Mali constitution.
government policy in the countries in which the Group operates can be
unpredictable, and the institutions of government and market economy may be
unstable and subject to rapid change, which may result in a material adverse
effect on the Group's operations. Mali adopted a new Mining Code in August 2023 with a key element being the
potential for the Government to purchase up to an additional 20% interest in a
project (previously 10% interest).
The renewal of exploration and exploitation licences is an area of risk given
the countries in which the Group operates. Whilst the Group has in place legal
titles on the assets in its portfolio, there remains a risk to the Group that In general, the security risk in Mali remains high. The United Nations voted
changes within regimes could put the ownership of these assets at risk. to end the peacekeeping mission in June 2023 with a phased departure of the UN
forces between 1 July and 30 December 2023. The security situation in the
north and east of the country remains fragile and unrest has continued in
neighbouring Burkina Faso and Niger.
The Group is also at risk of taxation reviews that may change or apply more
stringently the laws and regulations of the countries in which it operates.
In Cȏte d'Ivoire, the political situation has been calm since 2011. The
election in 2015 returned the government of President Ouattara with increased
popular support and on 31 October 2020 President Ouattara was returned for a
further 5-year mandate.
The economic situation in Cȏte d'Ivoire is improving dramatically with
significant government expenditure on infrastructure and development activity.
Financial Risk
The Group is an exploration company and does not generate revenue or The Board regularly reviews the levels of discretionary spending on capital
self-sustaining funding at this stage. The Group requires funds to support items and exploration expenditure. This includes regularly updating working
ongoing exploration and future development of mineral properties. The Group's capital models, reviewing actual costs against budget and assessing potential
access to funding will depend on its ability to obtain financing through the impacts on future funding requirements and performance targets.
raising of equity capital, joint venture projects, debt financing, farm outs
or other means.
In the past, the Group has been successful in raising additional equity
finance to support its ongoing activities.
There is no assurance that the Group will be successful in obtaining the
necessary financing in a timely manner on acceptable terms to complete its
investment strategy. The equity markets and ability to raise finance were
significantly affected by the Covid-19 pandemic but have subsequently
improved.
If the Group is unable to obtain additional financing as needed, some
interests may be relinquished, and / or the scope of the operations reduced.
S172 Statement
The Directors of the Company have a duty to promote the success of the
Company. A director of the Company must act in the way they consider, in good
faith, to promote the success of the Company for the benefit of its members,
and in doing so have regard (amongst other matters) to:
• the likely consequences of any decision in the
long term;
• the interests of the Company's employees;
• the need to foster the Company's business
relationships with suppliers, customers and others;
• the impact of the Company's operations on the
community and the environment;
• the desirability of the Company to maintain a
reputation for high standards of business conduct; and
• the need to act fairly between members of the
Company.
The Directors are committed to developing and maintaining a governance
framework that is appropriate to the business and supports effective decision
making coupled with robust oversight of risks and internal controls.
The Board believes that long-term success requires good relations with a range
of different stakeholder groups both internal and external. The board has
identified Kodal's stakeholders to include employees and consultants working
for the Company, the local communities and governments in Mali and Cote
d'Ivoire in which it operates, suppliers and contractors, as well as
shareholders. As the Company looks to bring the Bougouni Lithium project
into development, the importance of capital equipment, suppliers, contractors,
local workforce, finance providers and offtake customers will increase
significantly.
In the Corporate Governance Report, we explain the regular engagement with
employees, communities and local governments in West Africa where we operate;
and the impact assessment we have performed on the environment and local
society as part of our permitting process. We also comment on the
decision-making for the long-term success of the Company, its governance and
culture; as well as the nature and methods of communication with all
shareholders.
The Group relies heavily on having suppliers and contractors with appropriate
levels of experience and expertise of working successfully with junior miners
in West Africa, as well as professional advice for AIM quoted companies in
London. Accordingly, Kodal is committed to maintaining constructive
relationships with all its suppliers and advisers and operating in line with
its Corporate Code of Conduct.
Signed on behalf of the Board
Bernard Aylward
Chief Executive Officer
5 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023
Note Year ended 31 March Year ended 31 March
2023 2022
£ £
Continuing operations
Administrative expenses (944,473) (540,655)
Share based payments 5 (516,581) (342,876)
OPERATING LOSS (1,461,054) (883,531)
Finance charge - (19,556)
LOSS BEFORE TAX 2 (1, 461,054) (903,087)
Taxation 6 - -
LOSS FOR THE YEAR FROM CONTINUING OPERATIONS
(1, 461,054) (903,087)
OTHER COMPREHENSIVE INCOME
Items that may be subsequently reclassified to profit or loss
Currency translation gain / (loss) 331,259 (108,167)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (1,129,795) (1,011,254)
Loss per share
Basic and diluted (pence) 4 (0.0087) (0.0057)
The loss for the current and prior years and the total comprehensive income
for the current and the prior years are wholly attributable to owners of the
parent company.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 31 MARCH 2023
Group Group
31 March 2023 31 March 2022
Note £ £
NON-CURRENT ASSETS
Intangible assets 7 14,521,888 11,442,403
Property, plant and equipment 8 91,771 3,309
Amounts due from 9
subsidiary undertakings - -
Investments in subsidiary
undertakings 9 - -
14,613,659 11,445,712
CURRENT ASSETS
Other receivables 10 11,175 5,769
Cash and cash equivalents 544,988 1,045,515
556,163 1,051,284
Non-current assets classified as held for sale 7 513,109 -
TOTAL ASSETS 15,682,931 12,496,996
CURRENT LIABILITIES
Trade and other payables 11 (800,007) (406,341)
TOTAL LIABILITIES (800,007) (406,341)
NET ASSETS 14,882,924 12,090,655
EQUITY
Attributable to owners of the parent:
Share capital 12 5,315,619 4,947,595
Share premium account 12 18,765,206 15,933,071
Share based payment reserve 1,537,779 1,150,678
Translation reserve 12,632 (318,627)
Retained deficit (10,748,312) (9,622,062)
TOTAL EQUITY 14,882,924 12,090,655
The Company's loss for the year ended 31 March 2023 was £1,206,922 (2022:
£651,696).
The financial statements were approved and authorised for issue by the board
of directors on 5 September 2023 and signed on its behalf by
Charles Joseland
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023
Share capital Share premium account Share based payment reserve Retained deficit Total equity
Translation reserve
Group £ £ £ £ £ £
At 31 March 2021 4,916,364 15,841,134 (8,718,975) 12,635,865
807,802 (210,460)
Comprehensive income
Loss for the year - - - - (903,087) (903,087)
Other comprehensive income
Currency translation loss - - - (108,167) - (108,167)
Total comprehensive income for the year - - (903,087) (1,011,254)
- (108,167)
Transactions with owners
Share based payment - - 342,876 - - 342,876
Proceeds from shares issued 31,231 91,937 - - - 123,168
4,947,595 15,933,071 (9,622,062) 12,090,655
At 31 March 2022 1,150,678 (318,627)
Comprehensive income
Loss for the year - - - - (1,461,054) (1, 461,054)
Other comprehensive income
Currency translation gain - - - 331,259 - 331,259
Total comprehensive income for the year - - (1,461,054) (1,129,795)
- 331,259
Transactions with owners
Share based payment - - 721,905 - - 721,905
Proceeds from shares issued 334,821 2,665,179 - - - 3,000,000
Proceeds from exercise of share options 33,203 309,171 - - 342,374
-
Share options lapse - - (334,804) - 334,804 -
Share issue expenses - (142,215) - - - (142,215)
5,315,619 18,765,206 (10,748,312) 14,882,924
At 31 March 2023 1,537,779 12,632
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2023
Group Group
Year ended Year ended
31 March 2023 31 March 2022
Note £ £
Cash flows from operating activities
Loss before tax (1,461,054) (903,087)
Adjustments for non-cash items:
Write back of impairment of intercompany balances - -
Share based payments 516,581 342,876
Operating cash flow before movements in working capital (944,473) (560,211)
Movement in working capital
(Increase) / decrease in receivables (5,406) 10,244
Increase / (decrease) in payables 393,666 (218,275)
388,260 (208,031)
Net movements in working capital
(556,213) (768,242)
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of tangible assets 8 (103,633) (1,600)
Purchase of intangible assets 7 (3,006,324) (2,474,768)
Loans to subsidiary undertakings - -
(3,109,957) (2,476,368)
Net cash outflow from investing activities
Cash flow from financing activities
Net proceeds from share issues 12 2,857,785 1,962,064
Net proceeds from exercise of share options 342,374 -
Net cash inflow from financing activities 3,200,159 1,962,064
(Decrease) in cash and cash equivalents (466,011) (1,282,546)
Cash and cash equivalents at beginning of the year
1,045,515 2,432,807
Exchange (loss) on cash (34,516) (104,746)
Cash and cash equivalents at end of the year 544,988 1,045,515
Cash and cash equivalents comprise cash on hand and bank balances.
FINANCIAL INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 March 2023 or 2022 but is derived
from those accounts.
Statutory accounts for 2022 have been delivered to the registrar of companies,
and those for 2023 will be delivered in due course. The auditor's report for
the 2022 accounts was (i) unqualified, (ii) did not contain any matter to
which the auditor drew attention by way of emphasis without modifying its
opinion and (iii) did not contain a statement under s.498(2) or (3) of the
Companies Act 2006.
The auditor's report for the 2023 accounts was (i) unqualified, (ii) contained
a material uncertainty in respect of going concern to which the auditor drew
attention by way of emphasis without modifying its opinion and (iii) did not
contain a statement under s.498(2) or (3) of the Companies Act 2006.
PRINCIPAL ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2023
The Group has adopted the accounting policies set out below in the preparation
of the financial statements. All of these policies have been applied
consistently throughout the period unless otherwise stated.
The Company is incorporated in England and Wales with registered number
07220790. The Company's registered office is at Prince Frederick House,
35-39 Maddox Street, London W1S 2PP.
Basis of preparation
The consolidated financial statements of Kodal Minerals Plc are prepared in
accordance with the historical cost convention and in accordance with
UK-adopted International Accounting Standards. The Company's ordinary shares
are quoted on AIM, a market operated by the London Stock Exchange.
In accordance with the exemption allowed by Section 408(3) of the Companies
Act 2006, the Company has not presented its own income statement or statement
of comprehensive income.
Going concern
The Group has not earned revenue during the year to 31 March 2023 as it is
still in the exploration and development phases of its business. The
operations of the Group are currently being financed from funds which the
Company has raised from the issue of new ordinary shares. On 31 August 2023
the group has cash at bank amounting to £1,984,000.
In January 2023 the Group signed binding agreements with Hainan to enter into
a joint venture to develop the Bougouni Lithium Project. Under these
agreements, Hainan will subscribe for equity in the joint venture vehicle
amounting US$100 million; they will also subscribe for equity of US$17.75m in
the ordinary shares of Kodal Minerals Plc, plus the immediate repayment to the
Company for historical development expenses amounting to US$5.66m, the
agreements together being the Financing Transaction.
Completion of the Financing Transaction is subject to meeting various
conditions precedent including Hainan receiving formal Government approval for
the investment and Kodal completing a restructure of its Mali subsidiary
holdings. At the date of this report, it is noted that Hainan has received
all necessary approvals from the Chinese Government authorities to allow it to
complete its funding and investment including "Overseas Project Investment
Filing Certificates" from the Hainan Province National Development and Reform
Commission ("NDRC") and Company Overseas Investment Certificate from the
Department of Commerce of Hainan Province.
Kodal has continued with the restructuring of its subsidiary companies and
confirms that the new mining company Les Mines de Lithium de Bougouni has been
fully registered and the Mali DNGM notified that this new company will be the
owner and operator of the mining licence. In addition, the Company has
completed the restructure of Future Minerals SARL such that all of Kodal's
lithium assets in Mali are now 100% owned by Kodal Mining UK Limited (the
joint venture vehicle for Kodal and Hainan to develop the Bougouni Lithium
project). Kodal is continuing to work with the relevant authorities to
finalise all regulatory matters to allow completion of the Financing
Transaction.
Both Hainan and the Company remain committed to the Financing Transaction and
Hainan has recently advanced to the Company a US$3.5m prepayment on its
subscription for ordinary shares in the Company. The long stop date for
finalising the conditions precedent has been extended several times by mutual
consent and the parties continue to work together to expedite the completion
of the Financing Transaction at the earliest opportunity.
The Group has prepared cash flow forecasts for the period ending 30 September
2024 under several scenarios, including on the basis that the Hainan
transaction completion is delayed for several more months and also that the
Hainan transaction does not proceed. Under both of these scenarios the Group
will require further funding within the foreseeable future.
The directors are confident of raising sufficient funding to cover ongoing
expenditure and overheads, based on indications from Hainan that they would
make further prepayments available, and/or the Group will be able to raise
further equity given the quality of the Bougouni lithium project, continuing
interest from potential investors and finance providers, and forecasts showing
continuing strong demand and pricing for spodumene and lithium. Although the
Group has been successful in the past obtaining additional funding, there is
no assurance that it will be able to do so in the future or that such
arrangements will be on terms advantageous to the Group.
These conditions indicate the existence of a material uncertainty that may
cast doubt on the Group's ability to continue as a going concern. The
consolidated statements for the year ended 31 March 2023 have been prepared on
a going concern basis as the Board is of the opinion that the group will be
successful in completing the Hainan transaction in the near future and/or
securing further funding in order to meet its liabilities as they fall due for
at least 12 months from the date of signing these accounts. Accordingly, these
consolidated financial statements do not include any adjustments to the
recoverability and classification of recorded assets and liabilities and
related expenses that might be necessary should the Group be unable to
continue as a going concern.
Basis of consolidation
The Group financial statements consolidate those of the Company and all of its
subsidiary undertakings drawn up to the statement of financial position date.
Subsidiary undertakings are entities over which the Group has the power to
control the financial and operating policies so as to obtain benefits from
their activities. The Group obtains and exercises control through voting
rights.
Unrealised gains on transactions between the Company and its subsidiaries are
eliminated on consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred.
Amounts reported in the financial statements of subsidiaries have been
adjusted where necessary to ensure consistency with the accounting policies
adopted by the Group.
Foreign currency translation
Items included in the Group's consolidated financial statements are measured
using the currency of the primary economic environment in which the Group
operates ("the functional currency"). The financial statements are presented
in pounds sterling ("£"), which is the functional and presentational currency
of the Parent Company and the presentational currency of the Group. End of
year balances in the Group's West African subsidiary undertakings were
converted using an end of year rate of XOF 1 : £0.00135 (2022: XOF 1 :
£0.00129).
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated using the rate of exchange
ruling at the reporting date and the gains or losses on translation are
included in profit and loss. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the exchange
rates as at the dates of the original transactions. Non-monetary items
measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and any recognised impairment loss. Depreciation, which is included in
administrative expenses, is charged so as to write off the costs of assets
down to their residual value, over their estimated useful lives, using the
straight-line method, on the following basis:
Plant and machinery
4 years
Motor vehicles
4 years
Fixtures, fittings and equipment 4 years
Where property, plant and equipment are used in exploration and evaluation
activities, the depreciation of the assets is capitalised as part of the cost
of exploration and evaluation assets. The assets' residual values and useful
lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for
impairment. Where the recoverable amount of the investment is less than the
carrying amount, an impairment is recognised.
Exploration and evaluation expenditure
In accordance with IFRS 6 (Exploration for and Evaluation of Mineral
Resources), exploration and evaluation costs incurred before the Group obtains
legal rights to explore in a specific area (a "project area") are taken to
profit or loss.
Upon obtaining legal rights to explore in a project area, the fair value of
the consideration paid for acquiring those rights and subsequent exploration
and evaluation costs are capitalised as exploration and evaluation assets. The
costs of exploring for and evaluating mineral resources are accumulated with
reference to appropriate cost centres being project areas or groups of project
areas.
Upon the technical feasibility and commercial viability of extracting the
relevant mineral resources becoming demonstrable, the Group ceases further
capitalisation of costs under IFRS 6.
Exploration and evaluation assets are not amortised prior to the conclusion of
appraisal activities, but are carried at cost less impairment, where the
impairment tests are detailed below.
Exploration and evaluation assets are carried forward until the existence (or
otherwise) of commercial reserves is determined:
• where commercial reserves have been discovered,
the carrying value of the exploration and evaluation assets are reclassified
as development and production assets and amortised on an expected unit of
production basis; or
• where a project area is abandoned, or a decision
is made to perform no further work, the exploration and evaluation assets are
written off in full to profit or loss.
Exploration and evaluation assets - impairment
Project areas, or groups of project areas, are determined to be cash
generating units for the purposes of assessment of impairment.
With reference to a project area or group of project areas, the exploration
and evaluation assets (along with associated production and development
assets) are assessed for impairment when such facts and circumstances suggest
that the carrying amount of the assets may exceed the recoverable amount.
Such indicators include, but are not limited to, those situations outlined in
paragraph 20 of IFRS 6 and include the point at which a determination is made
as to whether or not commercial reserves exist.
The aggregate carrying value is compared against the expected recoverable
amount, generally by reference to the present value of the future net cash
flows expected to be derived from production of the commercial reserves.
Where the carrying amount exceeds the recoverable amount, an impairment is
recognised in profit or loss.
Intangible assets and impairment
Externally acquired intangible assets are initially recognised at cost and
subsequently amortised over their useful economic lives. Amortisation, which
is included in administrative expenses, is charged so as to write off the
costs of intangible assets, over their estimated useful lives, using the
straight-line method, on the following basis:
Software
3 years
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantively
enacted by the reporting date and are expected to apply when the related
deferred tax is realised, or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the
future taxable profit will be available against which the temporary
differences can be utilised.
Financial instruments
Financial assets and financial liabilities are recognised on the Statement of
Financial Position when the Group becomes a party to the contractual
provisions of the instrument.
IFRS 7 (Financial Instruments: Disclosures) requires information to be
disclosed about the impact of financial instruments on the Group's risk
profile, how the risks arising from financial instruments might affect the
entity's performance, and how these risks are being managed. The required
disclosures have been made in Note 14 to the financial statements.
The Group's policies include that no trading in derivative financial
instruments shall be undertaken.
Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position comprise cash
at bank and in hand.
Other receivables
Other receivables are carried at amortised cost less provision made for
impairment of these receivables. A provision for impairment of receivables is
established when there is an expected credit loss on amounts due according to
the original terms of the receivables. The amount of the provision is the
difference between the assets' carrying amount and the recoverable amount.
Provisions for impairment of receivables are included in profit or loss.
Non-current assets classified as held for sale
Non-current assets are classified as held for sale if their carrying amount
will be recovered principally through a sale transaction rather than through
continued use. They are measured at the lower of their carrying amount and
fair value less costs of disposal. For non-current assets to be classified as
held for sale, they must be available for immediate sale in their present
condition and their sale must be highly probable. Non-current assets are not
depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of assets held for sale
continue to be recognised. Non-current assets classified as held for sale
are presented separately on the face of the statement of financial position,
in current assets.
Trade and other payables
Trade payables and other payables represent liabilities for goods and services
provided to the Group prior to the end of the financial year that are unpaid
and arise when the Group becomes obliged to make future payments in respect of
the purchase of these goods and services. These amounts are carried at
amortised cost. The amounts are unsecured and are usually paid within 30 days
of recognition.
Provisions
A provision is recognised when a present obligation (legal or constructive)
has arisen as a result of a past event and it is probable that a future
outflow of resources will be required to settle the obligation, provided that
a reliable estimate can be made of the amount of the obligation.
When the effect of discounting is material, the amount recognised for a
provision is the present value at the end of the reporting period of the
future expenditures expected to be required to settle the obligation. The
increase in the discounted present value amount arising from the passage of
time is included in profit or loss.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction
from the proceeds.
Equity settled transactions (Share based payments)
The Group has issued shares as consideration for services received. Equity
settled share-based payments are measured at fair value at the date of issue.
The Group has also granted equity settled options and warrants. The cost of
equity settled transactions is measured by reference to the fair value at the
date on which they were granted and is recognised over the vesting period,
which ends on the date the recipient becomes fully entitled to the award.
Fair value is determined by using the Black-Scholes option pricing model.
In valuing equity settled transactions, account is taken of service and
performance conditions (vesting conditions), in addition to performance
conditions linked to the price of the shares of the Company (market
conditions). No expense is recognised for awards that do not ultimately vest.
At each reporting date before vesting, the cumulative expense is calculated;
representing the extent to which the vesting period has expired and
management's best estimate of the number of equity instruments that will
ultimately vest. The movement in the cumulative expense since the previous
reporting date is recognised in profit and loss, with a corresponding entry in
equity, or for options awarded to executive directors, the award is considered
as part of their remuneration and the overall cost is allocated between
operating costs and exploration and evaluation cost.
Where the terms of the equity-settled award are modified, or a new award is
designated as replacing a cancelled or settled award, the cost based on the
original award terms continues to be recognised over the original vesting
period. In addition, an expense is recognised over the remainder of the new
vesting period for the incremental fair value of any modification, based on
the difference between the fair value of the original award and the fair value
of the modified award, both as measured on the date of the modification. No
reduction is recognised if the difference is negative.
Where an equity-based award is cancelled (including when a non-vesting
condition within the control of the entity or employee is not met), it is
treated as if it had vested on the date of the cancellation, and the cost not
yet recognised in profit and loss for the award is expensed immediately. Any
compensation paid up to the fair value of the award at the cancellation or
settlement date is deducted from equity, with any excess over fair value being
treated as an expense.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Board of Directors, which has been identified as the
Chief Operating Decision Maker. The Board of Directors is responsible for
allocating resources and assessing performance of the operating segments in
line with the strategic direction of the Company.
Critical accounting judgements and estimates
The preparation of these consolidated financial statements in accordance with
UK-adopted International Accounting Standards ("IFRS") requires the use of
accounting estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the consolidated financial statements
and the reported amounts of income and expenses during the reporting period.
Although these estimates are based on management's best knowledge of current
events and actions, actual results ultimately may differ from those
estimates. IFRS also require management to exercise its judgement in the
process of applying the Group's accounting policies.
The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of the assets and liabilities
within the next financial year are addressed below.
Exploration and evaluation expenditure
In accordance with the Group's accounting policy for exploration and
evaluation expenditure, after obtaining licences giving legal rights to
explore in the project area, all exploration and evaluation costs for each
project are capitalised as exploration and evaluation assets.
The exploration and evaluation assets for each project are assessed for
impairment when such facts and circumstances suggest that the carrying value
of the assets may exceed the recoverable amount.
The directors have assessed the Group's gold projects in Mali and Côte
d'Ivoire that are not part of the joint venture agreements and determined that
they remain prospective. Accordingly, the directors have determined to
continue to maintain these licences and explore ways for the Group to advance
these prospective areas most effectively. Accordingly, no impairment review
has been conducted on these assets.
The directors have assessed the Group's Bougouni Lithium project in Mali,
taking into account the updated Preliminary Feasibility Study and the
agreement reached with Hainan in January 2023 for the funding of the
project. This project continues to be evaluated and there is no indication
of impairment. Accordingly, no impairment review has been conducted on these
assets.
The Group's exploration activities and future development opportunities are
dependent upon maintaining the necessary licences and permits to operate,
which typically require periodic renewal or extension. In Mali and Côte
d'Ivoire, the process of renewal or extension of a licence can only be
initiated on expiry of the previous term and takes time to be processed by the
relevant government authority. Until formal notification is received there is
a risk that renewal or extension will not be granted.
As detailed in the Operational Review, at the date of these financial
statements, the Group's key exploration licences are current. As detailed in
note 7, the total carrying value of the exploration and evaluation assets at
31 March 2023 was £14.5 million (2022: £11.4 million). The Group complies
with the prevailing laws and regulations relating to these licences and
ensures that the regulatory reporting and government compliance requirements
for each licence are met.
Valuation of warrants and share options
In accordance with the Group's accounting policy for equity settled
transactions, all equity settled share-based payments are measured at fair
value at the date of issue. Fair value is determined by using the
Black-Scholes option pricing model based on the terms of the options and
warrants, the Company's share price at the time and assumptions for volatility
and exercise date. The assumptions used to value the options and warrants
are detailed in note 5.
For options awarded to the non-executive directors, the award has been
considered to be in relation to their overall contribution to the Group and,
accordingly, the charge has been included within operating costs in the
Consolidated Statement of Comprehensive Income. For options awarded to
executive directors, the award is considered as part of their remuneration.
This overall cost is allocated between operating costs and exploration and
evaluation cost, the latter of which are capitalised against specific
projects. For the award of warrants associated with the raising of funds
through the issue of new shares, the charge has been treated as a share issue
expense and offset against the share premium account.
Recoverability of Intercompany Balances to Subsidiary Undertakings
The Company has outstanding intercompany balances from its directly held
subsidiaries resulting from the primary method of financing the activity of
those subsidiaries. The balances are shown in the Company Statement of
Financial Position. However, there is a risk that the subsidiaries will not
commence sufficient revenue generating activities and that the carrying amount
of the intercompany balances will, therefore, exceed the recoverable amount.
Under the requirements of IFRS 9 management has run various scenarios on the
expected credit loss of the Company's intercompany balances, including the
project being put into operation, the project being sold and the project
collapsing. Management has updated its calculations reflecting additional
amounts advanced to its subsidiaries for work on its lithium and gold projects
during the year, the reduced the risk of credit loss given improvements since
last year in the financial, lithium and gold markets and the reduced risk of
project collapse following the granting of the mining licence. At 31 March
2023, amounts due to the Company from subsidiary undertakings totalled
£14,296,000 (2022: £10,785,000), net of a credit loss provision of £501,000
(2022: £681,000).
Adoption of New and Revised Standards
The Group has adopted all of the new or amended Accounting Standards and
interpretations issued by the International Accounting Standards Board
("IASB") that are mandatory and relevant to the Group's activities for the
current reporting period.
New standards and interpretations not applied
At the date of authorisation of these consolidated financial statements,
certain new standards, amendments and interpretations to existing standards
have been published but are not yet effective and have not been adopted early
by the Group. These are listed below. The Board anticipates that all of the
pronouncements will be adopted in the Group's accounting policies for the
first period beginning after the effective date of the pronouncement. The
amendments to the standards noted below are not expected to have a material
impact on the Group's consolidated financial statements.
Standard Details of amendment / New Standards and Interpretations Annual periods beginning on or after
IAS 1 Presentation of Financial Statements Amendments to IAS 1 Presentation of Financial Statements to specify the 1 January 2024
requirements for classifying liabilities as current or non-current.
IAS 1 Presentation of Financial Statements Amendments to IAS 1 Presentation of Financial Statements to specify the 1 January 2023
requirements for disclosure of accounting policies.
There are other standards and amendments in issue but not yet effective, which
are not likely to be relevant to the Group which have therefore not been
listed.
NOTES TO THE FINANCIAL STATEMENTS
1. SEGMENTAL REPORTING
The operations and assets of the Group in the year ended 31 March 2023 are
focused in the United Kingdom and West Africa and comprise one class of
business: the exploration and evaluation of mineral resources. Management have
determined that the Group had two operating segments being the West African
Gold Projects and the West African Lithium Projects, and a UK administration
centre. The Parent Company acts as a holding company. At 31 March 2023, the
Group had not commenced commercial production from its exploration sites and
therefore had no revenue for the year.
Year ended 31 March 2023 UK West Africa Total
West Africa
Gold Lithium
£ £ £ £
Administrative expenses 912,390 4,288 27,795 944,473
Share based payments 516,581 - - 516,581
Loss for the year 1,428,971 4,288 27,795 1,461,054
At 31 March 2023
Other receivables 11,175 - - 11,175
Cash and cash equivalents
425,704 90,426 28,858 544,988
Non-current assets classified as held for sale
- - 513,109 513,109
Trade and other payables (129,332) - (670,675) (800,007)
Intangible assets - exploration and evaluation expenditure
- 3,305,948 11,215,940 14,521,888
Property, plant and equipment
- 1,042 90,729 91,771
Net assets at 31 March 2023
307,547 3,397,416 11,177,961 14,882,924
UK West Africa Total
Year ended 31 March 2022
West Africa
Gold Lithium
£ £ £ £
Administrative expenses 538,625 866 1,164 540,655
Share based payments 342,876 - - 342,876
Finance charge 19,556 - - 19,556
Loss for the year 901,057 866 1,164 903,087
At 31 March 2022
Other receivables 5,769 - - 5,769
Cash and cash equivalents 949,850 38,481 57,184 1,045,515
Trade and other payables (100,959) - (305,382) (406,341)
Intangible assets - exploration and evaluation expenditure - 2,410,787 11,442,403
9,031,616
Property, plant and equipment - - 3,309
3,309
Net assets at 31 March 2022 854,660 2,449,268 12,090,655
8,786,727
2. LOSS BEFORE TAX
The loss before tax from continuing activities
is stated after charging:
Group Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Fees payable to the Company's auditor 53,000 40,000
Share based payments (note 5) 516,581 342,876
Directors' salaries and fees 182,247 167,980
Employer's National Insurance 10,598 5,980
Amounts payable to RSM UK Audit LLP and its associates in respect of audit
services are as follows;
Group Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Audit services
- statutory audit of parent and consolidated accounts 53,000 40,000
3. EMPLOYEES AND DIRECTORS' REMUNERATION
The average number of people employed in the Group is as follows:
Group Group
31 March 2023 31 March 2022
Number Number
Average number of employees (including directors): 45 19
The directors are key management personnel of the Company. The remuneration
expense for directors of the Company is as follows:
Year ended Year ended
31 March 2023 31 March 2022
£ £
Directors' remuneration 182,247 167,980
Directors' social security costs 10,598 5,980
Total 192,845 173,960
In addition to the amounts included above, £282,267 (2022: £79,469) of the
directors' remuneration cost has been treated as Exploration and Evaluation
expenditure. 100% of the salary cost of the Group's employees in West Africa
has been treated as Exploration and Evaluation expenditure (2022: 100%).
Directors' salary and fees year ended Share based payments
31 March 2023 year ended Total
31 March year ended
2023 (see note 5) 31 March
2023
£ £ £
Bernard Aylward (a) 177,847 180,724 358,571
Charles Joseland 50,000 78,153 128,153
Robert Wooldridge 45,000 119,366 164,366
Steven Zaninovich (b) 166,667 159,291 325,958
Qingtao Zeng (c) 25,000 139,680 164,680
464,514 677,214 1,141,728
Included within the amounts shown above for share based payments, £191,771
has been treated as Exploration and Evaluation expenditure. Four Directors
exercised share options in the period, with respective gains on exercise as
follows: Bernard Aylward £3,860; Charles Joseland £20,044; Robert
Wooldridge £10,509; and Steven Zaninovich £4,632.
Directors' salary and fees year ended Share based payments
31 March 2022 year ended Total
31 March year ended
2022 (see note 5) 31 March
2022
£ £ £
Bernard Aylward (a) 132,449 222,793 355,242
Charles Joseland 45,000 1,164 46,164
Robert Wooldridge 45,000 44,798 89,798
Qingtao Zeng (c) 25,000 2,549 27,549
247,449 271,304 518,753
a) Matlock Geological Services Pty Ltd ("Matlock") a company wholly
owned by Bernard Aylward, provided consultancy services to the Group during
the year ended 31 March 2023 and received fees of £139,514 (2022:
£97,450). These fees are included within the remuneration figure shown for
Bernard Aylward.
b) Zivvo Pty Ltd ("Zivvo") a company wholly owned by Steven Zaninovich,
provided consultancy services to the Group during the year ended 31 March 2023
and received fees of £140,000 in the period after his appointment as director
on 27 July 2022. These fees are included within the remuneration figure
shown for Steven Zaninovich. Steven Zaninovich was appointed to the board on
27 July 2022.
c) In addition to the amounts included above, Geosmart Consulting Pty
Ltd, a company wholly owned by Qingtao Zeng, provided consultancy services to
the Group during the year and received fees of £24,627 (2022: £27,136).
4. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the year
attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
The following reflects the result and share data used in the computations:
Loss Weighted average number of shares Basic loss per share (pence)
£
Year ended 31 March 2023 1,461,054 16,812,417,355 0.0087
Year ended 31 March 2022 903,087 15,809,383,877 0.0057
Diluted loss per share is calculated by dividing the loss attributable to
ordinary equity holders of the parent by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares. Options in issue are not
considered diluting to the loss per share as the Group is currently loss
making. Diluted loss per share is therefore the same as the basic loss per
share.
5. SHARE BASED PAYMENTS
The share-based payment reserve is used to recognise the value of
equity-settled share-based payments provided to employees, including key
management personnel, as part of their remuneration.
Year ended Year ended
31 March 2023 31 March 2022
Share options outstanding Number Number
Opening balance 250,000,000 205,000,000
Lapsed in the year (77,500,000) -
Issued in the year 470,000,000 45,000,000
Exercised in the year (60,000,000) -
Closing balance 582,500,000 250,000,000
Year ended Year ended
31 March 2023 31 March 2022
Performance share rights outstanding Number Number
Opening balance 175,000,000 -
Issued in the year 75,000,000 175,000,000
Exercised in the year (10,000,000) -
Closing balance 240,000,000 175,000,000
Year ended Year ended
31 March 2023 31 March 2022
Warrants outstanding Number Number
Opening balance 205,000,000 285,355,663
Lapsed in the year (12,500,000) -
Issued in the year 170,000,000 -
Exercised in the year (36,250,000) (80,355,663)
Closing balance 326,250,000 205,000,000
Options, warrants and performance share rights outstanding for each of the
directors at the year-end are outlined below:
Exercisable date Bernard Aylward Robert Wooldridge Qingtao Zeng Charles Joseland Steven Zaninovich
8 May 2019 - - 6,250,000 - - -
8 May 2024
20 Nov 2018 - - - 2,500,000 - -
20 Nov 2023
20 Nov 2019 - - - 2,500,000 - -
20 Nov 2024
1 Mar 2019 - - - - - 26,666,666
1 Mar 2024
6 November 2021 - - - - 33,333,334
To be determined (Note 2) - - - - 90,000,000
6 November 2021 30,000,000 - - - -
To be determined (Note 1) 40,000,000 - - - -
To be determined (Note 2) 75,000,000 - - - -
27 Aug 2021 - - 15,000,000 7,500,000 - -
27 Aug 2026
27 Aug 2022 - - 7,500,000 3,750,000 - -
27 Aug 2027
27 Aug 2023 - - 7,500,000 3,750,000 - -
27 Aug 2028
To be determined (Note 1) 30,000,000 - - - 72,500,000
To be determined (Note 2) 40,000,000 - - - 77,500,000
To be determined (Note 3) 60,000,000 - - - 95,000,000
18 Aug 2022 - - 23,333,334 43,333,334 25,000,000 -
18 Aug 2027
18 Aug 2023 - - 33,333,333 43,333,333 25,000,000 -
18 Aug 2028
18 Aug 2024 - - 33,333,333 43,333,333 25,000,000 -
18 Aug 2029
Closing balance 275,000,000 126,250,000 150,000,000 75,000,000 395,000,000
1. Exercisable from date of securing the finance for construction of
the Bougouni mine
2. Exercisable from date of first commercial production from the
Bougouni Project
3. Exercisable from date of production of 175,000 tonnes of spodumene
concentrate from the Bougouni project
Included within operating losses is a charge for issuing share options and
making share-based payments of £684,932 (2022: £342,876).
Details of share options outstanding at 31 March 2023:
Date of grant Number of options
Option price
Exercisable between
20 December 2013
13,333,333 0.7
pence 30 Dec 2014 -
30 Dec 2024
20 December 2013
13,333,333 0.7
pence 30 Dec 2015 -
30 Dec 2025
20 December 2013
13,333,333 0.7
pence 30 Dec 2016 -
30 Dec 2026
8 May 2017
12,500,000 0.38
pence 8 May 2018 - 8 May
2023
8 May 2017
20,000,000 0.38
pence 8 May 2019 - 8 May
2024
20 November 2017
2,500,000 0.38
pence 20 Nov 2018 - 20
Nov 2023
20 November 2017
2,500,000 0.38
pence 20 Nov 2019 - 20
Nov 2024
27 August 2021
22,500,000 0.36
pence 27 Aug 2021 - 27
Aug 2026
27 August 2021
11,250,000 0.36
pence 27 Aug 2022 - 27
Aug 2027
27 August 2021
11,250,000 0.36
pence 27 Aug 2023 - 27
Aug 2028
18 August 2022
37,500,000 0.3
pence To be
determined
18 August 2022
47,500,000 0.34
pence To be determined
18 August 2022
70,000,000 0.38
pence To be determined
18 August 2022
95,000,002 0.3
pence 18 Aug 2022
- 18 Aug 2027
18 August 2022
104,999,999 0.34
pence 18 Aug 2023 - 18
Aug 2028
18 August 2022
104,999,999 0.34
pence 18 Aug 2024 - 18
Aug 2029
Details of performance share rights outstanding at 31 March 2023:
Date of grant Number of
performance Option price
Exercisable between
share rights
27 August 2021
30,000,000
nil
6 November 2021
27 August 2021
50,000,000
nil
To be determined
27 August 2021
85,000,000
nil
To be determined
27 July 2022
25,000,000
nil
To be determined
27 July 2022
25,000,000
nil
To be determined
27 July 2022
25,000,000
nil
To be determined
Details of warrants outstanding at 31 March 2023:
Date of grant Number of
warrants Option price
Exercisable between
22 May 2017
6,250,000 0.38
pence 22 May 2019 -
22 May 2024
23 November 2018
26,666,666 0.14-0.38
pence 1 March 2019 - 1 March 2024
23 November 2018
33,333,334 0.14-0.38
pence To be determined
23 November 2018
90,000,000 0.14-0.38
pence To be determined
27 July 2022
47,500,000 0.28
pence To be
determined
27 July 2022
52,500,000 0.325
pence To be determined
27 July 2022
70,000,000 0.38
pence To be
determined
Additional disclosure information:
Weighted average exercise price of share options and warrants:
· outstanding at the beginning of the period
0.35 pence
· granted during the period
0.30 pence
· outstanding at the end of the period
0.27 pence
· exercisable at the end of the period
0.35 pence
Weighted average remaining contractual life of
share options outstanding at the end of the period
5.7 years
Warrants, Options and Performance Share Rights issued in the year to 31 March
2023
On 27 July 2022, the Company granted warrants over 170,000,000 ordinary shares
and Performance Share Rights of up to 75,000,000 ordinary shares to Steven
Zaninovich. The warrants are registered in the name of Zivvo Pty Ltd, a
company wholly owned by Steven Zaninovich.
The Warrants and Performance Share Rights carry vesting conditions that are
linked to achievement of milestones critical to the development of the
Bougouni Project as follows:
· Securing of finance for the Bougouni mine and completion
of all Mali Government Agreements, Update and Variation of Mining
Licence and Environment permitting in relation to the Bougouni Project;
· Receipt of funds from first sale of spodumene concentrate
from the Bougouni Project within 18 months of receipt of finance; and
· 175,000 tonnes of spodumene concentrate produced from the
Bougouni Project.
Subject to the vesting conditions being satisfied, Mr Zaninovich may call for
Ordinary Shares, as set out in the table below, to be issued to him at any
time within five years of the vesting condition being met and upon payment by
them of the nominal value for the Ordinary Shares in relation the Performance
Share Rights and the exercise price in relation to the share options.
Vesting criteria Warrants Performance Share Rights
Exercise Price Number
Securing of finance for the Bougouni mine £0.00280p 47,500,000 25,000,000 capped at £250,000 value
Receipt of funds from first sale of spodumene concentrate from Bougouni within £0.00325p 52,500,000 25,000,000 capped at £250,000 value
18 months of receipt of finance
Production of 175,000 tonnes of spodumene concentrate from Bougouni £0.00380p 70,000,000 25,000,000 capped at £250,000 value
Total £0.00335p average 170,000,000 75,000,000 total capped at £750,000 value
On 18 August 2022, the Company granted options over 155,000,000 ordinary
shares to Bernard Aylward and Mohamed Niare (Country Manager, Mali).
The Share Options carry vesting conditions that are linked to achievement of
milestones critical to the development of the Bougouni Project as follows:
· Securing of finance for the Bougouni mine and completion
of all Mali Government Agreements, Update and Variation of Mining
Licence and Environment permitting in relation to the Bougouni Project;
· Receipt of funds from first sale of spodumene concentrate
from the Bougouni Project within 18 months of receipt of finance; and
· 175,000 tonnes of spodumene concentrate produced from the
Bougouni Project.
Subject to the vesting conditions being satisfied, the holders of the Share
Options may call for Ordinary Shares, as set out in the table below, to be
issued to them at any time within five years of the vesting condition being
met.
Share Options
Exercise price
Vesting criteria Bernard Aylward Mohamed Niare
Securing of finance for the Bougouni mine 0.3 pence Up to 30 million ordinary shares Up to 7.5 million ordinary shares
Receipt of funds from first sale of spodumene concentrate 0.34 pence Up to 40 million ordinary shares Up to 7.5 million ordinary shares
175,000 tonnes of spodumene concentrate produced 0.38 pence Up to 60 million ordinary shares Up to 10 million ordinary shares
Total Up to 130 million ordinary shares Up to 25 million ordinary shares
On 18 August 2022, the Company granted options over 315,000,000 Ordinary
Shares to members of the management team, of which those granted to
Non-Executive Directors were as set out in the table below. The options will
vest in equal tranches with the first one third vesting immediately and
exercisable at 0.3 pence per share, and the remaining two thirds vesting in
two equal tranches on the first and second anniversaries of the grant and
exercisable at 0.34 pence per share.
Director Number of Options granted
Charles Joseland 75,000,000
Robert Wooldridge 100,000,000
Qingtao Zeng 130,000,000
The fair values of the options and warrants granted were calculated using the
Black-Scholes valuation model. The inputs to the model were:
27 July 2022 18 August 2022
Strike price 0.00p - 0.38p 0.30p - 0.38p
Share price 0.11p - 0.25p 0.11p - 0.26p
Volatility 75% 75%
Expiry date 15/3/28 - 15/12/30 15/3/28 - 15/12/30
Risk free rate 0.24% - 0.26% 0.23% - 0.30%
Dividend yield 0.0% 0.0%
Options and Performance Share Rights issued in the year to 31 March 2022
On 27 August 2021, the Company granted Performance Share Rights of up to
175,000,000 ordinary shares to Bernard Aylward and Mohamed Niare (Country
Manager, Mali).
The Performance Share Rights carry vesting conditions that are linked to
achievement of milestones critical to the development of the Bougouni Project
as follows:
· Award of mining licence;
· Securing the finance for construction of the Bougouni
mine; and
· First commercial production from the Bougouni Project.
Subject to the vesting conditions being satisfied, the holders of the
Performance Share Rights may call for Ordinary Shares, as set out in the table
below, to be issued to them at any time within five years of the vesting
condition being met and upon payment by them of the nominal value for the
Ordinary Shares.
Performance Share Rights over New Ordinary Shares
Vesting criteria Bernard Aylward Mohamed Niare
Award of mining licence Up to 30 million New Ordinary Shares (capped at value on vesting of £300,000) Up to 10 million New Ordinary Shares (capped at value on vesting of £100,000)
Securing the finance for construction of the Bougouni mine Up to 40 million New Ordinary Shares (capped at value on vesting of £400,000) Up to 10 million New Ordinary Shares (capped at value on vesting of £100,000)
First commercial production from the Bougouni Project Up to 75 million New Ordinary Shares (capped at value on vesting of £750,000) Up to 10 million New Ordinary Shares (capped at value on vesting of £100,000)
Total Up to 145 million New Ordinary Shares (capped at value on vesting of £1.45m) Up to 30 million New Ordinary Shares (capped at value on vesting of £300,000)
In the event of a change of control of the Company, 50 per cent. of any
unvested Performance Share Rights will vest immediately, provided that the
Company's share price at the time of the change of control exceeds 0.34 pence,
being the share price when the awards were made.
On 27 August 2021, options over Ordinary Shares were granted to Robert
Wooldridge and Qingtao Zeng as set out in the table below. The Options are
exercisable at 0.36 pence per share, with 50 per cent of the Options vesting
immediately and the remaining 50 per cent. vesting in two equal tranches on
the first and second anniversaries of the grant. All unvested options will
vest immediately on a change of control of the Company.
Director Number of Options granted
Robert Wooldridge 30,000,000
Qingtao Zeng 15,000,000
6. TAXATION
Group Group
Year ended Year ended
31 March 2023 31 March 2022
£ £
Taxation charge for the year - -
Factors affecting the tax charge for the year
Loss from continuing operations before income tax (1,461,054) (903,087)
Tax at 19% (2022: 19%) (277,600) (171,587)
Expenses not deductible 636 -
Losses carried forward not deductible 178,814 106,440
Deferred tax differences 98,150 65,147
Income tax expense - -
The Group has tax losses and other potential deferred tax assets (including in
relation to share options) totalling £3,759,000 (2022: £2,978,000) which
will be able to be offset against future income. No deferred tax asset has
been recognised in respect of these losses as the timing of their utilisation
is uncertain at this stage.
7. INTANGIBLE ASSETS
Exploration and evaluation
GROUP £
COST
At 1 April 2021 8,964,089
Additions in the year 2,546,686
Effects of foreign exchange (68,372)
11,442,403
At 1 April 2022
Additions in the year 3,226,956
Classified as held for sale (513,109)
Effects of foreign exchange 365,638
At 31 March 2023 14,521,888
AMORTISATION
At 1 April 2021 and 1 April 2022 and 31 March 2023 -
NET BOOK VALUES
At 31 March 2023 14,521,888
At 31 March 2022 11,442,403
At 31 March 2021 8,964,089
Group Group
31 March 2023 31 March 2022
£ £
Non-current assets classified as held for sale 513,109 -
513,109 -
On 19 April 2023, the Company announced the sale of the Bougouni West project,
further details on which are disclosed in Note 18. The Bougouni West project
was held as an asset for sale at 31 March 2023.
8. PROPERTY, PLANT AND EQUIPMENT
Plant and machinery
GROUP £
COST
1 April 2021 26,079
Additions in the year 1,600
Effects of foreign exchange (47)
At 1 April 2022 27,633
Additions in the year 103,633
Effects of foreign exchange 137
At 31 March 2023 131,403
DEPRECIATION
At 1 April 2021 17,402
Depreciation charge 6,922
At 1 April 2022 24,324
Depreciation charge 15,308
At 31 March 2023 39,632
NET BOOK VALUES
At 31 March 2023 91,771
At 31 March 2022 3,309
At 31 March 2021 8,677
All tangible assets are wholly associated with exploration and development
projects and therefore the amounts charged in respect of depreciation are
capitalised as evaluation and exploration assets within intangible assets.
9. SUBSIDIARY UNDERTAKINGS
The consolidated financial statements include the following subsidiary
companies:
Country of Registered office Equity holding Nature of
Company Subsidiary of incorporation business
Kodal Norway (UK) Ltd Kodal Minerals Plc United Kingdom Prince Frederick House, 100% Operating company
35-39 Maddox Street, London W1S 2PP
International Goldfields (Bermuda) Limited Kodal Minerals Plc Bermuda MQ Services Ltd 100% Holding company
Victoria Place,
31 Victoria Street,
Hamilton HM 10
Bermuda
International Goldfields Côte d'Ivoire SARL International Goldfields (Bermuda) Limited Côte d'Ivoire Abidjan Cocody Les Deux Plateaux 7eme Tranche 100% Mining exploration
BP Abidjan
Côte d'Ivoire
International Goldfields Mali SARL International Goldfields (Bermuda) Limited Mali Bamako, Faladi, Mali Univers, Rue 886 B, Porte 487 100% Mining exploration
Mali
Jigsaw Resources CIV Ltd International Goldfields (Bermuda) Limited Bermuda MQ Services Ltd 100% Holding company
Victoria Place,
31 Victoria Street,
Hamilton HM 10
Bermuda
Corvette CIV SARL Jigsaw Resources CIV Ltd Côte d'Ivoire Abidjan Cocody Les Deux Plateaux 7eme Tranche 100% Mining exploration
BP Abidjan
Côte d'Ivoire
Future Minerals SARL International Goldfields (Bermuda) Limited Mali Bamako, Faladi, Mali Univers, Rue 886 B, Porte 487 100% Mining exploration
Mali
Kodal Mining UK Limited Kodal Minerals Plc United Kingdon Prince Frederick House, 100% Mining exploration
35-39 Maddox Street, London W1S 2PP
10. OTHER RECEIVABLES
Group Group
31 March 2023 31 March 2022
£ £
Other receivables 11,175 5,769
11,175 5,769
All receivables at each reporting date are current. No receivables are past
due. The Directors consider that the carrying amount of the other
receivables approximates their fair value and there are no expected credit
losses.
11. TRADE AND OTHER PAYABLES
Group Group
31 March 2023 31 March 2022
£ £
Trade payables 616,877 348,505
Other payables 183,130 57,836
800,007 406,341
All trade and other payables at each reporting date are current. The
Directors consider that the carrying amount of the trade and other payables
approximates their fair value.
12. SHARE CAPITAL
Note Nominal Value Number of Ordinary Shares Share Capital Share Premium
£ £
At 31 March 2021 15,732,363,511 4,916,364 15,841,134
May 2021 a £0.0003125 48,790,008 15,247 14,515
May 2021 b £0.0003125 31,565,656 9,864 18,545
November 2021 c £0.0003125 19,583,212 6,120 58,877
At 31 March 2022 15,832,302,387 4,947,595 15,933,071
May 2022 d £0.0003125 1,071,428,569 334,821 2,522,964
March 2023 e £0.0003125 106,250,000 33,203 309,171
At 31 March 2023 17,009,980,956 5,315,619 18,765,206
a) On 18 May 2021, a total of 48,790,008 shares were issued to the
Investors at a price of 0.061 pence per share in connection with the exercise
of warrants.
b) On 18 May 2021, a total of 31,565,656 shares were issued to the
Investors at a price of 0.09 pence per share in connection with the exercise
of warrants.
c) On 5 November 2021, a total of 19,583,212 shares were issued pursuant
to the Company's agreement with Bambara Resources SARL at 0.3319p per share.
d) On 10 May 2022, a total of 1,071,428,569 shares were issued via a
placing and subscription at a price of 0.28 pence per share.
e) On 20 March 2023, a total of 106,250,000 shares were issued pursuant
to the exercise of options, warrants and Performance Share Rights from certain
directors, senior management and consultants of the Company. The shares were
issued at between 0.14 and 0.38 pence per share.
13. RESERVES
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value.
Share based payment reserve Cumulative fair value of options and share rights recognised as an expense.
Upon exercise of options or share rights, any proceeds received are credited
to share capital. The share-based payment reserve remains as a separate
component of equity.
Translation reserve Gains/losses arising on re-translating the net assets of overseas operations
into sterling.
Retained earnings Cumulative net gains and losses recognised in the consolidated statement of
financial position.
14. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
The Group's principal financial instruments comprise cash and cash
equivalents, other receivables and trade and other payables.
The main purpose of cash and cash equivalents is to finance the Group's
operations. The Group's other financial assets and liabilities such as other
receivables and trade and other payables, arise directly from its operations.
It has been the Group's policy, throughout the periods presented in the
consolidated financial statements, that no trading in financial instruments
was to be undertaken, and no such instruments were entered in to.
The main risk arising from the Group's financial instruments is market risk.
The Directors consider other risks to be more minor, and these are summarised
below. The Board reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and market factors such
as foreign exchange rates and interest rates will affect the Group's results
or the value of its assets and liabilities.
The objective of market risk management is to manage and control market risk
exposures within acceptable parameters while optimising the return.
Interest rate risk
The Group does not have any borrowings and does not pay interest.
The Group's exposure to the risks of changes in market interest rates relates
primarily to the Group's cash and cash equivalents with a floating interest
rate. These financial assets with variable rates expose the Group to interest
rate risk. All other financial assets and liabilities in the form of
receivables and payables are non-interest bearing.
In regard to its interest rate risk, the Group periodically analyses its
exposure. Within this analysis consideration is given to alternative
investments and the mix of fixed and variable interest rates. The Group does
not engage in any hedging or derivative transactions to manage interest rate
risk.
The Group in the year to 31 March 2023 earned interest of £nil (2022:
£nil). Due to the Group's relatively low level of interest-bearing assets
and the very low interest rates available in the market the Group is not
exposed to any significant interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty could default on its
contractual obligations resulting in financial loss to the Group. The Group's
principal financial assets are cash balances and other receivables.
The Group has adopted a policy of only dealing with what it believes to be
creditworthy counterparties and would consider obtaining sufficient collateral
where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group's exposure to and the credit ratings of its counterparties
are continuously monitored. An allowance for impairment is made where there is
objective evidence that the Group will not be able to collect all amounts due
according to the original terms of the receivables concerned.
Other receivables consist primarily of prepayments and other sundry
receivables and none of the amounts included therein are past due or impaired.
Financial instruments by category - Group
Other financial liabilities at amortised cost
Financial assets at amortised cost
Total
31 March 2023
Assets
Other receivables 11,175 - 11,175
Cash and cash equivalents 544,988 - 544,988
Total 556,163 - 556,163
Liabilities
Trade and other payables - (800,007) (800,007)
Total - (800,007) (800,007)
31 March 2022
Assets
Other receivables 5,769 - 5,769
Cash and cash equivalents 1,045,515 - 1,045,515
Total 1,051,284 - 1,051,284
Liabilities
Trade and other payables - (406,341) (406,341)
Total - (406,341) (406,341)
Foreign exchange risk
Throughout the periods presented in the consolidated financial statements, the
functional currency for the Group's West African subsidiaries has been the CFA
Franc.
The Group incurs certain exploration costs in the CFA Franc, US Dollars,
Australian Dollars and South African Rand and has exposure to foreign exchange
rates prevailing at the dates when Sterling funds are translated into other
currencies. The CFA Franc has a fixed exchange rate to the Euro and the Group
therefore has exposure to movements in the Sterling : Euro exchange rate.
The Group has not hedged against this foreign exchange risk as the Directors
do not consider that the level of exposure poses a significant risk.
The Group continues to keep the matter under review as further exploration and
evaluation work is performed in West Africa and other countries and will
develop currency risk mitigation procedures if the significance of this risk
materially increases.
The Group's consolidated financial statements have a low sensitivity to
changes in exchange due to the low value of assets and liabilities
(principally cash balances) maintained in foreign currencies. Once any
project moves into the development phase a greater proportion of expenditure
is expected to be denominated in foreign currencies which may increase the
foreign exchange risk.
Financial instruments by currency - Group
GBP USD ZAR AUD XOF Total
31 March 2023
Assets
Other receivables 11,175 - - - - 11,175
Cash and cash equivalents
425,704 - - - 119,284 544,988
Total 436,879 - - - 119,284 556,163
Liabilities
Trade and other payables
(122,278) (446,098) (98,621) (65,094) (67,916) (800,007)
GBP USD ZAR AUD XOF Total
31 March 2022
Assets
Other receivables 5,769 - - - - 5,769
Cash and cash equivalents 949,850 - - - 95,665 1,045,515
Total
955,619 - - - 95,665 1,051,284
Liabilities
Trade and other payables (64,671) (304,145) - (36,289) (1,236) (406,341)
Liquidity risk
Liquidity risk is the risk that the entity will not be able to meet its
financial obligations as they fall due.
The objective of managing liquidity risk is to ensure, as far as possible,
that the Group will always have sufficient liquidity to meet its liabilities
when they fall due, under both normal and stressed conditions.
The Group has established policies and processes to manage liquidity risk.
These include:
• Monitoring the maturity profiles of financial
assets and liabilities in order to match inflows and outflows;
• Monitoring liquidity ratios (working capital); and
• Capital management procedures, as defined below.
Capital management
The Group's objective when managing capital is to ensure that adequate funding
and resources are obtained to enable it to develop its projects through to
profitable production, whilst in the meantime safeguarding the Group's ability
to continue as a going concern. This is to enable the Group, once projects
become commercially and technically viable, to provide appropriate returns for
shareholders and benefits for other stakeholders.
The Group has historically relied on equity to finance its growth and
exploration activity, raised through the issue of shares. In the future, the
Board will utilise financing sources, be that debt or equity, that best suits
the Group's working capital requirements and taking into account the
prevailing market conditions.
Fair value
The fair value of the financial assets and financial liabilities of the Group,
at each reporting date, approximates to their carrying amount as disclosed in
the Statement of Financial Position and in the related notes.
The fair values of the financial assets and liabilities are included at the
amounts at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale.
The cash and cash equivalents, other receivables, trade payables and other
current liabilities approximate their carrying value amounts largely due to
the short-term maturities of these instruments.
Disclosure of financial instruments and financial risk management for the
Company has not been performed as they are not significantly different from
the Group's position described above.
15. RELATED PARTY TRANSACTIONS
The Directors represent the key management personnel of the Group and details
of their remuneration are provided in note 3.
Robert Wooldridge, a director, is a member of SP Angel Corporate Finance LLP
("SP Angel") which acts as financial adviser and broker to the Company. During
the year ended 31 March 2023, the Company paid fees to SP Angel of £173,605
(2022: £30,000). The increase compared to prior year reflects SP Angel's
provision of broker services in relation to the £3 million fundraising in May
2022. The balance due to SP Angel at 31 March 2023 was £nil (2022:
£nil).
Matlock Geological Services Pty Ltd ("Matlock") a company wholly owned by
Bernard Aylward, a director, provided consultancy services to the Group during
the year ended 31 March 2023 and received fees of £139,514 (2022:
£97,450). These fees are included within the remuneration figure shown for
Bernard Aylward in note 3. The balance due to Matlock at 31 March 2023 was
£nil (2022: £nil).
Geosmart Consulting Pty Ltd ("Geosmart"), a company wholly owned by Qingtao
Zeng, a director, provided consultancy services to the Group during the year
ended 31 March 2023 and received fees of £24,627 (2022: £27,136). The
balance due to Geosmart at 31 March 2023 was £nil (2022: £14,528).
Zivvo Pty Ltd ("Zivvo"), a company wholly owned by Steven Zaninovich, a
Director, provided consultancy services to the Group. Steven Zaninovich was
appointed as a Director on 27 July 2022 and between that date and 31 March
2023, Zivvo received fees of £140,000. These fees are included within the
remuneration figure shown for Steven Zaninovich in note 3. The balance due
to Zivvo at 31 March 2023 was £nil.
16. CONTROL
No one party is identified as controlling the
Group.
17. CAPITAL COMMITMENTS
The Group had capital commitments to
exploration and evaluation expenditure of £nil (2022: £nil).
18. EVENTS AFTER THE REPORTING PERIOD
On 19 April 2023, the Company announced the sale of the Bougouni West project
for a total cash consideration for Kodal of £2.0 million to Leo Lithium
Ltd. The Bougouni West project comprised two concessions, Mafélé Ouest and
N'kemene Ouest (the "Concessions"). Kodal entered into a binding agreement
with Leo Lithium Ltd to sell the Mafélé Ouest concession and agreed terms
for the sale of the N'kemene Ouest concession, conditional on renewal of the
licence. The Bougouni West project was held as an asset for sale at the year
end.
On 3 August, the Company announced receipt of a conditional prepayment of
US$3.5 million as part of the funding package for the Bougouni Lithium Project
between the Company and Hainan Mining Co. Limited and its wholly owned
UK-incorporated subsidiary Xinmao Investment Co. Limited. The prepayment is
repayable or, at the discretion of Hainan Mining Co. Limited, convertible into
new ordinary shares in the Company should the funding agreement not proceed.
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