REG - Kropz PLC - Final Audited Results
30/09/2024 18:15
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RNS Number : 3330G Kropz PLC 30 September 2024
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
30 September 2024
Kropz Plc
("Kropz" or the "Company")
Final Audited Results for the period ended 31 March 2024
and
Notice of General Meeting
Kropz plc (AIM: KRPZ), an emerging African phosphate producer, is pleased to
announce its Final Audited Results for the 15-month period ended 31 March 2024
and the publication of the Company's Annual Report and Accounts.
The full financial report will be available online immediately on the
Company's website at www.kropz.com (http://www.kropz.com) and will be posted
to shareholders that have elected to receive printed copies today. Printed
copies will, therefore, be available to shareholders who have elected to
receive them during the course of the week.
The Company will hold a General Meeting for the purposes of approving the
Annual Report which will be held at the offices of Memery Crystal at 165 Fleet
Street, London EC4A 2DY on 4 November 20224 at 12:30 p.m.
Highlights
Key developments during the financial period ended 31 March 2024
Corporate
· Kropz plc ("Kropz'' or the "Company'') changed its accounting
reference date from 31 December to 31 March in November 2023. Accordingly,
these financial statements cover the 15 months from 1 January 2023 to 31 March
2024. Comparative amounts are for the year ended 31 December 2022.
· As announced on 16 January 2023, Kropz appointed Louis
Loubser to the board of the Company as Chief Executive Officer ("CEO") and
executive director.
· Michelle Lawrence resigned as Chief Operating Officer of Kropz
and as an executive director of Kropz Elandsfontein with effect from 1 January
2023. Mark Maynard was appointed Chief Operating Officer with effect from 1
January 2023.
· PKF Littlejohn LLP has been appointed as the group auditors for
the financial period to 31 March 2024.
· The third, fourth and final fifth drawdown on the ZAR 550
million Equity Facility with the ARC Fund occurred during the financial
period.
· As announced on 14 March 2023, Kropz Elandsfontein and ARC Fund
agreed to a further ZAR 285 million (approximately US$ 15.5 million) of bridge
loan facility ("Loan 1") to meet immediate cash requirements at Kropz
Elandsfontein. The full loan was drawn down at 31 March 2024.
· As announced on 14 September 2023, Kropz Elandsfontein and ARC
Fund ("ARC") agreed to a further ZAR 250 million (approximately US$ 13.2
million) of bridge loan facility ("Loan 2") to meet immediate cash
requirements at Kropz Elandsfontein. The full loan was drawn down at 31 March
2024.
· As announced on 15 December 2023, Kropz Elandsfontein and ARC
Fund ("ARC") agreed to a ZAR 115 million (approximately US$ 6 million) of
bridge loan facility ("Loan 3") to meet immediate cash requirements at Kropz
Elandsfontein. The full loan was drawn down at 31 March 2024.
· As announced on 27 March 2024, Kropz Elandsfontein and ARC
Fund ("ARC") agreed to a ZAR 170 million (approximately US$ 9 million) of
bridge loan facility (the "Loan 4") to meet immediate cash requirements at
Kropz Elandsfontein. The full loan was drawn down at 31 March 2024.
Elandsfontein
· The focus at the Elandsfontein project continued to be the
production ramp-up of the mine and beneficiation plant.
· The first bulk shipments and trial sales have been recorded with
a total of 343,366 tonnes of phosphate concentrate sales over the 15 months
ending 31 March 2024 from Elandsfontein.
· Sales volumes are below expectations due to the lack of available
stock on hand. Production has been negatively impacted by unprecedented
seasonal rains during the period under review and continued ore variability.
While the Company is still ramping up to steady state production a gross loss
has been recognised in the period due to discounted sales prices as a new
market entrant and operating below full production level resulting in a cost
per tonne higher than would be expected once in full production.
· During the financial period, further delays were experienced in
the commissioning ramp up of operations at Elandsfontein resulting in further
funding shortfalls due to:
· The requirement to re-engineer parts of the fine flotation
circuit as proposed by the vendor;
· The lack of operator expertise and experience;
· Mining rates and associated delivery of ore to the plant being
compromised due to the presence of competent banks of hard material within the
orebody, that were previously unknown. Subsequently, the vendor has provided
design changes which were implemented at the plant, additional operator
training was conducted and new equipment was brought to site to facilitate
mechanical breaking which has been effective to date, but alternative methods
are being considered;
· The Western Cape has experienced unprecedented rain this season
which has led to severely wet mining conditions and has hindered ore delivery
to the plant and concentrate production during the period. This is being
addressed by increased drainage, and
· Production throughput is also being limited by the nature of
slimes material and, the Company is investing in new equipment to seek to
overcome this and aims to increase production throughput.
· To quantify and assess the impact of the hard material on the
future mine plan, an infill drilling programme was undertaken.
· Independent geological consultants were commissioned which
provided an updated JORC (2012) compliant Mineral Resource Estimate ("MRE"):
· The 2023 Reserve estimate was positively affected by the
completed infill and exploration drilling, which significantly improved the
total declared Measured and Indicated Mineral Resources. The Ore Reserves are
stated at 30 September 2023, and account for the pit depletions up until the
end of September 2023;
· Total Measured and Indicated resource tonnage has increased by
approximately 72%, while the total resource tonnage has reduced by 30%;
· Decrease in total phosphate resources at Elandsfontein to 74.23
million tonnes ("Mt") from 106.58 million tonnes in 2022; and
· Total Reserves are estimated at 26.63 Mt at
a P(2)O(5) grade of 9.38% of which 16.56 Mt is Proven at
10.25% P(2)O(5,) this compares to the previous estimate of 17.42 Mt at
9.19% P(2)O(5).
Hinda
· The Company is still in the process of identifying potential
funding solutions for the development of Hinda.
· Engagement is ongoing with local government regarding project
development and progress.
· A reduced-sized project is being assessed to propose a
fit-for-purpose low capex project to prove the concept of producing phosphate
concentrate in the Congo and exporting it.
Key developments post the financial period end
Corporate
· As more fully described in Note 34 Material Subsequent
Events, in September 2024, the Group announced a restructuring of its debt
obligations ("Restructuring") and a fundraising that was conditional on
shareholders' approval . and approval by the South African Reserve Bank
("SARB").. As a result of the Restructuring, Kropz Elandsfontein (Pty Ltd and
Kropz Elandsfontein Land Holdings (Pty) Ltd (the "Elandsfontein Subsidiaries")
will extinguish their debt obligations to ARC. Kropz will have convertible
debt of £88.9 million (including accumulated interest) outstanding with ARC,
being the aggregate of a new Convertible Loan Note ("CLN") and existing equity
facilities (the "Existing Equity Facilities"). Additionally, , Kropz will
complete a fundraising of £8.9 million from ARC and other shareholders before
expenses through the issue of new Ordinary Shares an Issue Price of 1.387
pence per new Ordinary Share in the capital of the Company (the
"Fundraising").. The Issue Price represents a discount of approximately 5 per
cent. to the 30-day volume weighted average share price per existing Ordinary
Share to 23 August 2024. In aggregate, 643,873,018 new Ordinary Shares will be
allotted and issued pursuant to the Fundraising.
· The Company previously announced on 3 April 2024 that BNP had
extended its waiver to allow compliance for the period to 30 June 2024. BNP
have also extended the waiver to 30 September 2024, the latest waiver expiry
date coincides with the final payment date.
· As announced on 11 July 2024, Kropz Elandsfontein and ARC
Fund ("ARC") agreed to a ZAR 140 million (approximately US$ 8 million)
bridge loan facility (the "Loan") to meet immediate cash requirements at Kropz
Elandsfontein. The loan was fully drawn at 22 August 2024.
Elandsfontein
· Elandsfontein achieved production of 132,706 tonnes of
phosphate concentrate and sales of 112,752 tonnes of phosphate
concentrate from April 2024 to August 2024.
· Kropz had started building its customer base over the 15
months ending 31 March 2024. The Company's rock phosphate has been qualified
at customers in South Korea, Australia, New Zealand and Brazil at both single
superphosphate ('SSP") and Phosphoric acid producers.
· Since the start of the 2024 calendar year, Kropz's core
customer base was narrowed down to focus on South Korea, Australia, New
Zealand and Brazil, where the special properties of Kropz Rock Phosphate (Low
Cadmium, - toxic metals, - moisture, - odour and - CaO levels) are
complementary to country rules dictating the final product properties.
· Management expects there to be more than sufficient demand
for Elandsfontein's Rock Phosphate forecast production to the end of 2025. Two
shipments have been planned for qualification trials in both India and Europe
to further diversify the customer base.
Hinda
· The reduced sized project continues to be assessed to propose a
fit-for-purpose low capex project to prove the concept of producing phosphate
concentrate in the Congo and exporting it. The update of the project
feasibility is ongoing. Cominco has engaged with two engineering firms and
local contractors.
· The Company continues to invest in and prioritise ongoing
community projects.
For further information visit www.kropz.com (about%3Ablank) or contact:
Kropz Plc Via Tavistock
Louis Loubser (CEO) +44 (0) 207 920 3150
Grant Thornton UK LLP Nominated Adviser
Samantha Harrison +44 (0) 20 7383 5100
Harrison Clarke
Ciara Donnelly
Hannam & Partners Broker
Andrew Chubb +44 (0) 20 7907 8500
Ernest Bell
Tavistock Financial PR & IR (UK)
Nick Elwes +44 (0) 207 920 3150
Jos Simson kropz@tavistock.co.uk
R&A Strategic Communications PR (South Africa)
Charmane Russell +27 (0) 11 880 3924
Marion Brower charmane@rasc.co.za
marion@rasc.co.za
About Kropz Plc
Kropz is an emerging African phosphate producer and developer with projects in
South Africa and in the Republic of Congo. The vision of the Group is to
become a leading independent phosphate rock producer and to develop into an
integrated, mine-to-market plant nutrient company focusing on sub-Saharan
Africa.
Chairman's Statement
Dear shareholder,
Since early 2023, the management team have achieved substantially increased
production at Elandsfontein, though not yet to planned levels. We have been
pleased to announce our first overseas sales of phosphate rock. But much
higher production levels and an improvement in phosphate grade still are
required to achieve our goals. Thanks to our major shareholder, African
Rainbow Capital ("ARC"), additional funding has been provided to help to meet
these challenges.
On 03 September 2024, we announced a restructuring of the Group's financing
arrangements (the "Restructuring"), including a simplification of the Group's
Financial structure.
The Board thanks all the members of the executive team, management, the teams
on the ground, contractors, auditors and advisers for all their efforts and
assistance during the period. Particular thanks also are due to our major
shareholder for their further commitment and continued support.
Lord Robin William Renwick of Clifton
Non-executive Chairman
30 September 2024
Strategic Report for the period ended 31 March 2024
Market overview
Global phosphate rock demand has shown growth compared to 2022. Demand early
in 2024 was particularly strong in Asia, driven by Chinese import increases
Already rebounding from the 2022 drop. Global demand is expected to exceed its
previous high in 2021 by 2025, as the slower recovery in Brazil and Europe is
offset by large import increases for China.
Elandsfontein rock concentrate is expected to be able to enjoy a slight
premium in pricing due to its low cadmium, low calcium and P(2)O(5) ratio as
well as advantageous freight rates to Asia, Australia, Brazil and New Zealand.
Significant changes in the state of affairs
Share issues
The issued share capital at 31 March 2024 was 923,718,223 ordinary shares
(2022: 923,718,223). There were no new share issues during the period. Since
the period-end, the Company will issue 643,873,018 new Ordinary Shares, to
increase its issued share capital to 1,567,591,241 Ordinary Shares through a
fundraising. The Company will also complete a Restructuring of the debt
obligations of Kropz Elandsfontein such that the Elandsfontein Subsidiaries
will no longer have any debt obligations to ARC.
Projects
Elandsfontein overview
Elandsfontein hosts the second largest phosphate deposit in South Africa,
after Foskor's operation at Phalaborwa. Elandsfontein has been developed
with the capacity to produce circa one million tonnes per annum ("Mtpa") of
phosphate rock concentrate from a shallow mineral resource which is expected
to be sold on both local and international markets. The Company owns 74% of
the issued share capital of Kropz Elandsfontein, the company which owns the
Elandsfontein project.
Elandsfontein's geographic location and proximity to logistics infrastructure
are advantageous and allow for easy access to both local and international
markets.
Prior to the current financial period, in excess of US$ 150 million was spent
at Elandsfontein on project capital expenditure to construct the original and
optimisation phases of the processing plant and infrastructure, initial mining
and capitalised working capital. Following a suspended commissioning process
in 2017, Kropz Elandsfontein conducted further geological drilling and a
metallurgical test programme to define a robust process circuit, to cater for
the increased variability of ore present within the Elandsfontein resource.
As a result of competent banks of hard material encountered in the pit,
further drilling was conducted in the current financial period and
consequently a revised mineral resource estimate was produced as further
discussed below.
Activity for the period ended 31 March 2024
The first trial sales revenues (US$40 million) have been recognised by Kropz
Elandsfontein (Pty) Ltd during the period ended 31 March 2024.
During the financial period, the plant moved from the commissioning phase to
the ongoing production ramp up phase.
As the Group is still ramping up to steady-state production, a gross loss has
been recognised in the period of US$ 7.06 million. The loss was largely due
to Elandsfontein having to discount its sales prices as a new market entrant
and to consider lower grades being achieved as part of the ramp-up process,
coupled with higher production costs per tonne. With Elandsfontein operating
below planned production levels operational cost per tonne remains elevated.
The production ramp-up has been delayed due to the need to re-engineer parts
of the fine flotation circuit based on actual particle size distribution
("PSD") observed in the ore body. Mining and processing have also been
affected by early, unpredicted ore variability which led to implementation of
more complex mining processes and challenged limited operator experience in
these changing conditions. Kropz Elandsfontein is in the process of analysing
the hard bank and other challenging ore variants identified with high
phosphate content, within the ore body to select the appropriate method of
mining and processing to extract phosphate. The mine is in the process of
deploying pilot scale milling and flotation equipment as part of the plan to
address the ore variability and to assist with the redesign of internal plant
components.
During June to August 2023, the Western Cape experienced unprecedented rain
which resulted in severely wet mining conditions during the period under
review; this additionally hindered ore delivery to the plant and concentrate
production. This is being addressed by increased in-pit drainage,
intermediate ore stockpiling and has yielded good results.
Production throughput is also being limited by the nature and excessive amount
of slimes material encountered in the ore deposit. Management believes that
most of the issues related to the high slimes content ore will be addressed
through the recently installed centrifuge unit.
Management is intently focused on addressing the various challenges.
Mining and geology
The significant write-down in declared Ore Reserves from 2018 to 2022 has been
partially reversed in the 2023 Ore Reserve estimate, largely due to the
additional infill drilling which was completed in 2023.
It is expected that the future drilling campaigns will continue to improve the
Mineral Resource estimates from Inferred to Measured or Indicated categories
and will enable improved conversion of the Mineral Resources to Reserves.
While both the declared Reserve tonnes and grade have increased, the grade and
tonnage estimate of the Resource has decreased. This aligns to the improved
confidence in the grade estimation of the deposit and reflects the declining
grade of the deposit over its life.
Based on the current mining conditions, on-site learnings and revised
geological interpretations, it was considered prudent that the mineral
resource be reclassified.
The updated Elandsfontein resource is defined below, on a total (gross) and
net attributable basis.
ELANDSFONTEIN RESOURCE STATEMENT AS OF 30 SEPTEMBER 2023
CLASS TONNES P2O5 SiO2 Al2O3 MgO Fe2O3 (%) CaO CON-TAINED P2O5
(Mt) (%) (%) (%) (%) (%) (Mt)
Measured 19.96 10.25 63.86 1.22 0.15 0.79 14.68 2.05
Indicated 12.78 7.68 64.30 1.30 0.15 0.88 11.30 0.98
Total Measured & Indicated 32.74 9.24 64.03 1.25 0.15 0.83 13.36 3.03
Inferred 41.49 6.30 66.26 1.39 0.15 0.86 9.52 2.61
Total Resources 74.23 7.60 65.28 1.33 0.15 0.85 11.21 5.64
NETT ATTRIBUTABLE (74% TO THE COMPANY)
Measured 14.77 10.25 63.86 1.22 0.15 0.79 14.68 1.51
Indicated 9.45 7.68 64.30 1.30 0.15 0.88 11.30 0.73
Total Measured & Indicated 24.23 9.24 64.03 1.25 0.15 0.83 13.36 2.24
Inferred 30.70 6.30 66.26 1.39 0.15 0.86 9.52 1.93
Total Resources 54.93 7.60 65.28 1.33 0.15 0.85 11.21 4.17
Note: All numbers are reported to two decimals places. Rounding may cause
minor discrepancies to the numbers reported in this table.
The 2023 Mineral Resource Estimate (MRE) for Elandsfontein reflects
significant changes compared to 2022 and was notably affected by the
completed infill and exploration drilling. The total Measured and Indicated
resources have increased by approximately 72%, rising from 19.02 Mt in 2022 to
32.74 Mt in 2023, despite a slight decrease in the P(2)O(5) grade from 9.54%
to 9.24%. Conversely, the total Inferred resources have decreased
substantially from 87.56 Mt in 2022 to 41.49 Mt in 2023, accompanied by a
decline in the P(2)O(5) grade from 7.68% to 6.30%. This reduction in Inferred
resources and the simultaneous increase in Measured and Indicated resources
indicate improved confidence in the resource estimates due to the successful
infill drilling program. These changes highlight the enhanced accuracy in
predicting the spatial distribution and grade of the ore body, leading to a
more reliable reserve estimate and better strategic planning for future mining
operations.
DIFFERENCE 2023 VS 2022 RESOURCE DECLARATION
CLASS TONNES P(2)O(5) SiO(2) Al(2)O(3) MgO Fe(2)O(3) CaO CON-TAINED P(2)O(5)
(Mt) (%) (%) (%) (%) (%) (%) (Mt)
Total Measured and Indicated 2023 32.74 9.24 64.03 1.25 0.15 0.83 13.36 3.03
Total Measured and Indicated 2022 19.02 9.54 70.45 1.15 0.14 0.88 13.64 1.81
Difference Measured and Indicated 13.72 -0.30 -6.42 0.10 0.01 -0.05 -0.28 1.22
Inferred 2023 41.49 6.30 66.26 1.39 0.15 0.86 9.52 2.61
Inferred 2022 87.56 7.68 73.92 1.20 0.16 1.03 11.15 6.72
Difference Inferred -46.07 -1.38 -7.66 0.19 -0.01 -0.17 -1.63 -4.11
Note: All numbers are reported to two decimal places. Rounding may cause minor
discrepancies to the numbers reported in this table.
The 2023 reserve statement for Elandsfontein reflects significant improvements
compared to the 2022 estimates, driven by changes in the resource base and a
better understanding of the modifying factors to be applied.
The combined total of proven and probable reserves has risen from 17.42 Mt at
a P(2)O(5) grade of 9.19% in 2022 to 26.63 Mt at a grade of 9.38% in 2023.
ELANDSFONTEIN RESERVE STATEMENT AS AT 30 SEPTEMBER 2023
CLASSIFICATION TONNES P(2)O(5) CONTAINED P(2)O(5)
(Mt) (%) (Mt)
Proven 16.56 10.25 1.70
Probable 10.07 8.01 0.81
Total Reserve 26.63 9.38 2.50
NETT ATTRIBUTABLE (74% TO THE COMPANY)
Proven 12.26 10.25 1.26
Probable 7.45 8.01 0.60
Total Reserve 19.70 9.38 1.85
There is a 9 Mt difference between the 2022 and 2023 estimates, as shown in
the table below. These changes are largely attributable to the successful
completion of infill and exploration drilling, which significantly improved
the total declared Measured and Indicated Mineral Resources.
DIFFERENCE 2023 VS 2022 RESERVE DECLARATION
RESOURCE CLASSIFICATION TONNES P(2)O(5) CONTAINED
(Mt) (%) P(2)O(5)
(Mt)
Total Proven 2023 16.56 10.25 1.70
Total Proven 2022 7.31 10.71 0.78
Total Probable 2023 10.07 8.01 0.81
Total Probable 2022 10.11 8.09 0.82
Total Proven and Probable 2023 26.63 9.38 2.50
Total Proven and Probable 2022 17.42 9.19 1.60
Difference Proven and Probable 9.21 0.19 0.9
Note: All numbers are reported to two decimal places. Rounding may cause minor
discrepancies to the numbers reported in this table
Plant and processing
Plant stability was difficult to achieve due to the influence of varying
quantities of ultra fine material contained in the ore and poor flotation
conditioning.
Despite power generation issues in South Africa causing intermittent load
shedding, we were able to mitigate the adverse effects on our production by
utilizing emergency backup generators on several occasions. However, it is
important to note that this has led to increased operating costs. Following
May 2024 load shedding has stopped and resulted in increased stability in
power supply. The current outlook is positive and in the near future could
possibly be the end of load shedding.
Safety, health, environment and community
As at 31 March 2024, the Lost Time Injury Frequency Rate ("LTIFR"), per
200,000 man hours, was nil (compared to 0.87 in March 2023), with zero LTIs
incurred for the reporting period. Commitment and focus on the forward
energy model contributed mostly to the achievement of this significant
milestone.
No major environmental incidents were reported during the period and the
external biennial Environmental Management Programme ("EMPr") performance
assessment and Water Use License ("WUL") audits were conducted with no major
non-conformances. The Department of Forestry, Fisheries and the Environment,
issued the permanent Atmospheric Emissions License ("AEL").
The annual closure costing was updated, and financial provision submitted and
accepted by the Department of Mineral Resource and Energy ("DMRW).
Social and Labour plan ("SLP") and Corporate social responsibility ("CSR")
The second generation (2022-2026) Social and Labour Plan ("SLP") was approved
by the DMRE, and Kropz commenced with the execution, aligned with the 2018
South African Mining Charter.
The following strategic focus areas have been identified:
· Education and skills development;
· Social wellbeing;
· Local economic development ("LED"); and
· Urban reconstruction and infrastructure upgrades.
Through collaboration, and inputs from various stakeholders, the execution of
community development projects continued during the period. The Saldanha Bay
Municipality ("SBM") confirmed alignment with their Infrastructure Development
Plan ("IDP") and has endorsement of the various SLP projects.
SLP and LED Projects
Educational support (Education and skills development)
During the period Kropz Elandsfontein continued to support the Hopefield
Primary School teacher's programme. For the 2022-2026 SLP, education will
remain a key focus area.
Hopefield Thusong community centre upgrade (Skills development and
infrastructure upgrades)
The infrastructure upgrade of the community centre included the addition of
two new rooms, a kitchen and bathroom facilities. An E-learning centre has
been established in one of the new rooms. It has been equipped with 12
computer cubicles and laptops have been acquired. The launch of the
E-learning centre took place in July 2024, providing a much-needed facility to
the community of Hopefield.
Human resource development
As per our commitment in the SLP, Kropz awarded two undergraduate and one
postgraduate bursaries.
Ad-Hoc CSR Projects
Through engagements with various stakeholders, Kropz Elandsfontein supported
the following initiatives and organizations:
1) Youth Connect (Skills development program for youths 16-27 years old)
2) Kids in Park and initiative from San Parks
3) Mandela day celebration
4) Eskom Expo for Young Scientists
Stakeholder Engagement
Kropz Elandsfontein continues to engage with the relevant stakeholders on a
regular basis and hosted its first annual open day during April 2024. A
newsletter was also issued to the community and other stakeholders to keep
them updated on the business as well as various initiatives and projects.
Post reporting period events
Transport and logistics
As announced on 23 November 2021, Transnet provided Kropz Elandsfontein with a
draft port access agreement to support the long-term export of Elandsfontein's
phosphate rock through the port of Saldanha. Final contract negotiations are
still underway and the agreement has not yet been signed. An interim
agreement, with tariffs and a forecast of export quantities, is in place while
the agreement is being finalised.
Sales
Elandsfontein achieved production of 132,706 tonnes of phosphate
concentrate and sales of 112,752 tonnes of phosphate concentrate from April
2024 to August 2024. These exports occurred through the port of Saldanha.
Hinda
The Hinda project, currently 100% owned by Cominco S.A., is believed to be one
of the world's largest undeveloped phosphate reserves. Ownership is expected
to be diluted to 90% through the participation of the Republic of Congo
("RoC") government. Hinda consists of a sedimentary hosted phosphate deposit
located approximately 40 km northeast of the city of Pointe-Noire. The
project is fully permitted.
Prior to acquisition by Kropz, more than US$ 40 million was spent on project
development, including drilling, metallurgical test work and feasibility
studies. Since its acquisition by Kropz, a further US$ 10 million has been
spent.
Activity for the period ended 31 March 2024
Kropz has been reviewing the Hinda Updated Feasibility Study ("Updated FS")
and the financial model as prepared by Hatch.
Highlights of the Updated FS
· The phased approach studied will initially deliver 1 Mtpa
phosphate rock concentrate through the existing Port of Pointe-Noire ("Phase
1"), expanding to 2 Mtpa phosphate rock concentrate through a new port
facility at Pointe Indienne ("Phase 2");
· The phased approach is intended to reduce up-front execution
capital requirements by making use of existing port facilities, thus limiting
the first phase to 1 Mtpa phosphate rock concentrate;
· The Hinda Updated FS demonstrates low technical and mining risk
and attractive project economics;
· The mineral resource is unchanged from the 2018 Competent Persons
Report, with 201 million tonnes of measured mineral resource at 11.6% P(2)O(5)
and 381 million tonnes of indicated mineral resource at 9.8% P(2)O(5);
· The Hinda Updated FS delivers a minimum 28-year life of mine
("LOM"), extracting 31 million tonnes of ore in Phase 1 and 214 million tonnes
of ore in Phase 2;
· Estimated Phase 1 capital cost is US$ 355 million, Phase 2
capital cost is US$ 310 million (in real 2021 terms), with a nominal, peak
funding requirement of US$ 392 million, as the first phase cash flows
supports the subsequent Phase 2 expansion capital expenditure;
· Phase 1 operating cost on a free-on-board ("FOB") basis is
US$ 63 per tonne phosphate rock concentrate, and Phase 2 operating cost is
US$ 70 per tonne phosphate rock concentrate, inclusive of mining royalties;
· Using a December 2021 price forecast received from CRU on a FOB
Pointe-Noire basis, the real LOM earnings before interest and taxation margin
is US$ 65 per tonne of phosphate rock concentrate;
· There is an estimated three-year execution schedule; and
· Base case, nominal internal rate of return ("IRR") of 19.2% and
base case, ungeared, nominal net present value ("NPV") (at 11.1% discount
rate) of US$ 397 million.
The Hinda Updated FS included detailed engineering of the open pit mine,
associated mine dewatering and surface water management, the beneficiation
plant and all associated infrastructure, tailings storage facilities and water
storage dam, a gas fired power plant and gas supply pipeline, a 30 kV
overhead line ("OHL") to support construction and early works, mine access
roads, an accommodation camp and port infrastructure. Costs and schedules
associated with procurement, construction management and commissioning are
also included.
Hatch delivered a robust execution strategy, which provides high confidence in
achieving execution success. The beneficiation plant employs standard and
proven technologies, and the design is based on extensive laboratory and
pilot-scale test work completed between 2013 and 2016.
Further Opportunities
A mine plan was run scheduling the immediate commencement of Phase 2
production, i.e. 2 Mtpa of phosphate rock concentrate to be exported through a
new port facility. This opportunity led to a conservative increase in ungeared
NPV (at 11.1% discount rate) to US$ 543 million with an IRR of 21%. The
estimated capital cost for the immediate commencement of Phase 2 is US$ 618
million, based on the study work completed. If this option is studied further,
it will be possible to further optimise both capital and operating costs.
Collaboration with other market players to share in costs of infrastructure
such as port, power and roads are also an opportunity to consider.
Further opportunities also exist to enter into a long-term power purchase
agreement with one of several companies already established in-country. The
capital cost of the gas fired power plant would therefore be removed from the
estimate, although this would be offset by an increase in power costs.
A number of other capital cost optimisation initiatives have been identified
for investigation ahead of detailed design which should further improve
project economics.
Environmental Social Impact Assessment ("ESIA")
The project has an approved environmental compliance certificate issued in
April 2020, valid for 25 years. As a result of the modifications to the
project in the Hinda Updated FS, the ESIA has been updated to comply with
local regulations. The RoC Ministry of Environment has approved the updated
ESIA and the project has a valid environmental compliance certificate.
Mining Investment Agreement ("MIA")
The MIA, which sets out the legal and fiscal framework under which Cominco
S.A. would invest and operate within the RoC was signed by all parties on 10
July 2018 and ratified by the RoC Government on 27 December 2021.
Déclaration d'Utilité Publique ("DUP")
The Ministry of Land Affairs and Public Domain is responsible for managing
land tenure and legal land rights in RoC. The main declaration of public
utility (DUP) process for the Hinda Project has covered an area of 30 km(2).
Public consultations were organized by Cominco and Cabinet Management et
Etudes Environnementales SARL("CM2E"). A land commission has evaluated the
land usage requirements of the Hinda Project and liaises with legal property
owners and traditional land users to determine, based on the legislation, a
baseline for land use to be used for compensation and relocation. Land surveys
were carried out from end of November 2020 until mid-January 2021, followed by
an optimisation session in line with the Updated FS. Cominco has not received
the final reportThe MIA states that expropriation costs and compensations are
to be borne by the government of the RoC and that Cominco can prefinance some
or all the costs.
A letter has been sent in October 2023 to the Minister of Land Affairs and
Public Domain to request the extension of the validity period, followed by a
letter dated 21 August 2024 to the State Minister of mining industries and
geology reminding of this (as requested).
A letter dated 30 August 2024 has been sent to the State Minister of mining
industries and geology to request that the State starts the compensation on an
initial footprint of 123 ha covering the plant site, the base camp, the
construction laydown area and the village of PK Mbili that will be relocated.
Mineral resources
The Hinda resource is defined below, on a total (gross) and net attributable
basis. No additional drilling was conducted in the period to 31 March 2024.
Mineral Resource Statement, as declared by SRK on 31 August 2018
Class Quantity (Mt) Grade (%P(2)O(5)) Grade (%Al(2)O(3)) Grade (%MgO) Grade (%Fe(2)O(3)) Grade (%CaO) Grade (%SiO(2)) Contained P(2)O(5) (Mt)
Gross
Measured 200.5 11.6 3.7 3.8 1.4 21.8 42.7 23.3
Indicated 380.9 9.8 5.0 3.3 1.8 17.6 48.5 37.3
Inferred 94.4 7.5 4.8 3.6 1.7 15.8 52.2 7.1
Total 675.8 10.0 4.6 3.5 1.7 18.6 47.3 67.7
Net Attributable (90% attributable to the Company)
Measured 180.5 11.6 3.7 3.8 1.4 21.8 42.7 20.9
Indicated 342.8 9.8 5.0 3.3 1.8 17.6 48.5 33.6
Inferred 85.0 7.5 4.8 3.6 1.7 15.8 52.2 6.4
Total 608.3 10.0 4.6 3.5 1.7 18.6 47.3 60.9
Safety, health and environment
No environmental or safety incidents were reported during the period.
Sustainability
In line with the MIA and its commitments, Cominco S.A. continued its
interactions with the local communities associated with the Hinda project.
On-going projects include the usage of project site manpower, the funding of
teachers at local schools, educational support for vulnerable children,
specific projects for woman, water boreholes and food security projects
through the establishment of orchards, vegetable gardens and small-scale
agriculture projects.
Post reporting period events
Prior to commencing Phase 1, a reduced sized test project is currently being
assessed to propose a fit-for-purpose low capex project to prove the concept
of producing phosphate concentrate in the Congo and exporting it. The project
will focus on the mining and processing the section of the resource which does
not require flotation.
Strategy
The Company's long-term strategy is to build a portfolio of high-quality
phosphate mines and to be a major player within the sub-Saharan African plant
nutrient sector. Its priority is to bring Elandsfontein to steady-state
production and profitability whereafter the development of Hinda will be
prioritised.
Business model
The Company's business model is to source high-quality resources and to bring
them into production to contribute to the Company's strategic competitiveness
and profitability.
Once production has commenced at Elandsfontein and Hinda, the Company may
consider acquiring additional assets and/or adding downstream beneficiation
opportunities, where the Board believes shareholder value could be increased.
Objectives and outlook for the year ahead
Objectives
Kropz
Kropz's overriding objective is to deliver strong shareholder and stakeholder
returns over the long term.
Elandsfontein
The primary focus of the year ahead will be to further increase the ramp-up of
operations to achieve steady state while optimising process recoveries and
mining costs.
Hinda
Further to the completion of the Hinda Updated FS in December 2021, management
is working to secure funding to commence with project development in
accordance with the MIA.
Outlook
Kropz's Elandsfontein project delivered first production in early 2022 and the
first trial sales in January 2023. The Company is confident in the inherent
value contained within each of its core assets. Global phosphate rock demand
and pricing is robust, and the work being carried out will provide Kropz with
direction for the next phase of its development, subject to short-term
challenges being managed. The year ahead should provide the Company with a
solid foundation for its future development and moving towards steady state
operations.
Financial review for the period ended 31 March 2024
Summary of key financial indicators for the period:
· Impairment reversal in the value of mine property, plant and
equipment and inventory at Kropz Elandsfontein of US$ 19 million;
· Cash and cash equivalents of US$ 1 million (2022: US$ 2 million);
· Various debt raises as set out in "Highlights" on page 1;
· Trade and other payables of US$ 10 million (2022: US$ 7 million);
and
· Property, plant, equipment and development and exploration
assets, after the impairment reversal above, of US$ 129 million (2022:
US$ 111 million).
Key performance indicators
The Company is a mining and development entity whose assets comprise a mine
and plant in the ramp-up phase in South Africa and an exploration asset in the
RoC. As the Company entered the new financial period it started with the first
trial sales being recorded from the trial production phase. The key
performance indicators for the Company will be achieving steady state
production and the advancement of the Hinda project.
Principal risks and uncertainties
The Company and its subsidiaries ("the Group") are subject to various risks
relating to political, economic, legal, social, industry, business and
financial conditions. The following risk factors, which are not presented in
any order of priority, do not purport to be a complete list or explanation of
all the risks involved in the Company or the Group's activities.
Access to financing
The ramp up at Elandsfontein, the capital expenditure plans of the Group and
the further development and exploration of mineral properties in which the
Group holds interests or which the Group may acquire, may depend upon the
Group's ability to obtain additional financing through joint ventures, debt
financing, equity financing or other means. The Group is in process of
Restructuring and Fundraising in September 2024, as described in Note 34.
However, no assurance can be given that the Group will be successful in
obtaining any additional financing that may be required as and when needed on
acceptable terms or at all, which could prevent the Group from further
development and exploration or additional acquisitions.
Failure to obtain additional financing on a commercial and timely basis may
cause the Group to postpone its capital expenditure plans, forfeit its rights
in properties or reduce or terminate operations. Reduced liquidity or
difficulty in obtaining future financing could have a material adverse effect
on the Group's business, financial condition, results of operations and
prospects.
The Group's Projects may require greater investment than currently expected or
suffer delays or interruptions, which could cause cost overruns. Any such
delay, interruption or cost overruns in implementing the Group's planned
capital investments could result in the Group failing to complete the Projects
and a reduction in future production volumes, which could have a material
adverse effect on the Group's business, financial condition, results of
operations and prospects. In addition, the Projects may not prove to be
commercially viable upon completion.
The Group's ability to obtain future financing will depend in part on its
ability to achieve positive cash flows from its current operations within time
and budget, an extended commissioning ramp-up period will have an adverse
impact on the business and financial performance of the Group. Refer to note
2a to the Group financial statements which explains that the Group is reliant
on revenue from production ramp up and whilst have almost successfully
completed a Restructuring and Fundraising it may still require additional
financing, and a material uncertainty exists may that cast significant doubt
on the Group's ability as a going concern.
Dependence on maintenance of good relationship with regulatory and
governmental departments
The Group relies on the maintenance of good relationships with regulatory and
governmental departments in South Africa and the RoC. Failure to maintain
these relationships may adversely impact the Group's performance. Continual
engagements with regulatory and governmental departments are maintained and
compliancy is upheld and monitored by the group.
Ramp-up of Elandsfontein
The Elandsfontein project may require further funding to achieve steady state
operations. Any delays in securing of additional funding will have an adverse
impact on the business and financial performance of the operation. There can
be no guarantee that implementation of the recently completed modifications
identified by the Company and its technical consultants will result in a
successful long-term operation of the mine. Failure to achieve ramp-up of the
Elandsfontein project, or a significant delay in the completion of ramp-up,
could result in a material adverse impact on the business, and the financial
performance and position of the Group. Management is intently focused on
addressing any challenges and adjustments that might be required.
Access to infrastructure
Mining, processing, development and exploration activities depend, to a
significant degree, on adequate infrastructure. In the course of developing
Hinda, the Group may need to construct and support the construction of
infrastructure, which includes permanent water supplies, tailings storage
facilities, power, logistics services and access roads.
Reliable roads, power sources and water supply are important determinants,
which affect capital and operating costs. Unusual or infrequent weather
phenomena, sabotage, government or other interference in the maintenance or
provision of such infrastructure could materially adversely affect the Group's
operations, financial condition and results of operations. Any such issues
arising in respect of the supporting infrastructure or on the Group's sites
could materially adversely affect the Group's results of operations or
financial condition.
Furthermore, any failure or unavailability of the Group's operational
infrastructure (for example, through equipment failure, disruption to its
transportation arrangements or reduced port capacity) could materially
adversely affect the production output from its mines or development of a mine
or project.
Limited or reduced port capacity at the Port of Saldanha, as well as the
associated cost increase for procuring alternative logistics could have an
adverse impact on the business and financial performance of the Group. There
are alternatives to the Port of Saldanha that have been identified, however at
increased operating cost.
Operational targets
The financial performance of the Group is subject to its ability to achieve a
target concentrate specification and production efficiency at its
Elandsfontein project, according to its pre-determined budget. Failure to do
this may result in failure to achieve operational targets with a consequent
material adverse impact on the business, operations and financial performance
of the Group.
Excessive overburden stripping, non-economical mining of ore, ore losses and
the dilution of feed grade to the processing facility could all have an
adverse impact on the processing operations. Furthermore, high variability in
the daily feed grades could also have an adverse impact on operations and
financial performance of the Group.
Any further unscheduled interruptions in the Group's operations due to
mechanical, electrical or other failures or industrial relations related
issues or problems or issues with the supply of goods or services could have a
serious impact on the financial performance of those operations. Furthermore,
any interruption or disruption in the supply chain of key production chemicals
sourced from international suppliers could materially adversely affect the
production output from the mine.
New entrant risk
Kropz Elandsfontein is a new entrant in the global phosphate rock market,
selling its products into a globally competitive and established market.
There can be no guarantee that the sales estimates set by Kropz Elandsfontein
will be achieved until a successful track record has been achieved. Not
achieving appropriate selling prices for its commercial grade products, would
have a material adverse effect on the business, operations and financial
performance of the Group.
Mining and mineral processing risks
The business of mining and mineral processing involves a number of risks and
hazards, including industrial accidents, labour disputes, community conflicts,
activist campaigns, unusual or unexpected geological conditions, geotechnical
risks, ore variability, equipment failure, changes in the regulatory
environment, environmental hazards, ground water and weather and other natural
phenomena such as earthquakes and floods. The Group may experience material
mine or plant shutdowns or periods of reduced production as a result of any of
the above factors. Such occurrences could result in material damage to, or the
destruction of, mineral properties or production facilities, human exposure to
pollution, personal injury or death, environmental and natural resource
damage, delays in mining, monetary losses and possible legal liability, and
may result in actual production differing, potentially materially, from
estimates of production, whether expressly or by implication. There can be no
assurance that the realisation of operating risks and the costs associated
with them will not materially adversely affect the results of operations or
financial conditions of the Group.
Geotechnical, ore variability, geological and hydrogeological risks could have
a material adverse impact on the safety, business and financial performance of
the Group's operation.
Failure to successfully dewater the mining area and maintain water levels in
the mining area at the Elandsfontein project could have a material adverse
impact on the operational performance, financial performance and financial
condition of the Group. This is being addressed by increased drainage and has
yielded good results.
Enforcement of contractual rights in the RoC
The legal system in the RoC is based on the French civil law system (the Civil
Code of the former French Equatorial Africa), which has enacted the Uniform
Act to harmonise business law in Africa in order to guarantee legal and
judicial security for investors and companies in its member states, as well as
a Uniform Act on Arbitration Law, allowing recourse to a standard arbitration
mechanism for the settlement of contractual disputes arising from civil or
commercial contracts concluded in the RoC as an alternative to RoC courts for
legal proceedings relating to contracts.
Under Congolese law, parties may enter into private contracts in the language
of their choice, however, a French translation is always required for them to
be used before any constituted authority in the RoC. In addition, enforcement
of contracts concluded outside of Congo before an RoC court, administrations
and other constituted authorities, requires their prior registration with the
Office for Registration and Stamp Duties and, in the absence of a specific
exemption, payment of the applicable registration fees and stamp duties.
Certain contracts concluded in the RoC (such as leases) must also be presented
for registration with the Office for Registration and Stamp Duties, due to
their nature and listing in the General Tax Code, Volume 2. Moreover, certain
contracts (such as commercial leases) must also be notarised or authenticated
by a notary if concluded as private deeds, prior being registered as described
above.
If any of these processes are not strictly followed, the RoC courts and
administrations may disregard the concerned contract and, as regards the
requirement to register certain contracts with the Office for Registration and
Stamp Duties, the tax administration may apply fines of 100% of the amount of
registration fees due. Further, the tax administration tends to disregard any
payment convention exemption for the purpose of applying these fines.
If any of the Group's contracts are deemed unenforceable, this could have a
material adverse effect on the operations and financial results of the Group.
Commodity pricing
The future profitability and viability of the Group's operations will be
dependent upon the market price of phosphate rock to be sold by the Group.
Mineral prices fluctuate widely and are affected by numerous factors beyond
the control of the Company. The level of interest rates, the rate of
inflation, the world supply of mineral commodities, the global level of demand
from consumers and the stability of exchange rates can all cause significant
fluctuations in prices. Such external economic factors are in turn influenced
by changes in international investment patterns, monetary systems and
political developments. Commodity prices have fluctuated widely in recent
years, and future price declines could cause commercial production to be
impracticable, thereby having a material adverse effect on the Company's
business, financial condition and results of operations. A significant or
sustained downturn in commodity prices would adversely affect the Group's
available cash and liquidity and could have a material adverse effect on the
business, results of operations and financial condition of the Group in the
longer term.
In addition to adversely affecting the Group's reserve estimates and its
financial condition, declining commodity prices can impact operations by
requiring a reassessment of the feasibility of a particular project. Such a
reassessment may be the result of a management decision or may be required
under financing arrangements related to a particular project. Even if the
Elandsfontein project and the Hinda project are ultimately determined to be
economically viable, the need to conduct such a reassessment may cause
substantial delays or may interrupt operations until the reassessment can be
completed.
Environmental regulation and environmental compliance
Mining operations have inherent risks and liabilities associated with damage
to the environment and the disposal of waste products occurring as a result of
mineral exploration and production. Environmental and safety legislation and
regulation (e.g. in relation to reclamation, disposal of waste products,
pollution and protection of the environment, protection of wildlife and
otherwise relating to environmental protection) is frequently changing and is
generally becoming more restrictive with a heightened degree of responsibility
for companies and their directors and employees and more stringent enforcement
of existing laws and regulations. Future changes could impose significant
costs and burdens on the Group (the extent of which cannot be predicted) both
in terms of compliance and potential penalties, liabilities and remediation.
Breach of any environmental obligations could result in penalties and civil
liabilities and/or suspension of operations, any of which could adversely
affect the Group. Further, approval may be required for any material plant
modifications or additional land clearing and for ground disturbing
activities. Delays in obtaining such approvals could result in the delay to
anticipated exploration programmes or mining activities.
There may also be unforeseen environmental liabilities resulting from mining
activities, which may be costly to remedy. If the Group is unable to fully
remedy an environmental problem, it may be required to stop or suspend
operations or enter into interim compliance measures pending completion of the
required remedy. The potential exposure may be significant and could have a
material adverse effect on the Group. The Group has not purchased insurance
for environmental risks (including potential liability for pollution or other
hazards as a result of the disposal of waste products occurring from
exploration and production) as it is not generally available at a price which
the Group regards as reasonable.
In South Africa, the Regulations Pertaining to the Financial Provision for
Prospecting, Exploration, Mining or Production Operations 2015 (R1147 of 20
Nov 2015) provides that the holder of a mining right must provide for
rehabilitation and remediation costs, with particular reference to when the
mine is decommissioned at the end of mining, or production operations. It is
expected that mining operations at Elandsfontein will cease in year 2032. The
under-provision of such a rehabilitation liability could result in future
liabilities being payable, which could have a material adverse impact on the
financial condition of the Group.
Government regulation and political risk
The Group's operating activities are subject to laws and regulations governing
expropriation of property, health and worker safety, employment standards,
waste disposal, protection of the environment, mine development, land and
water use, prospecting, mineral production, exports, taxes, labour standards,
occupational health standards, toxic wastes, the protection of endangered and
protected species and other matters. While the Directors believe that the
Group is in compliance with all material current laws and regulations
affecting its activities, future changes in applicable laws, regulations,
agreements or changes in their enforcement or regulatory interpretation could
result in changes in legal requirements or in the terms of existing permits
and agreements applicable to the Group or its properties, which could have a
material adverse impact on the Group's current operations or planned
development projects. Where required, obtaining necessary permits and licences
can be a complex, time-consuming process and the Group cannot assure whether
any necessary permits will be obtainable on acceptable terms, in a timely
manner or at all.
The costs and delays associated with obtaining necessary permits and complying
with these permits and applicable laws and regulations could stop or
materially delay or restrict the Group from proceeding with any future
exploration or development of its properties. Any failure to comply with
applicable laws and regulations or permits, even if inadvertent, could result
in interruption or closure of exploration, development or mining operations or
material fines, penalties or other liabilities.
The Group has operations located in South Africa and the RoC and the Group's
activities may be affected in varying degrees by political stability and
governmental regulations. Any changes in regulations or shifts in political
attitudes in South Africa and the RoC are beyond the control of the Group and
may adversely affect its operations.
Adverse sovereign action
The Group is exposed to the risk of adverse sovereign action by the
governments of South Africa and RoC. The mining industry is important to the
economies of these countries and thus can be expected to be the focus of
continuing attention and debate. In similar circumstances in other developing
countries, mining companies have faced the risks of expropriation and/or
renationalisation, breach or abrogation of project agreements, application to
such companies of laws and regulations from which they were intended to be
exempt, denials of required permits and approvals, increases in royalty rates
and taxes that were intended to be stable, application of exchange or capital
controls, and other risks.
Environmental, social and governance ("ESG") and climate change
As the focus on ESG increases, there are increasing environmental, social and
governance risks that may affect the Group's ability to raise capital; obtain
permits; work with communities, regulators and Non-Governmental Organisations
("NGOs") and/or protect its assets from impairments.
At Kropz, we acknowledge that our business activities affect the society and
environment around us, and that we have an opportunity and an implicit duty to
ensure this impact is positive. We also believe that efficient and sustainable
operations are a necessity for long-term value creation.
We are committed to taking responsibility when conducting our business by
integrating ESG factors into our investment decisions and operational
processes. Given the stage of development of Kropz, social initiatives have
been limited to those outlined above at Elandsfontein.
Climate change could potentially affect the demand for fertilisers by
impacting global agricultural activity. This in turn could affect the demand
for fertiliser feed materials and could cause events such as prolonged
droughts that could reduce the availability of water at the different project
sites.
As the Kropz operations develop, more initiatives will be undertaken on the
ESG front and progress on these will be reported on in the next annual report.
Governance
The Board considers sound governance as a critical component of the Group's
success and the highest priority. The Company has an effective and engaged
Board, with a strong non-executive presence from diverse backgrounds, and
well-functioning governance committees. Through the Group's compensation
policies and variable components of employee remuneration, the Remuneration
and Nomination Committee ("Remuneration Committee") of the Board seeks to
ensure that the Company's values are reinforced in employee behaviour and that
effective risk management is promoted.
More information on our corporate governance can be found in the Corporate
Governance Report on pages 43 to 55.
Directors' section 172 statement
The following disclosure describes how the Directors have had regard to the
matters set out in section 172 and forms the Directors' statement required
under section 414CZA of The Companies Act 2006. This reporting requirement is
made in accordance with the corporate governance requirements identified in
The Companies (Miscellaneous Reporting) Regulations 2018, which apply to
company reporting on financial years starting on or after 1 January 2019.
The matters set out in section 172(1) (a) to (f) are that a Director must act
in the way they consider, in good faith, would be most likely to promote the
success of the Company for the benefit of its members as a whole, and in doing
so have regard (amongst other matters) to:
a. the likely consequences of any decision in the long term;
b. the interests of the Company's employees;
c. the need to foster the Company's business relationships with suppliers,
customers and others;
d. the impact of the Company's operations on the community and the
environment;
e. the desirability of the Company maintaining a reputation for high
standards of business conduct; and
f. the need to act fairly between members of the Company.
The analysis is divided into two sections, the first to address stakeholder
engagement, which provides information on stakeholders, issues and methods of
engagement. The second section addresses principal decisions made by the Board
and focuses on how the regard for stakeholders influenced decision-making.
Section 1: Stakeholder mapping and engagement activities within the reporting
period
The Company continuously interacts with a variety of stakeholders important to
its success, such as equity investors, joint venture partners, debt providers,
employees, government bodies, local community and vendor partners. The Company
works within the limitations of what can be disclosed to the various
stakeholders with regards to maintaining confidentiality of market and/or
commercially sensitive information.
Who are the key stakeholder groups Why is it important to engage this group of stakeholders How did Kropz engage with the stakeholder group What resulted from the engagement
Equity investors and equity partners Access to capital is of vital importance to the long-term success of the The key mechanisms of engagement included: The Company engaged with investors on topics of strategy, governance, project
business to enable the development of Hinda. Equity partner involvement is
updates and performance.
vital to the success of the development of these projects, without which the
Company cannot create value for its shareholders by producing phosphate rock
All substantial shareholders that own more than 3% of the Company's shares are concentrate and therefore a return on the investment. Substantial shareholders
listed on page 37 of the Directors' Report.
Please see "Dialogue with shareholders" section of the Directors' report on
· Both ARC and Kropz International have appointed Directors to the Board of page 37.
Kropz; and
Through selected engagement activities, the Company strives to obtain investor
The Company owns 74% of Kropz Elandsfontein, the owner of the Elandsfontein buy-in into its strategic objectives detailed on page 13 and the execution · The other existing substantial shareholders have regular meetings and
project in South Africa. 26% is owned by ARC. thereof. interactions with the Chairman and/or CEO. The CEO presented at a number of investor roadshows, conferences and one on
one meetings.
The Company owns 70% of Elandsfontein Land Holdings (Pty) Ltd ("ELH"), the The Company seeks to promote an investor base that is interested in a Investment and equity partners
owner of the Elandsfontein mining property in South Africa. 30% is owned by long-term holding in the Company and will support the Company in achieving its
In terms of the ZAR 927 Million Equity Facilities, ARC will potentially be
ARC. strategic objectives. · ARC have representatives on the Kropz Elandsfontein and ELH Boards of able to acquire a total further 8.3% interest in the Company, eventually
Directors in terms of the respective shareholder's agreements; and taking its 83.2% interest at March 2024, to 91.5%.
· Regular Board meetings are held.
Kropz Elandsfontein may require further funding to complete the ramp up at During the course of the period ended 31 March 2024, the percentage of shares
Elandsfontein. Cominco Resources requires further funding to develop Hinda. held in public hands remained the same and the overall daily volume of shares
traded decreased.
Prospective and existing investors At the Company's AGM held on 30 June 2023 all resolutions were duly passed.
As such, existing equity investors and potential investment partners are · The AGM and Annual and Interim Reports;
important stakeholders.
· Investor roadshows and presentations;
· One on one investor meetings with the Chairman and/or CEO; At the Company's general meeting held on 1 September 2023 all resolutions were
duly passed with 100% of the votes cast in favour of resolutions proposed.
· Access to the Company's broker and advisers;
· Regular news and project updates; and
· Social media accounts e.g. X @Kropzplc;
· Site visits for potential cornerstone investors.
Funding providers Access to funding is of vital importance to the long-term success of the · One on one meetings with the CEO and/or COO; In May 2020, the amended facility agreement was signed between Kropz
business to be able to complete the Elandsfontein project. The debt facility
Elandsfontein and BNP, thereby moving the first principal debt repayment to 31
Kropz Elandsfontein has a US$30 million, fully utilised, debt facility with was utilised in the construction of Elandsfontein. · Regular reporting on project progress; December 2022. All payments have been made with the last repayment of
BNP that commenced in September 2016.
$3,750,000 due on 30 September 2024
· Ad hoc discussions with management, as required; and
Various contractual conditions of the debt finance require regular updates on · Tripartite discussions between Kropz Elandsfontein, ARC and management
ongoing progress. to ensure there are no compliance matters outstanding in relation to the
facility.
Ongoing support from potential new debt providers is required to achieve the
construction of Hinda.
Employees The majority of its employees going forward will be based in South Africa and General employees Employees
the Directors consider workforce issues holistically for the Group as a whole.
The Company has 15 South African, 2 UK and 5 RoC employees, including its
· The Company maintains an open line of communication between its The Board met with management to discuss the long-term remuneration strategy.
Directors. employees, senior management and the Board.
The Company's long-term success is predicated on the commitment of its • The CEO reports regularly to the Board;
workforce to its vision and the demonstration of its values on a daily basis.
Advisors were appointed to do the independent party review to examine
Two of the Directors are UK residents, 1 Monegasque, 1 American and 2 are
· Key members of the executive team are invited to some of the audit and non-executive Director and executive team remuneration in 2018 at the time of
South African resident Directors. risk committee meetings; the AIM IPO.
The Board have identified that reliance on key personnel is a known risk. · There is a formalised employee induction into the Company's corporate
governance policies and procedures; and
The CEO during the period under review was South Africa-based.
Board reporting has been optimised to include sections on engagement with
· There is an HR function in the UK. employees.
South African employees South African and Congo employees
· There is an HR function in South Africa; The team were trained in aspects of corporate policies and procedures to
engender positive corporate culture aligned with the Company code of conduct.
· Senior management regularly visit the operations in South Africa and
engage with its employees through one on one and staff meetings, employee
events, project updates, etc; and
Meetings were held with staff to provide project updates and ongoing business
· Staff safety committees continue to operate. objectives.
Congo employees
· Senior management regularly visit the operations in RoC and engage with
its employees through one on one and staff meetings, employee events, project
updates, etc.
Governmental bodies Regular engagement with organs of state at national, regional and local levels The Company provides general corporate presentations regarding the Meetings have been held with various representatives of the national, regional
is required to keep stakeholders informed and supportive of project Elandsfontein project development as part of ongoing stakeholder engagement and local government bodies, to discuss ongoing compliance and other
The Company is impacted by national, regional and local governmental developments. with the South African government, Western Cape provincial government and regulatory matters relating to mining.
organisations in South Africa and the RoC. local municipal government. The Company maintained its good relations with the
respective government bodies and frequently communicated progress.
The Company has received its South African requisite environmental and land
use permits.
The Company engages with the relevant departments of the RoC government in
order to progress the development of Hinda.
In addition, the Company has received the required permits to develop Hinda,
subject to securing funding for these activities.
Community The Company engages with the local community to obtain acceptance for future · The Company has community liaison officers in South Africa and RoC; The Company has ongoing engagements with the local community as part of its
development plans.
sustainability initiatives.
The local communities adjacent to Elandsfontein in South Africa and Hinda in
· The Company has identified all key stakeholders within the local
the RoC. community in the reporting period;
Community engagement will inform better understanding and decision making. · Elandsfontein management has open dialogue with the local government Stakeholder identification has enabled the Company to ensure that
and community leaders regarding the project development; representatives of all stakeholder groups may participate in the community
engagement programme.
· Similarly, Hinda management are actively engaging with local government
The local community in Hopefield and the greater Saldanha Bay municipal area and communities directly impacted by the Hinda project; and
provides employees for Elandsfontein and its contractors for operations.
· The Company has existing Corporate Social Responsibility policies and
Similarly, the communities surrounding Hinda will provide employees to the management structure at corporate level. The Company will expand on these
project and contractors during construction and operation. policies and structures at a local project level as the Company moves into
production.
The Company will have a social and economic impact on the local communities.
The Company is committed to ensuring sustainable growth, minimising adverse
impacts. The Company will engage these stakeholders as is appropriate.
Suppliers Kropz's contractors and suppliers are fundamental · Management continues to work closely with appointed contractors, See page 10 of the strategic report for an update on the potential transport
consultants and suppliers to manage and optimise deliverables; and and logistics uncertainties facing the Group.
During the Elandsfontein operations phase, the Company has be using key to ensuring that the Company can meet the ramp-up and steady state operating
suppliers under commercial contracts for the operations of mine, plant, road objectives. · One on one meetings between management and suppliers;
and port logistic operators and laboratory service providers, all of whom are
reputable and established service providers. · Vendor site visits and facility audits to ensure supplier is able to meet Smaller local vendors were engaged at a broader level to better align with
requirements; and company objectives.
Using quality suppliers ensures that as a
· Contact with procurement department and accounts payable.
The Company also relies on a number of supply and maintenance contracts to business, the high
ensure ongoing operations.
performance targets can be met.
At a community level, the Company has also partnered with a number of SMME
companies.
Section 2: Principal decisions by the Board
Principal decisions are defined as both those that have long-term strategic
impact and are material to the Group, but also those that are significant to
key stakeholder groups. In making the following principal decisions, the Board
considered the outcome from its stakeholder engagement, the need to maintain a
reputation for high standards of business conduct and the need to act fairly
between the members of the Company.
During the financial period ending 31 March 2024
Convertible loan facility for ZAR 550 million from ARC, entered into on 14
November 2022
A third drawdown of ZAR 60 million (approximately US$ 3.5 million) of the ZAR
550 Million Equity Facility was made on 25 January 2023, a fourth drawdown of
ZAR 40 million (approximately US$ 2.2 million) on 27 February 2023 and the
final draw down of ZAR 7.5 million was made 8 December 2023.
Bridge loan facilities of ZAR 285 million entered into on 14 March 2023
As announced on 14 March 2023, Kropz Elandsfontein and ARC Fund agreed to a
further ZAR 285 million (approximately US$ 15.5 million) of bridge loan
facility ("Loan 1") to meet immediate cash requirements at Kropz
Elandsfontein.
Loan 1 is unsecured, repayable on demand, with no fixed repayment terms and is
repayable by Kropz Elandsfontein on no less than two business days' notice.
Interest is payable on Loan 1 at the South African prime overdraft interest
rate plus 6%, nominal per annum and compounded monthly.
The first draw down on the Loan for an amount of ZAR 25 million was made
on 14 March 2023, a second draw down on the Loan for an amount of ZAR 90
million was made on 28 March 2023, a third drawdown was made for an amount
of ZAR 30 million on 25 April 2023, a fourth draw down on the Loan for an
amount of ZAR 80 million was made on 23 June 2023 and the final draw down
of ZAR 60 million was made 18 August 2023.
Bridge loan facilities of ZAR 250 million entered into on 14 September 2023
As announced on 14 September 2023, Kropz Elandsfontein and ARC Fund ("ARC")
agreed to a further ZAR 250 million (approximately US$ 13.2 million) of
bridge loan facility ("Loan 2") to meet immediate cash requirements at Kropz
Elandsfontein. The loan is unsecured, repayable on demand, with no fixed
repayment terms and is repayable by Kropz Elandsfontein on no less than two
business days' notice. Interest is payable at the South African prime
overdraft interest rate plus 6%, nominal per annum and compounded monthly. In
the event that any amounts are outstanding under the loan, together with
interest thereon, are not repaid within 6 months from the first utilisation
date, the interest rate will be increased by an additional 2%.
The first draw down of the Loan for an amount of ZAR 155 million was made on
18 September 2023, a second draw down on the Loan for an amount of ZAR 75
million was made on 20 October 2023 and the final draw down of ZAR 20
million was made on 8 December 2023.
Bridge loan facilities of ZAR 115 million entered into on 15 December 2023
As announced on 15 December 2023, Kropz Elandsfontein and ARC Fund ("ARC")
agreed to a ZAR 115 million (approximately US$ 6 million) of bridge loan
facility ("Loan 3") to meet immediate cash requirements at Kropz
Elandsfontein.
The Loan is unsecured. Interest is payable on the Loan at the South African
prime overdraft interest rate plus 6%, nominal per annum and compounded
monthly. In the event that any amounts outstanding under the Loan, together
with interest thereon, is not repaid within 6 months from the first
utilisation date, the interest rate will be increased by an additional 2%.
The first draw down of the Loan for an amount of ZAR 62.5 million was made
on 15 December 2023 and the final draw down on the Loan for an amount
of ZAR 52.5 million was made on 17 January 2024.
Bridge loan facilities of ZAR 170 million entered into on 27 March 2024
As announced on 27 March 2024, Kropz Elandsfontein and ARC Fund ("ARC")
agreed to a ZAR 170 million (approximately US$ 9 million) of bridge loan
facility (the "Loan 4") to meet immediate cash requirements at Kropz
Elandsfontein.
The Loan is unsecured. Interest is payable on the Loan at the South African
prime overdraft interest rate plus 6%, nominal per annum and compounded
monthly. In the event that any amounts outstanding under the Loan, together
with interest thereon, is not repaid within 6 months from the first
utilisation date, the interest rate will be increased by an additional 2%.
The first draw down of the Loan for an amount of ZAR 60 million was made on
28 March 2024, a second draw down on the Loan for an amount of ZAR 73
million was made on 2 April 2024 and the final draw down of ZAR 37
million was made 22 April 2024.
Post 31 March 2024
As announced on 11 July 2024, Kropz Elandsfontein and ARC Fund ("ARC")
agreed to a ZAR 140 million (approximately US$ 8 million) bridge loan
facility (the "Loan") to meet immediate cash requirements at Kropz
Elandsfontein.
The first draw down on the Loan for an amount of ZAR 80 million was made on
4 July 2024, a second and final draw down on the Loan for an amount
of ZAR 60 million was made on 22 August 2024.
As more fully described in Note 34 Material Subsequent Events, the Group is in
the process of completing a Fundraising and Restructuring. As a result of the
Restructuring, the Elandsfontein Subsidiaries will extinguish their debt
obligations to ARC. Kropz will have convertible debt of £88.9 million
(including accumulated interest) outstanding with ARC, being the aggregate of
the new CLN and the Existing Equity Facilities. Additionally, Kropz is in the
process of completing a Fundraising of £8.9 million from ARC and other
shareholders before expenses through the issue of new Ordinary shares an Issue
Price of 1.387 pence per new Ordinary Share in the capital of the Company. The
Issue Price represents a discount of approximately 5 per cent. to the 30-day
volume weighted average share price per existing Ordinary Share to 23 August
2024. In aggregate, 643,873,018 new Ordinary Shares will be allotted and
issued pursuant to the Fundraising.
This Strategic Report was approved by the Board of Directors.
Louis Loubser
Chief Executive Officer
30 September 2024
Consolidated Statement of Financial Position 31 March 2024 31 December
As at 31 March 2024 US$'000 2022
Notes US$'000
Non-current assets 85,411 68,965
Property, plant, equipment and mine development 4
Exploration assets 5 43,172 42,415
Other financial assets 7 1,527 860
Inventories 8 955 -
131,065 112,240
Current assets
Inventories 8 5,775 3,273
Trade and other receivables 9 6,913 1,857
Cash and cash equivalents 10 968 2,120
13,656 7,250
144,721 119,490
TOTAL ASSETS
Current liabilities
Trade and other payables 17 9,516 7,284
Shareholder loans and derivative 13 94,434 -
Other financial liabilities 15 11,722 26,808
Current taxation 26 650 597
116,322 34,689
Non-current liabilities
Shareholder loans and derivative 13 - 55,102
Provisions 16 1,375 2,697
1,375 57,799
117,697 92,488
TOTAL LIABILITIES
NET ASSETS 27,024 27,002
31 March 2024 31 December
US$'000 2022
Notes US$'000
Shareholders' equity
Share capital 11 1,212 1,212
Share premium 11 / 12 194,063 194,063
Merger reserve 11 / 12 (20,523) (20,523)
Foreign exchange translation reserve 12 (12,132) (11,195)
Share-based payment reserve 12 295 271
Accumulated losses (108,577) (116,972)
Total equity attributable to the owners of the Company 54,338 46,856
Non-controlling interests 33 (27,314) (19,854)
27,024 27,002
The notes on pages 74 to 127 form an integral part of these Consolidated
Financial Statements. The Financial Statements on pages 61 to 127 were
approved and authorised for issue by the Board of Directors and signed on its
behalf by:
Louis Loubser
Chief Executive Officer
30 September 2024
Consolidated Statement of Comprehensive Income For the period ended For the year ended
For the period ended 31 March 2024 31 March 31 December
2024 2022
Notes US$'000 US$'000
Revenue 19 40,087 -
Cost of sales 20 (47,148) -
Gross loss (7,061)
Other income 43 116
Selling and distribution expenses 22 (5,309) -
Operating expenses 22 (5,336) (5,808)
Operating loss (17,663) (5,692)
Finance income 21 265 136
Finance expense 24 (21,866) (9,812)
Fair value gain / (loss) from derivative liability 30 20,601 10,807
Impairment reversal /(losses) 25 19,033 (92,661)
Profit/(Loss) before taxation 370 (97,222)
Taxation 26 (27) (602)
Profit/(Loss) after taxation 343 (97,824)
Profit/(Loss) attributable to:
Owners of the Company 8,866 (66,639)
Non-controlling interests (8,523) (31,185)
343 (97,824)
Profit/(Loss) for the period/year 343 (97,824)
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
· Exchange differences on translating foreign operations (345) (3,246)
Total comprehensive loss (2) (101,070)
Attributable to:
Owners of the Company 7,929 (70,027)
Non-controlling interests (7,931) (31,043)
(2) (101,070)
Loss per share attributable to owners of the Company:
Basic and diluted (US cents) 27 0.96 (7.23)
Consolidated Statement of Changes in Equity Share capital Share premium Merger reserve Foreign currency translation reserve Share-based payment reserve Retained earnings Total Non-controlling interest Total
For the period ended 31 March 2024 equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January 2022 1,194 193,524 (20,523) (7,807) 1,197 (45,626) 121,959 5,778 127,737
Total comprehensive loss - - - (3,388) - (66,639) (70,027) (31,043) (101,070)
for the year
Issue of shares 18 539 - - - - 557 - 557
Share options exercised - - - - (694) 694 - - -
Share based payment credit - - - - (222) - (222) - (222)
Lapsed warrants - - - - (10) 10 - - -
Investment in non-redeemable preference shares of Kropz Elandsfontein - - - - - (5,411) (5,411) 5,411 -
Transactions with owners 18 539 - - (926) (4,707) (5,076) 5,411 335
Balance at 31 December 2022 1,212 194,063 (20,523) (11,195) 271 (116,972) 46,856 (19,854) 27,002
Total comprehensive loss - - - (937) - 8,866 7,929 (7,931) (2)
for the period
Share based payment credit - - - - 70 - 70 - 70
Share options forfeited - - - - (46) - (46) - (46)
Investment in non-redeemable preference shares of Kropz Elandsfontein - - - - - (471) (471) 471 -
Transactions with owners - - - -- 24 (471) (447) 471 24
Balance at 31 March 2024 1,212 194,063 (20,523) (12,132) 295 (108,577) 54,338 (27,314) 27,024
Consolidated Statement of Cash Flows
For the period ended 31 March 2024
For the period ended For the year ended
31 March 2024 31 December 2022
Notes
US$'000 US$'000
Cash flows from operating activities
Profit / (loss) before taxation 370 (97,222)
Adjustments for:
Depreciation of property, plant and equipment 4 921 821
Amortisation of right-of-use assets 6 - 5
Impairment (reversal) / losses 25 (19,034) 92,661
Share-based payment credit 12 6 (222)
Finance income 21 (265) (136)
Finance costs 24 18,489 6,496
Fair value gain on derivative liability 30 (20,601) (10,807)
Debt modification present value adjustment 24 (257) (233)
Foreign currency exchange differences 2,302 3,550
Fair value (gain) / loss on game animals 4 (74) 21
Operating cash flows before working capital changes (18,143) (5,066)
Increase in trade and other receivables 28 (5,191) (471)
Increase in inventories 28 (3,431) (3,453)
Increase / (Decrease) in trade and other payables 28 3,811 (172)
Net cash flows used in operating activities (22,954) (9,162)
Cash flows used in investing activities
Purchase of property, plant and equipment 4 (6,006) (29,215)
Disposal of property, plant and equipment 8
Exploration and evaluation expenditure 5 (628) (346)
Other financial asset 28 (766) 427
Finance income received 21 265 136
Transfer from restricted cash 10 - 4,727
Net cash flows used in investing activities (7,127) (24,271)
Cash flows from financing activities
Finance costs paid 24 (2,727) (2,586)
Shareholder loan received 13 46,614 38,727
Repayment of lease liabilities 14 - (6)
Other financial liabilities 28 (14,970) (3,712)
Issue of ordinary share capital 11 - 557
Net cash flows from financing activities 28,917 32,980
(1,164) (453)
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period 2,120 2,461
Foreign currency exchange gains on cash 12 112
Cash and cash equivalents at end of the period 968 2,120
Notes to the Consolidated Financial Statements for the period ended 31 March
2024
(1) General information
Kropz is an emerging plant nutrient producer and developer with an advanced
stage phosphate mining project in South Africa and an exploration phosphate
project in the Republic of Congo ("RoC"). The principal activity of the
Company is that of a holding company for the Group, as well as performing all
administrative, corporate finance, strategic and governance functions of the
Group.
The Company was incorporated on 10 January 2018 and is a public limited
company, with its ordinary shares admitted to the AIM Market of the London
Stock Exchange on 30 November 2018 trading under the symbol, "KRPZ". The
Company is domiciled in England and incorporated and registered in England and
Wales. The address of its registered office is 35 Verulam Road, Hitchin, SG5
1QE. The registered number of the Company is 11143400.
The Company changed its accounting reference date from 31 December to 31 March
in November 2023. Accordingly, these financial statements cover the 15 months
from 1 January 2023 to 31 March 2024. Comparative amounts are for the year
ended 31 December 2022.
(2) Summary of significant accounting policies
The principal accounting policies applied in the preparation of these
Consolidated Financial Statements are set out below. These policies have been
consistently applied unless otherwise stated.
(a) Basis of preparation
The Consolidated Financial Statements of the Company have been prepared in
prepared in accordance with UK adopted international accounting standards and
the Companies Act 2006 applicable to companies reporting under IFRS. The
Consolidated Financial Statements have been prepared under the historical cost
convention, as modified for any financial assets, financial liabilities and
game animals which are stated at fair value through profit or loss. The
Consolidated Financial Statements are presented in United States Dollars, the
presentation currency of the Company and figures have been rounded to the
nearest thousand.
Going concern
During the period ended 31 March 2024, the Group incurred a net profit/(loss)
of US$ 0.3 million (twelve months ended 31 December 2022: loss of US$ (97.8)
million) and experienced net cash outflows from operating activities. Cash and
cash equivalents totalled US$ 0.97 million at 31 March 2024 (31 December
2022: US$ 2.1 million).
Elandsfontein is currently the Group's only operating asset and source of
revenue. As Elandsfontein is still busy ramping up its operations and yet to
achieve break-even production levels, an operating loss is also expected in
the year following the date of these accounts. The Group is consequently
dependent on future fundraisings to meet any production costs, overheads,
future development and exploration requirements and quarterly repayments on
the BNP loan that cannot be met from existing cash resources and sales
revenue.
The Company did not reach project completion as stipulated in the BNP facility
agreement by 31 December 2022. The Company also failed to fund the debt
service reserve account as required. BNP has waived these requirements,
preventing the Company from falling into default on its loan terms, by means
of several waivers since December 2022 to 30 September 2024.
At the end of the waiver period the bank has the contractual right to request
the immediate repayment of the outstanding loan amount of US$ 3,750,000.
However, the latest waiver expiry date coincides with the final payment date.
Elandsfontein's forecast cashflows were estimated using market-based commodity
prices, exchange rate assumptions, estimated quantities of recoverable
minerals, production levels, operating costs and capital requirements over an
18-month period. As with the impairment assessment, the going concern
assessment only considered Elandsfontein's resources defined as "measured" and
"indicated" per the updated MRE. The resource classified as "inferred" was not
considered part of the mine plan for purposes of the going concern and
impairment assessments. However, it is expected that as mining and drilling
activities progress, progressively more of the total resource will be
reclassified from inferred to measured and indicated. In the current period of
assessment, the measured and indicated portions increased by 72% based on
updated drilling and statistical estimation.
The 18-month forecast assumed fundraising described in Note 34 will be
concluded by the end of September 2024. The short-term cash flow needs of the
Group depend on the successful conclusion of the restructuring and fundraising
transaction.
The critical estimates in the LOM plan and forecast cashflows expected to be
generated can be summarised as follows:
· Phosphate rock prices and grade;
· Phosphate recoveries;
· Operating costs;
· Foreign exchange rates; and
· Discount rates.
The going concern assessment and forecast cashflows are highly sensitive to
these estimates.
Phosphate rock prices and grade: Forecast phosphate rock prices are based on
management's estimates of quality of production and selling price and are
derived from forward price curves and long-term views of global supply and
demand in a changing environment, particularly with respect to climate risk,
building on past experience of the industry and consistent with external
sources.
In total Elandsfontein managed to achieve trial production sales totalling
US$40 million during the current period (Twelve months ended 31 December 2022:
US$ nil). Since 31 March 2024 and the date of the financial statements, an
additional US$13 million production sales were achieved.
Kropz is a new entrant to the phosphate market and has to date sold its
shipments at a discount to prevailing market prices. The discount was taken
into account in the going concern and impairment testing models. The discount
is, however, expected to unwind as Elandsfontein builds its reputation,
establishes itself in the global market and improves its production quality
and stability. As modification are planned and efficiency improvements are
implemented at Elandsfontein, Elandsfontein should see a gradual improvement
in both grade and quality, some of which have already materialised.
Phosphate recoveries: Estimated production volumes are based on detailed LOM
plans of the measured and indicated resource as defined in the MRE and take
into account development plans for the mine agreed upon by management as part
of the long-term planning process. Production volumes are dependent on a
number of variables, such as: the recoverable quantities; the production
profile; the cost of the development of the infrastructure necessary to
extract the reserves; the production costs; the contractual duration of mining
rights; and the selling price of the commodities extracted.
Estimated production volumes are subject to significant uncertainty given the
ongoing ramp-up. The production ramp-up has been delayed largely by the need
to re-engineer parts of the fine flotation circuit proposed by the vendor.
Mining and processing have also been affected by early unpredicted ore
variability and lack of operator experience. The Company is in the process of
analysing the hard bank and pink ore material to identify the appropriate
method of mining and processing to improve production yield. The Western Cape
has experienced unprecedented rain this season which has led to severely wet
mining conditions and has hindered ore delivery to the plant and concentrate
production during the period This is being addressed by increased drainage.
Production throughput is also being limited by the nature of slimes material
and, the Company is investing in new equipment to seek to overcome this and
aims to increase production throughput.
Reserves and resources: The LOM plan includes only the measured and indicated
resources as defined in the MRE which represents only around 8 years of
forecast production. There was a significant increase in the measured and
indicated resources in the MRE issued in March 2024 (an increase of 72%)
compared to the MRE issued in December 2022 as set out in the Strategic
report. The Directors believe that the inferred resources in the MRE are
capable of being accessed giving a mine life of around 12 years, but this has
not been taken into account in the discounted cashflows.
Exchange rates: Foreign exchange rates are estimated with reference to
external market forecasts. The assumed long-term US dollar/ZAR exchange rate
are based on a consensus for the period to year 2028. Future years' exchange
rates were estimated using the prevailing inflation and interest rate
differential between USD and ZAR.
Operating cost: Operating costs are estimated with reference to contractual
and actual current costs adjusted for inflation. Key operating cost estimates
are mine and plant operating costs and transportation and port costs. The
forecast mine and plant costs were based on the contracted rates with the
current mine and plant operators. Production cost per tonne currently is
higher than sales per tonne as full production has not been reached to date,
leading to a gross loss per tonne. The forecast assumes that as production
volumes increase the average cost per tonne of phosphate will decrease with
economies of scale and further efficiency gains.
Mine and plant operating costs: The forecast mine and plant costs were based
on the contracted rates with the current mine and plant operators.
Port costs: The Group has a draft port access agreement with Transnet for
Saldanha port but this has not yet been signed. The Group has paid guest port
charges (the higher rates were used in the forecast) for Saldanha for the
shipments in 2023 and 2024 to date.
Discount rates: A discount rate of 14.05% was applied to the discounted cash
flows used in the LOM plan. This discount rate is derived from the Group's
post-tax weighted average cost of capital (WACC), with appropriate adjustments
made to reflect the risks specific to the CGU and to determine the pre-tax
rate. The WACC takes into account both debt and equity. The cost of equity is
derived from the expected return on investment by the Group's investors. The
cost of debt is based on the interest-bearing borrowings the Group is obliged
to service and the expected cost of any incremental debt. Specific risk is
incorporated by applying beta factors.
There is a risk that revenue remains subdued and below operating costs and as
a result the expected improvement in operating margin included in the
discounted cashflows, may not materialise. In such a scenario the recoverable
amount from the Elandsfontein mine will be lower than the discounted cashflows
and subsequently impact the impairment assessment conclusion. Please also
see Note 25 Impairment losses for sensitivity analysis.
Funding
The Group is dependent on future fundraisings to meet production costs,
overheads, future development, exploration requirements and quarterly
repayments on the BNP loan that cannot be met from existing cash resources and
sales revenue alone.
The ARC Fund, on various occasions in the past, provided funding to support
the Group's operations. During the 2024 financial period, Kropz, Kropz
Elandsfontein and ARC Fund agreed to further funding totalling ZAR 820 million
(approximately US$ 44.2 million) bridge loan facilities ("Loan") to meet
immediate cash requirements at Kropz Elandsfontein. Subsequent to the year
end, Kropz, Kropz Elandsfontein and ARC Fund agreed to a further ZAR 140
million (approximately US$ 8 million) bridge loan facilities ("New Loan"). The
loan is now fully drawn. Kropz is completing a Restructuring and Fundraising
transaction is more fully described in Note 34.
Management engages frequently with BNP regarding the capital repayment and
refinancing of the BNP debt facility. The Company did not reach project
completion as stipulated in the BNP facility agreement by 31 December 2022.
Considering the delay in achieving sales, the Company also failed to fund the
debt service reserve account as required. BNP have, waived these requirements,
preventing the Company from falling in default of its loan terms. Kropz
Elandsfontein has made all the capital and interest payments to BNP as
required to the date of this report. Remaining balances as at 31 March 2024
US$ 11 250 000.00.
Management has successfully raised money in the past from its supportive major
shareholder, but there is no guarantee that any additional funds that might be
required will be available if needed in the future. Management engages
frequently with BNP regarding the capital repayment and refinancing of the BNP
debt facility.
Going concern basis
Based on the Group's current available reserves, recent operational
performance, forecast production and sales coupled with Management's track
record to successfully raise additional funds as and when required, to meet
its working capital and capital expenditure requirements, the Board have
concluded that they have a reasonable expectation that the Group will continue
in operational existence for the foreseeable future and at least for a period
of 18 months from the date of approval of these financial statements.
As more fully described in Note 34 Material Subsequent Events, the Group has
entered into a Restructuring of its debt obligations and a Fundraising
transaction. As a result of the Restructuring, Elandsfontein Subsidiaries will
extinguish its debt obligations to the ARC Fund. Kropz will have convertible
debt of totalling £88.9 million (including accumulated interest) outstanding
to the ARC Fund, being the aggregate of the new CLN and the Existing Equity
Facilities. Additionally, in September 2024, Kropz is completing a Fundraising
of £8.9 million from ARC and other shareholders before expenses through the
issue of new Ordinary shares an Issue Price of 1.387 pence per new Ordinary
Share in the capital of the Company. The Issue Price represents a discount of
approximately 5 per cent. to the 30-day volume weighted average share price
per existing Ordinary Share to 23 August 2024. In aggregate, 643,873,018 new
Ordinary Shares will be allotted and issued pursuant to the Fundraising.
For these reasons, the financial statements have been prepared on the going
concern basis, which contemplates the continuity of normal business activities
and the realisation of assets and discharge of liabilities in the normal
course of business.
As there can be no guarantee that any additional funding that might be
required can be raised in the necessary timeframe, a material uncertainty
exists that may cast significant doubt on the Group's ability to continue as a
going concern and therefore it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
The financial statements do not include adjustments relating to the
recoverability and classification of recorded asset amounts or to the amounts
and classification of liabilities that might be necessary should the Group not
continue as a going concern.
Operational cash flows and impairment
An impairment reversal of US$ 19 million has been recognised as at 31 March
2024 in relation to the Elandsfontein mine based on the latest life of mine
(LOM) plans following the updated mineral resource estimate as announced on
20 June 2024 and set out in the Strategic report. Please refer to Note 25
for some key assumptions and sensitivity analysis of the impairment assessment
performed. The recoverable amount of the Elandsfontein mine was estimated
based on discounted cash flows expected to be generated from the continued use
of the cash generating unit (CGU) using market-based commodity prices and
exchange rate assumptions, estimated quantities of recoverable minerals,
production levels, operating costs, capital requirements and its eventual
disposal based on the CGU's latest LOM plans. These calculations include a
number of estimates which if the actual outcome were different could have a
significant impact on the impairment assessment, financial outcome of the
Elandsfontein mine operations and the Group's funding needs.
Functional and presentational currencies
The Consolidated Financial Statements are presented in US Dollars.
The functional currency of Kropz plc is Pounds Sterling and its presentation
currency is US Dollars, due to the fact that US Dollars is the recognised
reporting currency for most listed mining resource companies on AIM.
The functional currency of Kropz SA and its subsidiaries (as shown below) is
South African Rand, being the currency in which the majority of the companies'
transactions are denominated.
The functional currencies of Cominco Resources and its subsidiaries are Euros,
Pounds Sterling and Central African Francs being the currency in which the
majority of the companies' transactions are denominated. Its presentation
currency is US Dollars.
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity's functional currency are recorded at the
rate of exchange prevailing on the date of the transaction.
At the end of each financial period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing as of the end of the
financial period. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing on
the date when the fair value was determined. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items, and on
retranslation of monetary items are included in profit or loss for the period.
Exchange differences arising on the retranslation of non-monetary items
carried at fair value are included in profit or loss for the period except for
differences arising on the retranslation of non-monetary items in respect of
which gains and losses are recognised directly in equity. For such
non-monetary items, any exchange component of that gain or loss is also
recognised directly in equity.
In order to satisfy the requirements of IAS 21 with respect to presentation
currency, the consolidated financial statements have been translated into US
Dollars using the procedures outlined below:
· Assets and liabilities where the functional currency is other
than US Dollars were translated into US Dollars at the relevant closing rates
of exchange;
· Non-US Dollar trading results were translated into US Dollars at
the relevant average rates of exchange;
· Differences arising from the retranslation of the opening net
assets and the results for the period have been taken to the foreign currency
translation reserve;
· Share capital has been translated at the historical rates
prevailing at the dates of transactions; and
· Exchange differences arising on the net investment in
subsidiaries are recognised in other comprehensive income.
Changes in accounting policies
(i) New standards, interpretations and amendments adopted from
1 January 2023
The following amendments are effective for the period beginning 1 January
2023:
Effect annual periods beginning before or after
IFRS 17 Insurance Contracts 1(st) January 2023
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice 1(st) January 2023
Statement 2
Definition of Accounting Estimates - Amendments to IAS 8 1(st) January 2023
Deferred tax relating to Assets and Liabilities arising from a Single 1(st) January 2023
Transaction - Amendments to IAS 12
International Tax Reform - Pillar Two Model Rules - Amendments to IAS 12 1(st) January 2023
The Group has considered the above new standards and amendments and has
concluded that they are either not relevant to the Group or they do not have a
significant impact on the Group's consolidated financial statements.
(ii) New standards, interpretations and amendments not yet
effective
At the date of authorisation of these consolidated Group financial statements,
the following standards and interpretations, which have not been applied in
these financial statements, were in issue but not yet effective. Management is
currently assessing the impact of these new standards on the Group.
Effect annual periods beginning before or after
Classification of Liabilities as Current or Non-current - Amendments to IAS 1 1(st) January 2024
Non-current Liabilities with Covenants - Amendments to IAS 1 1(st) January 2024
Lease Liability in a Sale and Leaseback (Amendments to IFRS 16 1(st) January 2024
Supplier Finance Arrangements - Amendments to IAS 7 and IFRS 7 1(st) January 2024
Lack of Exchangeability (Amendments to IAS 21) 1(st) January 2025
With the exception of IAS 1 presentation of financial statements (amendment -
classification of liabilities as current or non-current), the Group does not
believe that the amendments will have a significant impact.
On implementation of IAS 1 presentation of financial statements (amendment -
classification of liabilities as current or non-current), the Group will
present its convertible loan liabilities as current liabilities as opposed to
non-current liabilities which is the presentation in these financial
statements.
(b) Basis of consolidation
The Consolidated Financial Statements comprise the financial statements of the
Company and its subsidiaries listed in Note 3.
A subsidiary is defined as an entity over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Specifically, the
Group controls an investee if, and only if, the Group has all of the
following:
a) Power over the investee (i.e. existing rights that give it the current
ability to direct the relevant activities of the investee);
b) Exposure, or rights, to variable returns from its involvement with the
investee; and
c) The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in
control. When the Group has less than a majority of the voting, or similar,
rights of an investee, it considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
· The contractual arrangements with the other vote holders of the
investee;
· Rights arising from other contractual arrangements; and
· The Group's voting rights and potential voting rights.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control
ceases.
Intra-group transactions, balances and unrealised gains on transactions are
eliminated; unrealised losses are also eliminated unless cost cannot be
recovered. Where necessary, adjustments are made to the financial statements
of subsidiaries to ensure consistency of accounting policies with those of the
Group.
The total comprehensive income of non-wholly owned subsidiaries is attributed
to owners of the parent and to the non-controlling interests in proportion to
their relative ownership interests.
Accounting for asset acquisition within a corporate structure
Acquisitions of mineral assets through acquisition of non-operational
corporate structures that do not represent a business, and therefore do not
meet the definition of a business combination, are accounted for as the
acquisition of an asset and recognised at the fair value of the consideration.
Non-controlling interests
The Group initially recognised any non-controlling interest in the acquiree at
the non-controlling interest's proportionate share of the acquiree's net
assets. The total comprehensive income of non-wholly owned subsidiaries is
attributed to owners of the parent and to the non-controlling interests in
proportion to their relative ownership interests. The benefit accruing to the
non-controlling interests arising from their proportionate share of the
portion of the non-redeemable and non-participating preference share
investment by Kropz plc into Kropz Elandsfontein is attributed to the
non-controlling interests in proportion to their relative ownership interests.
Merger relief
The issue of shares by the Company is accounted for at the fair value of the
consideration received. Any excess over the nominal value of the shares issued
is credited to the share premium account other than in a business combination
where the consideration for shares in another company includes the issue of
shares, and on completion of the transaction, the Company has secured at least
a 90% equity holding in the other company. In such circumstances the credit is
applied to the merger relief reserve. In the case of the Company's acquisition
of Cominco Resources, where shares were acquired on a share for share basis,
then merger relief has been applied to those shares issued in exchange for
shares in Cominco Resources.
(c) Property, plant, equipment and mine development
Property, plant, equipment and mine development includes buildings and
infrastructure, machinery, plant and equipment, site preparation and
development and essential spare parts that are held to minimise delays arising
from plant breakdowns, that are expected to be used during more than one
period.
Assets that are in the process of being constructed are measured at cost less
accumulated impairment and are not depreciated. All other classes of property,
plant and equipment are stated at historical cost less accumulated
depreciation and accumulated impairment. Land is depreciated over the life of
the mine.
Historical cost includes expenditure that is directly attributable to the
acquisition of the items, including:
· The estimated costs of decommissioning the assets and site
rehabilitation costs to the extent that they related to the asset;
· Capitalised borrowing costs;
· Capitalised pre-production expenditure; and
· Topsoil and overburden stripping costs.
The cost of items of property, plant and equipment are capitalised into its
various components where the useful life of the components differs from the
main item of property, plant and equipment to which the component can be
logically assigned. Expenditure incurred to replace a significant component
of property, plant and equipment is capitalised and any remaining carrying
value of the component replaced is written off as an expense in the income
statement.
Direct costs incurred on major projects during the period of development or
construction are capitalised. Subsequent expenditure on property, plant and
equipment is capitalised only when the expenditure enhances the value or
output of the asset beyond original expectations, it is probable that future
economic benefits associated with the item will flow to the entity and the
cost of the item can be measured reliably. Costs incurred on repairing and
maintaining assets are recognised in the income statement in the period in
which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with
carrying amount. These are included in profit or loss.
Depreciation
All items of property, plant and equipment are depreciated on either a
straight-line method or unit of production method at cost less estimated
residual values over their useful lives as follows:
Item Depreciation method Average useful life
Buildings and infrastructure
Buildings Units of production Life of mine*
Roads Straight-line 15 years
Electrical sub-station Straight-line 15 years
Machinery, Plant and Equipment
Fixed plant and equipment Units of production Life of mine*
Water treatment plant Units of production Life of mine*
Critical spare parts Straight-line 2-15 years
Furniture and fittings Straight-line 6 years
Motor vehicles Straight-line 5 years
Computer equipment Straight-line 3 years
Mineral exploration site preparation Units of production Life of mine*
Stripping activity Units of production Life of mine*
* Depreciation of mining assets is computed principally by the
units-of-production method over life-of-identified ore based on estimated
quantities of economically recoverable proved and probable reserves, which can
be recovered in future from known mineral deposits.
Useful lives and residual values
The asset's useful lives and residual values are reviewed and adjusted if
appropriate, at each reporting date.
Stripping activity asset
The costs of stripping activity which provides a benefit in the form of
improved access to ore is capitalised as a non-current asset until ore is
exposed where the following criteria are met:
· it is probable that future economic benefit in the form of
improved access to the ore body will flow to the entity;
· the component of the ore body for which access has been improved
can be identified; and
· the cost of the stripping activity can be reliably measured.
The stripping activity is initially measured at cost and subsequently carried
at cost less depreciation and impairment losses.
(d) Mineral exploration and evaluation costs
All costs incurred prior to obtaining the legal right to undertake exploration
and evaluation activities on a project are written off as incurred. Following
the granting of a prospecting right, general administration and overhead costs
directly attributable to exploration and evaluation activities are expensed
and all other costs are capitalised and recorded at cost on initial
recognition.
The following expenditures are included in the initial and subsequent
measurement of the exploration and evaluation assets:
· Acquisition of rights to explore;
· Topographical, geological, geochemical or geographical studies;
· Exploratory drilling;
· Trenching;
· Sampling;
· Activities in relation to the evaluation of both the technical
feasibility and the commercial viability of extracting minerals;
· Exploration staff related costs; and
· Equipment and infrastructure.
Exploration and evaluation costs that have been capitalised are classified as
either tangible or intangible according to the nature of the assets acquired
and this classification is consistently applied.
If commercial reserves are developed, the related deferred exploration and
evaluation costs are then reclassified as development and production assets
within property, plant and equipment.
All capitalised exploration and evaluation expenditure is monitored for
indications of impairment in accordance with IFRS 6. One or more of the
following facts and circumstances indicate that an entity should test
exploration and evaluation assets for impairment:
· The period for which the entity has the right to explore in the
specific area has expired during the period or will expire in the near future
and is not expected to be renewed
· Substantive expenditure on further exploration for and evaluation
of mineral resources in the specific area is neither budgeted nor planned.
· Exploration for and evaluation of mineral resources in the
specific area have not led to the discovery of commercially viable quantities
of mineral resources and the entity has decided to discontinue such activities
in the specific area; or
· Sufficient data exist to indicate that, although a development in
the specific area is likely to proceed, the carrying amount of the exploration
and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
(e) Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
· Leases of low value assets; and
· Leases with a duration of 12 months or less.
Identifying Leases
The Group accounts for a contract, or a portion of a contract, as a lease when
it conveys the right to use an asset for a period of time in exchange for
consideration. Leases are those contracts that satisfy the following criteria:
(a) There is an identified asset;
(b) The Group obtains substantially all the economic benefits from use of the
asset; and
(c) The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights.
If the supplier does have those rights, the contract is not identified as
giving rise to a lease.
In determining whether the Group obtains substantially all the economic
benefits from use of the asset, the Group considers only the economic benefits
that arise from use of the asset, not those incidental to legal ownership or
other potential benefits.
In determining whether the Group has the right to direct use of the asset, the
Group considers whether it directs how and for what purpose the asset is used
throughout the period of use. If there are no significant decisions to be made
because they are pre-determined due to the nature of the asset, the Group
considers whether it was involved in the design of the asset in a way that
predetermines how and for what purpose the asset will be used throughout the
period of use. If the contract or portion of a contract does not satisfy these
criteria, the Group applies other applicable IFRSs rather than IFRS 16.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Group's incremental borrowing rate on commencement of the lease is used.
The discount rate is the rate implicit in the lease, if readily determinable.
If not, the Company's incremental borrowing rate is used which the Company has
assessed to be 7.22%, being an average SOFR plus 3%, being an appropriate
level of risk to the risk-free rate of borrowing.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes:
· amounts expected to be payable under any residual value
guarantee;
· the exercise price of any purchase option granted in favour of
the Group if it is reasonably certain to assess that option; and
· any penalties payable for terminating the lease, if the term of
the lease has been estimated on the basis of termination option being
exercised.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
· lease payments made at or before commencement of the lease;
· initial direct costs incurred; and
· the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a
straight-line basis over the remaining term of the lease or over the remaining
economic life of the asset if, rarely, this is judged to be shorter than the
lease term.
When the Group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted at
the same discount rate that applied on lease commencement. The carrying
value of lease liabilities is similarly revised when the variable element of
future lease payments dependent on a rate or index is revised. In both cases
an equivalent adjustment is made to the carrying value of the right-of-use
asset, with the revised carrying amount being amortised over the remaining
(revised) lease term.
(f) Game animals
Game animals are wild animals that occur on the farm properties owned by the
Group. The animals are owned by Elandsfontein Land Holdings and held within
the approximately 5,000 hectares of farmland owned by Elandsfontein Land
Holdings. The property is appropriately fenced with game specific fencing.
These animals are managed in terms of a game management plan and excess
animals are either sold as live animals or harvested as and when required
based on estimated stocking levels and vegetation conditions. Law in South
Africa specifies that wild animals are the property of the owner of the land
that they occupy.
Game animals are measured at their fair value less estimated point-of-sale
costs, fair value being determined upon the age and size of the animals and
relevant market prices. Market price is determined on the basis that the
animal is either to be sold to be slaughtered or realised through sale to
customers at fair market value.
Fair market value of game animals is determined by using average live game
animal selling prices achieved at live game animal auctions during the
relevant period and published from time to time on game animal auctioneering
websites.
(g) Financial instruments
Classification and measurement
The Group classifies its financial instruments into the following
categories:
· Financial assets measured at amortised cost;
· Financial assets measured at fair value through profit and loss;
· Financial liabilities measured at amortised cost; and
· Derivative financial instruments accounted for at fair value
through profit and loss.
Classification of financial assets depends on the business model for
managing the financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial
recognition. Generally, the Group does not acquire financial assets for the
purpose of selling in the short term. The Group's business model is primarily
that of "hold to collect" (where assets are held in order to collect
contractual cash flows).
Financial assets held at amortised cost
This classification applies to debt instruments which are held under a hold
to collect business model and which have cash flows that meet the "solely
payments of principal and interest" ("SPPI") criteria.
At initial recognition, trade and other receivables that do not have a
significant financing component are recognised at their transaction price.
Other financial assets are initially recognised at fair value plus related
transaction costs. They are subsequently measured at amortised cost using the
effective interest method. Any gain or loss on de-recognition or modification
of a financial asset held at amortised cost is recognised in the income
statement.
Financial assets and liabilities held at fair value through profit or loss
Financial assets and liabilities at fair value through profit or loss are
carried in the statement of financial position at fair value with net changes
in fair value recognised in the statement of profit or loss. Assets and
liabilities in this category are classified as current if they are expected to
be settled within twelve months, otherwise they are classified as non-current.
Call options in the Company's own equity are recorded at fair value and change
in fair value recorded through income statement.
Undrawn facilities with a conversion option, for which the terms give rise to
a derivative, are revalued for changes in the share price prior to draw down
with a resulting loss for revaluation booked to Profit and Loss and the
remaining receivable extinguished through equity based on the relative draw
down percentage of undrawn facilities at each reporting period.
Impairment of financial assets
A forward-looking expected credit loss ("ECL") review is required for debt
instruments measured at amortised cost or held at fair value through other
comprehensive income, financial guarantees not measured at fair value through
profit or loss and other receivables that give rise to an unconditional right
to consideration.
As permitted by IFRS 9, the Group applies the "simplified approach" to trade
receivables, contract assets and lease receivables and the "general approach"
to all other financial assets. The general approach incorporates a review for
any significant increase in counterparty credit risk since inception. The ECL
reviews include assumptions about the risk of default and expected loss rates.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
These are classified as financial assets at amortised cost.
Trade and other payables
Trade and other payables are classified as financial liabilities at
amortised cost.
Interest bearing borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings
using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as
transaction costs of the loan to the extent that it is probable that some or
all of the facility will be drawn down. In this case, the fee is deferred
until the draw down occurs. To the extent there is no evidence that it is
probable that some or all of the facility will be drawn down, the fee is
capitalised as a pre-payment for liquidity services and amortised over the
period of the facility to which it relates.
Modification of debt instruments
When the contractual terms of a financial liability are substantially
modified, it is accounted for as an extinguishment of the original debt
instrument and the recognition of a new financial liability. The new debt
instrument is recorded at fair value and any difference from the carrying
amount of the extinguished liability, including any non-cash consideration
transferred, is recorded in profit or loss. Any costs or fees incurred are
generally included in profit or loss, too.
If a modification to the terms of a financial liability is not substantial,
then the amortised cost of the liability is recalculated as the present value
of the estimated future contractual cash flows, discounted at the original
effective interest rate. The resulting gains or losses are recognised in
profit or loss. Any costs or fees incurred adjust the carrying amount of the
modified financial liability and are amortised over its term. The periodic
re-estimation of cash flows to reflect movements in market rates of interest
will change the effective interest rate of a floating-rate financial
liability.
To determine whether a modification of terms is substantial, the Company
performs a quantitative assessment. If the difference in the present values of
the cash flows is less than 10 percent, then the Company performs a
qualitative assessment to identify substantial differences in terms that by
their nature are not captured by the quantitative assessment. Performing a
qualitative assessment may require a high degree of judgement based on the
facts and circumstances.
(h) Taxation
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent unpaid, recognised
as a liability. If the amount already paid in respect of current and prior
periods exceeds the amount due for those periods, the excess is recognised as
an asset.
Deferred tax assets and liabilities
Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date.
A deferred tax liability is recognised for all taxable temporary differences,
except to the extent that the deferred tax liability arises from the initial
recognition of an asset or liability in a transaction which at the time of the
transaction, affects neither accounting profit nor taxable profit and
differences relating to investments in subsidiaries to the extent they are
controlled and probably will not reverse in the foreseeable future.
A deferred tax asset is recognised for all deductible temporary differences to
the extent that it is probable that taxable profit will be available against
which the deductible temporary difference can be utilised. A deferred tax
asset is not recognised when it arises from the initial recognition of an
asset or liability in a transaction at the time of the transaction, affects
neither accounting profit nor taxable profit.
Deferred tax assets and liabilities are measured at the tax rates that are
expected to apply to the period when the asset is realised or the liability is
settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax assets and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets against current income
tax liabilities and the deferred taxes relate to the same taxable entity and
the same taxation authority.
Tax expense
Tax expense is recognised in the same component of total comprehensive income
(i.e. continuing operations, discontinued operations, or other comprehensive
income) or equity as the transaction or other event that resulted in the tax
expense.
(i) Impairment of non-financial assets
The Group assesses at each reporting date whether there is any indication that
an asset may be impaired. If any such indication exists, the Group estimates
the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable
amount is estimated for the individual asset. If it is not possible to
estimate the recoverable amount of the individual asset, the recoverable
amount of the cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit ('CGU') is the
higher of its fair value less costs to of disposal ('FVLCD') and its value in
use ('VIU').
If the recoverable amount of an asset is less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount. That
reduction is an impairment loss.
An impairment loss, of assets carried at cost less any accumulated
depreciation or amortisation, is recognised immediately in profit or loss.
The increased carrying amount of an asset other than goodwill attributable to
a reversal of an impairment loss does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the
asset in prior periods.
A reversal of an impairment loss of assets carried at cost less accumulated
depreciation or amortisation other than goodwill is recognised immediately in
profit or loss. Any reversal of an impairment loss of a revalued asset is
treated as a revaluation increase.
(j) Inventories
Inventories are measured at the lower of cost and net realisable value.
Plant spares and consumables stores are capitalised to the balance sheet and
expensed to the income statement as they are utilised.
Spares and consumables are valued at the lower of cost and net realisable
value. Cost is determined using the weighted average method.
Obsolete, redundant and slow-moving items of spares and consumables are
identified on a regular basis and written down to their net realisable value.
Inventories are included in current assets, unless the inventory will not be
used within 12 months after the end of the reporting period.
(k) Provisions and contingencies
Environmental rehabilitation
The provision for environmental rehabilitation is recognised as and when an
obligation to incur rehabilitation and mine closure costs arises from
environmental disturbance caused by the development or ongoing production of a
mining property. Estimated long-term environmental rehabilitation provisions
are measured based on the Group's environmental policy taking into account
current technological, environmental and regulatory requirements. Any
subsequent changes to the carrying amount of the provision resulting from
changes to the assumptions as to the timing of the rehabilitation applied in
estimating the obligation are recognised in property, plant and equipment.
The provisions are based on the net present value of the estimated cost of
restoring the environmental disturbance that has occurred up to the reporting
date, using the risk-free rate and the risk adjusted cash flows that reflect
current market assessments and the risks specific to the provisions.
Increases due to the additional environmental disturbances are capitalised and
amortised over the remaining life of the mine.
Decommissioning provision
The estimated present value of costs relating to the future decommissioning of
plant or other site preparation work, taking into account current
environmental and regulatory requirements, is capitalised as part of property,
plant and equipment, to the extent that it relates to the construction of an
asset, and the related provisions are raised in the statement of financial
position, as soon as the obligation to incur such costs arises.
These estimates are reviewed at least annually and changes in the measurement
of the provision that result from the subsequent changes in the timing of
costs and the risk-free rate, are added to, or deducted from, the cost of the
related asset in the current period. Other changes are charged to profit or
loss. If a decrease in the liability exceeds the carrying amount of the asset,
the excess is recognised immediately in the income statement. If the asset
value is increased and there is an indication that the revised carrying value
is not recoverable, an impairment test is performed in accordance with the
accounting policy on impairment of non-financial assets above.
(l) Share capital and equity
Ordinary shares are classified as equity and are recorded at the proceeds
received net of issue costs.
(m) Convertible debt
The proceeds received on issue of the Group's convertible debt which fail the
fixed-for-fixed criterion under IFRS are allocated into their liability and
derivative liability components. The derivative liability is measured at fair
value with subsequent changes recognised in profit or loss The debt component
is accounted for as a financial liability measured at amortised cost until
extinguished on conversion or maturity of the debt.
(n) Borrowing costs
Interest on borrowings directly related to the financing of qualifying
capital projects under development is added to the capitalised cost of those
projects during the development phase, until such time as the assets are
substantially ready for their intended use or sale which, in the case of
mining properties, is when they are capable of commercial production. Where
funds have been borrowed specifically to finance the project, the amount
capitalised represents the actual borrowing costs incurred. Where the funds
used to finance a project forming part of general borrowings, the amount
capitalised is calculated using a weighted average of rates applicable to
relevant general borrowings of the Group during the period.
Qualifying assets are assets that necessarily take a substantial period of
time (more than 12 months) to get ready for their intended use or sale.
Borrowing costs are added to the cost of these assets, until the assets are
substantially ready for their intended use or sale.
Capitalisation is suspended during extended periods in which active
development is interrupted.
Capitalisation ceases when substantially all the activities necessary to
prepare the qualifying asset for its intended use or sale are complete.
All other borrowing costs are recognised in the income statement in the period
in which they are incurred.
(o) Employee benefits
The cost of short-term employee benefits, such as leave pay and sick leave,
bonuses, and non-monetary benefits such as medical care, are recognised in
the period in which the service is rendered and are not discounted.
(p) Intangible assets
All intangible assets are stated at cost less accumulated amortisation and any
accumulated impairment losses.
(q) Finance income
Interest income is recognised as other income on an accrual basis based on the
effective yield on the investment.
(r) Share-based payment arrangements
Equity-settled share-based payments to employees are measured at the fair
value of the equity instruments at the grant date. Equity-settled share-based
payments to non-employees are measured at the fair value of services received,
or if this cannot be measured, at the fair value of the equity instruments
granted at the date that the Group obtains the goods or counterparty renders
the service.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of equity instruments that will eventually vest, with
a corresponding increase in equity.
Where there are no vesting conditions, the expense and equity reserve arising
from share-based payment transactions is recognised in full immediately on
grant.
At the end of each reporting period, the Group revises its estimate of the
number of equity instruments expected to vest. The impact of the revision of
the original estimates, if any, is recognised in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding
adjustment to other reserves.
Details regarding the determination of the fair value of equity-settled
share-based transactions are set out in the Directors' Report and Note 11 to
the Consolidated Financial Statements.
(s) Revenue from contracts with customers
IFRS 15 establishes a comprehensive framework for determining whether, how
much and when income is recognised. Under IFRS 15, income is recognised at an
amount that reflects the consideration to which an entity expects to be
entitled for transferring goods or services to a customer. Income is measured
based on the consideration specified in a contract with a customer and
excludes amounts collected on behalf of third parties. The Group recognises
income when it transfers control over a product or services to a customer.
Revenue comprises the fair value of the consideration received or receivable
from the sale of products or services rendered in the ordinary course of the
Group's activities. Revenue is recognised when it is probable that the
economic benefits associated with a transaction will flow to the Group and the
amount of income, and associated costs incurred or to be incurred can be
measured reliably.
The Group recognises revenue from the following major sources:
Phosphate income
Revenue from contracts with customers is recognised when control of the goods
or services is transferred to the customer at an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods.
Rock phosphate sales are generally physically delivered to customers in the
period in which it is produced, with the sales price based on contractual
agreement. The price applied will be the prevailing rate at the point of
revenue recognition. The agreed price is adjusted if the grade, tonnage or
moisture content of the rock phosphate differs from that guaranteed by the
Group.
As the transfer of risks and rewards is at a point in time under IFRS 15, the
key judgements in reaching this conclusion are that the control of all goods
and services (transferred to the customer under a sales contract) is satisfied
at the point in time when loading at port is complete and there are no
materially distinct performance obligations.
Most export sales are free on-board origin (FOB) whereby the buyer assumes all
risk once the Group has loaded the product on board the vessel.
All the Group's sales are wholesale.
Payment of the transaction price is typically made on presentation of Bills of
Lading and the issue of Certificates of Quality and Quantity issued by an
independent surveyor. At this point in time, the Group's performance
obligations are complete, and revenues are recognised in full immediately,
i.e. when control of the goods or services underlying the particular
performance obligation is transferred to the customer. The full consideration
is allocated to the performance obligation per the contract which is the sale
of the phosphate concentrate.
The Group has concluded that it is the principal in its revenue contracts
because it typically controls the goods or services before transferring them
to the customer.
A receivable is recognised by the Group when the goods are shipped to the
customer as this represents the point in time at which the right to
consideration becomes unconditional, as only the passage of time is required
before payment is due.
(t) Cost of sales
When inventories are sold, the carrying amount of those inventories is
recognised as an expense in the period in which the related revenue is
recognised. The amount of any write-down of inventories to net realisable
value and all losses of inventories are recognised as an expense in the period
the write-down or loss occurs. The amount of any reversal of any write-down of
inventories, arising from an increase in net realisable value, is recognised
as a reduction in the amount of inventories recognised as an expense in the
period in which the reversal occurs.
(u) Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management, from time to time, to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of assets,
liabilities, income and expenses. These estimates and associated assumptions
are based on experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates. The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected.
The critical judgements made by management in applying accounting policies,
apart from those involving estimations, that have the most significant effect
on the amounts recognised in the financial statements, are outlined as
follows:
(i) Exploration and evaluation assets (Note 5)
The application of the Group's accounting policy for exploration and
evaluation assets requires judgement in determining whether it is likely that
costs incurred will be recovered through successful development or sale of the
asset under review when assessing impairment. Estimates and assumptions made
may change if new information becomes available. If, after expenditures are
capitalised, information becomes available suggesting that the recovery of
expenditures is unlikely, the amount capitalised is written off in the net
profit or loss in the period when the new information becomes available. In
situations where indicators of impairment are present for the Group's
exploration and evaluation assets, estimates of recoverable amount must be
determined as the higher of the estimated VIU or the estimated FVLCD.
(ii) Functional currency
The Group transacts in multiple currencies. The assessment of the functional
currency of each entity within the consolidated Group involves the use of
judgement in determining the primary economic environment each entity operates
in. The Group first considers the currency that mainly influences sales prices
for goods and services, and the currency that mainly influences labour,
material and other costs of providing goods or services. In determining
functional currency, the Group also considers the currency from which funds
from financing activities are generated, and the currency in which receipts
from operating activities are usually retained. See Note 31 for sensitivity
analysis of foreign exchange risk.
(iii) Decommissioning and rehabilitation provisions (Note 16)
Quantifying the future costs of these obligations is complex and requires
various estimates and judgements to be made, as well as interpretations of and
decisions regarding regulatory requirements, particularly with respect to the
degree of rehabilitation required, with reference to the sensitivity of the
environmental area surrounding the sites. Consequently, the guidelines issued
for quantifying the future rehabilitation cost of a site, as issued by the
South African Department of Mineral Resources, have been used to estimate
future rehabilitation costs. The Group appointed Braaf Environmental
Practitioners to conduct an independent specialist update of the
decommissioning and rehabilitation provision.
(iv) Other financial assets
The Group has given guarantees to a number of third parties as described in
Note 7 and lodged funds as security.
The amounts are recoverable subject to satisfactory performance of certain
conditions which requires judgement as to the likelihood of the return of such
guarantees. At the balance sheet date the Directors make judgements on the
amounts expected to be returned and consider that all amounts are recoverable.
(v) Taxation
Judgement is required in determining the provision for income taxes due to the
complexity of legislation. There are many transactions and calculations for
which the ultimate tax determination is uncertain during the ordinary course
of business.
The Group recognises the net future tax benefit related to deferred income
tax assets to the extent that it is probable that the deductible temporary
differences will reverse in the foreseeable future. Assessing the
recoverability of deferred income tax assets requires the Group to make
significant estimates related to expectations of future taxable income.
Estimates of future taxable income are based on forecast cash flows from
operations and the application of existing tax laws in each jurisdiction. To
the extent that future cash flows and taxable income differ significantly
from estimates, the ability of the Group to realise the net deferred tax
assets recorded at the end of the reporting period could be impacted.
Management's judgement is that due to the mine not being at steady state
production it is premature to recognise a deferred tax asset for the
accumulated tax losses.
(vi) Fair value of financial instruments
The judgements and estimates made by the Group in determining the fair values
of the financial instruments are described in Note 13 and 30 to the
Consolidated Financial Statements.
(vii) Impairment indicator assessment
The Group reviews and tests the carrying value of assets when events or
changes in circumstances ("impairment indicators") suggest that the carrying
amount may not be recoverable. At 31 March 2024 and a calculation of
recoverable amount was performed and an impairment reversal of US$ 19 million
is recorded (refer to Note 25). As part of the impairment indicator
assessment, management evaluate the life of mine plan discounted cash flow
model. These calculations require the use of estimates and assumptions. The
key estimates made include discount rates, being the Group's weighted average
cost of capital, future prices of phosphate rock, mine production levels and
foreign currency exchange rates.
(v) Key sources of estimation uncertainty
Property, plant and equipment
The depreciable amount of property, plant and equipment is allocated on a
systematic basis over its useful life. In determining the depreciable amount
management makes certain assumptions with regard to the residual value of
assets based on the expected estimated amount that the Group would currently
obtain from disposal of the asset, after deducting the estimated cost of
disposal, if the asset were already of the age and in the condition expected
at the end of its useful life. If an asset is expected to be abandoned the
residual value is estimated at zero.
In determining the useful lives of property, plant and equipment that is
depreciated, management considers the expected usage of assets, expected
physical wear and tear, legal or similar limits of assets such as mineral
rights as well as obsolescence.
This estimate is further impacted by management's best estimation of proved
and probable phosphate ore reserves and the expected future life of each of
the mines within the Group. The forecast production could be different from
the actual phosphate mined. This would generally result from significant
changes in the factors or assumptions used in estimating phosphate reserves.
These factors include:
· changes in proved and probable ore reserves;
· differences between achieved ore prices and assumptions;
· adverse movements in foreign exchange;
· unforeseen operational issues at mine sites; and
· changes in capital, operating, mining, processing, reclamation
and logistics costs, discount rates and foreign exchange rates.
Any change in management's estimate of the useful lives and residual values of
assets would impact the depreciation charge. Any change in management's
estimate of the total expected future life of each of the mines would impact
the depreciation charge as well as the estimated rehabilitation and
decommissioning provisions.
In determining the FVLCD for purposes of the impairment consideration, the
value is most sensitive to the following assumptions:
· Phosphate rock prices;
· Phosphate recoveries;
· Foreign exchange rates; and
· Operating costs.
Refer to Note 25 for further details.
Life of mine
Life of mine is defined as the remaining years of production, based on
proposed production rates and ore reserves and will be assessed as soon as
additional exploration drilling has been performed and further reserves proven
based on additional test results.
Fair value of derivative instruments
Information about the specific techniques, assumptions and inputs is disclosed
in Note 13 and 30 to the Consolidated Financial Statements. The key estimates
associated with the fair value of the derivative liability include volatility
and the assumptions regarding conversion timing.
(3) Subsidiaries of the Group
The subsidiaries of the Group, all of which are private companies limited by
shares, as at 31 March 2024, are as follows:
Company Country of Registration or Incorporation Registered Office Principal Activity Percentage of ordinary shares held by Company
Kropz SA (Pty) Limited South Africa 1st Floor Intermediate holding company
43 Plein Street 100%
Stellenbosch, 7600
1st Floor
43 Plein Street
Stellenbosch, 7600
1st Floor
43 Plein Street
Stellenbosch, 7600
1st Floor
43 Plein Street
Stellenbosch, 7600
1st Floor
43 Plein Street
Stellenbosch, 7600
Elandsfontein Land Holdings (Pty) Ltd South Africa Property owner 70% *
Kropz Elandsfontein (Pty) Ltd South Africa Phosphate exploration and mining 74% **
West Coast Fertilisers (Pty) Ltd Phosphoric acid production 70%
South Africa
Xsando (Pty) Ltd South Africa Sand sales 70%
Cominco Resources Limited Woodbourne Hall, Intermediate holding company
BVI PO Box 3162, Road Town, 100%
Tortola, British Virgin Islands
Cominco S.A. RoC Woodbourne Hall, Development 100% ***
PO Box 3162, Road Town,
Tortola, British Virgin Islands
Cominco Resources (UK) Ltd England and Wales 35 Verulam Road Service company
Hitchin 100% ***
SG5 1QE
* 46.67% held indirectly
** 38.18% held indirectly
*** held indirectly
The accounting reference date of each of the subsidiaries is coterminous with
that of the Company except of Cominco SA Being 31 December as regulated in the
RoC.
(4) Tangible assets - Property, plant, equipment and mine
development
31 Mar 2024 31 Mar 31 Mar 31 Dec 2022 31 Dec 31 Dec
2024 2024 2022 2022
Cost Accumulated Carrying value Cost Accumulated Carrying value
Depreciation and Impairment Depreciation and Impairment
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Buildings and infrastructure
Land 1,278 (615) 663 1,418 (795) 623
Buildings 9,379 (3,949) 5,430 9,840 (5,597) 4,243
Capitalised road costs 6,853 (4,906) 1,947 7,600 (5,709) 1,891
Capitalised electrical sub-station costs 2,973 (2,090) 883 3,297 (2,445) 852
Machinery, plant and equipment
Critical spare parts 1,824 (755) 1,069 1,786 (1,002) 784
Plant and machinery 86,837 (36,243) 50,594 95,061 (53,486) 41,575
Water treatment plant 2,941 (1,222) 1,719 2,333 (1,308) 1,025
Furniture and fittings 51 (40) 11 56 (41) 15
Geological equipment 71 (52) 19 79 (48) 31
Office equipment 130 (125) 5 30 (28) 2
Other fixed assets 1 (1) - 1 (1) -
Motor vehicles 252 (93) 159 93 (93) -
Computer equipment 138 (121) 17 79 (45) 34
Mine development 17,762 (7,148) 10,614 17,724 (9,788) 7,936
Stripping activity costs 20,536 (8,492) 12,044 22,257 (12,485) 9,772
Game animals 237 - 237 182 - 182
Total 151,263 (65,852) 85,411 161,836 (92,871) 68,965
Reconciliation of property, plant, equipment and mine development - Period
ended 31 March 2024
Opening Additions Fair value gain/ (loss) Impair-ment* Depreciation charge Foreign exchange loss Closing balance
Balance US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000
Disposals
US$'000
Buildings and infrastructure
Land 623 - - - 337 - (297) 663
Buildings 4,243 516 - (1) 1,109 (37) (400) 5,430
Capitalised road costs 1,891 - - 800 (582) (162) 1,947
-
Capitalised electrical sub-station costs 852 - - 356 (252) (73) 883
-
Machinery, plant and equipment
Critical spare parts 784 218 - - 138 - (71) 1,069
Plant and machinery 41,575 1,186 - (42) 11,768 (202) (3,691) 50,594
Water treatment plant 1,025 853 - (60) - (99) 1,719
-
Furniture and fittings 15 - - - - (4) - 11
Geological equipment 31 - - - - (9) (3) 19
Office equipment 2 129 - (27) - (99) - 5
Other fixed assets - - - - - - - -
Motor vehicles - 127 - 56 - (24) - 159
Computer equipment 34 70 (2) - - (81) (4) 17
Mine development 7,936 1,812 - - 1,570 - (704) 10,614
Stripping activity costs 9,772 474 - 2,665 - (867) 12,044
-
Game animals 182 - - 74 - - (19) 237
Total 68,965 5,385 (2) 60 18,683 (1,290) (6,390) 85,411
* Refer to Note 25.
Reconciliation of property, plant, equipment and mine development - Year ended
31 December 2022
Opening Additions Fair value loss Impair-ment* Depreciation charge Foreign exchange loss Closing balance
Balance US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
US$'000
Buildings and infrastructure
Land 1,515 - - (795) - (97) 623
Buildings 10,458 - - (5,747) (33) (435) 4,243
Capitalised road costs 5,143 - - (2,522) (527) (203) 1,891
Capitalised electrical sub-station costs 2,310 - - (1,137) (229) (92) 852
Machinery, plant and equipment
Critical spare parts 1,713 190 - (1,046) - (73) 784
Plant and machinery 86,180 14,911 - (55,775) (1) (3,740) 41,575
Water treatment plant 2,435 56 - (1,366) - (100) 1,025
Furniture and fittings 9 10 - - (4) - 15
Geological equipment 20 18 - - (6) (1) 31
Office equipment 11 - - - (9) - 2
Other fixed assets - - - - - - -
Motor vehicles - - - - - - -
Computer equipment 24 24 - - (12) (2) 34
Mine development 18,938 - - (10,227) - (775) 7,936
Stripping activity costs 6,126 17,178 - (13,035) - (497) 9,772
Game animals 217 - (21) - - (14) 182
Total 135,099 32,387 (21) (91,650) (821) (6,029) 68,965
Game animals
Game animal assets are carried at fair value. The different levels are
defined as follows:
· Level 1: Quoted unadjusted prices in active markets for identical
assets or liabilities that the Group can access as measurement date.
· Level 2: Inputs other than quoted prices included in level 1 that
are observable for the asset or liability either directly or indirectly.
· Level 3: Unobservable inputs for the asset or liability.
Levels of fair value measurements - Level 3.
Kropz Elandsfontein has a fully drawn down project financing facility with BNP
Paribas for US$ 30 million (see Note 15), the outstanding balance as at
period end was US$ 11,262,000. BNP has an extensive security package over all
the assets of Kropz Elandsfontein and Elandsfontein Land Holdings (Pty) Ltd
("Elandsfontein Land Holdings") as well as the share investments in those
respective companies owned by Kropz SA (Pty) Ltd ("Kropz SA").
(5) Intangible assets - Exploration and evaluation costs
31 March 2024 31 March 2024 31 March 2024 31 Dec 31 Dec 31 Dec
2022 2022 2022
Amort- Carrying value Amort- Carrying value
Cost isation Cost isation
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
43,172 - 43,172 42,415 - 42,415
Capitalised costs
The costs of mineral resources acquired and associated exploration and
evaluation costs are not subject to amortisation until they are included in
the life-of-the-mine plan and production has commenced.
Where assets are dedicated to a mine, the useful lives are subject to the
lesser of the asset category's useful life and the life of the mine, unless
those assets are readily transferable to another productive mine. In
accordance with the requirements of IFRS 6, the Directors assessed whether
there were any indicators of impairment. No indicators were identified.
Reconciliation of exploration assets
Opening Additions Disposals Foreign exchange loss Closing balance
Balance US$'000 US$'000 US$'000 US$'000
US$'000
Period ended 31 March 2024
Capitalised exploration costs 42,415 393 - 364 43,172
Opening Additions Disposals Foreign exchange loss Closing balance
Balance US$'000 US$'000 US$'000 US$'000
US$'000
Year ended 31 December 2022
Capitalised exploration costs 44,631 346 - (2,562) 42,415
(6) Right-of-use assets
Period ended Year ended
31 March 2024 31 December
US$'000 2022
US$'000
Cost
Brought forward 103 110
Right-of-use asset derecognised (42)
Foreign exchange differences (4) (7)
As at 31 December 57 103
Amortisation
Brought forward 103 103
Charge for the period - 5
Right-of-use asset derecognised (42)
Foreign exchange differences (4) (5)
As at 31 December (57) 103
Net book value - -
(7) Other financial assets
31 March 31 December
2024 2022
US$'000 US$'000
Eskom guarantee (1) 279 309
Eskom guarantee (2) 283 313
Eskom guarantee (3) 243 -
Centriq insurance DMR guarantee 455 238
Margin Account 267 -
Total 1,527 860
(1) Eskom guarantee
Guarantee issued to Eskom Holdings SOC Limited in the amount of ZAR 5,235,712
in respect of "supply agreement (early termination) guarantee".
(2) Eskom guarantee
Guarantee issued to Eskom Holdings SOC Limited in the amount of ZAR 5,305,333
in respect of an "electricity accounts guarantee".
(3) Eskom guarantee
Guarantee issued to Eskom Holdings SOC Limited in the amount of ZAR4,458,954
in respect of an "electricity accounts guarantee".
Centriq insurance DMR guarantee
Guarantee in favour of Department of Mineral Resources of ZAR 50 million in
respect of a "financial guarantee for the rehabilitation of land disturbed by
prospecting/mining" under an insurance policy. An additional annual premium is
due on 1 November 2024.
Margin Account
Cash collateral balance held with a reputable financial institution of high
credit standing.
Fair value of other financial assets
The carrying value of other financial assets approximate their fair value.
(8) Inventories
31 March 31 December
2024 2022
Non-current: US$'000 US$'000
Stockpile 955 -
Current:
Concentrate* 1,003 790
Consumables 4,772 2,483
Total 6,730 3,273
* Phosphate rock produced by Kropz Elandsfontein.
Inventories classified as 'non-current assets' relate to the phosphate
stockpiles. The Company is in process of analysing and testing the various ore
types being stockpiled to identify and refine the appropriate method of mining
and processing to drive efficiencies. The stockpile ore is unlikely to be
processed within the next 12 months and has therefore been classified as
non-current.
(9) Trade and other receivables
31 March 31 December
2024 2022
US$'000 US$'000
Trade receivables 4,293 -
Prepayments and accrued income 170 209
Deposits 40 41
VAT 1,890 1,294
Other receivables 332 313
Forward exchange contract 188 -
Total 6,913 1,857
Credit quality of trade and other receivables
The credit quality of trade and other receivables are considered recoverable
due to management's assessment of debtors' ability to repay the outstanding
amount.
Credit risk
The maximum exposure to credit risk at the reporting date is the fair value of
each class of receivable mentioned above.
Trade and other receivables past due but not impaired
None of the trade and other receivables were past due at the end of the
reporting dates.
Trade and other receivables impaired
None of the trade and other receivables were considered impaired. Trade and
other receivables have not been discounted as the impact of discounting is
considered to be insignificant.
Fair value of trade and other receivables
The carrying value of trade and other receivables approximate their fair
value.
Expected credit losses
There are no current receivable balances lifetime expected credit losses in
the current period.
(10) Cash and cash equivalents
31 March 31 December
2024 2022
US$'000 US$'000
Bank balances 968 2,120
Total 968 2,120
Credit quality of cash at bank and short-term deposits
The Group only deposits cash and cash equivalents with reputable banks with
good credit ratings.
Fair value of cash at bank
Due to the short-term nature of cash and cash equivalents the carrying amount
is deemed to approximate the fair value.
(11) Share capital
Each shareholder has the right to one vote per ordinary share in general
meeting. Any distributable profit remaining after payment of distributions is
available for distribution to the shareholders of the Company in equal amounts
per share. Shares were issued as set out below:
Share capital Share premium Merger reserve
Number of Total
shares US$'000 US$'000 US$'000 US$'000
At 1 January 2022 909,571,975 1,194 193,524 (20,523) 174,195
Share options exercised 6,700,000 9 - - 9
Shares issued in settlement of guarantee fees 3,971,712 4 307 - 311
Convertible loan - issue of shares 3,474,536 5 232 - 237
As at 31 December 2022 923,718,223 1,212 194,063 (20,523) 174,752
Convertible loan - issue of shares - - - - -
At 31 March 2024 923,718,223 1,212 194,063 (20,523) 174,752
Issue of share capital in the period ended 31 March 2024:
The were no changes to the issued share capital of the Company between
1 January 2023 and 31 March 2024.
Subsequent to the period-end, the Company will issue 643,873,018 new Ordinary
Shares and the Company's issued share capital will then be 1,567,591,241
Ordinary Shares.
Convertible loan facility
Please refer to Note 13.
Share based payment arrangements
Employee Share Option Plan and Long-Term Incentive Plan
As more fully described in the Directors' Report, the Company operates an
ownership-based scheme for executives and senior employees of the Group. In
accordance with the provisions of the plans, executives and senior employees
may be granted options to purchase parcels of ordinary shares at an exercise
price determined by the Board based on a recommendation by the Remuneration
Committee.
The following plans have been adopted by the Company:
· an executive share option plan used to grant awards on Admission
of the Company to AIM and following Admission (the "ESOP Awards") - a
performance and service-related plan pursuant to which nominal-cost options
can be granted; and
· an executive long-term incentive plan (the "LTIP Awards") - a
performance and service-related plan pursuant to which conditional share
awards, nominal-cost options and market value options can be granted,
(together, the ''Incentive Plans'').
An option-holder has no voting or dividend rights in the Company before the
exercise of a share option.
ESOP Awards
ESOP Awards were issued at the time of the Admission of the Company's shares
to the AIM market of the London Stock Exchange in November 2018.
The ESOP Awards will vest as to performance as follows:
· 20% of the award shall vest for growth in share price of 100%
from the Admission placing price (40 pence);
· a further 20% of the award shall vest for growth in share price
of 250% from the Admission placing price;
· a further 30% of the award shall vest for growth in share price
of 350% from the Admission placing price; and
· a further 30% of the award shall vest for growth in share price
of 500% from the Admission placing price.
The value of the options was calculated by way of a Monte Carlo Simulation
using the following assumptions.
ESOP Award assumptions at issue date
Share price GBP 0.40
Exercise price GBP 0.40
Expected volatility 40%
Expected dividends 0%
Risk-free interest rate 2.1%
Option life 10 years
The expected volatility is based on the historic volatility. Options are
stated in UK Pounds Sterling as the Company is listed on the AIM market of the
London Stock Exchange.
As announced on 20 July 2022, Mark Summers expressed his intention to leave
the Company and he resigned as Chief Executive Officer ("CEO") and Executive
Director of the Company in January 2023 and the 3,362,609 ESOP options awarded
to him lapsed and expired. Michelle Lawrence resigned on 31 December 2022 and
the 1,465,137 ESOP options awarded to her lapsed and expired on that date.
There were therefore nil ESOP options remaining at 31 March 2024.
LTIP Awards
A total of 6,700,000 LTIP Awards were issued to a Director and senior
management in August 2020 which were fully exercised in January 2022.
In July 2021, 7,800,000 LTIP Awards were awarded to key members of the
executive management team, including certain Persons Discharging Managerial
Responsibilities ("PDMRs"). Of this total, 4,800,000 lapsed in December
2022. No further LTIP Awards were made in the period ended 31 March 2024 and
none of these LTIP Awards were exercised or lapsed in this period.
Accordingly, 3,000,000 Awards remained outstanding as at 31 March 2024.
These LTIP Awards vest on or before 31 December 2024, subject to the terms of
the LTIP Plan Rules, including financial and non-financial performance
conditions.
These performance conditions are aligned to implementing the Company's
strategic plans, including appropriate weightings on the successful
commissioning and ramp-up of the Elandsfontein project, completion of the
development plan, fund raising and construction of the Hinda project.
The LTIP Awards are £0.001 priced options over a total of 3,000,000 ordinary
shares and represent 0.23% of the Company's issued share capital as at
31 March 2024.
Participants of the LTIP Awards need to remain employed by Kropz in order to
exercise awards.
The Remuneration Committee will determine whether the performance conditions
have been met and to the extent performance conditions have not been achieved
on or before the fifth anniversary of the date of grant.
LTIP Awards were valued using a Monte Carlo simulation model and are to be
expensed over the respective vesting periods, being 17 months for LTIP
Awards.
The value of the options was calculated by using the Black-Scholes model,
using the following assumptions.
LTIP Award assumptions at issue date
Share price GBP 0.055
Exercise price GBP 0.001
Expected volatility 30%
Expected dividends 0%
Risk-free interest rate 1.3%
Option life 7 years
Equity warrants
As part of the equity facility and fundraising in August 2020 the Company
granted 121,837 warrants over the ordinary shares of 0.1 pence each in the
Company, exercisable at 6.75 pence per Ordinary Share for a period of two
years from issue. As they had not been exercised, these options lapsed
during the 2022 financial year and no equity warrants remain in place.
(12) Reserves
Nature and purpose of reserves
Foreign exchange translation reserve
The foreign exchange translation reserve comprises all foreign currency
differences arising from the translation of the assets, liabilities and equity
of the entities included in these consolidated financial statements from
their functional currencies to the presentational currency. A decrease in the
reserve of US$ 937,000 (2022: US$ 3,388,000) was recorded due to changes in
the foreign currencies used to translate assets, liabilities and equity at
consolidation.
Share premium
The share premium account represents the amount received on the issue of
ordinary shares by the Company, other than those recognised in the merger
reserve described below, in excess of their nominal value and is
non-distributable.
Merger reserve
The merger reserve represents the amount received on the issue of ordinary
shares by the Company in excess of their nominal value on acquisition of
subsidiaries where merger relief under section 612 of the Companies Act 2006
applies. The merger reserve consists of the merger relief on the issue of
shares to acquire Kropz SA on 27 November 2018 and Cominco Resources on 30
November 2018. The merger reserve also includes differences between the book
value of assets and liabilities acquired and the consideration for the
business acquired under common control.
Share-based payment reserve
The share-based payment reserve arises from the requirement to value share
options and warrants in existence at fair value (see Note 11).
(13) Shareholder loans and derivative
31 March 31 December
2024 2022
US$'000 US$'000
Shareholder loans - ARC 18,826 17,010
Demand Loan Facility - ARC 41,745 -
Convertible debt - ARC 27,387 15,055
Derivative liability (refer to Note 30) 6,476 23,037
94,434 55,102
Maturity
Non-current - 55,102
Current 94,434 -
94,434 55,102
Shareholders loans - ARC
The loans are: (i) US$ denominated, but any repayments will be made in ZAR at
the then prevailing ZAR/US$ exchange rate; (ii) carry interest at monthly US
LIBOR plus 3%; and (iii) are repayable by no later than 1 January 2035 (or
such earlier date as agreed between the parties to the shareholder
agreements).
Demand Loan facility - ARC Fund
The loans are unsecured, repayable on demand, and interest accruing at SA
prime overdraft rate plus 6%, if not repaid within 6 months from first
utilisation date rate increases by 2%. ARC have no intention to call any
outstanding loans over the next 12 months for cash repayment.
Convertible debt - ARC
On 20 October 2021, the Company entered into a new convertible equity facility
of up to ZAR 200 million ("ZAR 200 Million Equity Facility") with ARC, the
Company's major shareholder. Interest is payable at 14% nominal, compounded
monthly. At any time during the term of the ZAR 200 Million Equity Facility,
repayment of the ZAR 200 Million Equity Facility capital amount will, at the
election of ARC, either be in the form of the conversion into ordinary shares
of 0.1 pence each ("Ordinary Shares") in the Company and issued to ARC, at a
conversion price of 4.5058 pence per Ordinary Share each, representing the
30-day Volume Weighted Average Price ("VWAP") on 21 September 2021, and at
fixed exchange rate of GBP 1 = ZAR 20.24 ("Conversion"), or payable in cash by
the Company at the end of the term of the ZAR 200 Million Equity Facility
which is 27 October 2026. The Company made a drawdown of ZAR 90 million of
the ZAR 200 Million Equity Facility on 26 October 2021 and a further ZAR 37
million on 9 December 2021. Two further draw downs were made in 2022, one
on 25 March 2022 for ZAR 40 million and ZAR 33 million on 26 April 2022. The
ZAR 200 Million Equity Facility is fully drawn at the date of this report.
As announced on 11 May 2022, the Company entered into a new conditional
convertible equity facility of up to ZAR 177 million ("ZAR 177 Million Equity
Facility") with ARC. Interest is payable at 14% nominal, compounded monthly.
At any time during the term of the ZAR 177 Million Equity Facility, repayment
of the ZAR 177 Million Equity Facility capital amount will, at the election of
ARC, either be in the form of the conversion into Ordinary Shares in the
Company and issued to ARC, at a conversion price of 9.256 pence per Ordinary
Share each, representing the 30-day Volume Weighted Average Price ("VWAP") on
4 May 2022, and at fixed exchange rate of ZAR 1 = GBP 0.0504 ("Conversion"),
or payable in cash by the Company at the end of the term of the ZAR 177
Million Equity Facility which is 2 June 2027. The first drawdown on the ZAR
177 Million Equity Facility occurred on 2 June 2022 for ZAR 103.5 million. The
second drawdown on the ZAR 177 Million Equity Facility was made on 7 July 2022
for ZAR 60 million. On 9 August 2022, a final drawdown on the ZAR 177 Million
Equity Facility was made for ZAR 13.5 million. The ZAR 177 Million Equity
Facility is fully drawn at the date of this report.
As announced on 14 November 2022, the Company entered into a new conditional
convertible equity facility of up to ZAR 550 million ("ZAR 550 Million Equity
Facility") with ARC. Interest is payable at the South African prime overdraft
interest rate plus 6%, nominal per annum and compounded monthly. At any time
during the term of the ZAR 550 Million Equity Facility, repayment of the
ZAR 550 Million Equity Facility capital amount will, at the election of ARC,
either be in the form of the conversion into Ordinary Shares in the Company
and issued to ARC, at a conversion price of 4.579 pence per Ordinary Share
each, representing the 30-day Volume Weighted Average Price ("VWAP") on 21
October 2022 and at fixed exchange rate of ZAR 1 = GBP 0.048824
("Conversion"), or payable in cash by the Company at the end of the term of
the ZAR 550 Million Equity Facility which is 30 November 2027. The Company
drew down a further ZAR 107.5 million during the 15-month period and was fully
drawn as at 31 March 2024.
Derivative liability
It was determined that the conversion option embedded in the convertible debt
equity facility be accounted for separately as a derivative liability.
Although the amount to be settled is fixed in ZAR, when converted back to
Kropz's functional currency will result in a variable amount of cash based on
the exchange rate at the date of conversion. The value of the liability
component and the derivative conversion component were determined at the date
of draw down using a Monte Carlo simulation. The debt host liability was
bifurcated based on the determined value of the option. Subsequently, the
embedded derivative liability is adjusted to reflect fair value at each period
end with changes in fair value recorded in profit and loss (refer to Note
30).
Fair value of shareholder loans
The carrying value of the loans approximates their fair value.
(14) Finance lease liabilities
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
In respect of right-of-use assets
Balance brought forward - 7
Repayments during the period - (6)
Foreign exchange differences - (1)
Lease liabilities at end of period - -
Maturity
Current - -
Non-current - -
Total lease liabilities - -
(15) Other financial liabilities
31 March 31 December
2024 2022
US$'000 US$'000
BNP 11,262 26,298
Greenheart Foundation 460 510
Total 11,722 26,808
Maturity
Non-current - -
Current 11,722 26,808
Total 11,722 26,808
BNP
A US$ 30,000,000 facility was made available by BNP Paribas to Kropz
Elandsfontein in September 2016.
In May 2020, Kropz Elandsfontein and BNP Paribas agreed to amend and restate
the term loan facility agreement entered into on or about 13 September 2016
(as amended from time to time). The BNP Paribas facility amendment agreement
extends inter alia the final capital repayment date to Q3 2024, with eight
equal capital repayments to commence in Q4 2022 and an interest rate of 6.5%
plus US LIBOR, up to project completion and 4.5% plus US LIBOR thereafter.
BNP Paribas has an extensive security package over all the assets of Kropz
Elandsfontein and Elandsfontein Land Holdings as well as the share investments
in those respective companies owned by Kropz SA.
The BNP loan is subject to covenant clauses. Kropz Elandsfontein did not reach
project completion as stipulated in the agreement to be 31 December 2022 and
failed to fund the Debt Service Reserve Account, however BNP Paribas has
provided, a waiver to 30 September 2024. The outstanding balance is therefore
presented as a current liability as at 31 March 2024. However, the latest
waiver expiry date coincides with the final payment date.
Greenheart Foundation
A loan has been made to the Group by Greenheart Foundation which is
interest-free and repayable on demand. Louis Loubser, a Director of Kropz plc,
is a Director of Greenheart Foundation.
Fair value of other financial liabilities
The carrying value of the loans approximate their fair value.
(16) Provisions
Reconciliation of provisions - Period ended 31 March 2024
Opening Additions/ Foreign exchange gains Closing balance
Balance Adjustments US$'000 US$'000
US$'000 US$'000
Provision for dismantling costs 973 (614) (84) 275
Provisions for rehabilitation 1,724 (462) (162) 1,100
Total 2,697 (1,076) (246) 1,375
Reconciliation of provisions - Year ended 31 December 2022
Opening Additions/ Foreign exchange gain Closing balance
Balance Adjustments US$'000 US$'000
US$'000 US$'000
Provision for dismantling costs 2,241 (1,367) 99 973
Provisions for rehabilitation 1,792 (185) 117 1,724
Total 4,033 (1,552) 216 2,697
Dismantling and rehabilitation provisions
Prior to 2015, financial provisioning and rehabilitation were governed by the
Mineral and Petroleum Resources Development Act, 2002 (Act No. 28 of 2002)
("MPRDA") and the National Environmental Management Act, 1998 (Act No. 107 of
1998) ("NEMA"). As such the previous financial provisioning was based on the
quantum of the financial provision under regulations 53 and 54 of the MPRDA
and the guideline document published by the Department of Mineral Resources
(now "Department of Mineral Resources and Energy") (DMR 2005 Guideline
Document for the Evaluation of the Quantum of Closure-Related Financial
Provision Provided by a Mine) and assessed according to the guideline.
The Kropz Elandsfontein Mine was placed on Care and Maintenance Phase from
August 2017 to September 2020 due to flaws in the design of the production
process. This was followed by an Optimisation Phase from September 2020 to
September 2021 which related to plant modifications to meet optimal
operational requirements to allow the mine to go into production. At this
time, Kropz Elandsfontein updated their EMPr to include the optimisation
phase. As such the DMRE issued updated conditions, which stated that the
holder of the EMPr must annually assess the environmental liabilities of the
operation by using the master rates in line with the applicable Consumer Price
Index ("CPI") at the time and address the shortfall on the financial provision
submitted in terms of section 24P of NEMA. To comply with the requirements,
Kropz Elandsfontein commissioned Braaf Environmental Practitioners SA (Pty)
Ltd to update the provision in 2021, which was done under the 2015 Regulations
(GNR 1147) and approved by the DMRE.
Kropz Elandsfontein commissioned Braaf Environmental Practitioners SA (Pty)
Ltd to update the provision the 2024 provision and was done in accordance to
Section 41(3) of the MPRDA, the DMRE, as well as Regulations 53 and 54
promulgated in terms of the MPRDA, requires the holder of a prospecting right,
mining right or mining permit to annually assess his or her environmental
liability and increase his or her financial provision to the satisfaction of
the Minister.
The expected timing of any outflows of these provisions will be on the closure
of the respective mines. Estimates are based on costs that are reviewed
regularly and adjusted as appropriate for new circumstances. Future cash flows
are appropriately discounted. A discount rate of 15.26% (2022: 5.52%) was
used.
(17) Trade and other payables
31 March 31 December
2024 2022
US$'000 US$'000
Trade payables 9,149 6,605
Other payables 133 10
Accruals 234 669
Total 9,516 7,284
Fair value of trade and other payables
Trade and other payables are carried at amortised cost, with their carrying
value approximating their fair value.
(18) Directors' remuneration, interests and transactions
The Directors of the Company and the two executives of Kropz Elandsfontein and
Cominco Resources are considered to be the Key Management Personnel ("KMP") of
the Group. Details of the Directors' remuneration, Key Management Personnel
remuneration which totalled US$ 1,074,489 (2022: US$ 747,329) (including
notional option cost and social security contributions) and Directors'
interests in the share capital of the Company are disclosed in the Directors'
Report on page 33. Amounts reflected relate to short-term employee benefits
and were converted to US$ at the 31 March 2024 GBP exchange rate of 0.801 and
ZAR exchange rate of ZAR 18.538.
The highest paid Director in the period received remuneration, excluding
notional gains on share options, of US$ 372,567 (2022: US$ 330,340). Refer
to page 33 to 34 for further details.
(19) Revenue
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Phosphate concentrate 40,087 -
Total 40,087 -
Timing of transfer of Goods
Delivery to port of departure 40,087 -
Total 40,087 -
All revenue from phosphate concentrate is trial revenue. Revenue from
phosphate is recognised at a point in time when control transfers.
(20) Cost of sales
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Production costs 23,645 -
Fuel and diesel 6,470 -
Electricity 5,415 -
Consumables and spares 10,592 -
Wages and salaries 1,026 -
Total 47,148 -
(21) Finance income
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Interest income 265 136
Total 265 136
(22) Operating expenses
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Fair value loss / (gain) on game animals (74) 22
Selling and distribution expenses 5,309 -
Amortisation of right of use asset - 5
Depreciation of property, plant and machinery 912 821
Employee costs (excluding share option cost) 775 1,133
Share option (credit) / cost 6 (222)
Electricity and water - mine operations 434 928
Mining costs* - 54
Plant operating costs and recoveries 318 216
Professional and other services 1,275 667
Auditor's remuneration in respect of audit of the Group and parent 104 136
Auditor's remuneration in respect of audit of the Cominco Group 64 52
Component auditor's remuneration in respect of audit of South African 79 71
controlled entities
Other expenses 1,443 1,925
Total 10,645 5,808
(23) Staff costs
Period ended Year ended 31 December
31 March
2024 2022
No. No.
The average monthly number of employees was:
Operations 12 10
Finance and administration 8 6
Management 3 3
23 19
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Aggregate remuneration (including Directors):
Wages and salaries (including bonuses) 1,708 1,003
Social security costs 88 127
Share-based payments (credit) / cost 6 (222)
Pension costs 5 3
1,807 911
(24) Finance expense
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Shareholder loans 15,350 3,407
Foreign exchange losses 3,634 3,550
Bank debt 2,705 2,576
BNP - debt modification present value adjustment amortisation (257) (233)
BNP amendment fee amortisation 226 205
Other 208 307
Total 21,866 9,812
(25) Impairment reversal/losses
As a result of the recoverable amount analysis performed at the period end,
the following impairment reversal / (loss) was recognised:
31 March 31 December
2024 2022
US$'000 US$'000
Mine property 18,525 (91,650)
Inventory 508 (1,011)
19,033 (92,661)
The impairment reversal / (loss) was recognised in relation to the
Elandsfontein mine. The triggers for the impairment test in the period were
primarily due to the results from the updated MRE increasing in the measured
and indicated resource. The recoverable amount of the Elandsfontein mine was
based on management's estimate of FVLCD and is estimated based on discounted
future cash flows expected to be generated from the continued use of the CGU
using market-based commodity prices and exchange assumptions, estimated
quantities of recoverable minerals, production levels, operating costs and
capital requirements and latest life of mine (LOM) plans following the updated
MRE as announced on 20 June 2024. The impairment test only considered the
section of the mineral resource classified as measured and indicated. The
inferred resource classification was disregarded for impairment testing
purposes.
Key assumptions
The determination of FVLCD is most sensitive to the following assumptions:
· Phosphate rock prices;
· Phosphate recoveries;
· Foreign exchange rates;
· Operating costs.
Phosphate rock prices: Forecast phosphate rock prices are based on
management's estimates and are derived from forward price curves and long-term
views of global supply and demand in a changing environment, particularly with
respect to climate risk, building on past experience of the industry and
consistent with external sources. These prices are reviewed semi-annually.
Estimated long-term phosphate rock prices for the current period that have
been used to estimate future revenues, are as follows:
Long term (2027+)
Assumptions 2025 2026
Phosphate rock per tonne $130 $145 $150
Phosphate recoveries: The production volumes incorporated into the cash flow
model were 4.9 million tonnes of phosphate rock. Estimated production volumes
are based on detailed life-of-mine plans, of the measured and indicated
resourced as defined in the MRE and take into account development plans for
the mine agreed by management as part of the long-term planning process.
Production volumes are dependent on a number of variables, such as: the
recoverable quantities; the production profile; the cost of the development of
the infrastructure necessary to extract the reserves; the production costs;
the contractual duration of mining rights; and the selling price of the
commodities extracted.
Exchange rates: Foreign exchange rates are estimated with reference to
external market forecasts. The assumed long-term US dollar/ZAR exchange rate
are based on a consensus for the period to year 2028. Future years' exchange
rates were estimated using the prevailing inflation and interest rate
differential between USD and ZAR.
Operating cost: Operating costs are estimated with reference to contractual
and actual current cost and adjusted for inflation.
Discount rates: A discount rate of 14.05% was applied to the discounted cash
flows used in the LOM plan. This discount rate is derived from the Group's
post-tax weighted average cost of capital (WACC), with appropriate adjustments
made to reflect the risks specific to the CGU and to determine the pre-tax
rate. The WACC takes into account both debt and equity. The cost of equity is
derived from the expected return on investment by the Group's investors. The
cost of debt is based on the interest-bearing borrowings the Group is obliged
to service and the expected cost of any incremental debt
Sensitivity analysis
The following table summarises the potential impact of changes in the key
estimates and assumptions on the quantum of impairment (assessed independently
of each other):
Reversal of / (increase in) impairment
US$ million
Impact if discount rate Increased by 2% (7.6)
reduced by 2% 8.5
Impact if selling prices increased by 10% 43.5
reduced by 10% -43.5
Impact if production tonnes increased by 10% 26.68
reduced by 10% (29.68)
Impact if foreign exchange rates increased by 10% 6.2
reduced by 10% (6.5)
Impact if operating costs: increased by 10% (35.0)
reduced by 10% 35.0
(26) Taxation
Major components of tax charge Period ended Year ended 31
31 March December 2022
2024 US$'000
US$'000
Deferred
Originating and reversing temporary differences - -
Current tax
Local income tax (27) (602)
Total (27) (602)
The tax charge arose predominantly due to the devaluation of GBP against US$
and the recorded unrealised foreign exchange gains being taxable in the UK.
Reconciliation of tax charge
Period ended 31 March Year ended 31 December
2024 2022
US$'000 US$'000
Profit/(Loss) before tax 370 (97,222)
Applicable UK tax rate 23.8% 19%
Tax at applicable tax rate 88 (18,472)
Adjustments for different tax rates in the Group (1,798) (12,031)
Disallowable expenditure (3,493) 23,744
Losses carried forward not recognised 5,230 7,361
Tax charge 27 602
The movement in tax liabilities is summarised below:
Period ended 31 March Year ended 31 December
2024 2022
US$'000 US$'000
Balance brought forward 597 -
Current period charge 27 602
Interest - 6
Tax paid - -
Foreign exchange differences 26 (11)
Balance carried forward 650 597
The Group had losses for tax purposes of approximately US$ 74.5 million as at
31 March 2024 (2022: US$ 57.5 million) which, subject to agreement with
taxation authorities, are available to carry forward against future profits.
They can be carried forward indefinitely.
A net deferred tax asset of approximately US$ 15.1 million (2022: US$ 16.1
million), after set off of accelerated depreciation allowances in respect of
fixed assets of US$ 38.3 million (2022: US$ 41.1 million), arises in respect
of these losses. It has not been recognised as steady state production has not
been reached. The deferred tax asset and deferred tax liability relate to
income tax in the same jurisdiction and the law permits set off.
(27) Earnings per share
The calculations of basic and diluted loss per share have been based on the
following profit/(loss) attributable to ordinary shareholders and weighted
average number of ordinary shares outstanding:
Period ended Year ended
31 March 31 December
2024 2022
US$'000 US$'000
Profit/(Loss) attributable to ordinary shareholders 8,866 (66,639)
926,718,223 921,908,785
Weighted average number of ordinary shares used in basic loss per share
Share options and warrants - -
Weighted average number of ordinary shares used in diluted loss per share 926,718,223 921,908,785
Basic and diluted profit / (loss) per share (US$ cents) 0.96 (7.23)
(28) Notes to the statement of cash flows
Issue of shares
Period ended 31 March 2024
Non-cash consideration Cash consideration Total
US$'000 US$'000 US$'000
As at 31 March 2024 - - -
Year ended 31 December 2022
Non-cash consideration Cash consideration Total
US$'000 US$'000 US$'000
Share options exercised - 9 9
Shares issued in settlement of guarantee fees - 311 311
Equity facility - issue of shares - 237 237
As at 31 December 2022 - 557 557
Net debt reconciliation
Period ended 31 March 2024
Opening Accrued Fair value movements Cash Foreign exchange gain/(loss) Closing balance
Balance interest US$'000 movements Non-Cash US$'000 US$'000
US$'000 US$'000 US$'000 movements
US$'000
Other financial assets - (11) - 766 0 (88) 1,527
Shareholder loan payable and derivative (55,102) (15,351) 20,601 (46,614) 2,032 (94,434)
-
Other financial liabilities (26,808) - - 14,970 31 85 (11,722)
Total (81,050) (15,361) 20,601 (30,878) 31 2,029 (104,629)
Year ended 31 December 2022
Opening Accrued Fair value movements Cash Foreign exchange gain/(loss) Closing balance
Balance interest US$'000 movements Non-Cash US$'000 US$'000
US$'000 US$'000 US$'000 movements
US$'000
Other financial assets 1,357 - - (427) - (70) 860
Shareholder loan payable and derivative (25,043) (3,791) 8,671 (38,727) 1,135 (57,755)
-
Other financial liabilities (30,586) 28 - 3,712 - (38) (26,808)
Finance leases (7) - - 6 - 1 -
Total (54,279) (3,763) 8,671 (35,436) - 1,028 (83,703)
Reconciliation of working capital items:
Period ended 31 March 2024
Opening Cash Capital allocated Foreign exchange gain/(loss) Closing balance
Balance movements US$'000 US$'000 US$'000
US$'000 US$'000
Trade and other receivables 1,857 5,191 - (135) 6,913
Inventories 3,273 3,431 - 26 6,730
Trade and other payables (7,284) (3,811) - 1,579 (9,516)
Total (2,154) 4,811 - 1,470 4,127
Year ended 31 December 2022
Opening Cash Capital allocated Foreign exchange gain/(loss) Closing balance
Balance movements US$'000 US$'000 US$'000
US$'000 US$'000
Trade and other receivables 1,511 471 - (125) 1,857
Inventories 1,025 3,453 - (197) 4,281
Trade and other payables (3,543) 172 (4,588) 675 (7,284)
Total (1,007) 4,096 (4,588) 353 (1,146)
(29) Related parties
Kropz plc and its subsidiaries
The following parties are related to Kropz plc:
Name Relationship
Mark Summers Director
Louis Loubser Director
Mike Nunn Director
Linda Beal Director
Mike Daigle Director
Lord Robin William Renwick Director
Gerrit Jacobus Duminy Director
Kropz SA (Pty) Ltd Subsidiary
Elandsfontein Land Holdings (Pty) Ltd ("ELH") Subsidiary
Kropz Elandsfontein (Pty) Ltd Subsidiary
West Coast Fertilisers (Pty) Ltd Subsidiary
Xsando (Pty) Ltd Subsidiary
Cominco Resources Limited Subsidiary
Cominco S.A. Subsidiary
Cominco Resources (UK) Ltd Subsidiary
Kropz International Shareholder
The ARC Fund ("ARC") Shareholder
Details of remuneration to KMP are contained in Note 18 to the Consolidated
Financial Statements.
The Consolidated Financial Statements, the following transactions were carried
out with related parties:
Related party balances
Loan accounts - owed to related parties
31 March 31 December
2024 2022
US$'000 US$'000
Shareholder loans - ARC 18,826 17,010
Demand Loan Facility - ARC 41,745 -
Convertible debt - ARC 27,387 15,055
Derivative liability (refer Note 13) 6,476 23,037
Greenheart Foundation (refer Note 15) 460 510
Total 94,894 55,612
Related party balances
Interest accrued to related parties
Period ended 31 March Year ended 31 December
2024 2022
US$'000 US$'000
ARC 15,528 3,407
Total 15,528 3,407
Convertible loan facilities
As described in Note 11 and 13, the Company made drawdowns totalling US$ 43.6
million (2022: US$ 39.2 million) under its convertible loan facilities from
ARC.
The related party transactions were made on terms equivalent to those that
prevail in arm's length transactions only when such terms can be
substantiated.
(30) Categories of financial instrument
Financial assets and liabilities by category
The accounting policies for financial instruments have been applied to the
line items below:
31 March 31 December
2024 2022
US$'000 US$'000
Financial assets at amortised cost
Trade and other receivables 5,023 563
Other financial assets 1,527 860
Cash and cash equivalents 968 2,120
Total 7,518 3,543
Financial liabilities at amortised cost
Trade and other payables 9,515 7,284
Shareholder loans 87,958 32,065
Other financial liabilities 11,722 26,808
Total 109,195 66,157
Financial liabilities at fair value
Derivative liability 6,476 23,037
Recognised fair value measurements
The net fair value and carrying amounts of financial assets and financial
liabilities are disclosed in the Consolidated Statement of Financial Position
and in the notes to the Consolidated Statement of Financial Position.
This note provides an update on the judgements and estimates made by the Group
in determining the fair values of the financial instruments.
(i) Financial instruments Measured at Fair Value
The financial instruments recognised at fair value in the Statement of
Financial Position have been analysed and classified using a fair value
hierarchy reflecting the significance of the inputs used in making the
measurements. At the reporting date, the Group had a convertible loan
facility with ARC. The ZAR amount of the facility is convertible into
ordinary shares of the parent entity (Note 13).
(ii) Fair value hierarchy
The fair value hierarchy consists of the following levels
· Quoted prices in active markets for identical assets and
liabilities (Level 1);
· Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices) (Level 2); and
· Inputs for the asset and liability that are not based on
observable market date (unobservable inputs) (Level 3).
Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
2024
Derivative liability - - 6,476 6,476
2022
Derivative liability - - 23,037 23,037
There were no transfers between levels for recurring fair value measurements
during the period. The Group's policy is to recognise transfers into and
transfers out of fair value hierarchy levels as at the end of the reporting
period.
(iii) Reconciliation: Level 3 fair value measurement
Period Year
ended ended
31 March 2024 31 December 2022
US$'000 US$'000
Derivative liability
Opening balance (23,037) (2,656)
Fair value at initial recognition (3,235) (31,852)
Fair value gain/(loss) recognised in profit and loss 20,601 10,807
Foreign exchange (805) 664
Closing balance (6,476) (23,037)
(iv) Valuation technique used to determine fair value
Derivative liability:
The fair value is calculated with reference to market rates using industry
valuation techniques and appropriate models from a third-party provider. The
Monte-Carlo model utilised includes a high level of complexity and the main
inputs are share price volatility, risk margin, foreign exchange volatility
and UK risk-free rate. A number of factors are considered in determining these
inputs, including assessing historical experience but also considering future
expectations. The determined fair value of the option is multiplied by the
number of shares available for issue pursuant to the ZAR 200 Million Equity
Facility, ZAR 177 Million Equity Facility and the ZAR 550 Million Equity
Facility (refer to Note 13).
Valuation results (as at 31 March 2024)
Total loan amount Value per Number of Total Value
Facility (ZAR) share (p) Shares (GBP)
ZAR200m facility 200,000,000 0.41 219,272,939 898,952
ZAR177m facility 177,000,000 0.29 96,378,567 277,317
ZAR550m facility 550,000,000 0.67 586,442,458 3,953,437
Total 902,093,964 5,129,706
Sensitivity Valuation results (as at 31 March 2024) - Volatility
Total Value (GBP) - Total Value
Base (GBP) - 75%
Base volatility assumption historical
Facility assumption volatility (65%)
ZAR200m facility 86.06% 898,952 342,399
ZAR177m facility 86.06% 277,317 71,099
ZAR550m facility 86.06% 3,953,437 1,700,255
Total 5,129,706 2,113,753
Sensitivity Valuation results (as at 31 March 2024) - Risk Margin
Total Value Total Value
Base risk margin (GBP) - 7% (GBP) - 3%
Facility assumption risk margin risk margin
ZAR200m facility 5% 901,200 896,584
ZAR177m facility 5% 278,116 276,472
ZAR550m facility 5% 3,970,547 3,935,272
Total 5,149,863 5,108,328
Sensitivity Valuation results (as at 31 March 2022) - FX volatility
Total Value Total Value
(GBP) - 20% (GBP) - 10%
Facility Base FX volatility FX volatility FX volatility
ZAR200m facility 13.78% 785,902 969,697
ZAR177m facility 13.78% 230,609 306,900
ZAR550m facility 13.78% 3,508,506 4,232,886
Total 4,525,017 5,509,483
Sensitivity Valuation results (as at 31 March 2024) - UK risk-free rate
Total Value Total Value
(GBP) - UK rf (GBP) - UK rf
Facility Base UK risk-free rate + 2% -2%
ZAR200m facility 3.6% 856,285 943,716
ZAR177m facility 3.6% 260,625 295,080
zAR550m facility 3.6% 3,696,977 4,227,654
Total 4,813,888 5,466,450
(31) Financial risk management objectives
Capital risk management:
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The capital structure of the Group consists of shareholder and external debt,
which includes loans and borrowings (excluding derivative financial
liabilities) disclosed in Notes 13 and 15 and equity as disclosed in the
Statement of Financial Position.
Shareholder and external third-party loans from foreign entities to South
African companies are subject to the foreign exchange controls as imposed by
the South African Reserve Bank ("SARB"). All inward loans into South Africa
require approval by the SARB and all loans in the current capital structure
have been approved by the SARB and all entities in the Group are compliant
with the SARB approvals relevant to the entity concerned and the approvals
granted by the SARB.
Liquidity risk:
Prudent liquidity risk management implies maintaining sufficient cash and
marketable securities, the availability of funding through an adequate amount
of committed credit facilities and the ability to close out market positions.
Due to the dynamic nature of the underlying businesses, Group treasury
maintains flexibility in funding by maintaining availability under committed
credit lines.
The Group's risk to liquidity is a result of obligations associated with
financial liabilities of the Group and the availability of funds to meet
those obligations. The Group manages liquidity risk through an ongoing review
of future commitments and credit facilities.
The table below analyses the Group's financial liabilities into relevant
maturity groupings based on the remaining period at the statement of
financial position to the contractual maturity date. The amounts disclosed in
the table are the contractual undiscounted cash flows. Balances due within 12
months equal their carrying balances as the impact of discounting is not
significant.
Less than Between Between Over five
one year one two and years
US$'000 and five years US$'000
two years US$'000
US$'000
At 31 March 2024
Shareholder loans payable 106,052 - 97,630 -
Trade and other payables 9,515 - - -
Other financial liabilities 11,940 - - -
Total 127,507 - 97,630 -
Less than one year Between one and two years Between two and five years Over five years
US$'000 US$'000 US$'000 US$'000
At 31 December 2022
Shareholder loans payable - - 152,099 -
Trade and other payables 7,283 - - -
Finance leases - - - -
Other financial liabilities 17,233 11,747 - -
Total 24,516 11,747 152,099 -
Credit risk:
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group's
financial assets include trade and other receivables, loans receivable, other
financial assets and cash and cash equivalents.
Ongoing credit evaluation is performed on the financial conditions of the
counterparties to the trade and other receivables, loans receivable and other
financial assets. The Group only deposits cash with major banks with high
quality credit standing and limits exposure to any one counterparty. No credit
limits were exceeded during the reporting period, and management does not
expect any losses from non-performance by these counterparties.
Interest rate risk:
As the Group has significant interest-bearing assets, the Group's income and
operating cash flows are substantially dependent on changes in market
interest rates. At 31 March 2024, if interest rates on the shareholder and
BNP loans (denominated in US$) had been 1% higher/lower with all other
variables held constant, post-tax profit and equity for the period would have
been approximately US$ 234,000 (2022: US$ 769,000) higher/lower
respectively.
Foreign currency risk:
Foreign currency risk is the risk that the fair value of future cash flows of
an exposure will fluctuate because of changes in foreign exchange rates. The
Group's exposure to the risk of changes in foreign exchange rates relates
primarily to the Group's financing activities (when financial liabilities and
cash are denominated other than in a company's functional currency).
Most of the Group's transactions are carried out in South African Rand.
Foreign currency risk is monitored closely on an ongoing basis to ensure that
the net exposure is at an acceptable level.
The Group maintains a natural hedge whenever possible, by matching the cash
inflows (revenue stream) and cash outflows used for purposes such as capital
and operational expenditure in the respective currencies.
The Group's net exposure to foreign exchange risk was as follows:
Functional currency
South African Rand British Pound Total
As at 31 March 2024 US$'000 US$'000 US$'000
Financial liabilities denominated in US$ (30,076) - (30,076)
Net foreign currency exposure (30,076) - (30,076)
Functional currency
South African Rand British Pound Total
As at 31 December 2022 US$'000 US$'000 US$'000
Financial assets denominated in US$ - 28 28
Financial liabilities denominated in US$ (43,260) - (43,260)
Net foreign currency exposure (43,260) 28 (43,232)
Foreign currency sensitivity analysis:
The following tables demonstrate the sensitivity to a reasonably possible
change in South African Rand and GBP exchange rates, with all other variables
held constant.
The impact on the Group's profit before tax is due to changes in the fair
value of monetary assets and liabilities. The Group's exposure to foreign
currency changes for all other currencies is not material.
A 10% movement in the Rand and Pound against the US Dollar would
increase/(decrease) net assets by the amounts shown below. This analysis
assumes that all other variables, in particular interest rates, remain
constant.
As at As at
31 March 2024 31 December 2022
Increase/ Increase/
(Decrease) (Decrease)
US$'000 US$'000
Effects on net assets
Rand:
- strengthened by 10% (3,341) (5,832)
- weakened by 10% 3,341 5,832
Effects on net assets
GBP:
- strengthened by 10% (1,353) (1,296)
- weakened by 10% 1,353 1,296
(32) Segment information
Operating segments
The Board of Directors consider that the Group has one operating segment,
being that of phosphate mining and exploration. Accordingly, all revenues,
operating results, assets and liabilities are allocated to this activity.
Geographical segments
The Group operates in two principal geographical areas - South Africa and the
RoC.
The Group's revenues and non-current assets by location of assets are detailed
below.
31 March 2024 Non-Current Assets
Revenues US$'000
US$'000
South Africa 40,087 87,685
Republic of Congo - 43,380
40,087 131,065
31 December 2022 Non-Current Assets
Revenues US$'000
US$'000
-
South Africa - 69,795
Republic of Congo - 42,415
- 112,240
(33) Non-controlling interests
31 March 31 December
2024 2022
US$'000 US$'000
As at beginning of period (19,854) 5,778
Share of losses for the period (8,523) (31,185)
Share of other comprehensive income 592 142
Kropz plc's investment in non-redeemable preference shares of Kropz 471 5,411
Elandsfontein attributable to non-controlling interest
As at end of the period (27,314) (19,854)
(34) Material subsequent events
Restructuring and fundraising
The Company has undertaken a fundraising to provide Kropz Elandsfontein (Pty)
Ltd ("Kropz Elandsfontein") with additional funds to progress the ramp-up of
operations at the Company's Elandsfontein phosphate project in South Africa
("Elandsfontein Project"), further funding to Cominco SA which owns the Hinda
project in the Republic of the Congo ("Hinda Project"), financing the
remaining repayment of the BNP Facility, partial repayment of accumulated
accrued interest on the CLN by Kropz as well as working capital for the
Company for general corporate purposes. The fundraising was conducted at an
issue price of 1.387 pence per new ordinary share in the Company by way of a
conditional subscription with ARC (the "Subscription") and a retail offer
("REX Retail Offer") via the REX platform ("REX Platform") to raise in
aggregate £8.9 million, before expenses (together, the "Fundraising").
The REX Retail Offer provided minority shareholders in the Company with the
opportunity to participate in the fundraising, on the same economic terms and
at the same price as ARC.
ARC agreed to subscribe for a minimum of 515,098,414 new ordinary shares (the
"Subscription Shares") and agreed to underwrite, pursuant to an underwriting
agreement entered into with the Company, an amount equal to the REX Retail
Offer to ensure that the entire amount of the Fundraising would equate to
approximately £8.9 million (before expenses). Retail investors subscribed in
the REX Retail Offer for a total of 243,118 ordinary shares of 0.1 pence each
in the capital of the Company ("Ordinary Shares"). ARC subsequently subscribed
for 643,629,900 Subscription Shares. The Restructuring, the issue of the CLNs,
the Subscription and the REX Retail Offer were conditional on shareholder
approval of certain resolutions passed at a general meeting held on 20
September 2024.
In addition, the Company will concludet a restructuring of the Group's
financing arrangements (the "Restructuring"). As part of the restructuring
exercise, intercompany debt and certain loans between the Company and its
subsidiaries and the ARC Fund ("ARC") will be simplified and new convertible
loan notes issued (the "Convertible Loan Notes" or "CLNs").
The Restructuring, the issue of the CLNs, and the Fundraising were also
conditional on approval from the South African Reserve Bank ("Exchange Control
Approval") under the South African Exchange Control Regulations, 1961.
The resolutions were duly passed at the general meeting and subject to, inter
alia, Exchange Control Approval being granted, 643,873,018 new Ordinary Shares
in the capital of the Company are to be allotted and issued pursuant to the
Fundraising, representing approximately 41 per cent. of the enlarged issued
share capital of the Company immediately following completion of the
Fundraising.
Details of the Restructuring
The restructuring sought to simplify the intra-group arrangements. In order to
achieve this, the Company plans to under takethe following:
· cancel all non-redeemable preference shares between Kropz and its
subsidiary, Kropz Elandsfontein. Given the accumulated losses and debt burden
in Kropz Elandsfontein, these had no value;
· convert £28.2 million (US$ 37.2 million, ZAR 659.3 million) of
debt held by ARC in Kropz Elandsfontein and other South African subsidiaries
to equity;
· convert all existing intercompany debt between Kropz Plc, Kropz
Elandsfontein, Kropz SA and Elandsfontein Land Holdings to equity; and
· settle £35.1 million (US$ 46.3 million, ZAR 821.3 million) of
the debt from Kropz Elandsfontein and other South African subsidiaries to ARC
through the issue of new CLNs by Kropz.
These steps will eliminate all the debt accumulated within the subsidiaries
and simplify the Group's corporate structure. The Company commissioned an
independent third party to produce an independent valuation of both Kropz
Elandsfontein and Elandsfontein Land Holdings (Pty) Ltd ("Elandsfontein Land")
(together, the "Elandsfontein Subsidiaries") for the purposes of the
Restructuring (the "Independent Valuation") to ensure that the restructuring
is implemented at arm's length using fair value estimates for the
Elandsfontein Subsidiaries.
The Restructuring will result in Kropz's direct and indirect holding moving to
70 per cent. in Kropz Elandsfontein and 66 per cent. in Elandsfontein Land
respectively, with ARC having a direct holding in each of the South African
subsidiaries, for compliance with the South African Black Economic Empowerment
requirements. The Company's ownership of Hinda is not affected by the
Restructuring and remains at 100 per cent (the Company's effective interest
being 90 per cent., after taking into account the dilutionary interest of the
government of the Republic of Congo).
The detailed steps of the above were as follows:
1. Cancellation of non-redeemable preference shares
The Group cancels all of the non-redeemable preference shares held by Kropz in
Kropz Elandsfontein. These are valued at nil and will be fully written down in
the accounts of Kropz.
2. Debt for equity swap between Kropz and the Elandsfontein Subsidiaries
The Elandsfontein Subsidiaries issues new shares to Kropz in proportion to
current debt balances owed. The cumulative debt balance owed by the
Elandsfontein Subsidiaries to Kropz was £29.2 million (US$ 38.6 million, ZAR
683.7 million).
Kropz will subscribe for new shares in Kropz Elandsfontein for a total of
£28.5 million (US$ 37.7 million, ZAR 667.7 million) and in Elandsfontein Land
for a total of £0.7 million (US$0.9 million ZAR 16 million) The subscriptions
will be done at a subscription price based on an Independent Valuation of each
of the Elandsfontein Subsidiaries. The Elandsfontein Subsidiaries utilise the
proceeds from the new share issue to repay the total debt balances owed to
Kropz.
The resultant balance of intercompany debt between Kropz and the Elandsfontein
Subsidiaries will be £ nil (US$ nil ZAR nil).
3. Debt for equity swap between Kropz and Kropz SA
Kropz subscribes for shares in Kropz SA for £2.1 million (US$ 2.7 million,
ZAR 48.5 million), the proceeds of which Kropz SA utilised to repay £2.1
million (US$ 2.7, million ZAR 48.5 million) of debt owed to Kropz. The
resultant balance of intercompany debt between Kropz and Kropz SA will be nil.
4. Debt for equity swap between ARC and the Elandsfontein Subsidiaries
The Elandsfontein Subsidiaries issues new shares to ARC. The cumulative debt
balance owed by the Elandsfontein Subsidiaries to ARC was £63.3 million (US$
83.5 million, ZAR 1.5 billion). ARC subscribes for new shares in Kropz
Elandsfontein for a total of £27.4 million (US$ 36.2 million, ZAR 641.1
million) and in Elandsfontein Land for a total of £0.8 million (US$ 1.0
million, ZAR 18.2 million). The subscriptions will be done at a subscription
price based on an Independent Valuation of each of the Elandsfontein
Subsidiaries. The Elandsfontein Subsidiaries then utilises the proceeds from
the new share issue to repay £28.2 million (US$ 37.2 million, ZAR 659.3
million) of the debt balance owed to ARC. The resultant balance of debt
between ARC and the Elandsfontein Subsidiaries will be £35.1 million (US$
46.3 million, ZAR 821.3 million).
Kropz also has approximately £54.9 million remaining (US$ 72.5 million, ZAR
1.3 billion) of existing convertible debt (the "Existing Equity Facilities")
with ARC (including accumulated interest) which will not be settled as part of
these arrangements. These will be amended to extend the repayment terms from
being 1 year after repayment of the BNP loan facility (which will occur by no
later than 30 September 2024) to being 3 years from the date of issue of the
new CLN, or such later date as confirmed by ARC in writing.
5. New Convertible Loan Note issue
To raise the capital required to settle the remaining balance of the
unconverted bridge loans for the Restructuring, Kropz issues a CLN instrument
to ARC for £35.1 million (US$ 46.3 million ZAR 821.3 million). The terms of
the CLN will be:
· the CLN will be repayable after 5 years or such later date as
confirmed by ARC in writing;
· the interest rate will be the South African prime rate plus 6%
(six percent); and
· the CLN will be convertible, at the lender's discretion, to
additional Kropz shares at the prevailing 30-day volume weighted average price
(VWAP) of 1.46 pence
Kropz utilises the proceeds of the CLN to subscribe for new ordinary shares in
Kropz Elandsfontein. Kropz Elandsfontein in turn applies the proceeds from the
share subscription to repay the outstanding portion of the bridge loans to
ARC, being £35.1 million (US$ 46.3 million, ZAR 821.3 million), resulting in
these being reduced to nil.
As a result of the Restructuring, the Elandsfontein Subsidiaries will no
longer have any debt obligations to ARC post the transaction date. Kropz will
have convertible debt of £88.9 million (including accumulated interest)
outstanding with ARC, being the aggregate of the new CLN and the Existing
Equity Facilities.
Bridge Loan Facility
On 11 July 2024, Kropz Elandsfontein and ARC Fund ("ARC") agreed to a
ZAR 140 million (approximately US$ 8 million) bridge loan facility (the
"Loan") to meet immediate cash requirements at Kropz Elandsfontein. The loan
has been fully drawn by 22 August 2024
(35) Ultimate controlling party
The Directors consider Ubuntu-Botho Commercial Enterprises Proprietary Limited
to be the ultimate controlling party of the Company.
Company Statement of Financial Position
(Registered number: 11143400)
As at 31 March 2024
31 March 31 December
2024 2022
Notes US$'000 US$'000
Fixed assets
Investment in subsidiaries 3 40,205 40,183
Amounts due from subsidiaries 7,906 7,211
48,111 47,394
Current assets
Debtors 4 153 115
Cash and bank balances 562 420
715 535
Current liabilities
Amounts falling due within one year 7 (196) (320)
Shareholder loans and derivative 8 (33,863) -
Current taxation (623) (597)
(34,682) (917)
Net current liabilities (33,967) (382)
Non-current liabilities
Shareholder loans and derivative 8 (-) (38,092)
Net Assets 14,144 8,920
Capital and Reserves
Share capital 5 1,212 1,212
Share premium account 194,757 194,757
Merger reserve 14,878 14,878
Foreign currency translation reserve (1,380) 58
Share-based payment reserve 305 281
Retained losses (195,628) (202,266)
14,144 8,920
The Company has elected to take the exemption under section 408 of the
Companies Act 2006, to not present the Statement of Comprehensive Income.
Capital and reserves include profit for the period of the parent company of
US$ 6,638,000 (2022: US$ (137,716,000)).
The notes on pages 130 to 135 form an integral part of these Financial
Statements.
The Financial Statements on pages 128 to 135 were approved and authorised for
issue by the Board of Directors and were signed on its behalf by:
Louis Loubser, Chief Executive Officer
30 September 2024
Company Statement of Changes in Equity
For the period ended 31 March 2024
Share capital Share premium Foreign currency translation reserve Share-
based Retained Total
Merger reserve payment losses
reserve
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2022 1,194 193,524 14,878 3,548 1,197 (64,550) 149,791
Loss for the year - - - - - (137,716) (137,716)
Other comprehensive loss - - - (3,490) - - (3,490)
Total comprehensive loss for the year - - - (3,490) - (137,716) (141,206)
18 539 - - - - 557
Issue of shares
Share options exercised - 694 - - (694) - -
Share-based payment credit - - - - (222) - (222)
Transactions with owners 18 1,233 - - (916) - 335
1,212 194,757 14,878 58 281 (202,266) 8,920
At 31 December 2022
Profit for the period - - - - - 6,638 6,638
Other comprehensive (loss)/income - - - (1,438) - - (1,425)
Total comprehensive (loss)/income for the period - - - (1,438) - 6,638 5,213
Share-based payment credit - - - - 70 - 70
Share options forfeited - - - - (46) - (46)
Transactions with owners - - - - 24 - 12
1,212 194,757 14,878 (1,380) 305 (195,628) 14,144
At 31 March 2024
Notes to the Company Financial Statements for the period ended 31 March 2024
1. General information
The Company was incorporated on 10 January 2018 and is a public limited
company limited by shares, with its ordinary shares admitted to the AIM Market
of the London Stock Exchange on 30 November 2018 trading under the symbol,
"KRPZ". The Company is domiciled in England and incorporated and registered in
England and Wales. The address of its registered office is 35 Verulam Road,
Hitchin, SG5 1QE. The registered number of the Company is 11143400.
2. Summary of significant accounting policies
(a) Basis of preparation
The Company's Financial Statements have been prepared in accordance with
applicable law and accounting standards in the United Kingdom and under the
historical cost accounting rules (Generally Accepted Accounting Practice in
the United Kingdom).
The Directors have assessed the Company's ability to continue in operational
existence for the foreseeable future in accordance with the FRC guidance on
the going concern basis of accounting and reporting on solvency and liquidity
risks (April 2016). It is considered appropriate to continue to prepare the
Financial Statements on a going concern basis. Disclosures in relation to
going concern are shown in Note 2 (a) to the Consolidated Financial
Statements.
These financial statements have been prepared in accordance with applicable
United Kingdom accounting standards, including Financial Reporting Standard
102 - "The Financial Reporting Standard applicable in the United Kingdom and
Republic of Ireland" ("FRS 102"), and with the Companies Act 2006. The
financial statements have been prepared on the historical cost basis.
The Company has taken advantage of Section 408 of the Companies Act 2006 and
has not included a Profit and Loss account in these separate Financial
Statements. The loss attributable to members of the Company for the period
ended 31 March is US$ 6,638,000 (2022: US$ 137,716,000).
The Company has taken advantage of the following disclosure exemptions in
preparing these financial statements, as permitted by FRS 102 "The Financial
Reporting Standard applicable in the UK":
· the requirements of Section 7 Statement of Cash Flows
· the requirements of Section 11 Financial Instruments
Going concern
Cash and cash equivalents totalled US$ 0.6 million as at 31 March 2024
(2022: US$ 0.4 million). Apart from revenue generated at Kropz Elandsfontein,
the Company has no other current source of operating revenue and the ramp up
of Elandsfontein is still in progress. Therefore, the Company is dependent on
future fund raisings to meet any production costs, overheads and future
development and exploration requirements and quarterly repayments on the BNP
loan that cannot be met from existing cash resources and sales revenue. Also
refer to the going concern note on page 75 to 79.
Going concern basis
Based on the Company's current available reserves, recent operational
performance, forecast production and sales at Kropz Elandsfontein coupled with
Managements' track record to successfully raised additional funds as and when
required, to meet its working capital and capital expenditure requirements,
the Board have concluded that they have a reasonable expectation that the
Company will continue in operational existence for the foreseeable future
and at least for a period of 12 months from the date of approval of these
financial statements.
For these reasons the financial statements have been prepared on the going
concern basis, which contemplates continuity of normal business activities and
the realisation of assets and discharge of liabilities in the normal course of
business.
As there can be no guarantee that the required future funding can be raised in
the necessary timeframe, a material uncertainty exists that may cast
significant doubt on the Company's ability to continue as a going concern and
therefore it may be unable to realise its assets and discharge its liabilities
in the normal course of business.
The financial report does not include adjustments relating to the
recoverability and classification of recorded asset amounts or to the amounts
and classification of liabilities that might be necessary should the Company
not continue as a going concern.
(b) Interest revenue
Interest revenue is accrued on a time basis, by reference to the principal
outstanding and the effective interest rate.
(c) Fixed asset investments
Fixed asset investments in Group undertakings are carried at cost less any
provision for impairment.
(d) Foreign currencies
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 contracted rate or
the rate of exchange ruling at the balance sheet date and the gains or losses
on translation are included in the profit and loss account.
Exchange differences arising on the translation of the Company's results and
net assets from its functional currency of GBP to the presentational currency
of US$ are taken to the foreign currency translation reserve.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, bank balances, deposits with
financial institutions and short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value.
(f) Share-based payment arrangements
The policy for the Company's share-based payment arrangements can be found in
Note 2(r) of the Consolidated Financial Statements.
(g) Derivative assets / liabilities
Derivatives that are embedded in a host contract are accounted for separately
as derivatives if they are not closely related to the host contract, unless
the hybrid (combined) instrument is measured at fair value with changes in
fair value recognised directly in the income statement.
Embedded derivatives are measured at fair value with changes in fair value
recognised in profit or loss.
A derivative is a financial instrument that changes in value in response to an
underlying price and creates the rights and obligations that usually have the
effect of transferring between parties to the instrument one or more of the
financial risks inherent in an underlying instrument. A key characteristic of
derivatives is that they require little or no initial net investment and will
be settled at a future date.
Separable embedded derivatives are measured at fair value with all changes in
fair value recognised in the income statement.
3. Investment in subsidiaries
31 March 31 December
2024 2022
US$'000 US$'000
Cost / recoverable amount
At beginning of the year 40,183 108,650
Purchase of non-redeemable preference shares in Kropz Elandsfontein 5,000 41,000
Impairment of non-redeemable preference shares in Kropz Elandsfontein (7,214) (56,104)
Preference shares paid in excess 2,214 (2,316)
Preference dividends due from subsidiary - Kropz Elandsfontein 14,619 5,046
Impairment of preference dividends due from subsidiary - Kropz Elandsfontein (14,619) (10,304)
Share-based payment transaction with subsidiaries (21) 57
Impairment of investment in subsidiaries - (45,846)
Functional currency translation adjustment 43 -
At end of period 40,205 40,183
Details of the Company's subsidiaries as at 31 March 2024 are set out in Note
3 to the Consolidated Financial Statements.
The Company has invested, in aggregate, US$ 127 million (2022: US$ 122
million) in non-redeemable preference shares of Kropz Elandsfontein. As
described in Note 34 to the Consolidated Financial Statements, the Group is
cancelling all of these non-redeemable preference shares and these are fully
written down in the Company's accounts.
4. Debtors
31 31 December
March
2024 2022
US$'000 US$'000
VAT recoverable 19 22
Other debtors 134 93
153 115
5. Share capital
Details of the Company's authorised, called-up and fully paid share capital
are set out in Note 11 to the Consolidated Financial Statements.
The ordinary shares of the Company carry one vote per share and an equal right
to any dividends declared.
6. Reserves
Foreign exchange translation reserve
The foreign exchange translation reserve comprises all foreign currency
differences arising from the translation of the assets, liabilities and equity
of the entities included in these financial statements from their functional
currencies to the presentational currency.
Share premium
The share premium account represents the amount received on the issue of
ordinary shares by the Company, other than those recognised in the merger
reserve described below, in excess of their nominal value and is
non-distributable.
Merger reserve
The merger reserve represents the amount received on the issue of ordinary
shares by the Company in excess of their nominal value on acquisition of
subsidiaries where merger relief under section 612 of the Companies Act 2006
applies. The merger reserve consists of the merger relief on the issue of
shares to acquire Kropz SA on 27 November 2018 and Cominco Resources on 30
November 2018.
Share-based payment reserve
The share-based payment reserve arises from the requirement to value share
options and warrants in existence at the period end at fair value (see Note 11
to the Consolidated Financial Statements).
7. Creditors: amounts falling due within one year
31 31 December
March
2024 2022
US$'000 US$'000
Trade creditors 89 176
Other creditors and accruals 107 144
196 320
8. Shareholder loans and derivative liability
31 31 December
March
2024 2022
US$'000 US$'000
Convertible debt - ARC 27,387 15,055
Derivative liability 6,476 23,037
33,863 38,092
Maturity
Non-current - 38,092
Current 33,863 -
33,863 38,092
Convertible debt - ARC
On 20 October 2021, the Company entered into a new convertible equity facility
of up to ZAR 200 million ("ZAR 200 Million Equity Facility") with ARC, the
Company's major shareholder. Interest is payable at 14% nominal, compounded
monthly. At any time during the term of the ZAR 200 Million Equity Facility,
repayment of the ZAR 200 Million Equity Facility capital amount will, at the
election of ARC, either be in the form of the conversion into ordinary shares
of 0.1 pence each ("Ordinary Shares") in the Company and issued to ARC, at a
conversion price of 4.5058 pence per Ordinary Share each, representing the
30-day Volume Weighted Average Price ("VWAP") on 21 September 2021, and at
fixed exchange rate of GBP 1 = ZAR 20.24 ("Conversion"), or payable in cash by
the Company at the end of the term of the ZAR 200 Million Equity Facility
which is 27 October 2026. The Company made a drawdown of ZAR 90 million of
the ZAR 200 Million Equity Facility on 26 October 2021 and a further ZAR 37
million on 9 December 2021. Two further draw downs were made in 2022, one on
25 March 2022 for ZAR 40 million and ZAR 33 million on 26 April 2022. The ZAR
200 Million Equity Facility is fully drawn at the date of this report.
As announced on 11 May 2022, the Company entered into a new conditional
convertible equity facility of up to ZAR 177 million ("ZAR 177 Million Equity
Facility") with ARC. Interest is payable at 14% nominal, compounded monthly.
At any time during the term of the ZAR 177 Million Equity Facility, repayment
of the ZAR 177 Million Equity Facility capital amount will, at the election of
ARC, either be in the form of the conversion into Ordinary Shares in the
Company and issued to ARC, at a conversion price of 9.256 pence per Ordinary
Share each, representing the 30-day Volume Weighted Average Price ("VWAP") on
4 May 2022, and at fixed exchange rate of ZAR 1 = GBP 0.0504 ("Conversion"),
or payable in cash by the Company at the end of the term of the ZAR 177
Million Equity Facility which is 2 June 2027. The first drawdown on the ZAR
177 Million Equity Facility occurred on 2 June 2022 for ZAR 103.5 million. The
second drawdown on the ZAR 177 Million Equity Facility was made on 7 July 2022
for ZAR 60 million. On 9 August 2022, a final drawdown on the ZAR 177 Million
Equity Facility was made for ZAR 13.5 million. The ZAR 177 Million Equity
Facility is fully drawn at the date of this report.
As announced on 14 November 2022, the Company entered into a new conditional
convertible equity facility of up to ZAR 550 million ("ZAR 550 Million Equity
Facility") with ARC. Interest is payable at the South African prime overdraft
interest rate plus 6%, nominal per annum and compounded monthly. At any time
during the term of the ZAR 550 Million Equity Facility, repayment of the
ZAR 550 Million Equity Facility capital amount will, at the election of ARC,
either be in the form of the conversion into Ordinary Shares in the Company
and issued to ARC, at a conversion price of 4.579 pence per Ordinary Share
each, representing the 30-day Volume Weighted Average Price ("VWAP") on 21
October 2022 and at fixed exchange rate of ZAR 1 = GBP 0.048824
("Conversion"), or payable in cash by the Company at the end of the term of
the ZAR 550 Million Equity Facility which is 30 November 2027. The Company
drew down a further ZAR 107.5 million during the 15-month period and is fully
drawn as at 31 March 2024.
These liabilities will be amended to extend the repayment terms from being 1
year after repayment of the BNP loan facility (which will occur by no later
than 30 September 2024) to being 3 years from the date of issue of the new
CLN, or such later date as confirmed by ARC in writing.
Convertible liability
It was determined that the conversion option embedded in the convertible debt
equity facility be accounted for separately as a derivative liability.
Although the amount to be settled is fixed in ZAR, when converted back to
Kropz's functional currency, will result in a variable amount of cash based on
the exchange rate at the date of conversion. The value of the liability
component and the derivative conversion component were determined at the date
of draw down using a Monte Carlo simulation. The debt host liability was
bifurcated based on the determined value of the option. Subsequently, the
embedded derivative liability is adjusted to reflect fair value at each period
end with changes in fair value recorded in profit and loss (refer to Note 30
to the Consolidated Financial Statements).
9. Related party transactions
The only key management personnel of the Company are the Directors. Details of
their remuneration are contained in Note 18 to the Consolidated Financial
Statements.
The following transactions and balances with subsidiaries occurred in the
period:
31 31 December
March
2024 2022
US$'000 US$'000
Opening balance 7,211 49,904
Loans advanced 695 612
Loans repaid (937) (877)
Reversal/(Impairment) of loans to subsidiaries 937 (42,428)
7,906 7,211
10. Subsequent events
Disclosures in relation to events after 31 March 2024 are shown in Note 34 to
the Consolidated Financial Statements.
Company information
Current Directors
Lord Robin William Renwick of Clifton, Non-executive Chairman
Louis Ronald Loubser, Chief Executive Officer
Gerrit Jacobus Duminy, Non-executive Director
Linda Janice Beal, Independent Non-executive Director
Michael Daigle, Non-executive Director
Company secretary
Fusion Corporate Secretarial Service (Pty) Ltd
Company number
11143400
Registered address
35 Verulam Road
Hitchin
SG5 1QE
Independent auditors
PKF Littlejohn LLP
15 Westferry Circus
Canary Wharf
London
E14 4HD
Nominated adviser
Grant Thornton UK LLP
30 Finsbury Square
London EC2A 1AG
Broker
H&P Advisory Limited
2 Park Street
Mayfair
London W1K 2HX
Legal advisers as to English Law
Memery Crystal Limited
165 Fleet Street
London EC4A 2DY
Legal advisers as to South African Law
Werksmans Attorneys
The Central, 96 Rivonia Road
Sandton 2196
Johannesburg
South Africa
Bowmans
22 Bree Street
Cape Town 8000
South Africa
Legal advisers as to the laws of Republic of Congo
PricewaterhouseCoopers Tax & Legal
88 Avenue du General de Gaulle
B.P. 1306
Pointe-Noire
Congo
Legal advisers as to the laws of the British Virgin Islands
Harney Westwood & Riegels LP
Craigmuir Chambers
PO Box 71,
Road Town
Tortola VG1110
British Virgin Islands
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Principal bankers
Barclays
One Churchill Place
London E14 5HP
BNP Paribas
11 Crescent Place
Melrose Arch
Johannesburg 2196
South Africa
Financial PR
Tavistock Communications Limited
1 Cornhill
London EC3V 3ND
Market consultant
CRU Consulting
Chancery House
53-64 Chancery Lane
London WC2A 1QS
Company's website: www.kropz.com (http://www.kropz.com)
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