REG-Pensana Plc: Interim results for the 6 months ended 31 Dec 2021
30/03/2022 07:15
30 March 2022 LSE: PRE
Pensana Plc
(“Pensana”, “the Company” or “the Group”)
Interim results for the six months ended 31 December 2021
Pensana Plc, building the world’s first independent, sustainable rare earth
magnet metal supply chain, announces its unaudited results for the six months
ended 31 December 2021.
Half Year Highlights
* Initiation of geotechnical drilling and trenching at both the Saltend and
Longonjo sites ahead of main construction activity
* Appointment of highly experienced natural resources financier Steven Sharpe
as Non-Executive Director of the Company
* Total comprehensive loss for the period of $4,235,572 (31 December 2020:
$1,717,491)
Post period end
* Front-End Engineering Design (“FEED”) for both Saltend and Longonjo
completed and value engineering ongoing
* Approaches received from major European and US electric vehicle and wind
turbine OEMS to secure magnet metal supply chain
* Memorandum of Understanding executed with key Asian trading house for 50% of
Saltend’s production
* Financing well advanced, including potential support from the UK
government’s UK Export Finance and the Automotive Transformation Fund
* Successful institutional equity placing of £10 million with M&G, one of the
UK's largest and long-standing fund managers
* Increasing engagement with UK and US generalist institutional investors
following M&G’s 5% direct investment and the appointment of Head of Investor
Relations and Communications
Comment from Paul Atherley, Chairman:
"We have seen six months of considerable progress for the Company as we look
to establish an independent and sustainable magnet metal rare earth production
facility at Saltend in the UK to meet the burgeoning demand from the electric
vehicle and offshore wind sectors. Both the Saltend and Longonjo projects have
been brought to FEED status, with financing and offtake discussions being well
advanced."
CEO’s Review
COVID-19
Whilst Covid-19’s grip on the world continued to be felt over this six-month
review period to 31 December 2021 (the “Period”) the team, alongside our
key technical advisors progressed unabated on the key workstreams of FEED,
geotechnical drilling and pilot plant test work on the Saltend and Longonjo
projects. Operational readiness programmes saw the work packages for Saltend
and Longonjo delineated to high levels of accuracy and the Group’s
management team strengthened with key appointments to the Board and our
business development team in Japan and Europe. M&G’s £10 million equity
investment which completed post period end was a further significant
institutional endorsement towards the Company’s strategy of becoming the
world’s first major new rare earth mine in over a decade and the critical
rare earth processing hub for the UK. The strategic relevance of these
projects has been highlighted by ongoing engagement with several EV makers,
OEMs, large industrials and potential downstream partners.
Rare earth supply continues to take centre stage
Pensana's Saltend Chemical processing facility is at the forefront of efforts
to break the UK's dependence on China for supplies of rare earths, critical
elements used in the manufacture of permanent magnets, which are used in green
technologies such as EVs and wind turbines. China produces more than 98% of
the world’s magnets and is preparing to tighten its grip on the market
by combining three of its huge state enterprises to form China Rare Earth
Group that will control 70% of China's output. Following recent comments by MP
Alexander Stafford, Chair of the APPG on ESG, vice-chair of the APPG on
Hydrogen, and vice-chair of the APPG for Critical Minerals that "China's
dominance of rare earth metals has left Britain strategically vulnerable",
politicians in Europe and the US are supporting efforts to diversify supply
chains. Recent events in Europe have further highlighted the significance of
ensuring diversification away from the world’s traditional reliance on
fossil fuels, and we believe Pensana will directly benefit from supportive UK
Government policies by building the facility within the Humber Freeport.
Saltend rare earth processing hub (“Saltend”)
Pensana is establishing Saltend in the Humber Freeport zone and alongside the
Wood Group, have designed the facility to be easily adapted to cater for a
range of rare earth feedstocks. This is an attractive alternative to mining
houses who may otherwise be limited to selling their products to China. In
addition to our plans to process Longonjo’s feedstock material, discussions
have advanced with third parties over the Period for the additional supply of
sustainably sourced rare earth carbonates.
Importantly for many miners around the world who are looking to access the
European and US supply chains, it is becoming increasingly clear that the
planned EU and potential UK carbon border taxation means that it is no longer
acceptable for manufacturers to source material extracted or processed
unsustainably. Once in production, Pensana will look to expand production
capacity when additional feedstock becomes available.
Project delivery
FEED for each of Saltend and Longonjo completed post-Period end. A
comprehensive value engineering and optimisation programme is well advanced
and is expected to be reported next month and is expected to result in further
reduction in capital costs.
Working alongside Wood Group’s Perth, Reading and Johannesburg offices,
Paradigm Project Management (PPM), a specialist Africa centric project
management and engineering company, and Professional Cost Consultants (PCC),
with offices in South Africa and the UK, the estimated capex has been reduced
from US$525 million to US$494 million (Saltend: US$195 million and Longonjo:
US$299 million).
Worldwide supply chain constraints and inflationary pressures brought about by
Covid-19 and the recent Ukraine-Russia conflict, which could have impacted
both Saltend and Longonjo projects, have been largely mitigated by this
detailed optimisation and value engineering processes.
Specific workstreams involving capital and operation cost savings currently
underway include:
* Spent acid regeneration to maximise the recycling efficiency of the
sulphuric acid plant integrated with off-gas from the calcining of concentrate
at Longonjo, which is an important aspect of the process and constitutes a
significant reduction of the carbon footprint through reduced reagent
consumption
* Piloting on a more cost-effective flotation concentrate calcining process
offered as a vendor alternative post FEED, which would enable a significantly
shorter lead time for fabrication and ease of installation at Longonjo
* Optimisation of Saltend’s civil & earthworks for load bearing structures
undertaken alongside the completion of detailed geotechnical investigation,
which will shorten the construction period and allow for future affordable
expansion into downstream activities associated with magnet metal production,
magnet recycling and processing of HREO
* Piloting of process simplification opportunities discovered in the MRES
precipitation circuit in Longonjo
Corporate
Board and key company appointments
As previously announced in September 2021, highly experienced natural
resources financier Steven Sharpe was appointed as Non-Executive Director of
the Company. Steve’s experience in the finance space alongside his intimate
knowledge of the rare earth industry has proven invaluable to date. As we move
towards main financing, Steve’s experience and guidance will be a key
component in the team progressing this workstream.
The Company has also appointed experienced ESG professional Danny McNeice as
Sustainability Manager. He will provide technical and strategic guidance to
the business to embed ESG throughout because of his local Yorkshire
experiences in the Drax fold and their carbon footprint mitigation activities.
A key market for the Company is Japan, and Pensana is pleased to announce the
appointment of experienced marketing executive Junji Kitaguchi as the
Company’s marketing representative. Junji has extensive experience of
business development and directed power, environmental and
infrastructure-related businesses as General Manager of Mitsubishi Corporation
Europe & Africa. He most recently operated as a senior advisor within
Mitsubishi corporation creating a joint venture with a major European utility
company.
Angola
At a macroeconomic level, Angola’s economy continues to de-risk. Their
handling of the Covid pandemic has been commendable and with a Fiscal Surplus
on the back of oil prices and a Debt to GDP ratio falling from 135% to 95% in
2021, it was not surprising to see Moody’s upgrade Angola’s credit rating
to B3 with a stable outlook. Anglo American, De Beers, Rio Tinto and others
are now re-investing in the country.
Pensana will host a UK Department of International Trade trip to Angola at the
end of this month. The visit includes delegates from several major mining
houses and UK Export Finance. As part of the trade summit, the delegation will
be visiting the Longonjo site, traveling via the recently upgraded US$2
billion Benguela railway line, which provides a direct link from Longonjo to
the Port of Lobito.
These are extremely positive developments for Angola and a true reflection of
their ongoing ambitions to place the country on a strong growth trajectory
with specific focus on critical technology minerals, agriculture and tourism
sectors.
Exploration
Good progress was made in advancing exploration activities on Longonjo’s
neighbouring Coola License despite Covid 19 travel restrictions preventing
international geological consultants from entering Angola during a large part
of 2021.
Soil samples collected over the Coola carbonatite complex in 2020 were
re-assayed for scandium (Sc) and fluorine (F). Scandium in the soils is highly
anomalous with most values >80 ppm. This is significant as, although scandium
is not an uncommon element, exceptional values of over 200 ppm occur at Coola.
Late-stage hydrothermal fluorite veining occurs in fenite to the southwest of
the ring dyke over an area of roughly 30 000 m2. The fluorite occurs in
breccias as discrete coarse purple grains and irregular veins varying from a
few mm to over 20 cm of pure purple fluorite. Fluorine in re-assayed soils
over the known fluorite occurrence reached values as high as 21% F. An outcrop
sample of a fluorite vein proved to be of very high-grade material (> 97%
CaF2).
The primary focus of exploration during the second half of 2021 was on the
Coola carbonatite following up the rare earth element, scandium and fluorite
mineralisation. The carbonatite complex at Coola was mapped in detail and soil
and rock chip sampling completed over the ring dyke to ascertain the nature,
degree, and extent of rare earth element and scandium mineralisation. In
addition, infill soil sampling and rock chip sampling was completed over the
area of fluorite mineralisation and an augering programme of the soil covered
central diatreme was successful in sampling the underlying saprolite. Detailed
mineralogical work has also commenced on a selection of Coola rock types.
A total of 750 individual samples were taken and dispatched to Nagrom in
Australia for analysis. Seven selected rock samples were sent for
mineralogical studies. Analytical results and mineralogical studies are
expected to be completed by late Q1 2022. Assay results received from the soil
sampling programme at Monte Verde alkaline complex identified an area of
roughly 5 km2 of > 0.5% TREO (max 2.0%) corresponding with mapped outcrops of
carbonatite breccia in which up to 1% TREO was encountered. The REE
mineralisation is accompanied by highly elevated levels of phosphorous,
barium, iron, tantalum, manganese, niobium and strontium.
At the Sulima alkaline complex, extensive trenching was identified from
satellite imagery corresponding with a well-defined radiometric anomaly.
Fieldwork confirmed the presence of five one to seven metre deep, NE-SW
trenches of roughly 90 m length and 500 m apart, excavated over a strike of
2200 m. Material in and around the trenches comprises predominantly secondary
iron and manganese oxides and hydroxides. Handheld XRF analysis of material
from the trenches indicated elevated iron, manganese, titanium, chromium, zinc
and barite. Rock chip samples from various trenches and outcrops in the area
were taken and have been submitted for whole rock geochemistry. Various other
geophysical anomalies identified within the Coola License remain to be
followed up with stream sediment sampling, mapping and rock chip sampling.
Environmental, Social and Governance
Progress continues to be made towards ensuring Pensana upholds the highest
standards of ESG throughout. The ESG Committee, under the Chair of
non-executive director, Baroness Northover, continued to refine the
Committee’s terms of reference to oversee effectiveness of our framework,
policies and systems for ESG management and integration across the Group. To
demonstrate this, Pensana became a signatory to the United National Global
Compact, a partner of the Taskforce for Climate-related Financial Disclosure
(TCFD) and a launch partner of the Oh Yes! Net Zero campaign to promote net
zero and climate action across the Humber region. These actions underline the
Company’s commitment to transparency and further efforts have included
testing the robustness of the Group’s strategy under future climate
scenarios.
Pensana remains focused on climate risk. In addition to becoming a partner of
the TCFD, a comprehensive transitional climate risk and opportunity assessment
was completed over the period, including testing the business strategy against
external climate models. HCV Africa have been instructed to carry out a
physical climate risk assessment for Longonjo and have included a specialist
climate hydrologist in their team to ensure any future climate impacts on
water supply are assessed.
At the Longonjo site, the Environment and Social Impact Assessment (ESIA) has
almost completed under the leadership of independent experts HCV Africa and
Groupo Simples. These independent organisations have ensured adherence to the
International Finance Corporation (IFC) Environmental and Social Performance
Standards has been achieved. The ESIA will provide a framework against which
Pensana will manage and monitor its ESG performance at Longonjo. Once
completed, this document will be submitted to the Angolan government for
mutual agreement.
As part of the resettlement action plan (RAP), mapping of all land in the
affected area has been completed. As a result, minor changes have been made to
the project boundary to minimise impact on the local communities. This has
been a key area of focus for the team, and we are pleased to report, there
will be zero displacement of the local community from their physical
residences.
Agreement with Equinor to recycle end-of-life wind turbine nacelles using
innovative Hydrogen process
In January, it was announced that Pensana had signed a cooperation agreement
with leading energy provider, Equinor, to form a working group to share
technical and commercial information to develop a low energy method for
recycling of end-of-life magnets at Saltend. The partnership with Equinor
supports Pensana’s commitment to the circular economy as it looks to recycle
an addressable annual market of 4,000 tonnes of end-of-life permanent magnets.
Recycling permanent magnets utilising hydrogen not as fuel, but as a
reductant, whilst benefitting from the decarbonised power supply within
Saltend, offers a clean alternative using 88% less energy than virgin
magnet manufacture and aligns with Pensana's continued efforts to produce
a sustainable supply chain for these critical materials. Equinor has
submitted plans for its ‘Hydrogen to Humber (H2H) Saltend’ hydrogen
production facility into phase two of the Government’s Cluster Sequencing
Process. The facility will be supported by the potential supply of hydrogen to
Pensana and other regional hydrogen users, which could be a world first and a
catalyst for the Humber to achieve net zero.
Conflict in Ukraine
Russia’s invasion of Ukraine has added increased concerns to an already
constrained global supply chain and rising inflationary pressures. The Group
has no direct exposure to the region, nor do we anticipate sourcing any
equipment or materials from the area, however we continue to monitor the
situation in the context of the contagion effect it is having on Europe and
the global economy. The Board has agreed to incorporate specific measures
around procurement, the awarding of contracts and any associated workstreams
involving external third-party service providers so as to ensure the Group is
in no way exposed to countries on the sanctions list.
Operating and Financial Review
During the period the consolidated entity incurred a comprehensive loss for
the period of $4,235,572 (31 December 2020: $1,717,491).
Administration expenses increased to $3,670,738 (31 December 2020: $2,010,316)
as a result of increases in PR fees, consultancy fees and increased employee
costs due to an increase in staff members driven by a ramp-up to construction
at Longonjo and Saltend.
The foreign currency exchange loss decreased from $621,652 to $410, 204 for
the six months ended 31 December 2021. These losses arise from the settlement
of invoices in currencies other than the functional currencies (USD, GBP,
AUD), as well as the translation of balances denominated in currencies such as
the pound, Australian dollar, etc. to the US dollar rate where the balances
are held in currencies other than the functional currency of the relevant
company and reflect the movements in these currencies during the respective
periods.
Group net assets decreased in the period to $31,968,192 from $36,168,634. This
was primarily driven by a decrease in cash and cash equivalents of
$12,251,234, as well as a decrease in trade and other receivables of
$3,449,092. These decreases were partially offset by an increase in
property, plant and equipment of $11,216,164. The loss of $4,080,914
incurred during the period further contributed to the decrease in net assets.
The decrease in cash was due to cash spent on the Longonjo and Saltend
projects of $11,407,614. Similarly, the increase in property, plant and
equipment was the result of the capitalisation to the Longonjo Project
development asset of $7,677,072, as well as the capitalization of assets under
construction at the Saltend facility of $3,555,777.
The decrease in trade and other receivables was due to the receipt of funds
following the equity raise in FY21.
The Group experienced net cash outflows from operating activities of
$4,204,325 (31 December 2020: $1,971,930).
Net cash outflows from operating activities increased due to an increase in
operating losses. Net cash outflows from investing activities of $11,407,586
increased from cash outflows of $3,172,186 at 31 December 2020 due to cash
spent on the additions to the Longonjo and Saltend projects as noted above.
The decrease in the cash inflows from financing activities from $8,576,685 for
the six months ended 31 December 2020 to $3,360,677 for the six months ended31
December 2021 was due to the decrease in the proceeds from the issuance of
equity.
The Directors have prepared a cash flow forecast for the period ended 30 June
2023. The forecast indicates that whilst the Group has sufficient funding to
meet its corporate and general operating costs, the Group will require
additional funding over the next twelve months to meet its committed and
planned exploration and development expenditure related to the Saltend and
Longonjo Projects. Please refer note 3 to the financial statements for more
detail on the going concern statement.
Accordingly, the Directors have resolved to undertake certain mitigating
actions including actively engaging with institutional investors and financing
institutions in the United Kingdom and Europe to discuss opportunities around
potential future financing in anticipation of key project investment
milestones as part of the business plan being reached and the associated
funding requirements attached thereto. Such additional funding will be
required to meet the Group’s committed and planned development expenditure
across the forthcoming year.
The ability of the Group to continue as a going concern is dependent on
securing such additional funding given its forecast expenditure above. These
conditions indicate a material uncertainty which may cast significant doubt as
to 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.
Principal Business Risks
The Group is exposed to a number of risks and uncertainties which could have a
material impact on its long-term development, and performance and management
of these risks is an integral part of the management of the Group. An overview
of the key risks which could affect the Group’s operational and financial
performance was included in the Company’s 2021 Annual Report, which can be
accessed at www.pensana.co.uk. These may impact the Group over the medium to
long term; however, the following key risks have been identified which may
impact the Group over the short term.
Financing and liquidity
The Company is of the opinion that the Group has sufficient cash to meet its
day to day corporate and operational working capital requirements and
currently committed exploration and development expenditure, however post
announcement of FEED and final investment decision expected by Q3 FY 2022, the
Group will furthermore need to raise additional capital based on the
forecasted exploration and development expenditures costs related to rollout
of the Longonjo and Saltend projects and the Coola exploration. The Group has
no history of NdPr oxide production at its planned Saltend facility nor
mineral production at the Longonjo Project and accordingly has no revenues
from operations and negative cash flows and will require additional future
capital in the short term to continue its exploration activities and to
commence development of the Saltend and Longonjo Project.
COVID-19 pandemic and Ukraine-Russia conflict
The outbreak of the COVID-19 pandemic has had an impact on the Group’s
businesses. The government lockdown in Angola led to a temporary suspension of
work at the Longonjo Project albeit that work has now resumed. Further
escalation of the COVID-19 pandemic, and the implementation of any additional
government-regulated restrictions which delays the Group in carrying out its
business activities at the Longonjo and Saltend Projects (such as preparatory
works) ultimately delays the Group’s ability to reach production and start
to generate cash and so could have a material adverse impact on the Group’s
operations and financial results. Additionally, the recent Ukraine-Russia
conflict has created increased uncertainty and volatility in debt and equity
markets alongside increased inflationary pressures, supply chain constraints
and increased FX volatility which may make the requisite funding for the
Longonjo and Saltend Projects more difficult to secure or affect the terms
available.
Mr. Tim George
Chief Executive Officer
29 March 2022
INDEPENDENT REVIEW REPORT TO PENSANA PLC
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 December 2021 is not prepared, in
all material respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of the United
Kingdom’s Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2021 which comprises the condensed consolidated statement of
comprehensive income, condensed consolidated statement of financial position,
condensed consolidated statement of changes in equity, the condensed
consolidated statement of cash flows and the related notes.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, “Review of Interim Financial Information Performed by
the Independent Auditor of the Entity” (“ISRE (UK) 2410”). A review of
interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an
audit. Accordingly, we do not express an audit opinion.
As disclosed in note 3, the annual financial statements of the group are
prepared in accordance with UK adopted International Financial Reporting
Standards (IFRSs). The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with UK adopted
International Accounting Standard 34, “Interim Financial Reporting”.
Material uncertainty related to Going Concern
We draw attention to note 3 to the half-yearly financial report concerning the
Group’s ability to continue as a going concern. The matters explained in
note 3 indicate that the Group will require additional funding to meet its
planned expenditures, that the required capital has not been secured at the
date of this report and the availability of such funding is not guaranteed. As
stated in note 3, these conditions indicate the existence of a material
uncertainty which may cast significant doubt over the Group’s ability to
continue as a going concern. Our opinion is not modified in respect of this
matter.
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom’s Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusions, including our conclusions in
the Material Uncertainty related to Going Concern section, are based on
procedures that are less extensive than audit procedures, as described in the
Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and
for the purpose of our terms of engagement or has been expressly authorised to
do so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
29 March 2022
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Condensed consolidated Statement of Comprehensive Income
for the six months ended 31 December 2021
Unaudited 31 December 2021 Unaudited 31 December 2020
Note US$ US$
Administration expenses 5 (3,670,738) (2,010,316)
Foreign currency exchange loss (410,204) (621,652)
Finance Income 28 223
Loss before income tax (4,080,914) (2,631,745)
Income tax credit 6 - -
Total loss for the period (4,080,914) (2,631,745)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (154,658) 914,254
Total comprehensive loss for the period (4,235,572) (1,717,491)
Net loss for the period is attributable to:
Owners of Pensana Plc (4,080,914) (2,631,745)
Total comprehensive loss is attributable to:
Owners of Pensana Plc (4,235,572) (1,717,491)
Loss per share attributable to owners of Pensana Plc:
Basic (cents per share) 16 (1.82) (1.00)
Diluted (cents per share) 16 (1.82) (1.00)
Notes to the interim financial statements are included on pages 13 to 23.
Condensed consolidated Statement of Financial Position
as at 31 December 2021
Unaudited As at 31 December 2021 Audited As at 30 June 2021
Note US$ US$
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 9 29,723,932 18,507,768
Exploration and evaluation expenditure 10 135,453 132,040
TOTAL NON-CURRENT ASSETS 29,859,385 18,639,808
CURRENT ASSETS
Cash and cash equivalents 7 4,552,862 16,787,591
Trade and other receivables 8 1,920,915 5,370,007
TOTAL CURRENT ASSETS 6,473,777 22,157,598
TOTAL ASSETS 36,333,162 40,797,406
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 11 4,364,970 4,628,772
TOTAL CURRENT LIABILITIES 4,364,970 4,628,772
TOTAL LIABILITIES 4,364,970 4,628,772
NET ASSETS 31,968,192 36,168,634
EQUITY
Issued capital 12 280,413 279,398
Share premium 34,278,655 34,195,957
Reserves 51,331,279 51,534,520
Accumulated losses (53,922,155) (49,841,241)
TOTAL EQUITY 31,968,192 36,168,634
Notes to the interim financial statements are included on pages 13 to 23.
Condensed consolidated Statement of Changes in Equity for the six months ended
31 December 2021
Fully paid ordinary shares Share premium Shares to be issued Reserve Accumulated Losses Merger Reserve
Unaudited US$ US$ US$ US$ US$
Balance at 1 July 2021 279,398 34,195,957 - (49,841,241) 45,748,045
Loss for the period - - - (4,080,914)
Other comprehensive income - - - - -
Total comprehensive loss for the period - - - (4,080,914) -
Issue of shares (note 12) 1,015 82,698 - - -
Share based payments (note 15) - - - - -
Balance at 31 December 2021 280,413 34,278,655 - (53,922,155) 45,748,045
Foreign Currency Reserve Share based Payments Reserve Equity Reserve Total
Unaudited US$ US$ US$ US$
Balance at 1 July 2021 422,678 5,863,797 (500,000) 36,168,634
Loss for the period - - (4,080,914)
Other comprehensive income (154,658) - - (154,658)
Total comprehensive loss for the period (154,658) - - (4,235,572)
Issue of shares (note 12) - (83,713) - -
Share based payments (note 15) - 35,130 - 35,130
Balance at 31 December 2021 268,020 5,815,214 (500,000) 31,968,192
Fully paid ordinary shares Share premium Shares to be issued Reserve Accumulated Losses Merger Reserve
US$ US$ US$ US$ US$
Unaudited
Balance at 1 July 2020 221 945 3,116,850 3,300,560 (40,470,379) 45,748,045
Loss for the period - - - (2,631,745) -
Other comprehensive income - - - - -
Total comprehensive loss - - - (2,631,745) -
Issue of shares (note 12) 39,541 11,954,334 (3,330,560) - -
Cost of issuing shares (116,620) - - -
Share based payments (note 15) - - - - -
Issue of shares – conversion of performance rights 654 62,922 - - -
Balance at 31 December 2020 262,140 15,017,486 - (43,102,124) 45,748,045
Foreign Currency Reserve Share based Payments Reserve Equity Reserve Total
US$ US$ US$ US$
Unaudited
Balance at 1 July 2020 (2,032,999) 5,477,162 (500,000) 14,861,184
Loss for the period - - - (2,631,745)
Other comprehensive income 914,254 - - 914,254
Total comprehensive loss 914,254 - - (1,717,491)
Issue of shares (note 12) - - - 8,693,305
Cost of issuing shares - - - (116,620)
Share based payments (note 15) - 350,797 - 350,797
Issue of shares – conversion of performance rights - (63,576) - -
Balance at 31 December 2020 (1,118,745) 5,764,383 (500,000) 22,071,185
Notes to the interim financial statements are included on pages 13 to 23.
Condensed consolidated Statement of Cash Flows
for the six months ended 31 December 2021
Unaudited 31 December 2021 Unaudited 31 December 2020
Note US$ US$
Cash flows from operating activities
Operating cash flows 18 (4,204,325) (1,971,930)
Net cash used in operating activities (4,204,325) (1,971,930)
Cash flows from investing activities
Interest received 28 223
Payments for exploration expenditure (3,413) (3,172,409)
Additions to property, plant and equipment (11,404,201) -
Net cash used in investing activities (11,407,586) (3,172,186)
Cash flows from financing activities
Proceeds from issues of equity securities 3,360,677 8,693,305
Share issue costs - (116,620)
Net cash provided by financing activities 3,360,677 8,576,685
Net (decrease)/ increase in cash and cash equivalents (12,251,234) 3,432,569
Cash and cash equivalents at 1 July 16,787,591 4,106,321
Effects of exchange rate changes on the balance of cash held in foreign currencies 16,505 13,851
Cash and cash equivalents at the end of the period 7 4,552,862 7,552,741
Notes to the interim financial statements are included on pages 13 to 23.
Notes to the financial statements
1. General information
The consolidated financial statements present the financial information of
Pensana Plc and its subsidiary (collectively, the Group) for the six months
ended 31 December 2021 in United States dollars (USD or $). Pensana Plc (the
Company or the parent) is a public company limited by shares listed on the
Main Market of the London Stock Exchange and incorporated in England & Wales
on 13 September 2019. The registered office is located at 100 Pall Mall, St
James, London, United Kingdom, SW1Y 5NQ.
The Company is focussed on the establishment of an integrated rare earth
processing facility in the UK with a view to creating the world’s first
sustainable magnet metal supply chain.
In early 2020, Pensana Metals Ltd re-domiciled the group to the United Kingdom
pursuant to a scheme of arrangement in which Pensana Metals Ltd became a
wholly owned subsidiary of Pensana Plc. Prior to the transaction the Company
was incorporated on 13 September 2019 and was a wholly owned subsidiary of
Pensana Metals Ltd.
The Board of Pensana Plc resolved to restructure the group to remove redundant
holding companies and streamline the group structure. As part of this
restructuring process the shares in the wholly owned subsidiaries, Sable
Minerals GmbH and Sable Rare Earths GmbH were acquired directly by Pensana
Rare Earths Plc and it is anticipated that additional dormant entities in
Tanzania and Australia will be liquidated during the next 6 months.
2. New accounting standards and interpretations
(a) Changes in accounting policies and disclosures
From 1 July 2021, the Group has adopted the following Standards and
Interpretations, mandatory for annual periods beginning on 1 July 2021.
Standard Description Effective date
Amendments to IFRS 16 Amendments to IFRS 16: Covid-19 – Related Rent Concessions 1 April 2021
Amendments to IFRS 4 Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 1 January 2021
Improvements to IFRSs’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform – Phase 2 1 January 2021
The application of these standards have not had a material impact on the
financial statements.
(b) Accounting standards and interpretations issued but not yet effective:
The Group has elected not to early adopt the following revised and amended
standards.
Standard Description Effective date
IFRS 17 IFRS 17 Insurance contracts 1 January 2023
Amendment to IFRS 17 Amendment to IFRS 17 – Initial application 1 January 2023
IAS 16 Amendments to IAS 16 ‘Property, plant and equipment’ 1 January 2022
IAS 37 Amendments to IAS 37 ‘Provisions, contingent liabilities and contingent assets’ 1 January 2022
IFRS 3 Amendments to IFRS 3 ‘Business Combinations’ 1 January 2022
Improvements to IFRSs’ Improvements to IFRS1, IFRS 9, IFRS 16 and IAS 41 1 June 2022
Amendments to IAS 8 Amendments to IAS 8: Definition of accounting estimates 1 January 2023
Amendments to IAS 1 and IFRS Practise Statement 2 Amendments to IAS 1 and IFRS Practise Statement 2 – Disclosure of accounting policies 1 January 2023
Amendments to IAS 12 Amendments to IAS 12: Deferred tax related to assets and liabilities from a single transaction 1 January 2023
Amendment to IAS 1 Amendments to IAS 1: Classification of liabilities as current or non-current 1 January 2023
Management has reviewed and considered these new standards and interpretations
and none of these are expected to have a material effect on the reported
results or financial position of the Group.
3. Significant accounting policies and Going Concern
Basis of preparation
The interim results, which are unaudited, have been prepared in accordance
with the requirements of International Accounting Standard 34. This condensed
interim report does not include all the notes of the type normally included in
an annual financial report. This condensed report is to be read in conjunction
with the Annual Report for the year ended 30 June 2021, and any public
announcements made by the Group during the interim reporting period. The
comparative financial information for the year ended 30 June 2021 in this
interim report does not constitute statutory accounts for that year. The
statutory accounts for 30 June 2021 have been delivered to the Registrar of
Companies.
The auditors' report on those accounts was unqualified but drew attention to a
material uncertainty in relation to going concern. It did not contain a
statement under 498(2) or 498(3) of the Companies Act 2006. The financial
report for the six months ended 31 December 2021 was prepared in accordance
with the annual financial statements of the group are prepared in accordance
with UK adopted International Financial Reporting Standards (IFRSs).
The accounting policies applied in this condensed interim report are
consistent with the polices applied in the annual financial report for the
year ended 30 June 2021 unless otherwise noted.
As disclosed in the 30 June 2021 Annual Report the Company was incorporated on
13 September 2019 as a wholly owned subsidiary of Pensana Metals Ltd. The
Company subsequently acquired 100% of the share capital of Pensana Metals and
its subsidiary companies for the effective issuance of 152,973,315 shares to
the shareholders of Pensana Metals Ltd further to the scheme of arrangement
approved on 22 January 2020 and completed on 5 February 2020.
The shares issued to the former shareholders of Pensana Metals Ltd comprised
the 50,000,000 shares with a nominal value of £0.001 per share subscribed on
incorporation of the Company by Pensana Metals Ltd which were transferred to
CHESS Depositary Nominees Pty Ltd (a subsidiary of the ASX) for use in the
scheme of arrangement and 102,973,314 shares with a nominal value of £0.001
per share additionally issued by the Company to CHESS Depositary Nominees Pty
Ltd for use in the scheme of arrangement. CHESS Depositary Nominees Ltd
subsequently issued CHESS Depositary Instruments in proportion to the
interests the former shareholders of Pensana Metals held in that company for
trading on the ASX with 152,973,315 CHESS Depositary Instruments issued for
trading. The transaction represented a group reconstruction and common control
transaction.
The accounting for common control transactions is scoped out of IFRS 3 and,
accordingly the Group has developed an accounting policy with reference to
methods applied in alternative GAAPs (Generally Accepted Accounting
Principles). Consequently, the consolidated financial statements are presented
as if the Company has always been the holding Company for the Group and the
Group has elected to apply merger accounting principles. Under this policy,
the Company and its subsidiaries are treated as if they had always been a
Group.
The results are included from the date the subsidiaries joined the Group and
the comparatives reflect the results of the Company and its subsidiaries. No
fair value adjustments occur as a result of the transaction and the assets and
liabilities are incorporated at their predecessor carrying values.
The consolidated financial statements are presented in United States Dollars
(US$) rounded to the nearest dollar.
The policies have been consistently applied to all the years presented, unless
otherwise stated.
Going Concern
The consolidated financial statements have been prepared on a going concern
basis with the Directors of the opinion that the Group can meet its
obligations as and when they fall due.
At 31 December 2021 the Group has a net asset position of $31,968,192 (30 June
2021: $36,168,634) including cash and cash equivalents of $4,552,862 (30 June
2021: $16,787,591), had incurred a loss after income tax of $4,080,914 (Six
months ended 31 December 2021: $2,631,745) and experienced cumulative net cash
outflows from operating and investing activities of $15,440,748 (Six months
ended 31 December 2020: $5,144,116).
The Directors have prepared a cashflow forecast for a period of at least
twelve months from the date of this report. In assessing the going concern
basis of preparation, the Directors have given consideration to the principal
risks and uncertainties facing the business, including specific consideration
of the impact of COVID-19 in terms of the availability of funding and
progression of the Longonjo NdPr Project in Angola and the Saltend Project in
the UK.
Similarly, the Directors have also considered the impact of the Russia-Ukraine
war as it relates to costs and the potential volatility in debt and equity
markets. Conversely, the demand for clean energy rises at such times,
sparking increases in prices of rare earth metals.
The forecasts demonstrate that the Group has sufficient cash to meet its day
to day corporate and operational working capital requirements and currently
committed exploration and development expenditure, however post announcement
of FEED and final investment decision expected by Q3 FY 2022, the Group will
furthermore need to raise additional capital based on the forecasted
exploration and development expenditures costs related to rollout of the
Longonjo and Saltend projects and the Coola exploration.
The Directors have therefore considered mitigating actions and are confident
of being able to raise the required capital through either debt or equity
financing (or combination thereof) during the 12-month period and have engaged
ABG Sundal Collier (ABGSC), a leading Nordic investment bank headquartered in
Oslo, Norway, to progress the debt financing. Furthermore, the Company’s
expression of interest in the UK Government’s up to £1bn Automotive
Transformation Fund (“ATF”) has been received positively by the programme
board. The application for grant or other forms of financial support is
currently under Government review, however the Company does not have any
indication on the timing of any potential award.
Despite the ongoing engagements, the directors note that the required capital
has not been secured at the date of this report and the availability of such
funding is not guaranteed. These circumstances indicate the existence of a
material uncertainty which may cast significant doubt about 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 the adjustments that would
result if the Group was unable to continue as a going concern.
Critical accounting judgements and key sources of estimation uncertainty
In applying the Group’s accounting policies management continually evaluates
judgements, estimates and assumptions based on experience and other factors,
including expectations of future events that may have an impact on the Group.
All judgments, estimates and assumptions made are believed to be reasonable
based on the most current set of circumstances available to management. Actual
results may differ from the judgements, estimates and assumptions.
Significant judgements, estimates and assumptions made by management in the
preparation of these financial statements are outlined below:
(i) Significant accounting judgements
Impairment of assessment of development assets (note 9), the impairment of
assessment of exploration and evaluation expenditure (note 9), as well as the
impairment of assessment of assets under construction (note 9)
The ultimate recovery of the value of the Group’s development assets and
assets under construction as at 31 December 2021, as well as the ultimate
recovery of the value of the Group’s exploration and evaluation assets as at
31 December 2021 and 31 December 2020, are dependent on the successful
development and commercial exploitation, or alternatively, sale, of the
Longonjo Project, as well as the successful development and commercial
exploitation of the Saltend facility.
31 December 2021
Judgment was exercised in assessing the extent to which impairment indicators
existed at 31 December 2021 in respect of the Longonjo Project and associated
balances, as well as the Saltend project. In forming this assessment,
internal and external factors were evaluated. Management determined that no
impairment indicators existed having considered the Company’s market
capitalisation relative to the Group’s net asset value, the progression of
the Longonjo Project and associated Competent Person’s Report, financial
Life of Mine Plan, studies and Bankable Feasibility Study equivalent
assessments. The underlying financial Life of Mine Plan involves estimates
regarding commodity prices, production and reserves, operating costs and
capital development together with discount rates.
31 December 2020
Management considered whether there are indicators as to whether the asset
carrying values for exploration and evaluation assets exceed their recoverable
amounts. This consideration included assessment of the following:
* expiration of the period for which the entity has the right to explore in
the specific area of interest with no plans for renewal;
* whether substantive expenditure on further exploration for and evaluation of
mineral resources in the specific area is neither budgeted nor planned;
* exploration for and evaluation activities 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; and
* whether sufficient data exists 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.
Management judgement is required to determine whether the expenditures which
are capitalised as exploration and evaluation assets will be recovered by
future exploitation or sale or whether they should be impaired. In assessing
this, management determines the possibility of finding recoverable ore
reserves related to a particular area of interest, which is a subject to
significant uncertainties. Many of the factors, judgements and variables
involved in measuring resources are beyond the Group’s control and may prove
to be incorrect over time. Subsequent changes in resources could impact the
carrying value of exploration and evaluation assets.
Based on the information the Company has on the above, it was concluded by
management that no impairment indicator existed at 31 December 2020 for the
exploration and evaluation assets. In forming this assessment, the Directors
exercised judgement and considered the results of ongoing exploration work,
the significant increase in demand for NdPr and associated pricing, the
implied valuations provided by the equity placings in the period, the
progression in the Business Plan towards project start up and the resource
statement.
Recoverability of equity receivable (note 8)
Management’s judgement is required to determine whether the outstanding
equity receivable at period end is recoverable. Management is comfortable that
the structured repayment plan, that includes secured collateralisation in
excess of the outstanding receivable adequately covers the outstanding
receivable and that no further provision thereon is required. Refer to note
8 for further details.
(ii) Significant accounting estimates and assumptions
Share-based payment transactions (note 15).
The Group measures the cost of equity-settled transactions with directors and
others by reference to the fair value of the equity instruments at the date at
which they are granted. The fair value is determined using a Binomial model
and requires estimates for inputs such as share price volatility. The
share-based payments arrangements are expensed on a straight-line basis over
the vesting period, based on the Group’s estimate of shares that will
eventually vest. At each reporting date, vesting assumptions are reviewed to
ensure they reflect current expectations and immediately recognises any impact
of the revision to original estimates. Judgment is required as to the
likelihood of the vesting conditions being met, such as project milestones
being achieved if fully vested share options are not exercised and expire then
the accumulated expense in respect of these is reclassified to accumulated
losses.
4. Operating Segments
Description of segments
The Group has identified its operating segments based on the internal reports
that are used by the chief operating decision makers in assessing performance
and determining the allocation of resources.
The Group has identified that it has two operating segments being related to
the activities in Angola and Saltend (UK), on the basis that the assets in
Tanzania were fully impaired at 30 June 2021. The unallocated relates to
operations in Australia and Portugal.
2021
Angola UK Unallocated Total
As at 31 December 2021 US $ US $ US $ US $
Non-current assets 21,682,389 3,716,490 4,460,506 29,859,385
Current and non-current liabilities 26,055 1,397,095 2,941,820 4,364,970
Six months ended 31 December 2021
Operating Loss (2,894,202) (3,242,001) 2,055,261 (4,080,942)
Loss before tax (2,894,202) (3,242,001) 2,055,289 (4,080,914)
Loss for the period (2,894,202) (3,242,001) 2,055,289 (4,080,914)
2020
Angola UK Unallocated Total
US $ US $ US $ US $
As at 30 June 2021
Non-current assets 18,473,893 162,330 3,585 18,639,808
Current and non-current liabilities 51,980 1,514,687 3,062,105 4,628,772
Six months ended 31 December 2020
Operating Loss - (2,346,411) (285,557) (2,631,968)
Loss before tax - (2,346,411) (285,334) (2,631,745)
Loss for the year - (2,346,411) (285,334) (2,631,745)
Non-current assets consist mainly of development assets and assets under
construction. Additions and depreciation to non-current assets are disclosed
in note 9.
5. Other Expenses
Six months ended 31 December 2021 US $ Six months ended 31 December 2020 US $
Administration expenses:
General administration costs 1,076,237 799,932
Audit fees 138,205 130,507
Consultant Fees 449,972 19,430
Travel expenses 100,579 1,825
Legal fees 133,433 91,068
Operating lease rental expenses:
Lease payments (short life leases) 45,795 23,036
Depreciation on non-current assets:
Property, plant and equipment 16,682 -
Employee Benefits 2021 US $ 2020 US $
Performance rights and options granted to directors, officers and employees 35,130 350,797
Directors’ fees, superannuation and salaries & wages 1,674,705 593,721
Total Administration expenses 3,670,738 2,010,316
Foreign currency exchange gains/losses:
Foreign exchange loss of $410,204 (2020: $621,652 loss) comprises realised
foreign exchange movements on retranslation of monetary balances and
unrealised foreign exchange movements on intercompany loans which are
considered repayable in the foreseeable future.
6. Income Taxes
Consolidated
2021 US $ 2020 US $
Current taxation
Current tax charge/ (credit) - -
No Liability to corporation tax arose in ordinary activities for the half year
ending 31 December 2021 or 31 December 2020.
The tax assessed for the year the standard rate of tax in the UK of 19% (2020:
19%).
Tax rate reconciliation:
Consolidated
Six months ended 31 December 2021 US $ Six months ended 31 December 2020 US $
Loss from continuing operations before tax (4,080,914) (2,631,745)
Loss on continuing activities multiplied by the rate of corporation tax in the UK of 19% (2020:19%) (775,374) (500,032)
Tax effects of:
Different tax rates in overseas jurisdictions (681,057) (130,849)
Permanent differences (664,276) (160,116)
Deferred tax assets not recognised 2,120,707 790,997
Total tax credit - -
7. Cash and Cash Equivalents
Consolidated
As at 31 December 2021 As at 30 June 2021
US$ US$
Cash at bank and on hand 4,552,862 16,787,591
4,552,862 16,787,591
8. Trade and Other Receivables
Consolidated
As at 31 December 2021 As at 30June 2021
US$ US$
Other debtors 1,920,915 5,370,007
1,920,915 5,370,007
Of the other debtors as at 31 December 2021, $1,350,834 related to payment
pending as part of the equity raise completed on 25 June 2021. Management are
comfortable that the structured repayment plan, that includes secured
collateralisation in excess of the outstanding receivable adequately covers
the outstanding receivable and that no further provision thereon is required.
9. Property, plant and equipment
Buildings Plant and equipment Development asset Assets under construction (1) Motor vehicles Office equipment Computer equipment Total
US$ US$ US$ US$ US$ US$ US$ US$
Cost
Balance at 1 July 2021 6,199 10,204 18,400,076 65,728 54,507 6,080 30,611 18,573,405
Additions 17,158 7,158 7,607,366 3,551,221 41,792 1,245 6,906 11,232,846
Balance at 31 December 2021 23,357 17,362 26,007,442 3,616,949 96,299 7,325 37,517 29,806,251
Depreciation - -
Balance at 1 July 2021 1,807 1,407 - - 40,653 1,400 20,370 65,637
Charge for the year 541 1,577 - - 10,490 351 3,723 16,682
Disposals - - - - - - - -
Balance at 31 December 2021 2,348 2,984 - - 51,143 1,751 24,093 82,319
Net Book Value
At 30 June 2021 4,392 8,797 18,400,076 65,728 13,854 4,680 10,241 18,507,768
At 31 December 2021 21,009 14,378 26,007,442 3,616,949 45,156 5,574 13,424 29,723,932
1. Assets under construction relate to Saltend
10. Exploration and Evaluation Expenditure
As at 31 December 2021 US$ As at 30 June 2021 US$
Carrying value:
Balance at beginning of the period 132,040 9,600,234
Additions 3,413 8,931,882
Transfers from asset held for sale - 2,500,000
Impairment of asset - (2,500,000)
Transfer to Longonjo development asset (18,400,076)
Balance at end of the period 135,453 132,040
The above amounts represent capitalised costs of exploration carried forward
as an asset in accordance with the accounting policies set out in the annual
report. The ultimate recoupment of the exploration and evaluation expenditure
in respect to the areas of interest carried forward is dependent upon the
discovery of commercially viable reserves and the successful development and
exploitation of the respective areas or alternatively the sale of the
underlying areas of interest for at least their carrying value.
11. Trade and Other Payables
As at 31 December 2021 $ As at 30 June 2020 $
Trade and other payables 3,279,620 2,988,864
Accrued expenses 1,085,350 1,639,908
4,364,970 4,628,772
12. Issued Capital
2021 No. 2021 US$ 2020 No. 2020 US$
Fully paid ordinary shares
Balance at 1 July 216,145,822 279,398 171,766,032 221,945
Share Placement - - 16,508,633 20,342
Shares issued in lieu of fees - - 821,157 1,728
Shares issued - conversion of performance rights 7,108,037 1,015 500,000 654
Share Placement - - 13,500,000 17,471
Balance at 31 December 223,253,859 280,413 203,095,822 262,140
Shares not yet issued (-) -
Placements during 2021 and 2020:
On 1 July 2020 the Company issued 16,508,633 fully paid ordinary shares to the
Angolan Sovereign Wealth fund (“ASF”). This was the balance of the shares
to be allotted out of a total of 25,808,633 fully paid ordinary shares that
formed part of their second equity placing in the Company of $ 5million as
announced on 11 June 2020.
On 11 August 2020, the Company announced the conversion of 500,000 zero cost
performance rights into fully paid ordinary shares on Listing on the London
Stock Exchange.
On 11 August 2020, the Company issued 821,157 fully paid ordinary shares to
third party service providers at a price of A$0.33 per share, for a total of
$0.2 million.
On 25 September 2020 the Group raised an additional $8.6 million (net of share
issuance costs) via the placing of 13,500,000 fully paid ordinary shares with
the ASF.
On 4 January 2021, the Company issued 550,000 fully paid ordinary shares (of
which 250,000 were related to share options, and 300,000 to third party
service providers at a price of £0.50 per share, for a total of $0.2 million.
On 25 June 2021, the Group raised circa $21.1 million (net of share issuance
costs) via the placing of 12,500,000 fully paid ordinary shares to long term
shareholders, the ASF and Chairman Paul Atherley.
On 6 July 2021 7,108,037 shares related to share awards were issued to
executive management.
Share options on issue
During the period, 500,000 options expired. As at 31 December 2021, there are
1,500,000 shares under option.
Performance rights on issue
There are no performance rights outstanding as at period end.
13. Commitments for Expenditure
The Group has certain obligations to perform exploration work and expend
minimum amounts of money on mineral exploration tenements.
No provision has been made in the accounts for minimum expenditure
requirements in respect of tenements.
1. Exploration Commitments
Commitments for payments under exploration permits and mineral leases in
existence at the reporting date but not recognised as liabilities payable are
as follows:
As at 31 December 2021 $ As at 31 December 2020 $
Exploration and evaluation expenditure
Not longer than 1 year 650,000 655,200
Longer than 1 year and not longer than 5 years 4,350,000 4,344,800
Longer than 5 years - -
5,000,000 5,000,000
14. Contingent Liabilities and Contingent Assets
The Directors are not aware of any other contingent liabilities or contingent
assets that are likely to have a material effect on the results of the Group
as disclosed in these financial statements.
15. Share-based Payments
Half year ended 31 December 2021
During the period, 7,108,037 shares were issued. These related to the
vesting of executive share awards. In addition 750,000, of the outstanding
2,250,000 legacy awards vested during the Period and amount of $16,179 was
charged to the statement of comprehensive income.
Half year ended 31 December 2020
During the prior period, no performance rights were issued. $350,797 was
charged to the statement of comprehensive income in respect of existing
performance rights. As at 31 December 2020 there were 10,358,037 performance
rights on issue. During the prior period, 500,000 performance rights were
converted to ordinary shares on the successful listing on the London Stock
Exchange.
During the prior period, no options were issued. No amount was charged to the
statement of comprehensive income in respect of existing options. As at 31
December 2020 there are were no options on issue.
Reconciliation of options outstanding
The following reconciles outstanding share options provided as share-based
payments at the beginning and end of the financial period:
Half year ended 31 December 2021 Half year ended 31 December 2020
Number of options Weighted average exercise price Number of options Weighted average exercise price
Balance at beginning of the financial year 2,750,000 - 250,000 $0.226
- -
Vested during the financial period (750,000) $0.001
Expired during the financial period (500,000) $0.001 - -
Exercised during the financial period - - (250,000) $0.226
Balance at end of the financial period 1,500,000 - - -
16. Loss per share
2021 cents per share 2020 cents per share
Basic loss per share
From continuing operations 1.82 1.00
Total basic loss per share 1.82 1.00
Diluted loss per share
From continuing operations 1.82 1.00
Total diluted loss per share 1.82 1.00
Basic loss per share
The net loss and weighted average number of ordinary shares used in the
calculation of basic loss per share are as follows:
Unaudited As at 31 December 2021 US$ Unaudited As at 31 December 2020 US$
Net loss (4,080,914) (2,631,745)
Losses used in the calculation of basic loss per share from continuing operations (4,080,914) (2,631,745)
Losses used in the calculation of diluted loss per share attributable to ordinary shareholders (4,080,914) (2,631,745)
As at 31 December 2021 No. As at 31 December 2020 No.
Weighted average number of ordinary shares for the purposes of calculating basic loss per share and diluted loss per share 223,253,859 195,710,638
1,500,000 options (31 December 2020: nil) and nil performance rights (31
December 2020: 10,358,037) have not been included in the diluted earnings per
share, as they were anti-dilutive in the current and prior period.
17. Related party transactions
Transactions with Key Management Personnel and Related Parties
No reportable related party transactions occurred during the period under
review.
18. Notes to the Consolidated Statement of Cashflows
Reconciliation of loss for the period to net cash flows from operating
activities
Half year ended 31 December 2021 US$ Half year ended 31 December 2020 US$
Net loss (4,080,914) (2,631,745)
Add/less non-cash items
Depreciation 16,682 -
Share based payments 35,130 350,797
Unrealised FX loss 410,204 621,652
Changes in Trade and other receivables 88,415 (78,331)
Changes in Trade and other payables (673,842) (234,303)
Net cash used in operating activities (4,204,325) (1,971,930)
19. Subsequent events
Post period end the Group completed a £10 million Placement to M&G Investment
Management (“M&G) by way of a placement of 12,345,680 new ordinary shares of
£0.001 each in the capital of the Company at a price of 81 pence per share.
Following the admission of the ordinary shares to trading M&G had an
interest in approximately 5% of the Company’s enlarged issued share capital.
No other matters or circumstances have arisen since 31 December 2021 that have
significantly affected, or may significantly affect:
* The Group’s operations in future financial years; or
* The results of those operations in future financial years; or
* The Group’s state of affairs in future financial years.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge: a. the Condensed Financial
Statements have been prepared in accordance with IAS 34 Interim Financial
Reporting and give a true and fair view of the assets, liabilities, financial
position and profit of the Group; and a. the Interim Management Report
includes a fair review of the information required by FCA’s Disclosure and
Transparency Rules (DTR 4.2.7 R and 4.2.8 R).
By order of the Board
Mr Paul Atherley
29 March 2022
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