REG-Pensana Plc: Unaudited Interim results for the six months ended 31 December 2023
28/03/2024 13:30
28 March 2024 LSE: PRE
Pensana Plc
(“Pensana”, “the company” or “the group”)
Unaudited Interim results for the six months ended 31 December 2023
The board is pleased to present its review of Pensana Plc, the rare earth
exploration, mining and processing group, whose flagship development assets
are the Longonjo NdPr Project and the Coola exploration project in Angola
alongside the Saltend rare earth processing hub in the UK.
Half Year Highlights
* Finalisation of revised Longonjo execution plan allowing for staged mine
development reducing upfront capital expenditure to US$217 million with US$105
million deferred until year three.
* Deployment of US$15 million Fundo Soberano de Angola (FSDEA) loan facility
as part of a broader US$80 million investment (subject to due diligence and
the finalisation of investment terms) to facilitate the development of the
Longonjo Project.
* Offtake memorandum of understanding for up to 100% of Longonjo production.
* Ongoing mineralogical studies confirm processing potential of the rare earth
host minerals at the Coola carbonatite and Sulima West exploration targets.
* Meeting with United Kingdom (UK) Minister Nusrat Ghani to discuss the
potential UK and United States (US) government support for the Saltend
Project.
* Pensana, working in partnership with Polestar, Route2 and the Universities
of Leeds and Hull, awarded £316,643 in conditional grant funding by Innovate
UK under its CLIMATES programme.
* Letter of intent signed between Pensana and The Yorkshire Energy Park
(“YEP”) for the site of a future permanent magnet metal facility within
the park. The YEP is located adjacent to the Saltend End Chemicals Park in the
Humber Freeport UK.
Post period-end
* The Company, through its 84% owned subsidiary Ozango Minerais SA (Ozango),
which owns 100% of the Longonjo project, has concluded a non-binding term
sheet (Term Sheet) with the Longonjo lender consortium for a US$156 million
project finance debt facility (Facility).
* Approval by one of Pensana’s major potential customers of the product
qualification specifications for Longonjo’s proposed mixed rare earth
carbonate (MREC) product.
* Technical due diligence report on the Longonjo rare earth project reported
on by The Mineral Corporation (TMC) to ABSA Capital (ABSA) as the Mandated
Lead Arranger for potential debt funding of the Project.
* Review by the six-member board, head of investment and key analysts of FSDEA
to review the early-stage construction activities being funded by the US$15
million bridging loan from FSDEA, ahead of conclusion of the main financing.
CEO’s Review
Dear Pensana Shareholders,
Over the period our owner’s team, along with key financial support from our
major shareholders, have focused on rapidly repositioning our Longonjo Rare
Earth Project and the Saltend separation facility into a staged development
programme targeting first production in early 2026.
The significant efforts have culminated in the finalisation of a Class 2 AACE
study being completed providing a high degree of confidence around the capital
estimates and contingencies and the lender appointed Independent technical
experts, The Mineral Corporation, being able to carry out a detailed review on
the updated project.
Additionally, all preferred vendors of major and long-lead equipment items
were identified over the Period and have been engaged in preparation for
project development; coupled with ongoing improvements and enhanced
modularisation enabling for a de-risked off-site pre-fabrication, testing and
containerised transport ensuring a faster and more efficient construction
phase in terms of schedule, equipment and manpower requirements.
The reduced US$217 million capital cost metallurgical plant is a downscaled
version of the identical processing unit stages within the existing defined
mining, comminution, flotation, thickening, calcining, leaching and product
precipitation process route.
The key points in the revised development implementation that allowed the team
to rapidly facilitate the reworked phased development plan were that:
* Existing permits remained intact including the Exploitation Licence, the
Environmental and Social Impact Assessment (ESIA) construction permit, the
Resettlement Action Plan (RAP) and the Livelihood Restoration Plan (LRP) as
developed in conjunction with the local community and relevant provincial
authorities;
* Pre-production spend was minimised whilst still ensuring that the
project’s potential for generating economic benefits on a larger scale were
not compromised;
* Production of a standardised and globally saleable refined radionuclide-free
mixed rare earth product from Angola, independent of other developments;
* The modular sulphuric acid plant production unit capacity provides the pivot
point around which the engineering and design work was undertaken and
optimised;
* The historical testwork and pilot plant trials conducted in collaboration
with equipment vendors continued to underpin the plant design criteria;
* Job creation in Angola along with training and skills transfer mechanisms
remain intact.
Notable developments towards de-risking aspects of the project included:
* The SRK team finalising their geotechnical investigation in support of the
dual-purpose TSF detailed design over the Period. The selected TSF site was
confirmed as also being able to provide suitable excavated material for use in
the TSF starter walls, pit haul roads, plant terracing and other
construction-related requirements, thus mitigating the need to develop
borrow-pit sources and associated licensing and material transport costs as
well as reducing the overall environmental impact.
* Integration of the Longonjo Project bulk reagent consumption requirements
(including sulphur and caustic soda) into the Trafigura/Mota Engil-led
strategic mineral-focused Lobito Corridor port and rail concessions is being
pursued as part of the ongoing operations readiness preparation. Logistical
and operational expenditure benefits are obvious in terms of broader reagent
supply to the existing Democratic Republic of the Congo (DRC) Copperbelt mines
alongside the limestone which will be sourced from the existing quarries in
the Lobito area.
* Negotiation of global procurement and logistical support for the
construction phase with Deugro, an internationally established
freight-forwarding business with a specific relationship with their
Africa-centric specialised project logistics division. This combination of
global and local logistics to enable efficient movement of material to and
from the project site is considered by management to contribute to
significantly de-risk this aspect of the project.
Saltend
With the focus on bringing the Longonjo project through financing and into
development, on-site activity for the Saltend Project along with all
significant engagements with third-party contractors continued to be put on
hold whilst the financing options are being advanced. The existing
Intellectual Property developed to date and core technical team expertise
remain available to the group. Once Longonjo is in construction, attention
will turn to the completion of the financing and development of the Saltend
facility.
Update on construction activities at Longonjo
Over the Period the early-stage development activities continued to be funded
via a US$15 million bridging loan provided by FSDEA ahead of the main
finance. The significant activities have been the civil works for the camp,
the rehabilitation of the access road to the Longonjo railway station and the
agricultural demonstration plots under the Livelihood Restoration
Programme.
The 4.5 kilometer road linking the site to the Benguela railway line has been
upgraded. The enhanced road features include an improved roadbed substructure,
a redefined road profile and rapid drainage systems. Serving as the primary
route for inbound materials during construction and later for reagent import
and the export of Mixed Rare Earth Carbonate in containers, the road connects
the mine to the Longonjo station for rail access to the port of Lobito for
shipping.
The Benguela railway line is part of the Lobito corridor undergoing a US$550
million investment from the US Government. The investment aims to secure
critical minerals across central Africa to be exported via the port of Lobito
and is anticipated to become one of Africa’s most important rail transport
systems.
Several kilometers of overhead powerlines, together with an underground water
supply and effluent disposal system have been installed ahead of the arrival
of the 350-person modular camp, which has been assembled at Johannesburg and
is being relocated to site. The camp will be the primary operations base for
the construction team.
Agricultural demonstration plots have been established by South African
agriculture consultants, Vuna Agri, as part of the Livelihood Restoration
Programme. The demonstration plots have an area of nine hectares and have now
successfully completed their first full season. The Livelihood Restoration
Programme was established to provide replacement land for any displaced
farmers and additionally to provide a training base for those persons affected
by the project to develop their agricultural skill sets.
The objective is to help local growers and farmers create healthy and
sustainable agro-ecosystems, boosting household income in nearby communities,
whilst enhancing overall food security. This ongoing programme is being
conducted in collaboration with local universities with a view to continually
improving farming practices.
With well on 50 engineering contractors and Longonjo staff now working on site
in preparation for the commencement of main construction there has been a very
positive reaction to the activities on site amongst the local community, in
particular with the creation of well-paid jobs and the successful
implementation of the first phase of the livelihood restoration programme.
We have a strong team supporting the main construction which is being managed
by MCC a leading project management team with a track record of delivering
projects across Africa, including Angola. The engineering team is supported by
ADP and ProProcess, both being African minerals specialists in the detailed
design, construction and commissioning of modular mineral processing plants
with extensive development experience in Angola.
Environment Social Governance (ESG)
The business continues to ensure ESG is at the heart of its activities with
the core business strategy focused on providing a source of sustainable rare
earths to the market.
Health, Safety and Environment
From a health, safety and environment view the business embeds HSE into its
operating culture and has had zero recordable cases and zero environmental
incidents in the Period. In Angola several staff residing in the community
reported the contraction of malaria and the business therefore has delivered a
malaria awareness programme.
Angola
In the Period the finalisation of the revised Longonjo execution plan
including sections on environmental, health and safety, stakeholder relations
and social and communities was completed.
After the completion of phase one of the resettlement action plan (RAP) in
October 2022, 28 project affected households continue to receive transitional
support food packages to supplement their temporary loss of livelihood. The
project plan will see the requirement for more resettlement to occur in 2024,
to ensure land is available for the project. The team are currently in the
process of contacting, engaging with and updating the records of all those who
will be affected by the next phase of the project. During the period the RAP
delivery plan has been reviewed and the project can therefore ensure
compensation will be fair and transparent.
Stakeholder engagement continues apace with regular meetings taking place over
the period between the project team and key stakeholders. This includes local
and national authorities, transitional leadership, project affected people,
training institutions and much more. This is supported by continued operation
of an active grievance mechanism with community engagement with the process.
All grievances raised have continued to be resolved at step 1, between the
complainant and Ozango staff.
Further progress has been made over the Period in developing the replacement
land to support the economic relocation of agricultural land affected by the
project. During the period further studies were undertaken to review existing
land use, biodiversity, and agricultural potential, confirming the
availability of sufficient suitable land. Additionally, the project has agreed
with the local community that Ozango will not affect any existing agricultural
land and land not currently used for agriculture will be purchased for a value
of at least market price. Furthermore, the project has invested in the
formation of two demo plots, one in each of two replacement land blocks, to
further investigate the most effective techniques and crops for optimal yield
and to further demonstrate to PAPs that the replacement land can effectively
host agriculture. These supplement the ongoing test and demonstration work at
the existing plots within the mine boundary.
UK
In the UK, the business continues to explore research and development
opportunities and during the period a studentship, in partnership with
University of York and University of Leeds has commenced looking at the social
impacts and opportunities from rare earth mining, using our Longonjo project
as a case study. This is in addition to the ongoing project funded by innovate
UK’s CLIMATEs fund to investigate, in partnership with University of Leeds,
University of Hull, Route2 and Polestar, opportunities across the value chain
to support Pensana’s objective of delivering a sustainable rare earth value
chain.
Exploration
In August the Company reported high grade TREO soil sampling results at Sulima
West and encouraging results from other targets on the Coola exploration
licence area. This was subsequently followed by a report on the Mineralogical
Characterisation studies undertaken by SGS South Africa of samples collected
at Sulima West and the Coola carbonatite during 2022.
The report highlighted that:
* the Sulima West laterite mineralisation contains monazite which hosts NdPr
with moderate liberation and exposure which should be amenable to some degree
of simple upgrading at the current location, prior to processing at Longonjo;
* the Coola carbonatite contains a significant amount of bastnaesite which is
host to more than 90% of the NdPr. The bastnaesite is moderately liberated
and exposed, again suggesting that there is potential for recovery using the
physical separation at the current location prior to processing at Longonjo.
The initial mineralogical study has confirmed the processing potential of the
rare earth host minerals for both the Sulima West laterite and the Coola
Carbonatite. The opportunity for upgrading the ore at the current location
using physical separation techniques is currently being further assessed with
the testing of larger samples which have been collected. We obviously see
both Sulima West and Coola carbonatite as having the potential for upgrading
the ore at its current location and thereby providing a high-grade near-term
feedstock which would be transported to Longonjo for further processing and
extraction of the rare earth elements.
Ground geophysical surveys were completed at both targets in 2023 which helped
to better define known areas of mineralization and added additional
exploration targets which will be further investigated in 2024.
Post-period end we continued with mineralogical studies and anticipate results
to be reported by mid-year. Exploration drilling of the most prospective
targets is scheduled for the latter half of 2024.
Operating and Financial Review
During the period, the consolidated entity incurred a comprehensive loss for
the period of US$3,657,839 (31 December 2022: US$4,218,451 loss).
Administration expenses decreased to US$3,461,420 (31 December 2022:
US$4,044,824). This was due to a decrease in consultancy fees, travel
expenditure and legal fees incurred.
The group incurred a foreign currency exchange gain of US$50,471 for the six
months ended 31 December 2023 (loss of US$42,468 during the six months ended
31 December 2022). These gains and losses arise from the settlement of
invoices in currencies other than the functional currencies (USD, GBP, AUD,
AOA), as well as the translation of balances denominated in currencies such as
the pound and Australian dollar to the US dollar, 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 from US$56,760,602 at 30 June 2023 to
US$53,812,514 at 31 December 2023. This was due to a decrease in cash of
$7,266,475 during the period, as explained below. The decrease in cash was
partially offset by an increase in property, plant and equipment and
intangible assets of US$5,531,583, mainly due to the construction programme at
the Longonjo project.
The decrease in cash was due to expenditure at the Longonjo development
project of US$10,425,893 (Six months ended 31 December 2022: US$8,615,868).
This was partially offset by the receipt of the bridging loan facility from
FSDEA which is secured over the company’s shareholding in Ozango. By 31
December 2023, $4.7 million of the facility was drawn down.
The Group experienced net cash outflows from operating activities of
US$3,223,494 (31 December 2022: US$4,074,921) with the decrease primarily
reflecting working capital movements.
Net cash outflows from investing activities of US$8,827,832 increased from
cash outflows of US$7,359,572 for the six months to 31 December 2022, mainly
due to a decrease in capex items locked up in working capital, due to the
timing of payment of invoices. Cash outflows for both periods under review
related to cash spent on additions to the Longonjo project, as well as the
Saltend project for the six months ended 31 December 2022. During the
period, the group also received a R&D tax credit of $1,598,061 for work
related to Saltend in the UK ($1,037,336), as well $560,725 for work related
to Longonjo.
The decrease in the cash inflows from financing activities from US$10,000,000
for the six months ended 31 December 2022 to US$4,784,851 for the six months
ended 31 December 2023 was mainly the result of no equity being issued during
the period. The group did however receive a bridging loan facility from
FSDEA of $4.7 million as explained above.
The ability of the company and group to continue with its plans to develop the
Longonjo mine are contingent on the successful completion of the proposed debt
and equity funding arrangements currently underway in the normal course of
business. It is anticipated that the contemplated financing across the group
may include further issues of equity at the asset level and export
credit-backed debt financing. There is a risk that funding may not be
available and/or the cost of financing may be higher than expected.
The ongoing support provided by the Angolan government and the approval of a
non-binding term sheet from the Longonjo lender consortium as announced
recently is expected to enable the Group to refinance the US$15m FSDEA loan
facility.
The Group has received a loan facility from two of its directors for GBP2
million to meet the underlying operating costs of the UK over the next 6 to 9
months, excluding the existing UK contractor balances and capital development
costs. The Board continues to engage proactively with the UK contractors to
maintain support while further funding is secured to enable settlement, with
non-binding letters of intent and agreements setting out the route to
settlement under discussion with the key contractors.
Please refer note 3 to the financial statements for the going concern
statement which includes a material uncertainty in relation to going concern.
Principal Business Risks
The Group is exposed to several 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 2023 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 group is in pre-production phase and therefore has no revenues from
operations currently.
The ability of the company and group to continue with its plans to develop the
Longonjo mine are contingent on the successful completion of the proposed debt
and equity funding arrangements currently underway in the normal course of
business. It is anticipated that the contemplated financing across the group
may include further issues of equity at the asset level and export
credit-backed debt financing. There is a risk that funding may not be
available and/or the cost of financing may be higher than expected.
The ongoing support provided by the Angolan government and the approval of a
non-binding term sheet from the Longonjo lender consortium as announced
recently is expected to enable the Group to refinance the US$15m FSDEA loan
facility.
The Group has received a loan facility from two of its directors for GBP2
million to meet the underlying operating costs of the UK over the next 6 to 9
months, excluding the existing UK contractor balances and capital development
costs. The Board continues to engage proactively with the UK contractors to
maintain support while further funding is secured to enable settlement, with
non-binding letters of intent and agreements setting out the route to
settlement under discussion with the key contractors.
Details of the Board’s going concern assessment are provided in note 3 to
the financial statements and include a material uncertainty in respect of
going concern.
Development of the Longonjo and Saltend Projects
The group’s operations are at an early stage of construction development and
future success will depend on the group’s ability to manage the Longonjo and
Saltend Projects (the projects) and the production of NdPr-rich MREC for
export to the Saltend refinery and further processing into a rare earth oxide.
In particular, the group’s success is dependent upon the directors’
ability to develop the projects by commencing and maintaining production at
the sites and there is no certainty that funding will be available.
Development of the projects could be delayed or could experience interruptions
or increased costs because of supply chain or inflationary pressures or may
not be completed at all due to a number of factors.
Logistical challenges and delays
Global supply chain challenges could result in logistical risks relating to
availability, potential delays and increased costs of equipment and material
both for the project and operations phase.
Commodity price
If the group is able to develop the Longonjo and Saltend Projects and/or the
Coola Project for production and the market price of rare earth oxide
decreases significantly for an extended period of time, the ability for the
group to attract finance and ultimately generate profits could be adversely
affected.
Attracting skilled employees
The group’s ability to compete in the competitive natural resources and
specialist rare earth chemical processing sectors depends upon its ability to
retain and attract highly qualified management, geological and technical
personnel. The loss of key management and/or technical personnel could delay
the development of the Longonjo Project, exploration at the Longonjo Project
and the Coola Project and development and commissioning of the Saltend
refinery thereby negatively impacting on the ability of the group to compete
in the resources and chemical processing sectors. In addition, the group will
need to recruit key personnel to develop its business as and when it moves to
construction and ultimately operation of a mine, each of which requires
additional skills.
Mr. Tim George
Chief Executive Officer
28 March 2024
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 2023 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 2023 which comprises the consolidated statement of comprehensive
income, the consolidated statement of financial position, the consolidated
statement of changes in equity, the consolidated statement of cash flows, and
notes to the financial statements, including a summary of significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK adopted international accounting
standards and as regards the Parent Company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on
Review Engagements (UK) 2410, “Review of Interim Financial Information
Performed by the Independent Auditor of the Entity” (“ISRE (UK) 2410
(Revised)”). 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 Pensana Plc are
prepared in accordance with UK adopted international accounting standards. 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 which
indicates that the group will require additional funding to settle outstanding
amounts due to suppliers and further subsequent additional funding to meet its
commitments and planned expenditures which is not guaranteed. As stated in
note 3, these events or conditions, along with other matters as set out in
note 3, indicate the existence of a material uncertainty which may cast
significant doubt over the group ability to continue as a going concern. Our
conclusion 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 conclusion, including our Conclusions
Relating to Going Concern, 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.
Ryan Ferguson
BDO LLP
Chartered Accountants
London, UK
28 March 2024
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 2023
Unaudited 31 December 2023 Unaudited 31 December 2022
Note US$ US$
Administration expenses 6 (3,461,420) (4,044,824)
Impairment of financial assets (46,543) (116,041)
Foreign currency exchange gains/(losses) 6 50,471 (42,468)
Loss from operations (3,457,492) (4,203,333)
Finance income - -
Finance costs - -
Loss before income tax (3,457,492) (4,203,333)
Income tax 7 - -
Total loss for the period (3,457,492) (4,203,333)
Other comprehensive loss
Items that may be reclassified subsequently to profit or loss
Foreign currency translation 1 (200,347) (15,118)
Total comprehensive loss for the period (3,657,839) (4,218,451)
Net loss for the period is attributable to:
Owners of Pensana Plc (3,457,492) (4,203,333)
Total comprehensive loss is attributable to:
Owners of Pensana Plc (3,657,839) (4,218,451)
Loss per share attributable to owners of Pensana Plc:
Basic (cents per share) 18 (1.21) (1.72)
Diluted (cents per share) 18 (1.21) (1.72)
1 Exchange differences arising on translation of foreign operations will be
reclassified to profit or loss if specific future conditions are met
Notes to the interim financial statements are included on pages 14 to 27.
Condensed Consolidated Statement of Financial Position
as at 31 December 2023
Unaudited As at 31 December 2023 As at 30 June 2023
Note US$ US$
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 52,879,304 47,969,254
Intangible assets 11 14,280,428 13,820,318
TOTAL NON-CURRENT ASSETS 67,159,732 61,789,572
CURRENT ASSETS
Cash and cash equivalents 8 2,447,697 9,695,491
Trade and other receivables 9 2,077,822 2,515,234
TOTAL CURRENT ASSETS 4,525,519 12,210,725
TOTAL ASSETS 71,685,251 74,000,297
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 12 13,005,626 17,239,695
Loans and borrowings 13 4,867,111 -
TOTAL CURRENT LIABILITIES 17,872,737 17,239,695
TOTAL LIABILITIES 17,872,737 17,239,695
NET ASSETS 53,812,514 56,760,602
EQUITY
Issued capital 14 356,898 356,898
Share premium 70,826,007 70,826,007
Reserves 47,031,597 46,522,193
Accumulated losses (64,401,988) (60,944,496)
TOTAL EQUITY 53,812,514 56,760,602
Refer to note 4 for details of the restatement of prior year results.
Notes to the interim financial statements are included on pages 14 to 27.
Condensed Consolidated Statement of Changes in Equity
for the six months ended 31 December 2023
Fully paid ordinary shares Share premium Accumulated Losses Merger Reserve Foreign Exchange Reserve Share based Payments Reserve Equity Reserve Total
Unaudited US$ US$ US$ US$ US$ US$ US$ US$
Balance at 1 July 2023 356,898 70,826,007 (60,944,496) 45,748,045 (198,038) 1,472,186 (500,000) 56,760,602
Loss for the period - - (3,457,492) - - - - (3,457,492)
Other comprehensive loss - - - - (200,347) - - (200,347)
Total comprehensive loss for the period - - (3,457,492) - (200,347) - - (3,657,839)
Share based payments (note 17) - - - - - 709,751 - 709,751
Balance at 31 December 2023 356,898 70,826,007 (64,401,988) 45,748,045 (398,385) 2,181,937 (500,000) 53,812,514
Fully paid ordinary shares Share premium Accumulated Losses Merger Reserve Foreign Exchange Reserve Share based Payments Reserve Equity Reserve Total
Unaudited US$ US$ US$ US$ g US$ US$ US$ US$
Balance at 1 July 2022 295,425 47,043,782 (56,641,673) 45,748,045 688,259 1,745,151 (500,000) 38,378,989 1
Loss for the period - - (4,203,333) - - - - (4,203,333)
Other comprehensive income - - - - (15,118) - - (15,118)
Total comprehensive loss for the period - - (4,203,333) - (15,118) - - (4,218,451)
Issue of shares (note 14) 14,993 9,985,007 - - - - - 10,000,000
Share based payments (note 17) - - - - - 417,818 - 417,818
Balance at 31 December 2022 310,418 57,028,789 (60,845,006) 45,748,045 673,141 1 2,162,969 (500,000) 44,578,356
Refer to note 4 for details of the restatement of prior year results.
Notes to the interim financial statements are included on pages 14 to 27.
Condensed Consolidated Statement of Cash Flows
for the six months ended 31 December 2023
Unaudited 31 December 2023 Unaudited 31 December 2022
Note US$ US$
Cash flows from operating activities
Operating cash flows 20 (3,223,494) (4,074,922) 1
Net cash used in operating activities (3,223,494) (4,074,922) 1
Cash flows from investing activities
R&D tax credit 1,598,061 1,256,296 1
Payments for property, plant and equipment and intangibles 20 (10,425,893) (8,615,868)
Net cash used in investing activities (8,827,832) (7,359,572)
Cash flows from financing activities
Proceeds from short-term debt 4,784,851 -
Proceeds from issues of equity securities 14 - 10,000,000
Net cash provided by financing activities 4,784,851 10,000,000
Net decrease in cash and cash equivalents (7,266,475) (1,434,494)
Cash and cash equivalents at beginning of the period 9,695,491 2,930,162
Effects of exchange rate changes on the balance of cash held in foreign currencies 18,681 (55,477)
Cash and cash equivalents at the end of the period 8 2,447,697 1,440,191
Refer to note 4 for details of the restatement of prior year results.
Notes to the interim financial statements are included on pages 14 to 27.
Notes to the financial statements
1. General information
The consolidated financial statements present the financial information of
Pensana Plc and its subsidiaries (collectively, the group) for the six months
ended 31 December 2023 in United States dollars (US$). Pensana Plc (the
company or the parent) is a public company limited by shares listed on the
Main Market of the London Stock Exchange (LSE) and incorporated in England &
Wales on 13 September 2019. The registered office is located at 107 Cheapside,
Second Floor, London, EC2V 6DN, United Kingdom.
The company is focused on rare earth exploration, mining and processing, whose
flagship development assets are the Longonjo NdPr Project and the Coola
exploration project in Angola alongside the Saltend rare earth processing hub
in the UK.
In early 2020, Pensana Metals Ltd redomiciled the group to the UK pursuant to
a scheme of arrangement in which Pensana Metals Limited 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 Limited.
2. New accounting standards and interpretations
(a) Changes in accounting policies and disclosures
From 1 July 2023, the Group has adopted the following Standards and
Interpretations, mandatory for annual periods beginning on or prior to 1
January 2023.
Standard Description Effective date
IFRS 17 IFRS 17 Insurance contracts 1 January 2023
Amendments to IAS 1 and IFRS Practise Statement 2 Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2 1 January 2023
Amendments to IAS 8 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment – Definition of Accounting Estimates) 1 January 2023
Amendments to IAS 12 IAS 12 Income Taxes (Amendment – Deferred Tax related to Assets and Liabilities arising from a Single Transaction) 1 January 2023
Amendments to IAS 12 International Tax Reform — Pillar Two Model Rules – Amendments to IAS 12 1 January 2023
The application of these standards has not had a material impact on the
financial statements.
(b) Accounting standards and interpretations issued but not yet effective:
There are several standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the group has decided not to adopt early.
Standard Description Effective date
Amendments to IFRS 16 Lease liability in sale and leaseback – Amendments to IFRS 16 1 January 2024
Amendment to IAS 1 Classification of Liabilities as Current or Non-Current – Amendments to IAS 1 Presentation of Financial Statements 1 January 2024
Amendments to IAS 1 Non-current liabilities with covenants – Amendments to IAS 1 Presentation of Financial Statements 1 January 2024
Amendments to IAS 7 Supplier Finance Arrangements – Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures 1 January 2024
Amendments to IAS 21 Lack of Exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates 1 January 2025
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. Material accounting policies and Going Concern
Basis of preparation
The condensed interim report, which is unaudited, have been prepared in
accordance with UK-adopted International Accounting Standard 34 Interim
Financial Reporting and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom’s Financial Conduct Authority. This
condensed interim report does not include all the notes of the type normally
included in an annual financial report. This condensed interim report is to be
read in conjunction with the annual report for the year ended 30 June 2023,
and any public announcements made by the group during the interim reporting
period. The comparative financial information for the year ended 30 June 2023
in this interim report does not constitute statutory accounts for that year.
The statutory accounts for 30 June 2023 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 2023 was prepared in accordance
with the annual financial statements of the group and are prepared in
accordance with UK adopted International Accounting Standards (IFRSs).
The accounting policies applied in this condensed interim report are
consistent with the polices applied in the annual financial statements for the
year ended 30 June 2023 and were prepared in accordance with UK adopted
International Financial Reporting Standards (IFRSs).
As disclosed in the 30 June 2023 Annual Report, the company was incorporated
on 13 September 2019 as a wholly owned subsidiary of Pensana Metals Limited.
The company subsequently acquired 100% of the share capital of Pensana Metals
Limited and its subsidiary companies for the effective issuance of 152,973,315
shares to the shareholders of Pensana Metals 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 Limited
comprised 50,000,000 shares with a nominal value of £0.001 per share
subscribed for incorporation of the company by Pensana Metals Ltd which were
transferred to CHESS Depositary Nominees Pty Ltd (a subsidiary of the
Australian Securities Exchange (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 generally accepted accounting principles
(GAAPs). 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 policies have been consistently applied to all the periods presented,
unless otherwise stated.
Going Concern
The group financial statements and parent company financial statements have
been prepared on a going concern basis with the directors of the opinion that
the group and parent company will be able to meet their obligations as and
when they fall due.
As at 31 December 2023, the group has a net asset position of US$53,812,514
(30 June 2023: US$56,760,602), net current liabilities of US$13,347,218 (30
June 2023: net current liabilities of US$5,028,970), had incurred a net loss
after income tax of US$3,457,492 (Six months ended 31 December 2022:
US$4,203,333) and experienced cumulative net cash outflows from operating and
investing activities of US$12,051,326 (Six months ending 31 December 2022:
US$11,434,494).
The directors have prepared a cash flow forecast for the period ending 30 June
2025.
In Angola, the group secured a US$15 million bridging loan facility from FSDEA
secured over the indirect shareholding in the group’s Angolan subsidiary.
The facility currently has a maturity date in April 2024; however this date is
being managed alongside the anticipated completion date of the main financing
which includes FSDEA. As at 27 March 2024 $7.5 million of the facility had
been utilized to meet the Angolan operating cash flow requirements and
progress the Longonjo Project in the near term.
The group would need to refinance the FSDEA facility that matures in April
2024 in the event the main financing is not complete by the maturity date of
the FSDEA loan. Given the support provided by the Angolan Government for the
Longonjo Project, the directors anticipate such a refinancing being made
available to the group.
The parent company is well advanced in its main financing workstreams on the
Longonjo Project having announced the approval of a non-binding term sheet
with the Longonjo lender consortium and is aiming to complete the main
financing shortly which is being structured to include the settlement of the
FSDEA facility and provide funds for the main project development.
The forecast indicates that funding is required to settle existing
project-related contractor balances in the UK and to also provide working
capital. On 28 March 2024, two of the company’s directors have made
available a loan facility of GBP 2 million to meet the underlying operating
costs of the UK over the next 6 to 9 months, excluding the existing contractor
balances and capital development costs. The Board continues to engage
proactively with the contractors to maintain support while further funding is
secured to enable settlement, with non-binding letters of intent and
agreements setting out the route to settlement under discussion with the key
contractors.
On the Saltend Project, the UK DBT has offered Pensana a conditional grant of
up to £4,000,000 towards the funding. A portion of this funding is
anticipated to be received in Q1 FY2025 and forms part of the forecast,
subject to securing of main financing which is a condition of receipt. The
board notes that, in addition to the existing funding requirement for the UK
operations, additional funding will also be required during the period to
maintain liquidity if the grant funding is delayed, or the conditions are not
met.
In assessing the going concern basis of preparation, the directors have also
considered supply chain challenges, inflation, the availability of funding and
its impact on the progression of the Longonjo Project in Angola and the
Saltend Project in the UK. Similarly, the directors have also considered the
impact of the ongoing Russia-Ukraine and Israel-Gaza wars as it relates to
costs and the potential volatility in the debt and equity markets.
The directors have continued to actively engage with institutional investors
and financing institutions in the UK, Europe and Africa to discuss
opportunities around potential future financing in anticipation of a final
investment decision being taken on its projects in the UK and Angola. Such
additional funding will be required to meet the group’s committed and
planned development expenditure across the forthcoming year. The ability of
the parent company and group to continue as a going concern is dependent on
securing such additional funding.
As noted earlier, on the Saltend Project, the UK DBT via the Automotive
Transformation Fund has offered Pensana a conditional grant of up to
£4,000,000 towards the funding; engagement continues at the highest level
within the UK government and bond financiers, which is coupled with strategic
engagement with offtake partners. Despite the current turbulence in the
world’s financial markets, the directors have received positive interest
from several key sectors across the rare earth supply chain and are
progressing discussions on the Saltend financing in collaboration with these
key industry players.
Despite the ongoing engagements, the directors note that the required funding
outlined above to settle existing contractor balances in the UK and meet
operational costs in the UK for the full forecast period has not been secured
at the date of approval of these financial statements and the availability of
such funding on terms that would be acceptable is not guaranteed. Similarly,
the grant from the UK DBT remains conditional and is dependent on progression
of the main financing, while settlement of the FSDEA loan is similarly
dependent on the main financing and delays would result in additional funding
requirements in the UK and a need to refinance the FSDEA facility in Angola.
These circumstances indicate the existence of a material uncertainty which may
cast significant doubt about the group’s and parent company’s ability to
continue as a going concern and therefore the group and parent company may be
unable to realise their assets and discharge their liabilities in the normal
course of business. The group and parent company 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 assessment of development assets, assets under construction and
Saltend intangibles
Impairment indicator assessment of development assets (note 10 and 11), as
well as impairment assessment of assets under construction and Saltend
intangibles (notes 10 and 11).
The ultimate recovery of the value of the Group’s development assets and
assets under construction and Saltend intangibles as at 31 December 2023, is
dependent on the successful development and commercial exploitation, or
alternatively, the sale of the Longonjo Project, as well as the successful
development and commercial exploitation of the Saltend facility or the sale
thereof.
Judgement was exercised in assessing the extent to which impairment existed as
at 31 December 2023 in respect of the Longonjo and Saltend Projects and
associated balances. In forming this assessment, internal and external factors
were evaluated, including those that applied last year. Management determined
that no impairment existed having considered the company’s market
capitalisation relative to the group’s net asset value, the progression of
the Longonjo and Saltend Projects and the financial life of mine plan,
feasibility study equivalent assessments and the associated Ore Reserve
Statement and the competent person’s report covering the Longonjo and
Saltend Projects. The underlying financial life of mine plan involves
estimates regarding commodity prices, production and reserves, operating costs
and capital development together with discount rates and demonstrates
significant headroom.
Recognition of R&D tax credits (note 4)
R&D tax credits are recognised when reliable estimates of the future benefits
have been made and when it is reasonably certain that the tax credit will be
received. Management have considered the nature of the tax claims, the limited
history of successful tax claims and receipt thereof. Management also do not
recognise any tax credits before submissions have been made to the relevant
tax authority.
(ii) Significant accounting estimates and assumptions
Share-based payment transactions (note 17)
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 stochastic model
to value awards with market-based conditions and a Black-Scholes valuation
model for awards that are not subject to market-based performance conditions.
These models require estimates for inputs such as share price volatility and
total shareholder return. The share-based payment 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 recognise any impact of the revision to original estimates.
Judgement is required as to the likelihood of the vesting conditions being
met, such as the progress of financing of various projects, the lost time
injury frequency rate, progress of construction of the projects, etc. If fully
vested share options are not exercised and expire, then the accumulated
expense in respect of these is reclassified to accumulated losses.
4. Restatement of prior year financial statements
As detailed in the Annual Report for the year ended 30 June 2023, the company
undertook a review of the classification of costs capitalised in respect of
the Saltend Project. Previously, such costs were wholly classified as
property, plant and equipment. Based on evaluation of the underlying costs, it
was determined that a material portion of these costs should have been
classified as intangible assets given their nature and the comparative period
was restated accordingly.
As detailed in the Annual Report for the year ended 30 June 2023, an error was
identified in the prior period results. In the year ended 30 June 2022, the
R&D tax credit related to capital expenditure incurred was recorded in the
consolidated income statement within income tax. The associated costs to which
the R&D tax credit related were capitalised in line with the group’s policy
on development assets and the credits are receivable in cash in the absence of
corporate tax liabilities such that they are judged to represent a form of
government grant. Based on IFRS requirements, the R&D tax credit should
therefore, in line with government grant accounting, have been deferred on the
balance sheet and netted off against the development asset to be released to
the income statement as the asset is depreciated in future periods. As such,
the total loss for the year ending 30 June 2022 was understated by
US$1,329,553 and the capitalised costs relating to the development at Saltend
(previously recognised in property, plant and equipment) were overstated by
US$1,256,296. Total equity as at 30 June 2022 was restated by £1,256,296
comprising the increased total loss of £1,329,553 and a £73,257 foreign
exchange credit on retranslation of property, plant and equipment. No other
previous financial periods are materially impacted by this restatement.
An error was also identified in the prior year results (30 June 2023), whereby
accruals were understated by US$2,374,604 and development assets understated
by US$2,374,604. No other previous financial years are materially impacted
by this restatement.
(Previously reported) US$ Restatement 1 US$ 31 December 2022 (Restated) US$
Cash flows from operating activities (2,816,626) (1,256,296) (4,072,922)
Cash flows from investing activities (8,615,868) 1,256,296 (7,359,572)
(Previously reported) US$ Restatement US$ 30 June 2023 (Restated) US$
30 June 2023
Property, plant and equipment 45,594,650 2,374,604 47,969,254
Trade and other payables (14,865,091) (2,374,604) (17,239,695)
5. 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 maker 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 are fully impaired as at 31 December 2023 and 30 June 2023.
Unallocated relates to operations in Australia and Portugal which consist of
corporate and head office-related costs.
31 December 2023 Angola US$ UK US$ Unallocated US$ Total US$
Non-current assets – opening balance 1 43,846,788 17,942,784 - 61,789,572
Non-current assets – additions 4,911,580 458,580 - 5,370,160
Non-current assets – closing balance 48,758,368 18,401,364 - 67,159,732
Current and non-current liabilities (546,505) (15,552,410) ()(1,773,822) (17,872,737)
Cash and cash equivalents 37,499 1,234,851 1,175,347 2,447,697
Six months ended 31 December 2023
Administration expenses (882,788) (2,435,620) (143,012) (3,461,420)
Depreciation (18,173) (3,430) - (21,603)
Operating (loss)/profit (842,884) (2,489,568) (125,040) (3,457,492)
(Loss)/profit before tax (842,884) (2,489,568) (125,040) (3,457,492)
(Loss)/profit for the period (842,884) (2,489,568) (125,040) (3,457,492)
30 June 2023 Angola US$ UK US$ Unallocated US$ Total US$
Non-current assets – opening balance 30,228,932 6,466,270 – 36,695,202
Non-current assets – additions 1 13,617,856 11,476,514 – 25,094,370
Non-current assets – closing balance 1 43,846,788 17,942,784 – 61,789,572
Current and non-current liabilities 1 (4,205,215) (12,298,921) (735,559) (17,239,695)
Cash and cash equivalents 30,594 8,883,904 780,993 9,695,491
Six months ended 31 December 2022
Administration expenses (880,515) (2,908,816) (255,493) (4,044,824)
Depreciation (23,716) (2,955) - (26,671)
Operating loss (682,645) (3,123,432) (397,256) (4,203,333)
Loss before tax (682,645) (3,123,432) (397,256) (4,203,333)
Loss for the period (682,645) (3,123,432) (397,256) (4,203,333)
1 Refer to note 4 for details of the restatement of prior year
results.
Non-current assets consist mainly of development assets, assets under
construction and intangible assets. Additions and depreciation of property,
plant and equipment are disclosed in note 10 and movements in intangible
assets are disclosed in note 11
6. Other Expenses
Six months ended 31 December 2023 US $ Six months ended 31 December 2022 US $
Administration expenses:
General administration costs 702,820 964,719
Audit fees 123,996 79,628
Consultant Fees 115,444 447,622
Travel expenses 63,180 211,551
Legal fees 35,101 216,559
Operating lease rental expenses:
Lease payments (short life leases) 80,433 69,827
Depreciation on non-current assets:
Property, plant and equipment 21,603 26,671
Employee Benefits
Performance rights and options granted to directors, officers and employees 709,751 417,818
Directors’ fees and employee benefits 1,513,705 1,516,450
Social security costs 95,387 93,979
Total administration expenses 3,461,420 4,044,824
Foreign currency exchange gains/losses:
Foreign exchange gain of $50,471 (2022: $42,468 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.
7. Income Taxes
Consolidated
6 months ending 31 December 6 months ending 31 December
2023 US $ 2022 US $
Current taxation
Current tax charge/ (credit) - -
No Liability to corporation tax arose in ordinary activities for the half year
ended 31 December 2023 or 31 December 2022.
The tax assessed for the year utilised the standard rate of tax in the UK of
25% (2023: 25%).
Tax rate reconciliation:
Six months ended 31 December 2023 US $ Six months ended 31 December 2022 US $
Loss from continuing operations before tax (3,457,492) (4,203,333)
Loss on continuing activities multiplied by the rate of corporation tax in the UK of 25% (2022:19%) (864,373) (798,633)
Tax effects of:
Different tax rates in overseas jurisdictions 571 (67,778)
Permanent differences 177,965 8,557
Deferred tax assets not recognised 685,837 857,854
Total tax charge/(credit) - -
8. Cash and Cash Equivalents
As at 31 December 2023 As at 30 June 2023
US$ US$
Cash at bank and on hand 2,447,697 9,695,491
2,447,697 9,695,491
9. Trade and Other Receivables
As at 31 December 2023 As at 30 June 2023
US$ US$
Trade receivables 43,795 34,756
Prepayments 323,610 184,744
R&D tax receivables - 1,037,336
VAT receivables 1,008,835 934,641
Other receivables 701,582 323,757
2,077,822 2,515,234
4 105
10. Property, plant and equipment
Buildings Plant and equipment Develop- ment 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 2023 28,310 33,021 43,504,012 4,272,967 214,239 7,325 34,092 48,093,966
Additions 2,590 1,488 5,491,923 34,603 - 557 422 5,531,583
R&D government grant deferred (560,725) (560,725)
Adjustment on currency translation - - (41,832) 2,744 - - (97) (39,185)
Balance at 31 December 2023 30,900 34,509 48,393,378 4,310,314 214,239 7,882 34,417 53,025,639
Depreciation
Balance at 1 July 2023 6,460 10,359 - - 88,538 3,628 15,727 124,712
Charge for the year 900 1,733 - - 13,687 399 4,884 21,603
Adjustment on currency translation - - - - - - 20 20
Balance at 31 December 2023 7,360 12,092 - - 102,225 4,027 20,631 146,335
Net Book Value
At 1 July 2023 21,849 22,662 43,504,012 4,272,967 125,701 3,697 18,366 47,969,254
At 31 December 2023 23,540 22,417 48,393,378 4,310,314 112,014 3,855 13,786 52,879,304
Refer to note 4 for details of the restatement of prior year results.
11. Intangible assets
As at 31 December 2023 US$ As at 30 June 2023 US$
Carrying value
Saltend intangible assets
Balance as at 1 July 2023 Additions 1 20 13,820,318 428,690 5,236,226 9,514,342
-R&D government grant deferred - (1,037,336)
Adjustment on currency translation 31,420 107,086
Total intangibles 14,280,428 13,820,318
1Includesbridging loan interest capitalised
12. Trade and Other Payables
As at 31 December 2023 US$ As at 30 June 2023 US$
Trade and other payables 1 10,624,495 13,003,570
Accrued expenses 2,330,731 4,186,457
Statutory liabilities 50,400 49,668
13,005,626 17,239,695
1 There has been no interest charged on the trade payables.
Refer to note 4 for restatement of prior period results.
13. Loans and borrowings
As at 31 December 2023 US$ As at 30 June 2023 US$
Interest bearing liabilities (current)
Bridging loan facility 4,867,111 -
Total interest-bearing liabilities (current) 4,867,111 -
Interest bearing liabilities (non-current)
Bridging loan facility - -
Total interest-bearing liabilities (non-current) - -
Total 4,867,111 -
On 7 August 2023, the company obtained a bridging loan facility from FSDEA
which is secured over the company’s shareholding in Ozango. The facility
carries interest at 2% plus 3 months SONIA and was repayable by 28 February
2024. The repayment date was subsequently extended to 19 April 2024. Refer
to note 21.
By 31 December 2023, $4.7 million of the facility was drawn down and the
average interest rate incurred during the period was 7.19%.
14. Issued Capital
As at 31 December As at 31 December As at 30 June As at 30 June
2023 No. 2023 US$ 2023 No. 2023 US$
Fully paid ordinary shares
Balance at 1 July 285,180,873 356,898 235,599,539 295,425
Shares issued - conversion of performance rights - - - -
Share Placement - - 49,581,334 61,473
Balance at period end 285,180,873 356,898 285,180,873 356,898
There were no shares issued during the half year ending 31 December 2023.
Placements during half year ending 31 December 2022:
On 5 August 2022, the company issued 12,331,334 fully paid ordinary shares to
M&G Investment Management at a price of £0.67 per share and raised US$10.0
million.
Share options on issue
During the period, 750,000 options vested (31 December 2022: 750,000). As at
31 December 2023, there are nil shares under option (31 December 2022:
750,000).
Performance rights on issue
There are no performance rights outstanding as at period end.
15. Commitments for Expenditure
The group has certain obligations to perform exploration work on mineral
exploration tenements.
No provision has been made in the accounts for minimum expenditure
requirements in respect of tenements, as no liability has been incurred as at
31 December 2023 relating to these requirements.
(i) Exploration Commitments
Commitments for payments under exploration permits and mineral leases in
existence at the reporting date but not recognised as liabilities payable are
as follows:
As at 31 December 2023 US$ As at 30 June 2023 US$
Exploration and evaluation expenditure
Not longer than 1 year 5,670 5,718
Longer than 1 year and not longer than 5 years - -
Longer than 5 years - -
5,670 5,718
(ii) Capital Commitments
Capital expenditure contracted for at the reporting date but not yet incurred
was as follows:
As at 31 December 2023 US$ As at 30 June 2023 US$
Capital expenditure 1,013,800 3,784,108
The expenditure relates primarily to the Longonjo Project in Angola.
16. 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.
17. Share-based Payments
Half year ended 31 December 2023
During the period 3,050,000 share awards were issued to directors, senior
management and employees.
During the period 1,342,000 short-term bonus share awards were also issued to
directors, senior management and employees.
US$709,751 was charged to the statement of comprehensive income relating to
these new awards, as well as to existing share awards.
During the period, the remainder of the 750,000 legacy awards vested.
Half year ended 31 December 2022
During the period no new share awards were issued.
US$417,818 was charged to the statement of comprehensive income related to
existing share awards.
During the period, 750,000 of the outstanding 1,500,000 legacy awards vested.
Reconciliation of options outstanding
The following reconciles outstanding share options provided as share-based
payments at the beginning and end of the financial period:
Six months ended 31 December 2023 Six months ended 31 December 2022
Number of options Weighted average exercise price Number of options Weighted average exercise price
Balance at beginning of the financial year 750,000 - 1,500,000 -
Vested during the financial period (750,000) $0.001 (750,000) $0.001
Expired during the financial period - - - -
Exercised during the financial period - - - -
Balance at end of the financial period - - 750,000 -
18. Loss per share
2023 cents per share 2022 cents per share
Basic loss per share
From continuing operations 1.21 1.72
Total basic loss per share 1.21 1.72
Diluted loss per share
From continuing operations 1.21 1.72
Total diluted loss per share 1.21 1.72
Basic loss per share
The net loss and weighted average number of ordinary shares used in the
calculation of basic loss per share are as follows:
Unaudited As at 31 December 2023 US$ Unaudited As at 31 December 2022 US$
Net loss (3,457,492) (4,203,333)
Losses used in the calculation of basic loss per share from continuing operations (3,457,492) (4,203,333)
Losses used in the calculation of diluted loss per share attributable to ordinary shareholders (3,457,492) (4,203,333)
As at 31 December 2023 No. As at 31 December
2022 No.
Weighted average number of ordinary shares for the purposes of calculating basic loss per share and diluted loss per share 285,180,873 244,654,098
No options (31 December 2022: 750,000) and nil performance rights (31 December
2022: nil) have not been included in the diluted earnings per share, as they
were anti-dilutive in the current and prior period.
19. Related party transactions
Transactions with Key Management Personnel and Related Parties
On 28 March 2024 the company’s Chairman , Mr Paul Atherley and the CEO, Mr
Tim George have made available a loan facility of GBP 2 million to the
company. The loan is repayable by 31 January 2025 and carries interest at 2%
plus 3 months SONIA.
20. Notes to the Consolidated Statement of Cashflows
Reconciliation of loss for the period to net cash flows from operating
activities
Six months ended 31 December Six months ended 31 December 2022 US$
2023 US$
Net loss (3,457,492) (4,203,333)
Add/less non-cash items
Depreciation 21,603 26,671
Share based payments 709,751 417,818
Impairment of assets 46,543 116,041
Foreign exchange (gains)/ losses (50,471) 42,468
Changes in Trade and other receivables (646,467) (775,219) 1
Changes in Trade and other payables 153,039 300,632
Net cash used in operating activities (3,223,494) (4,074,922) 1
Refer to note 4 for details of the restatement of prior year results.
Reconciliation of additions to property, plant and equipment to payments for
property, plant and equipment used in investing activities
Six months ended 31 December Six months ended 31 December 2022 US$
2023 US$
Additions to property, plant and equipment 10 (5,531,583) (9,352,769)
Additions to Saltend intangible assets and exploration and evaluation assets Adjustment for borrowing cost on bridging loan 11 (428,690) 82,260 (4,268,786) -
Total additions (5,878,013) (13,621,555)
Capital items included in working capital (4,547,880) 5,005,687
Payments for property, plant and equipment and intangibles (cash flow investing activities) (10,425,893) (8,615,868)
21. Subsequent events
Repayment of the bridging loan facility from FSDEA has subsequently been
extended to 19 April 2024.
On 28 March 2024 the company’s Chairman , Mr Paul Atherley and the CEO, Mr
Tim George, have made available a loan facility of GBP 2 million to the
company. The loan is repayable by 31 January 2025 and carries interest at 2%
plus 3 months SONIA.
Refer to note 3 for details of developments regarding funding.
No other matters or circumstances have arisen since 31 December 2023 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 Interim Report
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 b. 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
28 March 2024
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