REG - Shuka Minerals PLC - Annual Results for the year ended 31 December 2024
30/06/2025 07:00
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RNS Number : 8574O Shuka Minerals PLC 30 June 2025
30 June 2025
Shuka Minerals Plc
("Shuka" or the "Company")
Annual Results for the year ended 31 December 2024
Shuka Minerals Plc (AIM & AltX: SKA), an African-focused mine operator
and developer, announces its audited results for the year ended 31 December
2024.
For Enquiries:
Shuka Minerals Plc + 44 (0) 7990 503 007
Richard Lloyd - CEO
Strand Hanson Limited +44 (0) 20 7409 3494
Financial and Nominated Advisor
James Harris | Richard Johnson
AcaciaCap Advisors Propriety Limited +27 (11) 480 8500
JSE Sponsor and Listing Advisor
Michelle Krastanov
Tavira Securities Limited +44 (0) 20 7100 5100
Joint Broker
Oliver Stansfield | Jonathan Evans
Peterhouse Capital Limited
Joint Broker +44 (0)20 7469 0930
Charles Goodfellow | Duncan Vasey
Investor Relations
Faith Kinyanjui Mumbi +254 746 849 110
The 2024 Annual Report and Accounts is being posted to shareholders and will
shortly be available on the Company's website at:
https://www.shukaminerals.com/circularreports
(https://www.shukaminerals.com/circularreports) .
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR") and is disclosed
in accordance with the Company's obligations under Article 17 of MAR.
CHAIRMAN'S REPORT
In the year ending 31 December 2024, the Company continued its transition in
terms of management with a refocus on future strategy and direction and board
changes. During this continued period of change Richard Lloyd joined as the
new Chief Executive Officer (13/12/24) and Edward Ruheni as a Non-Executive
Director, and the Company accepted the resignations of directors Noel Lyons,
Paul Ryan and Allan Zimbler, we thank them for their efforts and wish them
well in their future endeavours. Jason Brewer also resigned as a Director but
continued as a consultant through Gathoni Muchai Investments ("GMI") . The
ongoing refocus of the Company has continued into the first half of 2025 with
a further major strategic financial commitment to the Company by GMI, subject
to final documentation, and the extension of the availability of the AUO
Commercial Brokerage LLC ("AUO") convertible loan note by 12 months to March
2026, as well as,material progress on a potential acquisition.
GMI is a Nairobi-based investment firm focused on mining, property and retail
sectors and headed up by Jason Brewer and Ms Jackline Muchai. GMI have
existing investments in four East African countries, including Tanzania and
are a major shareholder in battery metals focused mining company Marula Mining
plc and in Neo Energy Metals plc, each London-listed. GMI has a current 20.9%
shareholding in Shuka Minerals. Shuka's other major shareholder, AUO, led by
myself, has a current interest in 28.2% of the Company's issued shares.
On site in Tanzania, the Rukwa coal mine experienced continued production and
output challenges as has been the case historically with this coal asset.
However, a sufficient amount of investment, from a further drawdown of the
£500,000 GMI loan , is earmarked for H2 2025 and a restart, in mining
operations, is expected very soon. Production in 2024 amounted to 63 tonnes of
washed coal only this volume is set to be used to retest and restart the wash
plant and will then be sold. 60,000 tonnes of "fines" are stockpiled on
surface and we hope to achieve a sales price of USD7-8 per tonne for this
material which will generate valuable cashflow. A tight rein continues to be
kept on costs and we were pleased to have resolved the legacy dispute with the
Upendo Group .
A further funding commitment was entered into with GMI on 2 December 2024 with
an unsecured, non-convertible, interest free loan of £500,000, £335,000 of
which has been drawndown to date. This has been agreed to be further
extended by an extra £1.5m, subject to completion of the Company's due
diligence and signing of definitive funding documentation, post period, in
order to complete the acquisition of Leopard Exploration and Mining Limited
("LEM") . LEM is the registered holder of a large-scale mining license
12848-HQ-LML issued in December 2014 for a period of 25 years which
includes the world famous Kabwe Lead-Zinc-Silver-Vanadium mine in central
Zambia ("Kabwe Mine") approx.110km north of the capital city of Lusaka.
On 24 May 2024 the Company announced that it had completed due diligence on
the Kabwe Mine and was proposing to proceed with the acquisition of LEM. This
work, included independent technical and legal reports, and demonstrated a
technically robust and attractive acquisition opportunity of the Kabwe
operation (the "Project") which has a long history of mining and processing
operations (1904-1994) of base and precious metals. The Project's historical
non-JORC compliant resources have been independently verified by the Company's
retained technical experts Behre Dolbear meeting NI 43-101 reporting
requirements and which have an in-situ value of approx. US$4 billion based on
then prevailing London Metal Exchange prices. Preliminary economic analyses of
the Project have estimated pre-tax cashflow of US$1.84 billion, NPV10 US$0.56
billion and an IRR of 112% based on the development of two of the five
existing resources.
On the same date the Company was pleased to announce that it had entered a £2
million unsecured convertible loan note ("CLN") agreement with AUO. The
availability of the CLN was extended in March 2025 for a period of 1 year to
March 31(st) 2026 and repayment / conversion also extended to March 31(st)
2027. While AUO was previously unable to provide the requested funding, on
behalf of AUO I can confirm that we remain committed to meeting its
obligations under the CLN if required. The proceeds, if successfully drawn,
will either be applied towards future acquisition opportunities, including
LEM, or for general working capital purposes.
A conditional share purchase agreement ("SPA") was entered into between the
Company and LEM in December 2024, to acquire 100% of LEM's share capital.
The Kabwe Mine, was previously operated by Anglo American plc and Zambia
Consolidated Copper Mines Limited, and was mined continuously for 90 years
until its closure in 1994, due to the then prevailing commodity prices. It was
ranked as one of the world's highest-grade zinc and lead mining operations and
is considered one of the most famous mines in Africa, holding a position of
national economic importance in Zambia.
Subject to completion of the Acquisition and to securing the requisite
funding, the Company will commence a 3-phase exploration and development
program at the Kabwe Mine, as part of its plans to re-commence both open-pit
and underground mining and processing operations.
2024 was certainly a challenging period for the Company on the ground from an
operational perspective but outweighed by the strong steps taken to refocus
the Company for the future. We believe that the continued and anticipated
funding support by major shareholders, together with the investment strategy
outlined above, will lead to a successful period for the business in 2025 and
beyond.
I would like to extend my gratitude to all our stakeholders and former board
directors and to Richard Lloyd for taking on the role of CEO and redirecting
the Company with the conditional purchase of the Kabwe asset, planned
restarting Rukwa and a successful secondary listing on the AltX exchange
of the Johannesburg Stock Exchange ("JSE"). Thanks also goes to Jason Brewer,
who stepped down during the period though of course remains as a consultant,
for his contributions to the Company.
Yours Sincerely,
Quinton Van Der Burgh
Chairman
27 June 2025
CHIEF EXECUTIVE OFFICER'S REPORT
The past year, 2024, had a continued period of refocus for our Company and its
future direction. The vision for further growth beyond coal, whilst maximizing
the value of Rukwa continues. I only joined the Company at the very end of the
reporting period so will focus on the initiatives that were in place and which
I have been able to either complete or progress with the team. The focus for
2025 and beyond is key.
Board
I joined the board as the new CEO in December 2024 together with Edward Ruheni
who joined as an NED, joining Marc Nally the Independent NED. Jason Brewer,
whilst resigning as a Director, remains as a consultant through Gathoni Muchai
Investments ("GMI") and has been extremely supportive both from the funding
and strategic basis. The ongoing refocus of the Company has continued into the
first half of 2025 with a further major strategic financial commitments to the
Company by GMI, and the extension of the availability of the AUO Commercial
Brokerage LLC ("AUO") convertible loan note by 12 months to March 2026.
I hope to make further board appointments with technical capabilities in order
to progress our operations and strengthen the board.
In December 2024 Noel Lyons, Paul Ryan and Dr Allen Zimbler resigned as
Directors of the company. As part of the settlement agreement Noel Lyons and
Paul Ryan received £128,750 and £112,381 respectively in lieu of contractual
notice period. Both were also awarded bonuses of £125,000 each. The company
was grateful that £190,313.25 of the cash sum due to Noel Lyons and £178,036
of the cash sum due to Paul Ryan under their Settlement Agreements were paid
by the issuance of 2,584,583 new Shuka Shares (the subscription price
calculated using a 30 day VWAP) to Noel. Lyons and 2,417,850 new Shares to
Paul Ryan. The majority of the cash balance has now been settled.
In addition Noel Lyons and Paul Ryan were awarded 2,000,000 warrants each and
Dr Allen Zimbler was awarded 250,000 warrants (see Note 27).
Operations
The Rukwa coal mine in Tanzania, operated by Shuka owned subsidiary Edenville
International Tanzania Limited ("EITL"), has faced challenges throughout the
year, and has been managed on care and maintenance basis. However, a positive
reassessment of the potential for the Rukwa mine as well as various joint
venture discussions has resulted in a restart budget capex of c.USD150k in
order to return the mine to a targeted production rate of 4,000-5,000 tpcm by
Q3 2025, depending on when funding is secured. New equipment will be purchased
or leased, the wash plant tested and restarted and sales will re- commence.
Strategic partnerships with large cement manufacturers continue to be
discussed. There is interest in buying Rukwa's entire coal output, to a
maximum 10,000 tonnes per month. EITL will need to prove its ability to
produce a minimum of 4,000 tonnes per month uninterrupted. As mentioned this
will require some investment in capital and equipment.
In February 2024, the Company signed a definitive settlement agreement with
Upendo Group who hold a historic residual 10% interest in the Rukwa coal
mining licence. The settlement granted an immediate payment to Upendo Group of
USD 110,000. Upendo will also earn a royalty of $1.95 per tonne of coal from
Rukwa sold. Positive conversations have continued in 2025 with the new board
and Upendo regarding the operations restarting.
Kabwe / LEM acquisition
The Kabwe Mine, was previously operated by Anglo American plc and ZCCM from
1904-1994. It is one of the world's highest-grade zinc and lead mining
operations and has also produced significant amounts of Silver and Vanadium
oxide, and contains other rare earth minerals such as Gallium and Germanium.
Early testing of surface samples from my recent visit returned grades of 15 to
+30% Zn.
The Company completed due diligence on the Kabwe Mine and signed a conditional
share purchase agreement ("SPA") with Leopard Exploration and Mining Ltd in
December 2024 which is scheduled to complete no later than 30 June 2025. The
SPA anticipates the acquisition of 100% of LEM's share capital. LEM is the
registered holder of a large-scale mining license 12848-HQ-LML issued in
December 2014 for a period of 25 years, covering the Kabwe Mine and
surrounding area of 33sqkm.
Final authorisation has been approved by the Board of Commissioners of the
Competition and Consumer Protection Commission ("CCCPC") for the acquisition
of LEM.
The Company also agreed terms on a £1.5 million non-dilutive and unsecured
facility, subject to completion of the Company's due diligence and signing of
definitive funding documentation, to provide funding for the $1.35m balance of
cash consideration due to the LEM vendors.
Following receipt of the final regulatory approval noted above, the Company
has agreed the terms of an addendum to the SPA, subject to documentation,
whereby the principal LEM vendors have agreed that the share consideration for
the Acquisition, being $3.0 million, shall be settled on completion of the
Acquisition through the issue of 28,640,042 new ordinary Shuka shares
("Consideration Shares"), with no deferred consideration shares, equivalent to
an issue price of 7.737p per share (being a 10% discount to an agreed
reference price of 8.5965p under the terms of the SPA), a significant premium
to the current market price.
The Consideration Shares will represent, upon issue, 29.99% of the Company's
enlarged issued share capital.
As compensation for the issuance of the Consideration Shares upon completion,
with no deferred consideration shares, the Company has agreed to issue LEM
with a further 2,000,000 warrants with an exercise price of 12.5p and expiry
date of 31 December 2027, subject to the LEM vendors not holding post
exercise, in aggregate, over 29.99% of the Total Voting Rights.
The Company have also met with and engaged GeoQuest and discussed its
preliminary exploration plans and mine development strategy for the Kabwe
Mine. GeoQuest is a fully independent geological and environmental consultancy
and contract services group. GeoQuest's principals are well known by the
Company's CEO and NED Marc Nally. As part of their initial phase of work they
will complete a review of some of the historical resource drilling and
exploration work completed at the Kabwe Mine and complete a geophysical survey
of the Kabwe Mine and existing Mining License.
Behre Dolbear's NI 43-101 Competent Persons report is an extremely valuable
starting point for the analysis of the Kabwe Mine. Preliminary economic
analyses of the Project have estimated pre-tax cashflow of US$1.84 billion,
NPV10 US$0.56 billion and an IRR of 112% based on the development of two of
the five existing resources.
A 3-phase program, as recommended by Behre Dolbear, will comprise:
(i) a high-resolution geophysical survey,
(ii) a JORC Code 2012 resource drilling program, updated
metallurgical test work and additional environmental and mining studies; and
(iii) detailed feasibility study work and underground mine
refurbishment and new access decline activities as well as the establishment
of new ore processing facilities and project value addition in respect of the
production of refined metals products.
Funding
A funding commitment was entered into with GMI on 2 December 2024 for an
unsecured, non-convertible, interest free loan of £500,000. The Company has
agreed extended terms on an extra £1.5 million non-dilutive and unsecured
facility, subject to completion of the Company's due diligence and signing of
definitive funding documentation, in order to complete LEM acquisition (as
noted above).
The £2m AUO Investments (Dubai) ("AUO") convertible loan note was extended by
12 months to March 2026, with repayment also extended 12 months to Marh 2027,
which has also given the Company a possible further financing option. As
previously announced, while the funding was not provided when requested in
2024, AUO has confirmed that it intends to honor its commitments under the CLN
should it be called upon to do so.
The proceeds of the above facilities will be applied towards the cash element
of the LEM acquisition, or other future acquisition opportunities, and for
general working capital purposes.
The Company continues to assess the long outstanding debt owed by the Envirom
Group with debt collectors in Norway and is evaluating the potential for a
successful claim.
Corporate Social Responsibility
The Company remains committed to fulfilling its corporate and social
responsibilities ("CSR"). We recognise the importance of meeting social
requirements as an operator in Tanzania. The construction of the mining
operation at Rukwa has already led to improvements in local infrastructure,
most notably the construction and maintenance of a road from Kipandi to
Mkomolo village and beyond, benefiting farmers, the local population, and the
mine itself. We have also continued to prioritise the employment of local
individuals from surrounding villages, resulting in highly competent and
skilled employees. The positive social impact extends to the broader
community, where enterprising individuals are providing services such as food
supply for workers.
The CSR responsibilities in and around Kabwe with an historic, 100+ year old
mine and local operations will be challenging but Shuka have already engaged
local officials and representatives and will have a well thought out plan and
study in place before any operations commence.
Post Period Events
In May 2024 the Company entered into a £2 million unsecured convertible loan
note agreement ("CLN") with AUO Commercial Brokerage LLC ("AUO"), a
wholly-owned subsidiary of Q Global Commodities Group ("QGC"), which is led by
Quinton Van Den Burgh, the Company's Chairman. AUO has a current interest in
29.2% of the Company's issued shares.
On 4 April 2025 the availability of the entire principal amount was extended
to 31 March 2026, including the drawdown date and redemption date was
extended by 12 months to 31 March 2027.
The loan notes attract an interest of 3% per annum and are convertible at 15p
per share at any time up to 31 March 2027.
On 7 May 2025, 1,625,000 new ordinary shares of 1p each were issued at a price
of 8 pence per share in lieu of £130,000 of consultancy fees due to Gathoni
Muchai Investments Limited, £70,000 of which were outstanding at the year
end.
On 21 May 2025, the Company commenced its secondary listing on the AltX market
of the Johannesburg Stock Exchange
On 11 June final authorization was approved by the CCCPC for the acquisition
of LEM.
The Company also agreed terms on a £1.5 million non-dilutive and unsecured
facility, subject to completion of the Company's due diligence and signing of
definitive funding documentation, to provide funding for the $1.35m balance of
cash consideration due to the LEM vendors.
Following receipt of the final regulatory approval noted above, the Company
has agreed the terms of an addendum to the SPA, subject to documentation,
whereby the principal LEM vendors have agreed that the share consideration for
the Acquisition, being $3.0 million, shall be settled on completion of the
Acquisition through the issue of 28,640,042 new ordinary Shuka shares
("Consideration Shares"), with no deferred consideration shares, equivalent to
an issue price of 7.737p per share (being a 10% discount to an agreed
reference price of 8.5965p under the terms of the SPA), a significant premium
to the current market price.
The Consideration Shares will represent, upon issue, 29.99% of the Company's
enlarged issued share capital.
As compensation for the issuance of the Consideration Shares upon completion,
with no deferred consideration shares, the Company has agreed to issue LEM[,
following completion,] with a further 2,000,000 warrants with an exercise
price of 12.5p and expiry date of 31 December 2027, subject to the LEM
vendors not holding post exercise, in aggregate, over 29.99% of the Total
Voting Rights.
Summary and Outlook
We have a new and focused executive management team with strong technical
capabilities. Our investors bring extensive finance, and technical expertise
in the mining business on the African continent. The LEM acquisition, once
completed, and Kabwe project are huge milestone in Shuka's growth and a
Company changer. Furthermore, with an expected improved cash and funding
position, subject to completing funding, we will continue to target additional
asset acquisitions, leveraging the natural resources and capital markets
expertise of the Board and the significant shareholders.
I am firmly behind the future of Shuka and strongly believe that the future is
bright, both for the remainder of 2025 and beyond, with confidence in its
potential to generate shareholder value. The efforts made already in my short
tenure have provided strong results and a positive share price trend. The JSE
listing was a great success and opens the path to new and supportive
investors.
Richard Lloyd
Chief Executive Officer
27 June 2025
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF SHUKA MINERALS PLC
Opinion
We have audited the financial statements of Shuka Minerals Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 31 December
2024 which comprise the Group Statement of Comprehensive Income, the Group and
Parent Company Statement of Financial Position, the Group and Parent Company
Statement of Changes in Equity, the Group and Parent Company Cash Flows
Statements and notes to the financial statements, including significant
accounting policies. The financial reporting framework that has been applied
in their preparation is applicable law and UK-adopted international accounting
standards and as regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
In our opinion:
· the financial statements give a true and fair view of the state of
the group's and of the parent company's affairs as at 31 December 2024 and of
the group's loss for the year then ended;
· the group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
· the parent company financial statements have been properly prepared
in accordance with UK-adopted international accounting standards and as
applied in accordance with the provisions of the Companies Act 2006; and
· the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, which highlights the
need to re-commence commercial production at the Rukwa coal mine, uncertainty
over renewal of the Rukwa mining licence which falls due for renewal in
February 2026, and the need to access funds under the loan facilities within
the going concern period to meet the cash consideration under the LEM
acquisition and working capital requirements.
As stated in note 2, these events or conditions, along with the other matters
as set forth in note 2, indicate that a material uncertainty exists that may
cast significant doubt on the group's and company's ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the directors'
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors'
assessment of the group's and company's ability to continue to adopt the going
concern basis of accounting included
· Obtaining and evaluating management's going concern assessment,
including their assumptions, key risks and uncertainties, and any available
supporting documentation.
· Assessing the historical forecasting accuracy and consistency of
the going concern assessment with information obtained from other areas of the
audit, such as our audit procedures on management's impairment assessments.
· Testing the mathematical accuracy of the forecasts.
· Evaluating whether the assumptions made by management are
reasonable and appropriately conservative, considering the group's principal
risks and uncertainties. We challenged the assumptions and estimates made by
management where necessary.
· Reviewing all available agreements and commitments in respect of
the convertible loan note agreement and the non-convertible loan facility.
· Evaluating subsequent events impacting the going concern
assessment.
· Evaluating the adequacy of working capital, including assessing the
reasonableness of assumptions used in the cash flow forecasts and budgets and
any plans to address potential shortfalls.
· Performing sensitivity analysis on management's assumptions,
including applying incremental adverse cash flow sensitivities to assess the
potential impact of severe but plausible scenarios such as significant
movement in commodity prices or demand for coal, delays in re-commencing
production and any other risks specific to the mining industry.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report.
Emphasis of matter
Operationalisation of the 16% Government of Tanzania non-dilutable free
carried share interest.
We draw attention to note 28 of the financial statements, which highlights
that the Group has not completed the operationalisation of the issuance of the
16% non-dilutable free carried interest shares in its subsidiary, Edenville
International (Tanzania) Limited, as required by the Tanzania State
Participation Mining legislation.
Our opinion is not modified in this respect.
Our application of materiality
The quantitative and qualitative thresholds for materiality determine the
scope of our audit and the nature, timing, and extent of our audit procedures.
The materiality for the financial statements as a whole applied to the group
financial statements was £90,000 (2023: £88,000) based on 1.5% of gross
assets. We chose gross assets as the basis for materiality because in a mining
company, the primary focus of users is the efficient utilisation and
exploitation of mining assets to generate production, making it a key
performance indicator for stakeholders. The performance materiality for the
group was set at £58,000 (2023: £57,200) representing 65% (2023: 65%) of the
overall materiality. The materiality for the financial statements as a whole
applied to the parent company financial statements was £20,000 (2023:
£22,000) based on 2% of expenses. We chose expenses as the basis for
materiality for the parent company financial statements because it aligns with
the key cost components associated with its administrative and management
functions, considering the parent company primarily serves as a holding entity
for the subsidiary. The performance materiality for the parent company was
£13,000 (2023: £14,300) representing 65% (2023: 65%) of the overall
materiality. Performance materiality is based at a medium to high risk level
of 65% considering the inherent risks in the mining industry and the specific
risks identified and disclosed in the key audit matters. We use performance
materiality to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds overall
materiality. Specifically, we use performance materiality in determining the
scope of our audit and the nature and extent of our testing of account
balances, classes of transactions and disclosures, for example in determining
sample sizes.
For the component in the scope of our group audit, we allocated a materiality
that was less than our overall group materiality. This component
materiality, determined to be £58,000 (2023: £79,200), aligns with the same
benchmarks used for the group.
We agreed with those charged with governance that we would report all
differences identified during the course of our audit in excess of £4,000
(2023: £4,400) for the group and £1,000 (2023: £1,100) for the parent
company.
Our approach to the audit
In designing our audit approach, we determined materiality and assessed the
risks of material misstatement in the financial statements. In particular, we
assessed the areas involving significant accounting estimates and judgements
by the directors in respect of the carrying value of the mining assets and
carrying values of the parent company's investments in, and loans to,
subsidiaries and considered future events that are inherently uncertain. We
also addressed the risk of management override of internal controls, including
evaluation of whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
Of the four components of the group, two components being the London parent
company and its Tanzanian subsidiary that holds the Rukwa mining license were
identified as significant and material components. We performed a full scope
audit of the London parent company's complete financial information using a
team with specific experience of auditing mining entities and publicly listed
entities, and the Tanzanian subsidiary's audit was conducted by component
auditors from a PKF network firm. Specific procedures were performed in
respect of the remaining components because they were not material to the
group.
The subsidiary located in Tanzania was audited by a component auditor
operating under our instructions as the group auditor. The Senior Statutory
Auditor interacted regularly with the component audit team during all stages
of the audit and was responsible for the scope and direction of the audit
process. This, in conjunction with additional procedures performed, gave us
appropriate evidence for our opinion on the group and parent company's
financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were
of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters. In addition to the matters
described in the Material uncertainty related to going concern section we have
determined the matters described below to be the key audit matters to be
communicated in our report.
Key Audit Matter How our scope addressed this matter
Carrying value of mining assets (Note 15)
The entity has capitalised mining assets of £5,423,803 (2023: £5,334,949). Our work in this area included:
As per IAS 36, management is required to assess the carrying value of these
assets for impairment at each reporting date or when there is an indication of - Reviewing and challenging management's impairment review process,
impairment. including consideration of the NPV calculations used, and reviewing the
assumptions included in the models and performing a sensitivity analysis on
the key assumptions. We challenged management's assumptions by testing against
third-party evidence and ensuring the model is robust to these changes.
The impairment test involves estimation of the recoverable amount of the
assets, which requires significant judgement and estimation uncertainty. - Examining the assumptions made in the impairment review and
Management's assessment of the carrying value of mining assets involves supporting calculations. We tested the reasonableness of the assumptions and
significant estimation and judgement related to the assumptions and inputs compared them to industry benchmarks and other sources of external
used in the NPV valuation model, together with the timing of re-commencing information.
production activities to a commercial level.
- Considering the Group's resources, coal processing capacity, and
sales margins in our assessment of the carrying value of mining assets. We
evaluated the potential impact of changes in market conditions, such as
The carrying value of mining assets is a key audit matter because of the high changes in commodity prices or demand, on the carrying value of mining assets.
level of estimation uncertainty and judgement involved in determining the
carrying value of these assets reliably and accurately, the requirements of - Performing a sensitivity analysis to assess the impact of changes in
IAS 36 for the group to assess the carrying value of these assets for key assumptions on the carrying value of mining assets. This helped us to
impairment, and the significance of these assets on the group's statement of assess the potential range of outcomes and the degree of estimation
financial position. uncertainty associated with the carrying value of mining assets.
- Reviewing the terms and conditions of the mining license agreement
to determine the requirements for license renewal and assess whether Edenville
International Tanzania has complied with these requirements.
- Inquiring with the management regarding the steps taken to renew the
mining license and assess the probability of renewal based on their responses.
- Reviewing the correspondence and communication with relevant
authorities to assess if there are any indications of non-compliance or breach
of conditions that could affect the renewal of the mining license.
- Ensuring that all mining licences are active and in good standing.
- Assessing whether appropriate rehabilitation provisions have been
recognized in the financial statements, considering the expiry of the mining
license in 2026 and the potential costs associated with rehabilitation in the
event that the license is not renewed.
- Performing testing to ensure the existence and ownership of licenses
and consideration has been given to whether a decommissioning provision is
required. We evaluated the adequacy of the decommissioning provision, and
assessed whether the decommissioning liability is appropriately recognized in
the financial statements; and
- Considering whether the treatment of mining assets is in accordance
with IAS 16 and has been correctly classified. We evaluated the
appropriateness of accounting policies used for mining assets, including the
recognition and measurement of mineral reserves and mine development costs.
The future carrying value of the mining assets is dependent on the ability of
the subsidiary to re-commence production and fully realise the potential of
the mine, together with the ability to increase the mining activities and
extraction to pre-pandemic levels. The group has commenced discussions with
the relevant authorities to renew the mining license, which falls due for
renewal in February 2026. Refer to the observations within the key audit
matter above in respect of the carrying value of mining assets.
Valuation of the parent company's investment in, and loans to, subsidiaries
(Note 14)
The parent Company owns a significant investment in Edenville International Our work in this area included:
(Tanzania) Limited of £18,460,461 (2023: £18,277,299), which includes loans
to the subsidiary of £11,417,150 (2023: £11,233,987). The carrying value of - Reviewing and challenging management's impairment review of
this investment is linked to the value of the underlying assets held in investments held, including consideration of the NPV calculations used. We
Edenville International (Tanzania) Limited. These assets are primarily mining reviewed the assumptions included in the models and performed a sensitivity
assets located in Tanzania, and their valuation is subject to significant analysis on the key assumptions. We challenged management's assumptions by
estimation uncertainty and judgement. Therefore, there is a risk that the testing against third-party evidence and ensuring the model is robust to these
value in use of these assets is below the carrying value of the investment, changes. We also considered the reasonableness of the discount rate applied in
which could result in material misstatement of the amounts reported. the NPV calculations.
- Reviewing component auditor responses in relation to the Tanzania
based subsidiary and evaluating the impairment indicators. We evaluated the
As per IAS 36 - Impairment of Assets, management is required to assess the work of the component auditor and assessed the accuracy and completeness of
recoverable amount of the mining assets held by Edenville International their audit work. We also reviewed the documentation provided by the component
(Tanzania) Limited at each reporting date, or when there is an indication of auditor to assess the existence of any impairment indicators.
impairment. This involves estimating the future cash flows expected to be
generated from the mining assets and comparing this to the carrying value of - Ensuring that all conditions related to mining license renewal and
the investment in the subsidiary. The estimation of future cash flows is based extensions are complied with.
on assumptions made by management, including factors such as commodity prices,
production volumes, and operational costs. - Ensuring that mining licence with subsidiary are active and in good
standing.
- Reviewing the value of the net investment in subsidiaries against
The carrying value of the investment in Edenville International (Tanzania) the underlying assets and verifying and corroborating the judgements/estimates
Limited is a key audit matter due to the high level of judgement and used by management to assess the recoverability of investments and
estimation involved in determining the recoverable amount of the underlying intercompany receivables. We assessed the reliability of the underlying
mining assets. assumptions made by management regarding the expected future cash flows from
the mining assets held by the subsidiary. We also performed sensitivity
analysis on the key assumptions used in the valuation and challenge
management's estimates where necessary. Additionally, we corroborated the
supporting documentation provided by management, such as mineral resource
reports and feasibility studies, to assess the reasonableness of the
judgements made.
The future carrying value of the mining assets is dependent on the ability of
the subsidiary to fully realise the potential of the mine and increase the
mining activities and extraction to pre-pandemic levels.
Other information
The other information comprises the information included in the annual report,
other than the financial statements and our auditor's report thereon. The
directors are responsible for the other information contained within the
annual report. Our opinion on the group and parent company financial
statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the
work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
· the information given in the strategic report and the directors'
report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
· the strategic report and the directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent
company and their environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the directors'
report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
· adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received from
branches not visited by us; or
· the parent company financial statements are not in agreement with
the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are
not made; or
· we have not received all the information and explanations we
require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the group and parent company
financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors
are responsible for assessing the group and the parent company's ability to
continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and
regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
· We obtained an understanding of the group and parent company and
the sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard through discussions with management,
industry research, application of cumulative audit knowledge and experience of
the sector.
· We determined the principal laws and regulations relevant to the
group and parent company in this regard to be those arising from the Companies
Act 2006, AIM Rules for Companies and Mining Act (14/2010) and various
regulations made there under applicable to subsidiary in Tanzania.
· We designed our audit procedures to ensure the audit team
considered whether there were any indications of non-compliance by the group
and parent company with those laws and regulations. These procedures included,
but were not limited to enquiries of management, review of minutes and
Regulatory News Service (RNS) announcements, and review of legal and
regulatory correspondence.
· We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition to the
non-rebuttable presumption of a risk of fraud arising from management override
of controls, that the potential for management bias was identified in relation
to the impairment assessment of mining assets and parent company's valuation
of investments in loans to subsidiaries. We addressed this by challenging the
assumptions and judgements made by management when evaluating any indicators
of impairment.
· As in all of our audits, we addressed the risk of fraud arising
from management override of controls by performing audit procedures which
included, but were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the
normal course of business.
· For the significant component within the group, the audit
procedures performed by the component auditors relating to non-compliance with
laws and regulations and the posting of journal entries was reviewed for
evidence of non-compliance or potential instances of fraud detected. As noted
in the Emphasis of matter section of our report, non-compliance with
requirement of the Government of Tanzania on operationalisation of the 16%
non-dilutable free carried interest shares was identified in the year.
Because of the inherent limitations of an audit, there is a risk that we will
not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is
removed from the events and transactions reflected in the financial
statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) . This description forms part
of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company's members those matters we
are required to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as
a body, for our audit work, for this report, or for the opinions we have
formed.
David Thompson (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory Auditor
London E14 4HD
27 June 2025
GROUP STATEMENT OF COMPREHENSIVE INCOME
Note 2024 2023
£ £
Revenue 5 2,305 194,346
Cost of sales (200,566) (438,877)
(198,261) (244,531)
Gross loss
Administration expenses 6 (1,799,584) (1,424,120)
Group operating loss (1,997,845) (1,668,651)
Finance income 10 2,351 3,256
Finance costs 11 (9,433) (16,133)
Loss on operations before taxation (2,004,927) (1,681,528)
Income tax 12 - (972)
Loss for the year (2,004,927) (1,682,500)
Attributable to:
Equity holders of the Company (2,003,219) (1,680,848)
Non-controlling interest (1,708) (1,652)
Other comprehensive loss
Item that will or may be reclassified to the profit and loss:
Gain on translation of overseas subsidiary 90,521 (349,479)
Total comprehensive loss for the year (1,914,406) (2,031,979)
Attributable to:
Equity holders of the Company (1,912,698) (2,030,327)
Non-controlling interest (1,708) (1,652)
Earnings per Share (pence)
Basic and diluted loss per share 13 (3.32p) (4.11p)
All operating income and operating gains and losses relate to continuing
activities.
No separate statement of comprehensive income is provided as all income and
expenditure is disclosed above.
GROUP AND COMPANY STATEMENT OF FINANCIAL POSITION
Company Registered Number 05292528 Note Group Company
31 December 31 December 31 December 31 December
2024 2023 2024 2023
£ £ £ £
Non-current assets
Investment in subsidiaries 14 - - 18,460,460 18,277,299
Property, plant and equipment 15 5,526,188 5,469,134 422 562
Intangible assets 16 338,836 333,041 - -
5,865,024 5,802,175 18,460,882 18,277,861
Current assets
Inventories 17 4,454 75,011 - -
Trade and other receivables 18 240,377 416,370 666,147 497,311
Cash and cash equivalents 19 36,038 633,093 33,449 499,661
280,869 1,124,474 699,596 996,972
Current liabilities
Trade and other payables 20 (891,155) (515,376) (583,794) (150,538)
Borrowings 21 (195,307) (34,366) (150,000) -
(1,086,462) (549,742) (733,794) (150,538)
Current assets less current liabilities (805,593) 574,732 (34,198) 846,434
Total assets less current liabilities 5,059,431 6,376,907 18,426,684 19,124,295
Non-current liabilities
Borrowings 21 - (32,131) - -
Environmental rehabilitation liability 22 (36,237) (32,086) - -
5,023,194 6,312,690 18,426,684 19,124,295
Equity
Called-up share capital 23 4,612,482 4,562,344 4,612,482 4,562,344
Share premium account 24,372,638 23,995,626 24,372,638 23,995,626
Share option reserve 561,125 364,842 561,125 364,842
Foreign currency translation reserve 1,014,035 923,514 - -
Retained earnings (25,512,880) (23,509,661) (11,119,561) (9,798,517)
Attributable to the equity shareholders of the Company 5,047,400 6,336,665 19,124,295
18,426,684
Non- controlling interests (24,206) (23,975) - -
Total equity 5,023,194 6,312,690 18,426,684 19,124,295
The financial statements were approved by the board of directors and
authorised for issue on 27 June 2025 and signed on its behalf by:
Richard Lloyd, Director
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
group
--------------------------------------------------Equity
Interests---------------------------------------
Share Capital Share Premium Retained Earnings Account Share Option Reserve Foreign Currency Total Non-controlling interest Total
Translation Reserve
£ £ £ £ £ £ £ £
At 1 January 2023 4,233,744 22,569,976 (21,896,430) 277,654 1,272,993 6,457,937 (19,697) 6,438,240
Other comprehensive loss for the year
Foreign currency translation - - - - (349,479) (349,479) (2,464) (351,943)
Loss for the year - - (1,680,848) - - (1,680,848) (1,652) (1,682,500)
Total comprehensive income for the year - - (1,680,848) - (349,479) (2,030,327) (4,116) (2,034,443)
Transactions with owners
Issue of share capital 328,600 1,445,650 - - - 1,774,250 - 1,774,250
Share issue costs - (20,000) - - - (20,000) - (20,000)
Share options/warrants charge
- - 154,805 - 154,805 - 154,805
Lapse of share options/warrants
- - 67,617 (67,617) - - - -
Total transactions with owners 328,600 1,425,650 67,617 87,188 - 1,909,055 - 1,909,055
Non- controlling interest share of goodwill
- - - - - - (162) (162)
At 31 December 2023 4,562,344 23,995,626 (23,509,661) 364,842 923,514 6,336,665 (23,975) 6,312,690
--------------------------------------------------Equity
Interests---------------------------------------
Share Capital Share Premium Retained Earnings Account Share Option Reserve Foreign Currency Total Non-controlling interest Total
Translation Reserve
£ £ £ £ £ £ £ £
At 1 January 2024 4,562,344 23,995,626 (23,509,661) 364,842 923,514 6,336,665 (23,975) 6,312,690
Other comprehensive loss for the year
Foreign currency translation - - - - 90,521 90,521 1,244 91,765
Loss for the year - - (2,003,219) - (2,003,219) (1,708) (2,004,927)
Total comprehensive income for the year - - (2,003,219) - 90,521 (1,912,698) (464) (1,913,162)
Transactions with owners
Issue of share capital 50,138 318,212 - - - 368,350 368,350
Share options/warrants charge 255,083 255,083 - 255,083
-
Lapse of share options/warrants
- 58,800 (58,800) - - -
Total transactions with owners 50,138 377,012 - 196,283 - 623,433 - 623,433
Non- controlling interest share of goodwill
- - - - - - 233 233
At 31 December 2024 4,612,482 24,372,638 (25,512,880) 561,125 1,014,035 5,047,400 (24,206) 5,023,194
COMPANY
Retained Earnings Account Share
Share Capital Share Premium Option Reserve
Total
£ £ £ £ £
At 1 January 2023 4,233,744 22,569,976 (8,843,866) 277,654 18,237,508
Other comprehensive loss for the year
Loss for the year - - (1,022,268) - (1,022,268)
Total comprehensive income for the year - - (1,022,268) - (1,022,268)
Transactions with owners
Issue of share capitals 328,600 1,445,650 - - 1,774,250
Share issue costs - (20,000) - - (20,000)
Share option/warrants charge - - 154,805 154,805
Lapse of share options/warrants 67,617 (67,617) -
Total transactions with owners 328,600 1,425,650 67,617 87,188 1,909,055
At 31 December 2023 4,562,344 23,995,626 (9,798,517) 364,842 19,124,295
Other comprehensive loss for the year
Loss for the year - - (1,321,044) - (1,321,044)
Total comprehensive income for the year - - (1,321,044)) - (1,321,044)
Transactions with owners
Issue of share capital 50,138 318,212 368,350
Share issue costs 255,083 255,083
Share option/warrants charge 58,800 (58,800) -
Lapse of share options/warrants
Total transactions with owners 50,138 377,012 - 196,283 623,433
At 31 December 2024 4,612,482 24,372,638 (11,119,561) 561,125 18,426,684
GROUP AND COMPANY CASH FLOW STATEMENTS
Group Company
Year ended Year ended Year ended Year ended 31 December
31 December 31 December 31 December 2024 2023
2024 2023
£ £
£ £
Note
Operating activities
Operating loss (1,997,845) (1,668,651) (1,361,968) (1,047,987)
Adjustments to reconcile profit before tax to net cash flows:
Depreciation
15 38,098 114,422 140 187
Share based payments 27 255,083 154,805 255,083 154,805
Expected credit losses (301) (4,387) - -
Impairment of inventories 17 75,313 45,925 - -
Provisions 178,637 - - -
Foreign exchange difference 12,317 (2,135) - -
Working capital changes:
Decrease/ in inventories (4,756) (8,798) - -
Increase in trade and other receivables (1,067) (94,500) (130,265) (229,023)
Increase/(decrease)/ in trade and other payables 351,457 104,216 433,258 (7,226)
Net cash outflow from operating activities (1,093,064) (1,359,103) (803,752) (1,129,244)
Tax paid (912) - - -
Cash flows from investing activities
Capital introduced to subsidiaries 14 - - (183,161) (324,822)
Purchase of property, plant and equipment - - -
Finance income 10 2,351 3,256 2,351 3,256
Net cash from/(used in) investing activities 2,351 3,256 (180,810) (321,566)
Cash flows from financing activities
New loans 21 150,000 150,000
Repayment of lease liabilities (21,190) (25,265) - -
Interest payable - (3,187) - (3,187)
Lease interest (4,910) (9,687) - -
Proceeds from issue of ordinary shares 368,350 1,814,100 368,350 1,814,100
Share issue costs - (20,000) - (20,000)
Net cash inflow from financing activities 492,250 1,755,961 518,350 1,790,913
Net (decrease)/increase in cash and cash equivalents (599,375) 400,114 (466,212) 340,103
Cash and cash equivalents at beginning of year 633,093 237,300 499,661 159,558
Effect of foreign exchange rate changes on cash and cash equivalents
2,320 (4,321) - -
Cash and cash equivalents at end of year 19 36,038 633,093 33,449 499,661
NOTES TO THE COMPANY'S FINANCIAL STATEMENTS
1. General Information
Shuka Minerals Plc is a public limited Company incorporated in England and
Wales. The address of the registered office is Aston House, Cornwall Avenue,
London, N3 1LF. The Company's shares are listed on AIM, a market operated by
the London Stock Exchange.
The principal activity of the Group is the exploration, development and mining
of energy commodities predominantly coal in Africa.
2. Group Accounting Policies
Basis of preparation and statement of compliance
The Group's and Company's financial statements have been prepared in
accordance with UK-adopted international accounting standards ('UK adopted
IAS') and as applied in accordance with the provisions of the Companies Act
2006. The Group's financial statements have been prepared under the historical
cost convention.
The preparation of financial statements in conformity with UK adopted IAS
requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
Group's financial statements are disclosed in Note 4.
The Company has elected to take the exemption under section 408 of the
Companies Act 2006 from presenting the Parent Company Income Statement. The
loss after tax for the Parent Company for the year was £1,321,044 (2023:
£1,022,268).
Going concern
At 31 December 2024 the Group had cash balances totalling £36,038. The Group
is also able to raise £2,000,000 by the issue of convertible loan notes (see
note 31) as well as an additional loan of £500,000, having already drawn down
£335,000 to date, and up to a further £1,500,000 once the £500,000 has been
fully drawn down. The agreement for the additional £1,500,000 has not yet
been signed and is subject to completion of the Company's due diligence. The
convertible loan note facility is available to 31 March 2026 with a repayment
date of 31 March 2027. Amounts drawn down under the loan facility are
repayable from 30 May 2026.
Based on the current working capital forecast, and assuming the Company
secures funding from the agreed £1.5 million facility as noted above, the
Group expects to have sufficient funds for the next 12 months in order to
allow it to re-commence production at Rukwa and complete the acquisition of
LEM, the owner of the Kabwe mine. Uncertainty exists however regarding the
timing of re-commencement of mining at Rukwa and the ability to fully access
the funds under the loan facilities. Further funding may be required through
an equity raise, although there is no guarantee that such funding will be
obtained.
The Directors therefore consider that the Group will have sufficient funds in
place to continue as a going concern for at least 12 months from the date of
approval of these financial statements.
Adoption of new and revised standards and changes in accounting policies
The following amendments are effective for the period beginning 1 January
2024:
· Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 17).
· Lease Liability in Sales and Leaseback (Amendments to IFRS 16)
· Classification of Liabilities as Current or Non- Current
(Amendments to IAS 1); and
· Non-current Liabilities with Covenants (Amendments to IAS 1)
2. Group Accounting Policies (continued)
These amendments had no effect on the consolidated financial statements of the
Group. In the current year the group has applied a number of new and amended
IFRS Accounting Standards issued by the International accounting Standards
Board ("IASB") and adopted by the UK, that are effective for the first time
for the financial year beginning 1 January 2024. Their adoption has not had
any material impact on the disclosure or on the amounts reported in these
financial statements.
Standards and interpretations in issue but not yet effective or not yet
relevant
There are a number of 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.
Effect annual periods beginning before or after
IAS 21 The Effects of Changes in Foreign Exchange Rates 1(st) January 2025
Lack of Exchangeability (Amendment to IAS 21 The Effects of Changes in Foreign
Exchange Rates)
IFRS 7 Financial Instruments: Disclosure 1(st) January 2026
Amendments regarding the classification and measurement of financial
instruments
IFRS 7 Financial Instruments: Disclosure 1(st) January 2026
Amendments resulting from Annual Improvements to IFRS Accounting Standards
IFRS 7 Financial Instruments 1(st) January 2026
Contracts Referencing Nature-dependent Electricity
IFRS 9 Financial Instruments 1(st) January 2026
Amendments regarding the classification and measurement of financial
instruments
IFRS 9 Financial Instruments 1(st) January 2026
Amendments resulting from Annual Improvements to IFRS Accounting Standards
IFRS 9 Financial Instruments 1(st) January 2026
Contracts Referencing Nature-dependent Electricity
IFRS 18 Presentation and Disclosure of Financial Statements 1(st) January 2027
Original issue
IFRS 19 Subsidiaries without Public Accountability: Disclosures 1(st) January 2027
Original issue
IFRS 18 Presentation and Disclosures in Financial Statements
IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1
unchanged and complementing them with new requirements.
IFRS 18 introduces new requirements to:
• present specified categories and defined subtotals in the
statement of profit or loss
• provide disclosures on management-defined performance measures
(MPMs) in the notes to the financial statements
• improve aggregation and disaggregation.
The directors of the company anticipate that the application of these
amendments may have an impact on the group's consolidated financial statements
in future periods.
The Group is currently assessing the effect of these new accounting standards
and amendments.
The Group does not expect to be eligible to apply IFRS 19.
2. Group Accounting Policies (continued)
Share based payments (Share options and Warrants)
The Group operates a number of equity-settled, share-based compensation plans,
under which the entity receives services from employees as consideration for
equity instruments (share options) of the Group. The fair value of the
employee services received in exchange for the grant of options is recognised
as an expense.
The Group also , from time to time , issues warrants, primarily to advisors of
the company in connection with placing of shares and/or other services. There
fair value of these warrants is either recognised as an expense or as a share
issue costs offset against share premium, depending on the nature of services.
The total amount to be expensed or offset against share premium in respect of
share issue costs is determined by reference to the fair value of the options
granted:
· including any market performance conditions;
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability, sales growth targets and
remaining an employee of the entity over a specified time period); and
· excluding the impact of any non-vesting conditions (for example,
the requirement of employees to save).
Assumptions about the number of options that are expected to vest include
consideration of non-market vesting conditions. The total expense is
recognised over the vesting period, which is the period over which all of the
specified vesting conditions are to be satisfied. At the end of each reporting
period, the entity revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium when the options are
exercised.
Basis of consolidation
The Group's financial statements consolidate the financial statements of Shuka
Minerals Plc and all its subsidiary undertakings (Edenville International
(Seychelles) Limited, Edenville International (Tanzania) Limited and Edenville
Power (TZ) Limited) made up to 31 December 2024 (Note 14). Profits and
losses on intra-group transactions are eliminated on consolidation.
Subsidiaries are all entities over which the group has control. The group
controls an entity when the group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the group. They
are deconsolidated from the date that control ceases.
Consolidation of a subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of
during the year are included in the statement of profit or loss and other
comprehensive income from the date the Group gains control until the date the
Group ceases to control the subsidiary. Where the Group's interest is less
than 100 per cent, the interest attributable to outside shareholders is
reflected in non-controlling interests (NCIs).
2. Group Accounting Policies (continued)
Business combinations
The Group adopts the acquisition method in accounting for the acquisition of
subsidiaries. On acquisition the cost is measured at the fair value of the
assets given, plus equity instruments issued and liabilities incurred or
assumed at the date of exchange. The assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured at their
fair value at the date of acquisition. Any excess of the fair value of the
consideration over the fair value of the identifiable net assets acquired is
recorded as goodwill.
Any deficiency of the fair value of the consideration below the fair value of
identifiable net assets acquired is credited to the income statement in the
period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year
are included in the group statement of comprehensive income statement from the
effective date of acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by the group. Inter-company transactions and balances between group companies
are eliminated.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable,
and represent amounts receivable for goods supplied, stated net of discounts,
returns and value added taxes. Under IFRS 15, there is a five-step approach to
revenue recognition which is adopted across all revenue streams. The process
is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the
contract; and
Step 5: Recognise revenue as and when the entity satisfies the performance
obligation.
The Group has one revenue stream being the sale of coal and other aggregate
bi-products produced by the Group. Sales are predominantly made at the Group's
premises as customers collect their quantities from the mine. Such revenue is
recognised at the point of contact at a pre-agreed fixed price on a per
tonnage basis. For deliveries made to customer premises, revenue is recognised
at the point of which the products leave the Group's premises.
2. Group Accounting Policies (continued)
Presentational and functional currency
The Group's consolidated financial statements are presented in pound sterling,
which is also the parent company's
functional currency.
For each entity, the Group determines the functional currency and items
included in the financial statements of each entity are measured using that
functional currency. The Group uses the direct method of consolidation and on
disposal of a foreign operation, the gain or loss that is reclassified to
profit or loss reflects the amount that arises from using this method.
The functional currency of the Group's subsidiaries is US Dollars.
In preparing the financial statements of individual entities, transaction in
currencies other than the entity's functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the
transactions. At each balance sheet date, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at the balance
sheet date.
For the purposes of presenting consolidated financial statements, the assets
and liabilities of the Group's foreign operations (including comparatives) are
expressed in pounds sterling using exchange rates prevailing at the balance
sheet date. Income and expense items are translated at the average exchange
rate for the period. Exchange differences arising, if any, are classified as
equity and transferred to the Group's foreign currency translation reserve.
Such translation differences are recognised in the income statement in the
period in which the foreign operation is disposed.
Financial instruments
Financial assets
Financial assets comprise investments, cash and cash equivalents and
receivables. Unless otherwise indicated, the carrying amounts of the Group's
financial assets are a reasonable approximation of their fair values.
Classification and measurement
The Group classifies its financial assets into the following categories: those
to be measured subsequently at fair value (either through other comprehensive
income (FVOCI) or through the income statement (FVPL) and those to be held at
amortised cost.
Classification depends on the business model for managing the financial assets
and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial
recognition. The Group's policy with regard to financial risk management is
set out in note 3. Generally, the group does not acquire financial assets for
the purpose of selling in the short term.
The group's business model is primarily that of "hold to collect" (where
assets are held in order to collect contractual cash flows). When the
group enters into derivative contracts, these transactions are designed to
reduce exposures relating to assets and liabilities, firm commitments or
anticipated transactions.
Impairment
The Group recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original EIR. The expected cash
flows will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms.
2. Group Accounting Policies (continued)
ECLs are recognised in two stages. For credit exposures for which there has
not been a significant increase in credit risk since initial recognition, ECLs
are provided for credit losses that result from default events that are
possible within the next 12-months (a 12-month ECL). For those credit
exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected
over the remaining life of the exposure, irrespective of the timing of the
default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other
receivables due in less than 12 months, the Group applies the simplified
approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group
does not track changes in credit risk, but instead, recognises a loss
allowance based on the financial asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are
90 days past due. However, in certain cases, the Group may also consider a
financial asset to be in default when internal or external information
indicates that the Group is
unlikely to receive the outstanding contractual amounts in full before taking
into account any credit enhancements held by the Group. A financial asset is
written off when there is no reasonable expectation of recovering the
contractual cash flows and usually occurs when past due for more than one year
and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Debt instruments that are held under a business model where they
are held for the collection of contractual cash flows and also for sale
("collect and sale") and which have cash flows that meet the SPPI criteria. An
example would be where trade receivable invoices for certain customers were
factored from time to time. All movements in the fair value of these
financial assets are taken through comprehensive income, except for the
recognition of impairment gains and losses, interest revenue (including
transaction costs by applying the effective interest method), gains or losses
arising on derecognition and foreign exchange gains and losses which are
recognised in the income statement. When the financial asset is derecognised,
the cumulative fair value gain or loss previously recognised in other
comprehensive income is reclassified to the income statement.
- Equity investments where the group has irrevocably elected to
present fair value gains and losses on revaluation of such equity investments,
including any foreign exchange component, are recognised in other
comprehensive income.
- When equity investment is derecognised, there is no
reclassification of fair value gains or losses previously recognised in other
comprehensive income to the income statement. Dividends are recognised in the
income statement when the right to receive payment is established.
2. Group Accounting Policies (continued)
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases,
transaction costs are immediately expensed to the income statement.
- Debt instruments that do not meet the criteria of amortised
costs or fair value through other comprehensive income.
- Equity investments which are held for trading or where the FVOCI
election has not been applied. All fair value gains or losses and related
dividend income are recognised in the income statement.
- Derivatives which are not designated as a hedging instrument.
All subsequent fair value gains or losses are recognised in the income
statement.
Derecognition
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of ownership of the asset to
another entity.
On derecognition of a financial asset measured at amortised cost, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case of loans
and borrowings and payables, net of directly attributable transaction costs.
The Group's financial liabilities include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as
described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss. Financial liabilities are
classified as held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes derivative
financial instruments entered into by the Group that are not designated as
hedging instruments in hedge relationships as defined by IFRS 9. Separated
embedded derivatives are also classified as held for trading unless they are
designated as effective hedging instruments. Gains or losses on liabilities
held for trading are recognised in the statement of profit or loss and other
comprehensive income.
Trade and other payables
After initial recognition, trade and other payables are subsequently measured
at amortised cost using the EIR method. Gains and losses are recognised in the
statement of profit or loss and other comprehensive income when the
liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss
and other comprehensive income.
2. Group Accounting Policies (continued)
Derecognition
A financial liability is derecognised when the associated obligation is
discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability
are substantially modified, such an exchange or modification is treated as the
derecognition of the original liability and the recognition of a new
liability. The difference in the respective carrying amounts is recognised in
profit or loss and other comprehensive income.
Liabilities within the scope of IFRS 9 are classified as financial liabilities
at fair value through profit and loss or other liabilities, as appropriate.
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised
initially at fair value and subsequently at amortised cost.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using the weighted average costing method. Components of
inventories consist of coal, parts and supplies, net of allowance for
obsolescence. Coal inventories represent coal contained in stockpiles, coal
that has been mined and hauled to the wash plant (raw coal) for processing and
coal that has been processed (crushed, washed and sized) and stockpiled for
shipment to customers.
The cost of raw and prepared coal comprises extraction costs, direct labour,
other direct costs and related production overheads (based on normal operating
capacity). It excludes borrowing costs. Net realisable value is the estimated
selling price in the ordinary course of business, less applicable variable
selling expenses.
The Group performs inventory obsolescence assessment at each reporting date.
In determining whether inventories are obsolete, the Company assesses the age
at which inventories held in the store in order to make an assessment of the
inventory write down to net realisable value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits
and other short term highly liquid investments that are readily convertible to
a known amount of cash and are subject to insignificant risk of changes in
value.
Convertible loan notes
The convertible loan notes issued by the Company are classified separately as
financial liabilities in accordance with the substance of contractual
arrangements. The convertible loan note ("CLN") is a compound financial
instrument that cannot be converted to share capital at the option of the
holder. As the CLN, and the accrued interest, can only be repaid as a loan, it
has been recognised within liabilities. Interest is accounted for on an
accruals basis and charged to the Consolidated Income Statement and added to
the carrying amount of the liability component of the CLN.
2. Group Accounting Policies (continued)
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition less
accumulated depreciation and accumulated impairment losses.
Depreciation is provided on all property, plant and equipment categories at
rates calculated to write off the cost, less estimated residual value on a
reducing balance basis over their expected useful economic life. The
depreciation rates are as follows:
Basis of depreciation
Fixtures, fittings and equipment 25% reducing balance
Plant and machinery 5 years straight line or 25% reducing balance
Office equipment 25% reducing balance
Motor vehicles 25% reducing balance
Costs capitalised include the purchase price of an asset and any costs
directly attributable to bringing it into working condition for its intended
use.
Coal Production assets
Coal land, mine development costs, which include directly attributable
construction overheads, land and coal rights are recorded at cost. Coal land
and mine development are depleted and amortised, respectively, using the units
of production method, based on estimated recoverable tonnage. The depletion of
coal rights and depreciation of restoration costs are expensed by reference to
the estimated amount of coal to be recovered over the expected life of the
operation.
Coal Mine Reclamation Costs
Future cost requirements for land reclamation are estimated where surface
operations have been conducted, based on the Group's interpretation of the
technical standards of regulations enacted by the Government of Tanzania.
These costs relate to reclaiming the pit and support acreage at surface mines
and sealing portals at deep mines. Other costs include reclaiming refuse and
slurry ponds as well as related termination/exit costs.
The Group records asset retirement obligations that result from the
acquisition, construction or operation of long-lived assets at fair value when
the liability is incurred. Upon the initial recognition of a liability, that
cost is capitalised as part of the related long-lived asset and expensed over
the useful life of the asset. The asset retirement costs are recorded in Land,
Coal Rights and Restoration Costs.
The Group expenses reclamation costs prior to the mine closure. The
establishment of the end of mine reclamation and closure liability is based
upon permit requirements and requires significant estimates and assumptions,
principally associated with regulatory requirements, costs and recoverable
coal lands. Annually, the end of mine reclamation and closure liability is
reviewed and necessary adjustments are made, including adjustments due to mine
plan and permit changes and revisions of cost and production levels to
optimize mining and reclamation efficiency. The amount of such adjustments is
reflected in the year end reclamation provision calculation.
2. Group Accounting Policies (continued)
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping (waste removal)
costs during the production phase of its operations. Stripping activities
undertaken during the production phase of a surface mine (production
stripping) are accounted for as set out below.
After the commencement of production, further development of the mine may
require a phase of unusually high stripping that is similar in nature to
development phase stripping. The cost of such stripping is accounted for in
the same way as development stripping (as outlined above). Production
stripping is generally considered to create two benefits, being either the
production of inventory or improved access to the ore to be mined in the
future. Where the benefits are realised in the form of inventory produced in
the period, the production stripping costs are accounted for as part of the
cost of producing those inventories.
Where the benefits are realised in the form of improved access to ore to be
mined in the future, the costs are recognised as a non-current asset, referred
to as a 'stripping activity asset', if the following criteria are met:
a) Future economic benefits (being improved access to the ore body) are
probable;
b) The component of the ore body for which access will be improved can be
accurately identified; and
c) The costs associated with the improved access can be reliably measured
If any of the criteria are not met, the production stripping costs are charged
to profit or loss as operating costs as they are incurred.
In identifying components of the ore body, the Group works closely with the
mining operations personnel for each mining operation to analyse each of the
mine plans. Generally, a component will be a subset of the total ore body, and
a mine may have several components. The mine plans, and therefore the
identification of components, can vary between mines for a number of reasons.
These include, but are not limited to: the type of commodity, the geological
characteristics of the ore body, the geographical location, and/or financial
considerations.
The stripping activity asset is initially measured at cost, which is the
accumulation of costs directly incurred to perform the stripping activity that
improves access to the identified component of ore, plus an allocation of
directly attributable overhead costs. If incidental operations are occurring
at the same time as the production stripping activity, but are not necessary
for the production stripping activity to continue as planned, these costs are
not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping activity asset are
not separately identifiable, a relevant production measure is used to allocate
the production stripping costs between the inventory produced and the
stripping activity asset. This production measure is calculated for the
identified component of the ore body and is used as a benchmark to identify
the extent to which the additional activity of creating a future benefit has
taken place. The Group uses the expected volume of waste extracted compared
with the actual volume for a given volume of ore production of each component.
The stripping activity asset is accounted for as an addition to, or an
enhancement of, an existing asset, being the mine asset, and is presented as
part of the Coal Production Asset in the statement of financial position.
Finance costs
Finance costs of debt, including premiums payable on settlement and direct
issue costs are charged to the income statement on an accruals basis over the
term of the instrument, using the effective interest method.
2. Group Accounting Policies (continued)
Income taxation
The taxation charge represents the sum of current tax and deferred tax.
The tax currently payable is based on the taxable profit for the period using
the tax rates that have been enacted or substantially enacted by the balance
sheet date. Taxable profit differs from the net profit as reported in the
income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible.
Deferred taxation
Deferred tax is recognised, using the liability method, in respect of
temporary differences between the carrying amount of the Group's assets and
liabilities and their tax base. Deferred tax liabilities are offset against
deferred tax assets within the same taxable entity or qualifying local tax
group. Any remaining deferred tax asset is recognised only when, on the basis
of all available evidence, it can be regarded as probable that there will be
suitable taxable profits, within the same jurisdiction, in the foreseeable
future against which the deductible temporary difference can be utilised.
Deferred tax is determined using tax rates that are expected to apply in the
periods in which the asset is realised or liability settled, based on tax
rates and laws that have been enacted or substantially enacted by the balance
sheet date. Deferred tax is recognised in the income statement, except when
the tax relates to items charged or credited directly in equity, in which case
the tax is also recognised in equity.
Investments in subsidiaries
Investments in subsidiaries are measured at cost less accumulated impairment.
The Group considers long term loans to be cost of investment in subsidiary.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
• leases of low value assets; and
• leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
group's incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes:
• amounts expected to be payable under any residual value guarantee;
• the exercise price of any purchase option granted in favour of the group
if it is reasonably certain to assess that option; and
• any penalties payable for terminating the lease, if the term of the lease
has been estimated on the basis of termination
option being exercised.
2. Group Accounting Policies (continued)
Right of use assets ("RoU") are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
• lease payments made at or before commencement of the lease;
• initial direct costs incurred; and
• the amount of any provision recognised where the group is contractually
required to dismantle, remove or restore the leased asset.
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
When the group revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted at
the same discount rate that applied on lease commencement. The carrying value
of lease liabilities is similarly revised when the variable element of future
lease payments dependent on a rate or index is revised. In both cases an
equivalent adjustment is made to the carrying value of the right-of-use asset,
with the revised carrying amount being amortised over the remaining (revised)
lease term.
When the group renegotiates the contractual terms of a lease with the lessor,
the accounting depends on the nature of the modification:
• if the renegotiation results in one or more additional assets being
leased for an amount commensurate with the standalone price for the additional
rights-of-use obtained, the modification is accounted for as a separate lease
in accordance with the above policy;
• in all other cases where the renegotiated increases the scope of the lease
(whether that is an extension to the lease term, or one or more additional
assets being leased), the lease liability is remeasured using the discount
rate applicable on the modification date, with the right-of-use asset being
adjusted by the same amount; and
• if the renegotiation results in a decrease in the scope of the lease, both
the carrying amount of the lease liability and right-of-use asset are reduced
by the same proportion to reflect the partial of full termination of the lease
with any difference recognised in profit or loss. The lease liability is then
further adjusted to ensure its carrying amount reflects the amount of the
renegotiated payments over the renegotiated term, with the modified lease
payments discounted at the rate applicable on the modification date. The
right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the group to use an identified asset
and require services to be provided to the group by the lessor, the group has
elected to account for the entire contract as a lease, i.e. it does allocate
any amount of the contractual payments to, and account separately for, any
services provided by the supplier as part of the contract.
Lease Liability
The lease liability is initially measured at the present value of lease
payments over the lease term, discounted using the interest rate implicit in
the lease, or, if that rate cannot be readily determined, the Group's
incremental borrowing rate. Subsequent to initial measurement, the lease
liability is reduced for lease payments made and increased to reflect interest
on the lease liability.
2. Group Accounting Policies (continued)
Short-Term and Low-Value Leases
The Group has elected not to recognise RoU assets and lease liabilities for
leases with a lease term of 12 months or less or leases of low-value assets.
Lease payments associated with these leases are recognised on a straight-line
basis as an expense in profit or loss.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as
deduction, net of tax, from the proceeds.
Intangible assets
Intangible assets arose as a result of the valuation placed on the original
six Tanzanian licences acquired on the acquisition of Edenville (Tanzania)
Limited. The allocation price was based on the price paid to acquire these the
Group's licences. The licences are amortised over the life of the production
asset using rates of depletion.
Operating segments
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief executive officer.
The Board considers that the Group's project activity constitutes one
operating and reporting segment, as defined under IFRS 8.
The total profit measures are operating profit and profit for the year, both
disclosed on the face of the combined income statement.
3. Financial risk management
Fair value estimation
The carrying value less impairment provision of trade receivables and payables
is assumed to approximate their fair values, due to their short-term nature.
The fair value of financial liabilities for disclosure purposes is estimated
by discounting the future contractual cash flows at the current market
interest rate that is available to the group for similar financial
instruments.
4. Critical accounting estimates and areas of judgement
The Group makes estimates and assumptions concerning the future, which by
definition will seldom result in actual results that match the accounting
estimate. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amount of assets and liabilities
within the next financial year are those in relation to:
· the impairment of coal production assets and intangible assets;
· the recoverability of investments in the subsidiary
· share based payments
· Valuation of provision for restoration costs
· Recoverability of VAT balance
· Recoverability of Inventory
4. Critical accounting estimates and areas of judgement
(continued)
Impairment - coal production assets and intangible assets (notes 15 and 16)
The Group is required to perform an impairment review, on coal production
assets, for each CGU to which the asset relates. Impairment review is also
required to be performed on other intangible assets when facts and
circumstances suggest that the carrying amount of the asset may exceed its
recoverable amount. The recoverable amount is based upon the Directors'
judgements and are dependent upon the ability of the Company to obtain
necessary financing to complete the development and future profitable
production or proceeds from the disposal, at which point the value is
estimated based upon the present value of the discounted future cash flows.
In assessing whether an impairment is required for the carrying value of an
asset, its carrying value is compared with its recoverable amount. The
recoverable amount is the higher of the asset's fair value less costs to sell
and value in use. Given the nature of the Group's activities, information on
the fair value of an asset is usually difficult to obtain unless negotiations
with
potential purchasers or similar transactions are taking place. Consequently,
unless indicated otherwise, the recoverable amount used in assessing the
impairment charges described below is value in use.
The calculation of value in use is most sensitive to the following
assumptions:
· Production volumes
Production volumes are based on management's most reasonable possible estimate
of mine increasing production of ROM30,000 tonnes per year in 2025 to 120,000
tonnes per year by 2030. The total mining quantities are on the assumption
that there are resources which is supported by the JORC report carried out in
2017 indicating that the mine has 7 million tonnes of coal.
· Sales volumes
Sales volumes are based on the assumption that all of the coal produced will
be sold.
· Terminal growth rates
There is terminal growth rate applied in calculation of value in use is 5%
which is based on the assumption that mining licenses will be renewed and
extended. The current mining license expires in February 2026. Management
have already submitted a renewal application, for an additional 10 years,
together with the associated fee.
· Discount rates
The future cash flows are adjusted for risks specific to the asset and
discounted using a pre-tax discount rate of 10%. The Directors believe this
rate to be appropriate as this is in line with the borrowing rates the Group
are expected to receive if they were to obtain significant long-term finance
based on discussions between the Directors and prospective parties. The
Directors acknowledge that the Group does have small, short term finance
arrangements which attract a higher rate but have chosen not to use these
rates as they would not be financing the production asset using short term
borrowing facilities.
· Selling prices
Coal selling prices are based on the most recent realisable value available
based on signed contracts with customers.
The directors have assessed the value of exploration and evaluation
expenditure and development assets and intangible assets. In their opinion
there has been no impairment loss to these intangible assets in the period,
other than the amounts charged to the income statement.
4. Critical accounting estimates and areas of judgement
(continued)
Recoverability of Invetsments in the subsidiary (note 14)
Management is required to make critical judgements in assessing the
recoverability of the Company's investment in its subsidiary engaged in coal
mining operations. As at the reporting date, the carrying value of the
investment is assessed for indicators of impairment in accordance with IAS 36
Impairment of Assets.
Given the nature of the mining sector, the recoverability of the investment is
inherently dependent on the future viability and commercial success of the
underlying mining operation, which is subject to several significant
uncertainties, which are described above.
The Group has performed a discounted cash flow (DCF) analysis to estimate the
net present value (NPV) of future cash flows expected to be generated by the
mine. This model incorporates management's best estimates of forecast
production volumes, commodity pricing, capital expenditures, operating costs,
and a risk-adjusted discount rate reflecting current market assessments of the
time value of money and project-specific risks.
The outcome of the NPV calculation is highly sensitive to changes in key
assumptions. Management considers this area to involve significant judgement
due to the estimation uncertainty involved, particularly regarding:
· the life-of-mine plan and mineable reserves,
· long-term coal price forecasts,
· timing and cost of required capital investment, and
· regulatory and environmental developments.
If the NPV of the future cash flows falls below the carrying value of the
investment, an impairment loss is recognised in accordance with IAS 36. Any
reversal of a previously recognised impairment loss is considered if there is
evidence of improved viability or changes in key assumptions.
Management concluded that, based on the NPV assessment performed, no
impairment of the investment is required at the reporting date. However, this
conclusion is subject to change based on future developments in the project
and external market conditions.
Share based payments (note 27)
The estimate of share based payments costs requires management to select an
appropriate valuation model and make decisions about various inputs into the
model including the volatility of its own share price, the probable life of
the options, the vesting date of options where non-market performance
conditions have been set and the risk free interest rate.
Valuation of provision for restoration costs (note 15)
The Company makes full provision for the future cost of rehabilitating mine
sites and related production facilities on a discounted basis at the time of
developing the mines and installing and using those facilities. The
rehabilitation provision represents the present value of rehabilitation costs
relating to mine sites, which are expected to be incurred in the future, which
is when the producing mine properties are expected to cease operations. These
provisions have been created based on the Company's internal estimates and a
third party estimate from an independent consultant. Assumptions based on the
current economic environment have been made, which management believes are a
reasonable basis upon which to estimate the future liability. These estimates
are reviewed regularly to take into account any material changes to the
assumptions. However, actual rehabilitation costs will ultimately depend upon
future market prices for the necessary rehabilitation works required that will
reflect market conditions at the relevant time. Furthermore, the timing of
rehabilitation is likely to depend on when the mines cease to produce at
economically viable rates. This, in turn, will depend upon future coal prices,
which are inherently uncertain.
4. Critical accounting estimates and
areas of judgement (continued)
Management increases reclamation costs estimates at an annual inflation rate
to the anticipated future mine closure date. This inflation rate is based on
the historical rate for the industry for a comparable.
Recoverability of VAT receivable (note 18)
The group considers the recoverability of the VAT balance in Tanzania to be a
key area of judgement, as the VAT can only be recovered by an offset against
VAT payable on future sales. The VAT recoverable has been provided in full in
the current year.
Recoverability of Inventory (Note 17)
The group considers the recoverability of the inventory to be a key area of
judgement, and this is held at its realisable value. The directors believe the
inventory to be in good condition.
Current dramatic increases in Global coal prices have had a major impact on
the demand situation in country and the east African region overall, with one
of the major producers turning their focus to export. As a result of this the
company has received regular coal sales enquiries and is focused on finding
new markets for its product and gearing up production. It has already
commenced the sale of fines and has regular enquiries about the purchase of
its washed coal.
The company has made limited sales during the period and production has been
low, as such the recoverability of Fines in certain and therefore has been
provided against.
5. Segmental information
The Board considers the business to have one reportable segment being Coal
production assets.
Other represents unallocated expenses and assets held by the head office.
Unallocated assets primarily consist of cash and cash equivalents.
Coal Production Assets
2024 Coal Other Total
Consolidated Income Statement £ £
Revenue - Tanzania 2,305 - 2,305
Cost of sales (excluding depreciation and amortisation) (196,596) - (196,596)
Depreciation - - -
Depletion of development assets (3,970) - (3,970)
(198,261) - (198,261)
Gross loss
Administrative expenses (283,629) (1,226,744) (1,510,373)
Depreciation (33,988) (140) (34,128)
Share based payments (255,083) (255,083)
Group operating loss (515,878) (1,481,967) (1,997,845)
Finance income 2,351 2,351
Finance cost (9,433) (9,433)
Loss on operations before taxation (525,311) (1,479,616) (2,004,927)
Income tax - - -
Loss for the year (525,311) (1,479,616) (2,004,927)
5. Segmental information (continued)
Coal Production Assets
2023 Coal Other Total
Consolidated Income Statement £ £ £
Revenue - Tanzania 194,346 - 194,346
Cost of sales (excluding depreciation and amortisation) (369,182) - (369,182)
Depreciation (38,824) - (38,824)
Depletion of development assets (30,871) - (30,871)
Gross loss (244,531) - (244,531)
Administrative expenses (211,592) (1,012,994) (1,224,586)
Depreciation (44,542) (187) (44,729)
Share based payments - (154,805) (154,805)
Group operating loss (500,665) (1,167,986) (1,668,651)
Finance income - 3,256 3,256
Finance cost (12,946) (3,187) (16,133)
Loss on operations before taxation (513,611) (1,167,917) (1,681,528)
Income tax (972) - (972)
Loss for the year (514,583) (1,167,917) (1,682,500)
Business Segment Carrying value of segment assets Additions to non-current assets and intangibles Total liabilities
2024 2023 2024 2023 2024 2023
£ £ £ £ £ £
Coal 5,971,946 6,295,784 - - 396,077 469,761
Other 173,947 630,865 - - 726,622 144,198
6,145,893 6,926,649 - - 1,122,699 613,959
By Geographical Area
£ £ £ £ £ £
Africa (Tanzania) 5,971,946 6,295,784 - - 396,999 469,761
Europe 173,947 630,865 - - 726,622 144,198
6,145,893 6,926,649 - - 1,123,621 613,959
5. Segmental information (continued)
Information about major customers
In 2024 revenues arising form the sale of coals are revenues which arise from
the Group's largest customers based in Burundi and Rwanda.
In 2023 revenues arising from the sale of coal are revenues which arose from
sales to the Group's largest customers based in Tanzania except for Customer 2
which was based in Rwanda.
No other customers contributed 10% or more to the Group's revenue in either
2024 or 2023.
2024 2023
£ £
Customer 1 - 78,503
Customer 2 - 81,570
Customer 3 - -
Customer 4 - 20,005
Customer 5 1,225 -
Customer 6 1,080 -
2,305 180,078
6. Expenses by nature
2024 2023
£ £
Staff costs 734,347 653,592
Share based payments 255,083 154,805
Audit fees 72,423 72,810
Office and other administrative services 61,075 46,530
AIM related costs including investor relations 5,000 28,417
Professional, legal and consultancy fees 445,814 385,737
Travel, entertaining and subsistence 13,331 18,674
Exchange gain 51 (506)
Depreciation 34,128 44,729
Provisions and expected credit losses 178,332 (4,387)
Other costs - 23,719
1,799,584 1,424,120
7. Auditors' remuneration
2024 2023
£ £
Fees payable to the Company's auditor for the audit of the parent Company and
consolidated accounts
64,600 50,000
8. Employees
Group
2024 2023
£
Wages and salaries 798,570 745,435
Social security costs 8,897 13,892
Benefits in kind - 5,094
Pensions - -
Share based payments 255,083 154,805
Other costs - 723
1,062,550 919,949
The average number of employees and directors during the year was as follows:
Group
2024 2023
Administration 6 5
Mining , plant processing and security 12 18
18 23
Remuneration of key management personnel
The remuneration of the directors and other key management personnel is set
out below:
2024 2023
£ £
Emoluments 733,381 648,000
Pensions - -
Benefits in kind - 4,869
Share based payments 255,083 154,805
988,464 807,674
9. Directors' remuneration
2024 2023
£ £
Emoluments 733,381 648,000
Pensions - -
Benefits in kind - 4,869
Share based payment 255,083 154,805
988,464 807,674
The highest paid director received remuneration of £402,420 (2023:
£300,496).
Included in the above are accrued Director's remuneration of £86,000 (2023:
£50,750)
Directors' interest in outstanding share options per director is disclosed in
the directors' report.
10. Finance income
2024 2023
£ £
Interest income on short-term bank deposits 2,351 3,256
2,351 3,256
11. Finance Costs
2024 2023
£ £
Hire purchase interest 5,913 9,687
Interest on rehabilitation provision 3,520 3,259
Other interest payable - 3,187
9,433 16,133
12. Income tax
2024 2023
£ £
Current tax:
Current tax on loss for the year
Foreign taxation - 972
Total current tax 972
Deferred tax
On write off/impairment on intangible assets - -
Tax charge for the year 972
No corporation tax charge arises in respect of the year due to the trading
losses incurred. The Group has Corporation Tax losses available to be
carried forward and used against trading profits arising in future periods of
£10,120,546 (2023: £9,149,345).
A deferred tax asset of £2,530,030 (2023 £2,287,195) calculated at 25%
(2023: 25%) has not been recognised in respect of the tax losses carried
forward due to the uncertainty that profits will arise against which the
losses can be offset.
The tax assessed for the year differs from the standard rate of corporation
tax in the UK as follows:
2024 2023
£ £
Loss on ordinary activities before tax (2,004,927) (1,681,529)
Expected tax credit at standard rate of UK Corporation Tax
25% (2023: 25.52%) and 30% (2023:30%) In Tanzania (534,938) (459,682)
Disallowable expenditure 87,534 120,380
Depreciation in excess of capital allowances 9,071 87,464
Other adjustments 68,545 872
Losses carried forward 369,788 251,938
Tax charge for the year - 972
13. Earnings per share
The basic loss per share is calculated by dividing the loss attributable to
equity shareholders by the weighted average number of shares in issue.
The loss attributable to equity shareholders and weighted average number of
ordinary shares for the purposes of calculating diluted earnings per ordinary
share are identical to those used for basic earnings per ordinary share. This
is because the exercise of warrants would have the effect of reducing the loss
per ordinary share and is therefore anti-dilutive.
2024 2023
£ £
Net loss for the year attributable to ordinary shareholders (2,004,927) (1,682,500)
Weighted average number of shares in issue 60,439,641 40,922,217
Basic and diluted loss per share (3.32) (4.11)
14. Investment in subsidiaries
Shares in Loans to
subsidiaries subsidiaries Total
Company £ £ £
Cost
At 1 January 2023 7,043,312 10,909,166 17,952,478
Additions - 324,821 324,821
_________ _________ _________
At 31 December 2023 7,043,312 11,233,987 18,277,299
Accumulated impairment
As at 1 January 2023 - - -
Impairment - - -
_________ _________ _________
At 31 December 2023 - - -
Net Book Value
As at 31 December 2023 7,043,312 11,233,987 18,277,299
Shares in Loans to
subsidiaries subsidiaries Total
Company £ £ £
Cost
At 1 January 2024 7,043,312 11,233,987 18,277,299
Additions 183,1611 183,161
_________ _________ _________
At 31 December 2024 7,043,312 11,417,148 18,460,460
Accumulated impairment
As at 1 January 2024 - - -
Impairment
_________ _________ _________
At 31 December 2024 - - -
Net Book Value
As at 31 December 2024 7,043,312 11,417,148 18,460,460
The value of the Company's investment and any indications of impairment is
based on the prospecting and mining licences held by its subsidiaries.
The Tanzanian licences comprise a mining licence and various prospecting
licences. The licences are located in a region displaying viable prospects for
coal and occur in a country where the government's policy for development of
the mineral sector aims at attracting and enabling the private sector to take
the lead in exploration mining, development, mineral beneficiation and
marketing.
The JORC compliant resource statement completed in 2013 can be found in the
operations section of the Groups website: www.shukaminerals.com
(http://www.shukaminerals.com) .
14. Investment in subsidiaries (continued)
During 2018 the activities of the Company's subsidiary evolved from
exploration and evaluation to development and as a result the exploration and
evaluation assets held by the Company's subsidiary were transferred to
development expenditure. The Directors carried out an impairment review on
reclassification of exploration and evaluation assets to development assets,
which covered the Company's investments in, and loans to, its subsidiaries.
Following the impairment reviews the Directors did not consider the Company's
investments to be impaired.
In April 2019, the subsidiary moved into the production phase.
The Directors have carried out an impairment review and consider the value in
use to be greater than the book value in respect of The Company's investment
in its subsidiary Company Edenville International (Tanzania) Limited.
The Directors considered the recoverable amount by assessing the value in use
by considering future cash flow projections of the revenue generated by its
subsidiary through the sale of its coal resources.
Cash flows were based on the revenue generated to date plus expected growth
from current production levels to 10,000 tons per month in the short to medium
term.
. The Group is continuing to sell its washed coal through export to
neighbouring countries for use by cement manufacturers. It is expected these
sales, subject to satisfactory continuous production, will increase going
forward.
The Company is now in significant discussions with its new target market, that
being the supply of coal and coal fines to cement factories in nearby
countries. While the location of the mine is a challenge for the market
outside Africa, it is strategically placed for neighbouring countries where
supply is limited and transport costly, therefore giving the company a
strategic and economic advantage. Oftakes are already in place for as much
production as Rukwa can manage and supply has already started to companies
such as Crimera and others. The company will focus on increasing production
and developing the partnership with these cement producing entities, who not
only seek our coal for its location but also for its chemical composition and
quality.
However, based upon estimated resources, the subsidiary has significant coal
resources which based upon current projections prepared by the Directors would
be sufficient to support the book value in the financial statements. The
Directors are of the view that this amount is adequately supported by proposed
returns generated by supplying coal to nearby cement factories in neighbouring
countries. Production projections are based on ROM (Run of Mine) which is
higher than the actual production levels and the value in use is dependent on
the mine achieving ROM capacity. The Directors have applied a 10% discount
rate in their forecasts. Additional factors that may affect these projections
include the following: -
An increase in the discount factor to 15.5% would result in an impairment of
the Edenville International (Tanzania) Limited investment by £377k.
A decrease of 60% in the price of coal would result in an impairment of the
Edenville International (Tanzania) Limited investment by £216k.
A decrease of quantity by 46% would result in an impairment of the Edenville
International (Tanzania) Limited investment by £154k.
The mining license is due to expire in 2026. Should the mining license not be
renewed this would result in an impairment of £18.4m.
14. Investment in subsidiaries (continued)
Holdings of more than 20%:
The Company holds more than 20% of the share capital of the following
companies:
Subsidiary undertaking Country of incorporation Class Shares held
Edenville International (Seychelles) Limited Seychelles Ordinary 100%
Edenville International (Tanzania) Limited Tanzania Ordinary 99.75%*
Edenville Power (Tz) Limited Tanzania Ordinary 99.9%
* These shares are held by Edenville International (Seychelles) Limited.
15. Property, plant and equipment
Coal Production assets Plant and machinery Fixtures, fittings and equipment Motor vehicles Total
£ £ £ £ £
Cost
As at 1 January 2023 5,855,019 1,344,491 7,554 328,480 7,535,544
Foreign exchange adjustment (74,262) (17,318) (416,979)
(325,211) (188)
As at 31 December 2023 5,529,808 1,270,229 7,366 311,162 7,118,565
Depreciation
As at 1 January 2023 173,642 1,301,920 7,445 140,661 1,623,668
Depletion/ Charge for the year 39,171 44,353 114,422
30,871 27
Foreign exchange adjustment (71,908) (6,910) (88,659)
(9,653) (188)
As at 31 December 2023 194,860 1,269,183 7,284 178,104 1,649,431
Net book value
As at 31 December 2023 5,334,948 1,046 82 133,058 5,469,134
15. Property, plant and equipment (continued)
Coal Production assets Plant and machinery Fixtures, fittings and equipment Motor vehicles Total
£ £ £ £ £
Cost
As at 1 January 2024 5,529,808 1,270,229 7,366 311,162 7,118,565
Foreign exchange adjustment 21,972 5,124 123,361
96,209 56
As at 31 December 2024 5,626,017 1,292,201 7,422 316,286 7,241,926
Depreciation
As at 1 January 2024 194,860 1,269,183 7,284 178,104 1,649,431
Depletion/ Charge for the year 266 33.841 38,098
3,970 21
Foreign exchange adjustment 21,956 2,814 28,209
3,383 56
As at 31 December 2024 202,213 1,291,405 7,361 214,759 1,715,738
Net book value
As at 31 December 2024 5,423,804 796 61 101,527 5,526,188
Plant and machinery depreciation amounting to £Nil (2023: £40,489) is
included within cost of sales as it relates to mining equipment.
Included within Motor Vehicles are Right of Use assets with a carrying value
of £299,595 (2023: £294,471). The depreciation provided in the year on
these assets was £33,758 (2023: £44,242).
15. Property, plant and equipment (continued)
Company
Fixtures, fittings and equipment
Plant and machinery Motor Vehicles
Total
£ £ £ £
Cost
As at 1 January 2023 and 31 December 2023 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2023 7,274 4,044 16,248 27,566
Charge for the year 49 27 111 187
As at 31 December 2023 7,323 4,071 16,359 27,753
Net book value
As at 31 December 2023 148 82 332 562
Fixtures, fittings and equipment
Plant and machinery Motor Vehicles
Total
£ £ £ £
Cost
As at 1 January 2024 and 31 December 2024 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2024 7,323 4,071 16,359 27,753
Charge for the year 37 21 82 140
As at 31 December 2024 7,360 4,092 16,441 27,893
Net book value
As at 31 December 2024 111 61 250 422
16. Intangible assets
Group
Mining Licences
£
Cost or valuation
As at 1 January 2023 1,667,530
Foreign exchange adjustment (92,619)
At 31 December 2023 1,574,911
Accumulated depletion, amortisation and impairment
As at 1 January 2023 1,314,903
Amortisation
Foreign exchange adjustment (73,033)
At 31 December 2023 1,241,870
Net book value
As at 31 December 2023 333,041
Group
Mining Licences
£
Cost or valuation
As at 1 January 2024 1,574,911
Foreign exchange adjustment 27,403
At 31 December 2024 1,602,314
Accumulated depletion, amortisation and impairment
As at 1 January 2024 1,241,870
Amortisation -
Foreign exchange adjustment 21,608
At 31 December 2024 1,263,478
Net book value
As at 31 December 2024 338,836
16. Intangible assets (continued)
Mining Licences
Intangible assets arose as a result of the valuation placed on the original
six Tanzanian licences acquired on the acquisition of Edenville (Tanzania)
Limited. The allocation price was based on the price paid to acquire these the
Group's licences.
These assets are reviewed for impairment annually alongside the coal
production assets. (see note 4 for Critical accounting estimates and
judgements).
17. Inventories
Group
2024 2023
£ £
ROM stockpiles 2,442 30
Fines 164,907 162,033
Washed coal 2,012 2,542
Less; Impairment (164,907) (89,594)
4,454 75,011
The cost of inventories recognised as an expense during the year in was
£11,694 (2023: £136,021).
.
18. Trade and other receivables
Group Company
2024 2023 2024 2023
£ £ £ £
Trade receivables 70,820 93,657 - -
Less : Expected credit loss allowance (70,820) (70,986) - -
Net Trade receivables - 22,671 - -
Other receivables 153,229 148,642 120,080 120,080
Less : Expected credit loss allowance (27,310) (26,843) - -
125,919 121,799 120,080 120,080
Amounts due from related parties - 525,242 366,670
VAT receivable 114,458 271,900 20,825 10,561
Prepayments - - - -
240,377 416,370 666,147 497,311
19. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash
flow statement:
Group Company
2024 2023 2024 2023
£ £ £ £
Cash at bank and in hand 36,038 633,093 33,449 499,661
20. Trade and other payables
Group Company
2024 2023 2024 2023
£ £ £ £
Trade payables 432,595 132,578 312,851 13,979
Amounts owed to subsidiary undertakings - - 6,340 6,340
Accruals and deferred income 279,082 138,064 264,603 130,219
Other payables 179,478 244,734 - -
891,155 515,376 583,794 150,538
21. Borrowings
Group Company
2024 2023 2024 2023
£ £ £ £
Lease liabilities
Repayable within 1 year 45,307 34,366 - -
Repayable within 2 to 5 years - 32,131 - -
45,307 66,497 - -
Other loans
Repayable within 1 year 150,000 - 150,000 -
Total
Repayable within 1 year 195,307 34,366 150,000 -
Repayable with 2 to 5 years - 32,131 - -
195,307 66,497 150,000
The loan of £150,000 is interest free and repayable on demand.
21. Borrowings (continued)
Lease liabilities
Group
2023
£
As at 1 January 2023 95,504
Interest expense 9,687
Lease payments (34,952)
Foreign exchange (4,742)
As at 31 December 2023 66,497
Interest expense 5,913
Lease payments (26,100)
Foreign exchange (1,003)
As at 31 December 2023
45,307
22. Environmental rehabilitation liability
Group
2024 2023
£ £
At 1 January 32,086 30,609
Interest 3,520 3,260
Foreign exchange movement 631 (1,783)
36,237 32,086
The group makes full provision for the future cost of rehabilitating mine
sites and related production facilities on a discounted basis at the time of
developing the mines and installing and using those facilities. The
rehabilitation provision represents the present value of rehabilitation costs
relating to mine sites which are expected to be incurred in the future, which
is when the producing mine properties are expected to cease operations. Those
provisions have been created based on the Company's internal estimates.
Assumptions based on the current economic environment have been made, which
management believes are a reasonable basis upon which to estimate the future
liability. These estimates are reviewed regularly to take into account any
material changes to the assumptions. However actual rehabilitation costs will
ultimately depend upon future market prices for the necessary rehabilitation
costs will ultimately depend upon future market prices for the necessary
rehabilitation works required that will reflect market conditions at the
relevant time. Furthermore, the timing of rehabilitation is likely to depend
on when the mines cease to produce at economically viable rates. This, in turn
will depend upon future coal prices, which inherently uncertain.
23. Share capital
Group and Company
No £ No £ £
Ordinary shares of 1p each Ordinary shares of 0.02p/1p each Deferred shares of 0.001p each Deferred shares of 0.001p each Total share capital
Issued and fully paid
At 1 January 2023 27,359,861 273,600 396,014,437,346 3,960,144 4,233,744
On 31 May 2023 11,500,000 Ordinary 1p shares were issue for 5p 11,500,000 115,000 - - 115,000
On 7 September 2023 17,860,000 Ordinary 1p shares were issued for 5p
17,860,000 178,600 - - 178,600
On 7 September 2023 3,500,000 Ordinary shares of 1p each were issued for 8.75p
3,500,000 35,000 - - 35,000
As at 31 December 2023 60,219,861 602,200 396,014,437,346 3,960,144 4,562,344
No £ No £ £
Ordinary shares of 1p each Ordinary shares of 0.02p/1p each Deferred shares of 0.001p each Deferred shares of 0.001p each Total share capital
Issued and fully paid
At 1 January 2024 60,219,861 602,200 396,014,437,346 3,960,144 4,562,344
On 16 December 2024 5,013,736 shares were issued for 7.3468p
5,013,736 50,138 - - 50,138
As at 31 December 2024 65,233,597 652,338 396,014,437,346 3,960,144 4,612,482
The deferred shares have no voting rights, dividend rights or any rights of
redemption. On return of assets on winding up the holders are entitled to
repayment of amounts paid up after repayment to ordinary shareholders.
24. Capital and reserves attributable to shareholders
Group Company
2024 2023 2024 2023
£ £ £ £
Share capital 4,612,482 4,562,344 4,612,482 4,562,344
Share premium 24,372,638 23,995,626 24,372,638 23,995,626
Other reserves 1,575,160 1,288,356 561,125 364,842
Retained deficit (25,512,880) (23,509,661) (11,119,561) (9,798,517)
Total equity 5,047,400 6,336,665 18,426,684 19,124,295
There have been no significant changes to the Group's capital management
objectives or what is considered to be capital during the year.
25. Capital management policy
The Group's policy on capital management is to maintain a low level of
gearing. The group funds its operation primarily through equity funding.
The Group defines the capital it manages as equity shareholders' funds less
cash and cash equivalents.
The Group objectives when managing its capital are:
· To safeguard the group's ability to continue as a going concern.
· To provide adequate resources to fund its exploration, development
and production activities with a view to providing returns to its investors.
· To maintain sufficient financial resources to mitigate against risk
and unforeseen events.
The group's cash reserves are reported to the board and closely monitored
against the planned work program and annual budget. Where additional cash
resources are required the following factors are considered:
· the size and nature of the requirement.
· preferred sources of finance.
· market conditions.
· opportunities to collaborate with third parties to reduce the cash
requirement.
26. Financial instruments
The Board of Directors determine, as required, the degree to which it is
appropriate to use financial instruments to mitigate risk with the main risk
affecting such instruments being foreign exchange risk, which is discussed
below.
Group Company
Categories of financial instruments 2024 2023 2024 2023
£ £ £ £
Receivables at amortised cost including cash and cash equivalents:
Investments and loans to subsidiaries - - 11,409,148 11,233,987
Cash and cash equivalents 36,038 633,093 33,499 499,661
Trade and other receivables 125,919 121,799 644,488 497,311
Total 161,957 754,892 12,087,135 12,230,959
Financial liabilities
Financial liabilities at amortised cost: 150,000
Trade and other payables 891,155 515,376 319,191 150,538
891,155 515,376 469,191 150,538
Net (729,198) 239,516 11,617,944 12,080,421
Cash and cash equivalents
This comprises cash held by the Group and short-term deposits. The carrying
amount of these assets approximates to their fair value.
General risk management principles
The Directors have an overall responsibility for the establishment of the
Group's risk management framework. A formal risk assessment and management
framework for assessing, monitoring and managing the strategic, operational
and financial risks of the Group is in place to ensure appropriate risk
management of its operations.
The following represent the key financial risks that the Group faces:
Interest rate risk
The Group only interest-bearing asset is cash invested on a short-term basis
which attracts interest at the bank's variable interest rate.
26. Financial instruments (continued)
Credit risk
Credit risk arises principally from the Group's trade receivables and
investments in cash deposits. It is the risk that the counterparty fails to
discharge its obligation in respect of the instrument.
VAT receivable is owed to Edenville International (Tanzania) Limited which is
only recoverable against future sales made by Edenville International
(Tanzania) Limited. The Group expects to recover the above VAT from sales of
commercial coal.
The Group holds its cash balances with reputable financial institutions with
strong credit ratings. There were no amounts past due at the balance sheet
date.
The maximum exposure to credit risk in respect of the above as at 31 December
2024 is the carrying value of financial assets recorded in the financial
statements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium and long-term
cash flow forecasts to ensure the adequacy of working capital.
The Group's policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. To achieve this aim, it
seeks to maintain cash balances to meet expected requirements for a period of
one year.
Currency Risk
The Group is exposed to currency risk as the assets (see note 5) of its
subsidiaries are denominated in US Dollars. The Group's policy is, where
possible, to allow group entities to settle liabilities denominated in their
functional currency (primarily US Dollars) with cash. The Company transfers
amounts in sterling or US dollars to its subsidiaries to fund its operations.
Where this is not possible the parent Company settles the liability on behalf
of its subsidiaries and will therefore be exposed to currency risk.
The Group has no formal policy in respect of foreign exchange risk; however,
it reviews its currency exposure on a regular basis. Currency exposures
relating to monetary assets held by foreign operations are included in the
Group's income statement. The Group also manages its currency exposure by
retaining the majority of its cash balances in sterling, being a relatively
stable currency.
The effect of a 10% strengthening of sterling against the US dollar
would result in an increase the net assets of the group of £559,341, whist
a 10% weaking would result in a fall in net assets of the group of £508,492.
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could be exchanged in
an arm's length transaction between informed and willing parties, other than a
forced or liquidation sale and excludes accrued interest. Where available,
market values have been used to determine fair values. Where market values are
not available, fair values have been calculated by discounting expected cash
flows at prevailing interest rates and by applying year end exchange rates.
The Directors consider that there is no significant difference between the
book value and fair value of the Group's financial assets and liabilities.
26. Financial instruments (continued)
The tables below summarise the maturity profit of the combined Group's
non-derivative financial liabilities at each financial year end based on
contractual undiscounted payments.
Group
2023
Less than 1 year 1- 2 years Total
Trade payables 132,578 - 132,578
Accruals 138,064 - 138,064
Other payables 244,734 - 244,734
Borrowings 34,366 34,131 66,497
549,742 34,131 581,873
2024
Less than 1 year 1- 2 years Total
Trade payables 432,595 - 432,595
Accruals 279,082 - 279,082
Other payables 179,478 - 179,478
Borrowings 195,307 - 195,307
1,086,462 - 1,086,462
Company
2023
Less than 1 year 1-2 years Total
Trade payables 13,979 - 13,979
Other payables 6,340 - 6,340
Accruals 130,219 - 130,219
150,538 - 150,538
2024
Less than 1 year 1-2 years Total
Trade payables 312,851 - 312,851
Other payables 6,340 - 6,340
Accruals 264,603 - 264,603
Borrowings 150,000 - 150,000
733,794 - 733,794
27. Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
Number of options
Grant Date Expiry date Exercise price* As at 1 January 2024 Granted Lapsed As at 31 December 2024
3 April 2020 2 April 2025 £3.00 270,000 - - 270,000
270,000 - - 270,000
The following warrants over ordinary shares have been granted by the Company:
At the date of grant, the options were valued using the Black-Scholes option
pricing model. The fair value per option granted and the assumptions used in
the calculation were as follows:
Date of grant 17 April 2020
Expected volatility 72%
Expected life 3 years
Risk-free interest rate 0.11%
Expected dividend yield -
Possibility of ceasing employment before vesting -
Fair value per option 0.02p
Volatility was determined by reference to the standard deviation of daily
share prices for one year prior to the date of grant.
The charge to the income statement for share-based payments for the year ended
31 December 2024 was £Nil (2023: £Nil).
The following warrants over ordinary shares have been granted by the Company:
Number of Warrants
Grant Date Expiry date Exercise price As at 1 January 2024 Granted Lapsed As at 31 December 2024
14 January 2021 13 January 2024 25p 180,000 - (180,000) -
26 May 2021 25 May 2024 25p 9,900,000 - - 9,900,000
26 May 2021 25 May 2024 25p 495,000 - - 495,000
26 May 2021 25 May 2024 35p 117,459 - (117,459) -
9 December 2022 8 December 2025 7p 285,714 - - 285,714
6 December 2022 5 December 2027 25p 333,334 - 333,334
3 August 2023 25 May 2024 25p 5,451,691 - 5,451,691
3 August 2023 02 August 2028 9.125p 3,600,000 - 3,600,000
13 December 2024 31 December 2027 12.5p 4,250,000 - 4,250,000
20,363,198 4,250,000 (297,459) 24,315,739
27. Equity-settled share-based payments (continued)
At the date of grant, those warrants that came under the scope of IFRS 2 Share
based payment were valued using the Black-Scholes option pricing model. The
fair value per option granted and the assumptions used in the calculation were
as follows:
Date of grant 9 December 2022 6 December 2022 3 August 2023 13 December 2024
Expected volatility 66% 60% 79% 176%
Expected life 3 years 3 years 3 years 3 years
Risk-free interest rate 3.33% 3.21% 4.78% 4.12%
Expected dividend yield - - - -
Fair value per option £0.03 £0.019 £0.058 £0.104
Volatility was determined by reference to the standard deviation of daily
share prices for one year prior to the date of grant.
A charge of £255,083 (2023: 154,805 against share premium in respect of share
issue costs) was charged to the income statement during the year.
Movements in the number of options outstanding and their related weighted
average exercise prices are as follows:
2024 2023
Number of options Weighted average exercise price per share Number of options Weighted average exercise price per share
pence pence
At 1 January 270,000 289 370,000 289
Granted - - - -
Lapsed - - (100,000)
At 31 December 270,000 289 270,000 289
Exercisable at year end 270,000 270,000
The weighted average remaining contractual life of options as at 31 December
2024 was 0.25 years (2023: 1.26 years).
27. Equity-settled share-based payments (continued)
Warrants
Movements in the number of warrants outstanding and their related weighted
average exercise prices are as follows:
2024 2023
Number of options Weighted average exercise price per share Number of options Weighted average exercise price per share
pence pence
At 1 January 20,363,198 13.28 11,189,074 25.08
Granted 4,250,000 12.50 9,385,025 18.91
Lapsed (297,459) (28.95) (210,901) (48.15)
At 31 December 24,315,739 20.25 20,363,198 13.28
The weighted average remaining contractual life of warrants as at 31 December
2024 was 1.37 years (2023: 1.22 years).
28. Contingent liabilities
As of the time of signing of these financial statements, the Group had not
finalised the operationalisation of the issuance of up to 16% non-dilutable
free carried interest shares to the Government of Tanzania as per the
requirements of the State Participation Government Notice No. 939 of 30
October 2020 which require the Government of Tanzania to acquire up to 16% of
the non-dilutable free carried interest shares in the capital of a mining
company or any other person holding a mining license or special mining
license. This situation is being managed by our experienced local directors.
29. Reserves
The following describes the nature and purpose of each reserve:
Share Capital represents the nominal value of equity shares
Share Premium amount subscribed for share capital in excess of the nominal value
Share Option Reserve fair value of the employee and key personnel equity settled share option
scheme and broker warrants as accrued at the balance sheet date.
Retained Earnings cumulative net gains and losses less distributions made
30. Related Party Transactions
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling activities of the Company, and are all
directors of the Company. For details of their compensation please refer to
the Remuneration report.
During the year the Company paid £183,161(2023: £324,821) to or on behalf of
its wholly owned subsidiary, Edenville International (Tanzania) Limited. The
amount due from Edenville International (Tanzania) Limited at year end was
£11,413,437 (2023: 11,230,276). This amount has been included within loans to
subsidiaries.
A further amount of £525,242 (2023: £366,670) is due from Edenville
International (Tanzania) Limited included in trade and other receivables in
respect of management fees and interest receivable.
The company also invoiced Edenville International (Tanzania) Limited £120,000
(2023: £120,000) and £38,573 (2023: £25,650) in respect of management fees
and interest respectively . This remained outstanding at the year end.
At the year end the Company was owed £3,712 (2023: £3,712) by its subsidiary
Edenville International (Seychelles) Limited.
At the year end the Company was owed £6,340 (2023: £6,340) by its subsidiary
Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was owed $41,677
(2023: $41,677) by Edenville Power Tz Limited.
31. Events after the reporting date
Convertible loan note
In May 2024 the Company entered into a £2 million unsecured convertible loan
note agreement ("CLN") with AUO Commercial Brokerage LLC ("AUO"), a
wholly-owned subsidiary of Q Global Commodities Group ("QGC"), which is led
by Quinton Van Den Burgh, the Company's Chairman. AUO has a current interest
in 29.2% of the Company's issued shares.
The £2 million is to be received by no later than 31 March 2025, although the
company can receive the £2 million via a drawdown process from August 2024 to
March 2025.On 4 April 2025 the availability of the entire principal amount was
extended to 31 March 2026, including the drawdown date and redemption date
was extended by 12 months to 31 March 2027.
The loan notes attract an interest of 3% per annum and are convertible at 15p
per share at any time up to 31 March 2026.
On 7 May 1,625,000 new ordinary shares of 1p each were issued at price of
8 pence per share in lieu of £130,000 of consultancy fees due to Gathoni
Muchai Investments Limited, £70,000 of which were outstanding at the year
end.
On 21 May 2025 the company commenced its secondary listing on the Johannesburg
Stock Exchange.
On 11 June final authorization was approved by the CCCPC for the acquisition
of LEM.
The Company also agreed terms on a £1.5 million non-dilutive and unsecured
facility, subject to completion of the Company's due diligence and signing of
definitive funding documentation, to provide funding for the $1.35m balance of
cash consideration due to the LEM vendors.
31. Events after the reporting date (continued)
Following receipt of the final regulatory approval noted above, the Company
has agreed the terms of an addendum to the SPA, subject to final
documentation, whereby the principal LEM vendors have agreed that the share
consideration for the Acquisition, being $3.0 million, shall be settled on
completion of the Acquisition through the issue of 28,640,042 new ordinary
Shuka shares ("Consideration Shares"), with no deferred consideration shares,
equivalent to an issue price of 7.737p per share (being a 10% discount to an
agreed reference price of 8.5965p under the terms of the SPA), a significant
premium to the current market price.
The Consideration Shares will represent, upon issue, 29.99% of the Company's
enlarged issued share capital.
As compensation for the issuance of the Consideration Shares upon completion,
with no deferred consideration shares, the Company has agreed to issue LEM, at
completion, with a further 2,000,000 warrants with an exercise price of
12.5p and expiry date of 31 December 2027, subject to the LEM vendors not
holding post exercise, in aggregate, over 29.99% of the Total Voting Rights
32. Commitments
License commitments
Shuka owns a coal mining exploration licence in Tanzania. These licences
include commitments to pay annual licence fees and minimum spend requirements.
As at 31 December 2024 these are as follows:
Group 2024 2023
£ £
Not later than one year 23,657 23,253
Later than one year and no later than five years 23,657 23,253
Total 47,314 46,506
33. Ultimate Controlling Party
The Group considers that there is no ultimate controlling party.
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