Pensana Plc - Unaudited Interim results for the six months ended 31 December 2023
(“Pensana”, “the company” or “the group”)
Unaudited Interim results for the six months ended
The board is pleased to present its review of
Half Year Highlights
-- Finalisation of revised Longonjo execution plan allowing for staged mine
development reducing upfront capital expenditure to US$217 million with
US$105 million deferred until year three.
-- Deployment of US$15 million Fundo Soberano de Angola (FSDEA) loan
facility as part of a broader US$80 million investment (subject to due
diligence and the finalisation of investment terms) to facilitate the
development of the Longonjo Project .
-- Offtake memorandum of understanding for up to 100% of Longonjo
production.
-- Ongoing mineralogical studies confirm processing potential of the rare
earth host minerals at the Coola carbonatite and Sulima West exploration
targets.
-- Meeting with United Kingdom (UK ) Minister Nusrat Ghani to discuss the
potential UK and United States (US) government support for the Saltend
Project .
-- Pensana, working in partnership with Polestar, Route2 and the
Universities of Leeds and Hull , awarded £316,643 in conditional grant
funding by Innovate UK under its CLIMATES programme.
-- Letter of intent signed between Pensana and The Yorkshire Energy Park
(“YEP”) for the site of a future permanent magnet metal facility within
the park. The YEP is located adjacent to the Saltend End Chemicals Park
in the Humber Freeport UK .
Post period-end
-- The Company, through its 84% owned subsidiary Ozango Minerais SA
(Ozango), which owns 100% of the Longonjo project, has concluded a
non-binding term sheet (Term Sheet) with the Longonjo lender consortium
for a US$156 million project finance debt facility (Facility).
-- Approval by one of Pensana’s major potential customers of the product
qualification specifications for Longonjo’s proposed mixed rare earth
carbonate (MREC) product.
-- Technical due diligence report on the Longonjo rare earth project
reported on by The Mineral Corporation (TMC) to ABSA Capital (ABSA) as
the Mandated Lead Arranger for potential debt funding of the Project.
-- Review by the six-member board, head of investment and key analysts of
FSDEA to review the early-stage construction activities being funded by
the US$15 million bridging loan from FSDEA, ahead of conclusion of the
main financing.
CEO’s Review
Dear Pensana Shareholders,
Over the period our owner’s team, along with key financial support from our major shareholders, have focused on rapidly repositioning our
The significant efforts have culminated in the finalisation of a Class 2 AACE study being completed providing a high degree of confidence around the capital estimates and contingencies and the lender appointed Independent technical experts,
Additionally, all preferred vendors of major and long-lead equipment items were identified over the Period and have been engaged in preparation for project development; coupled with ongoing improvements and enhanced modularisation enabling for a de-risked off-site pre-fabrication, testing and containerised transport ensuring a faster and more efficient construction phase in terms of schedule, equipment and manpower requirements .
The reduced
The key points in the revised development implementation that allowed the team to rapidly facilitate the reworked phased development plan were that:
-- Existing permits remained intact including the Exploitation Licence, the
Environmental and Social Impact Assessment (ESIA) construction permit,
the Resettlement Action Plan (RAP) and the Livelihood Restoration Plan
(LRP) as developed in conjunction with the local community and relevant
provincial authorities;
-- Pre-production spend was minimised whilst still ensuring that the
project’s potential for generating economic benefits on a larger scale
were not compromised;
-- Production of a standardised and globally saleable refined
radionuclide-free mixed rare earth product from Angola , independent of
other developments;
-- The modular sulphuric acid plant production unit capacity provides the
pivot point around which the engineering and design work was undertaken
and optimised;
-- The historical testwork and pilot plant trials conducted in
collaboration with equipment vendors continued to underpin the plant
design criteria;
-- Job creation in Angola along with training and skills transfer
mechanisms remain intact.
Notable developments towards de-risking aspects of the project included:
-- The SRK team finalising their geotechnical investigation in support of
the dual-purpose TSF detailed design over the Period. The selected TSF
site was confirmed as also being able to provide suitable excavated
material for use in the TSF starter walls, pit haul roads, plant
terracing and other construction-related requirements, thus mitigating
the need to develop borrow-pit sources and associated licensing and
material transport costs as well as reducing the overall environmental
impact.
-- Integration of the Longonjo Project bulk reagent consumption
requirements (including sulphur and caustic soda) into the
Trafigura/Mota Engil -led strategic mineral-focused Lobito Corridor port
and rail concessions is being pursued as part of the ongoing operations
readiness preparation. Logistical and operational expenditure benefits
are obvious in terms of broader reagent supply to the existing
Democratic Republic of the Congo (DRC) Copperbelt mines alongside the
limestone which will be sourced from the existing quarries in the Lobito
area.
-- Negotiation of global procurement and logistical support for the
construction phase with Deugro, an internationally established
freight-forwarding business with a specific relationship with their
Africa -centric specialised project logistics division. This combination
of global and local logistics to enable efficient movement of material
to and from the project site is considered by management to contribute
to significantly de-risk this aspect of the project.
Saltend
With the focus on bringing the Longonjo project through financing and into development, on-site activity for the
Update on construction activities at Longonjo
Over the Period the early-stage development activities continued to be funded via a
The 4.5 kilometer road linking the site to the Benguela railway line has been upgraded. The enhanced road features include an improved roadbed substructure, a redefined road profile and rapid drainage systems. Serving as the primary route for inbound materials during construction and later for reagent import and the export of Mixed Rare Earth Carbonate in containers, the road connects the mine to the Longonjo station for rail access to the port of Lobito for shipping.
The Benguela railway line is part of the Lobito corridor undergoing a
Several kilometers of overhead powerlines, together with an underground water supply and effluent disposal system have been installed ahead of the arrival of the 350-person modular camp, which has been assembled at
Agricultural demonstration plots have been established by South African agriculture consultants,
The objective is to help local growers and farmers create healthy and sustainable agro-ecosystems, boosting household income in nearby communities, whilst enhancing overall food security. This ongoing programme is being conducted in collaboration with local universities with a view to continually improving farming practices.
With well on 50 engineering contractors and Longonjo staff now working on site in preparation for the commencement of main construction there has been a very positive reaction to the activities on site amongst the local community, in particular with the creation of well-paid jobs and the successful implementation of the first phase of the livelihood restoration programme.
We have a strong team supporting the main construction which is being managed by MCC a leading project management team with a track record of delivering projects across
Environment Social Governance (ESG)
The business continues to ensure ESG is at the heart of its activities with the core business strategy focused on providing a source of sustainable rare earths to the market.
Health, Safety and Environment
From a health, safety and environment view the business embeds HSE into its operating culture and has had zero recordable cases and zero environmental incidents in the Period. In
In the Period the finalisation of the revised Longonjo execution plan including sections on environmental, health and safety, stakeholder relations and social and communities was completed.
After the completion of phase one of the resettlement action plan (RAP) in
Stakeholder engagement continues apace with regular meetings taking place over the period between the project team and key stakeholders. This includes local and national authorities, transitional leadership, project affected people, training institutions and much more. This is supported by continued operation of an active grievance mechanism with community engagement with the process. All grievances raised have continued to be resolved at step 1, between the complainant and Ozango staff.
Further progress has been made over the Period in developing the replacement land to support the economic relocation of agricultural land affected by the project. During the period further studies were undertaken to review existing land use, biodiversity, and agricultural potential, confirming the availability of sufficient suitable land. Additionally, the project has agreed with the local community that Ozango will not affect any existing agricultural land and land not currently used for agriculture will be purchased for a value of at least market price. Furthermore, the project has invested in the formation of two demo plots, one in each of two replacement land blocks, to further investigate the most effective techniques and crops for optimal yield and to further demonstrate to PAPs that the replacement land can effectively host agriculture. These supplement the ongoing test and demonstration work at the existing plots within the mine boundary.
In the
Exploration
In August the Company reported high grade TREO soil sampling results at Sulima West and encouraging results from other targets on the Coola exploration licence area. This was subsequently followed by a report on the Mineralogical Characterisation studies undertaken by
The report highlighted that:
-- the Sulima West laterite mineralisation contains monazite which hosts
NdPr with moderate liberation and exposure which should be amenable to
some degree of simple upgrading at the current location, prior to
processing at Longonjo;
-- the Coola carbonatite contains a significant amount of bastnaesite which
is host to more than 90% of the NdPr. The bastnaesite is moderately
liberated and exposed, again suggesting that there is potential for
recovery using the physical separation at the current location prior to
processing at Longonjo.
The initial mineralogical study has confirmed the processing potential of the rare earth host minerals for both the Sulima West laterite and the Coola Carbonatite. The opportunity for upgrading the ore at the current location using physical separation techniques is currently being further assessed with the testing of larger samples which have been collected.
We obviously see both
Ground geophysical surveys were completed at both targets in 2023 which helped to better define known areas of mineralization and added additional exploration targets which will be further investigated in 2024.
Post-period end we continued with mineralogical studies and anticipate results to be reported by mid-year. Exploration drilling of the most prospective targets is scheduled for the latter half of 2024.
Operating and Financial Review
During the period, the consolidated entity incurred a comprehensive loss for the period of
Administration expenses decreased to
The group incurred a foreign currency exchange
gain
of
Group net assets decreased in the period from
The decrease in cash was due to expenditure at the Longonjo development project of
The Group experienced net cash outflows from operating activities of
Net cash outflows from investing activities of
The decrease in the cash inflows from financing activities from
The ability of the company and group to continue with its plans to develop the Longonjo mine are contingent on the successful completion of the proposed debt and equity funding arrangements currently underway in the normal course of business. It is anticipated that the contemplated financing across the group may include further issues of equity at the asset level and export credit-backed debt financing. There is a risk that funding may not be available and/or the cost of financing may be higher than expected.
The ongoing support provided by the Angolan government and the approval of a non-binding term sheet from the Longonjo lender consortium as announced recently is expected to enable the Group to refinance the
The Group has received a loan facility from two of its directors for
Please refer note 3 to the financial statements for the going concern statement which includes a material uncertainty in relation to going concern.
Principal Business Risks
The Group is exposed to several risks and uncertainties which could have a material impact on its long-term development, and performance and management of these risks is an integral part of the management of the Group. An overview of the key risks which could affect the Group’s operational and financial performance was included in the company’s 2023 Annual Report, which can be accessed at www.pensana.co.uk. These may impact the Group over the medium to long term; however, the following key risks have been identified which may impact the Group over the short term.
Financing and liquidity
The group is in pre-production phase and therefore has no revenues from operations currently.
The ability of the company and group to continue with its plans to develop the Longonjo mine are contingent on the successful completion of the proposed debt and equity funding arrangements currently underway in the normal course of business. It is anticipated that the contemplated financing across the group may include further issues of equity at the asset level and export credit-backed debt financing. There is a risk that funding may not be available and/or the cost of financing may be higher than expected.
The ongoing support provided by the Angolan government and the approval of a non-binding term sheet from the Longonjo lender consortium as announced recently is expected to enable the Group to refinance the
The Group has received a loan facility from two of its directors for
Details of the Board’s going concern assessment are provided in note 3 to the financial statements and include a material uncertainty in respect of going concern.
Development of the Longonjo and Saltend Projects
The group’s operations are at an early stage of construction development and future success will depend on the group’s ability to manage the Longonjo and Saltend Projects (the projects) and the production of NdPr-rich MREC for export to the
Logistical challenges and delays
Global supply chain challenges could result in logistical risks relating to availability, potential delays and increased costs of equipment and material both for the project and operations phase.
Commodity price
If the group is able to develop the Longonjo and Saltend Projects and/or the
Attracting skilled employees
The group’s ability to compete in the competitive natural resources and specialist rare earth chemical processing sectors depends upon its ability to retain and attract highly qualified management, geological and technical personnel. The loss of key management and/or technical personnel could delay the development of the
Mr.
Chief Executive Officer
INDEPENDENT REVIEW REPORT TO
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended
Basis for conclusion
We conducted our review in accordance with Revised International Standard on Review Engagements (
As disclosed in note 3, the annual financial statements of the
Material uncertainty related to Going Concern
We draw attention to note 3 to the half-yearly financial report which indicates that the group will require additional funding to settle outstanding amounts due to suppliers and further subsequent additional funding to meet its commitments and planned expenditures which is not guaranteed. As stated in note 3, these events or conditions, along with other matters as set out in note 3, indicate the existence of a material uncertainty which may cast significant doubt over the group ability to continue as a going concern. Our conclusion is not modified in respect of this matter.
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting.
This conclusion is based on the review procedures performed in accordance with ISRE (
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom’s
In preparing the half-yearly financial report, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom’s
Chartered Accountants
Condensed Consolidated Statement of Comprehensive Income
for the six months ended
Unaudited Unaudited
31 December 2023 31 December 2022
Note US$ US$
Administration expenses 6 (3,461,420) (4,044,824)
Impairment of financial assets (46,543) (116,041)
Foreign currency exchange gains/(losses) 6 50,471 (42,468)
Loss from operations (3,457,492) (4,203,333)
Finance income - -
Finance costs - -
Loss before income tax (3,457,492) (4,203,333)
Income tax 7 - -
Total loss for the period (3,457,492) (4,203,333)
Other comprehensive loss
Items that may be reclassified
subsequently to profit or loss
Foreign currency translation1 (200,347) (15,118)
Total comprehensive loss for the period (3,657,839) (4,218,451)
Net loss for the period is attributable
to:
Owners of Pensana Plc (3,457,492) (4,203,333)
Total comprehensive loss is attributable
to:
Owners of Pensana Plc (3,657,839) (4,218,451)
Loss per share attributable to owners of Pensana Plc :
Basic (cents per share) 18 (1.21) (1.72)
Diluted (cents per share) 18 (1.21) (1.72)
1 Exchange differences arising on translation of foreign operations will be reclassified to profit or loss if specific future conditions are met
Notes to the interim financial statements are included on pages 14 to 27.
Condensed Consolidated Statement of Financial Position
as at
Unaudited
As at
As at
30 June
31 December
2023
2023
Note US$ US$
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 52,879,304 47,969,254
Intangible assets 11 14,280,428 13,820,318
TOTAL NON-CURRENT ASSETS 67,159,732 61,789,572
CURRENT ASSETS
Cash and cash equivalents 8 2,447,697 9,695,491
Trade and other receivables 9 2,077,822 2,515,234
TOTAL CURRENT ASSETS 4,525,519 12,210,725
TOTAL ASSETS 71,685,251 74,000,297
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 12 13,005,626 17,239,695
Loans and borrowings 13 4,867,111 -
TOTAL CURRENT LIABILITIES 17,872,737 17,239,695
TOTAL LIABILITIES 17,872,737 17,239,695
NET ASSETS 53,812,514 56,760,602
EQUITY
Issued capital 14 356,898 356,898
Share premium 70,826,007 70,826,007
Reserves 47,031,597 46,522,193
Accumulated losses (64,401,988) (60,944,496)
TOTAL EQUITY 53,812,514 56,760,602
Refer to note 4 for details of the restatement of prior year results.
Notes to the interim financial statements are included on pages 14 to 27.
Condensed Consolidated Statement of Changes in Equity
for the six months ended
Fully Foreign Share
paid Share Accumulated Merger Exchange based Equity Total
ordinary premium Losses Reserve Reserve Payments Reserve
shares Reserve
Unaudited US$ US$ US$ US$ US$ US$ US$ US$
Balance at 1 356,898 70,826,007 (60,944,496) 45,748,045 (198,038) 1,472,186 (500,000) 56,760,602
July 2023
Loss for the - - (3,457,492) - - - - (3,457,492)
period
Other
comprehensive - - - - (200,347) - - (200,347)
loss
Total
comprehensive - - (3,457,492) - (200,347) - - (3,657,839)
loss for the
period
Share based
payments - - - - - 709,751 - 709,751
(note 17)
Balance at 31 356,898 70,826,007 (64,401,988) 45,748,045 (398,385) 2,181,937 (500,000) 53,812,514
December 2023
Fully Foreign Share
paid Share Accumulated Merger Exchange based Equity Total
ordinary premium Losses Reserve Reserve Payments Reserve
shares Reserve
US$
Unaudited US$ US$ US$ US$ US$ US$ US$
g
Balance at 1 295,425 47,043,782 (56,641,673) 45,748,045 688,259 1,745,151 (500,000) 38,378,9891
July 2022
Loss for the - - (4,203,333) - - - - (4,203,333)
period
Other
comprehensive - - - - (15,118) - - (15,118)
income
Total
comprehensive - - (4,203,333) - (15,118) - - (4,218,451)
loss for the
period
Issue of
shares (note 14,993 9,985,007 - - - - - 10,000,000
14)
Share based
payments - - - - - 417,818 - 417,818
(note 17)
Balance at 31 310,418 57,028,789 (60,845,006) 45,748,045 673,1411 2,162,969 (500,000) 44,578,356
December 2022
Refer to note 4 for details of the restatement of prior year results.
Notes to the interim financial statements are included on pages 14 to 27.
Condensed Consolidated Statement of Cash Flows
for the six months ended
Unaudited Unaudited
31 December 2023 31 December 2022
Note US$ US$
Cash flows from operating activities
Operating cash flows 20 (3,223,494) (4,074,922)1
Net cash used in operating activities (3,223,494) (4,074,922)1
Cash flows from investing activities
R&D tax credit 1,598,061 1,256,2961
Payments for property, plant and 20 (10,425,893) (8,615,868)
equipment and intangibles
Net cash used in investing activities (8,827,832) (7,359,572)
Cash flows from financing activities
Proceeds from short-term debt 4,784,851 -
Proceeds from issues of equity securities 14 - 10,000,000
Net cash provided by financing activities 4,784,851 10,000,000
Net decrease in cash and cash equivalents (7,266,475) (1,434,494)
Cash and cash equivalents at beginning of 9,695,491 2,930,162
the period
Effects of exchange rate changes on the
balance of cash held in foreign 18,681 (55,477)
currencies
Cash and cash equivalents at the end of 8 2,447,697 1,440,191
the period
Refer to note 4 for details of the restatement of prior year results.
Notes to the interim financial statements are included on pages 14 to 27.
Notes to the financial statements
1. General information
The consolidated financial statements present the financial information of
The company is focused on rare earth exploration, mining and processing, whose flagship development assets are the
In early 2020,
2 . New accounting standards and interpretations
(a) Changes in accounting policies and disclosures
From
______________________________________________________________________________ |Standard |Description |Effective date| |____________________________|__________________________________|______________| |IFRS 17 |IFRS 17 Insurance contracts |1 January 2023| |____________________________|__________________________________|______________| | |Disclosure of Accounting Policies | | |Amendments to IAS 1 and IFRS|–Amendments to | | |Practise Statement 2 | |1 January 2023| | |IAS 1 and IFRS Practice Statement | | | |2 | | |____________________________|__________________________________|______________| | |IAS 8 Accounting Policies, Changes| | | |in Accounting | | | | | | |Amendments to IAS 8 |Estimates and Errors(Amendment – |1 January 2023| | |Definition of | | | | | | | |Accounting Estimates) | | |____________________________|__________________________________|______________| | |IAS 12 Income Taxes(Amendment – | | | |Deferred Tax | | | | | | |Amendments to IAS 12 |related to Assets and Liabilities |1 January 2023| | |arising from a Single | | | | | | | |Transaction) | | |____________________________|__________________________________|______________| | |International Tax Reform — Pillar | | |Amendments to IAS 12 |Two Model Rules – |1 January 2023| | | | | | |Amendments to IAS 12 | | |____________________________|__________________________________|______________|
The application of these standards has not had a material impact on the financial statements.
(b) Accounting standards and interpretations issued but not yet effective:
T here are several standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early.
_____________________________________________________________________________ |Standard |Description |Effective date| |_____________________|________________________________________|______________| | |Lease liability in sale and leaseback – | | |Amendments to IFRS 16| |1 January 2024| | |Amendments to IFRS 16 | | |_____________________|________________________________________|______________| | |Classification of Liabilities as Current| | | |or Non-Current – | | |Amendment to IAS 1 | |1 January 2024| | |Amendments to IAS 1 Presentation of | | | |Financial Statements | | |_____________________|________________________________________|______________| | |Non-current liabilities with covenants –| | |Amendments to IAS 1 | |1 January 2024| | |Amendments to IAS 1 Presentation of | | | |Financial Statements | | |_____________________|________________________________________|______________| | |Supplier Finance Arrangements – | | |Amendments to IAS 7 |Amendments to IAS 7 Statement of Cash |1 January 2024| | |Flows and IFRS 7 Financial Instruments: | | | |Disclosures | | |_____________________|________________________________________|______________| | |Lack of Exchangeability – Amendments to | | |Amendments to IAS 21 |IAS 21 The Effects of Changes in Foreign|1 January 2025| | |Exchange Rates | | |_____________________|________________________________________|______________|
Management has reviewed and considered these new standards and interpretations and none of these are expected to have a material effect on the reported results or financial position of the Group.
3. Material accounting policies and Going Concern
Basis of preparation
The condensed interim report, which is unaudited, have been prepared in accordance with
The auditors' report on those accounts was unqualified but drew attention to a material uncertainty in relation to going concern. It did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The financial report for the six months ended
The accounting policies applied in this condensed interim report are consistent with the polices applied in the annual financial statements for the year ended
As disclosed in the
The shares issued to the former shareholders of
The accounting for common control transactions is scoped out of IFRS 3 and, accordingly the Group has developed an accounting policy with reference to methods applied in alternative generally accepted accounting principles (GAAPs). Consequently, the consolidated financial statements are presented as if the company has always been the holding company for the group and the group has elected to apply merger accounting principles. Under this policy, the company and its subsidiaries are treated as if they had always been a group.
The results are included from the date the subsidiaries joined the group and the comparatives reflect the results of the company and its subsidiaries. No fair value adjustments occur as a result of the transaction, and the assets and liabilities are incorporated at their predecessor carrying values.
The policies have been consistently applied to all the periods presented, unless otherwise stated.
Going Concern
The group financial statements and parent company financial statements have been prepared on a going concern basis with the directors of the opinion that the group and parent company will be able to meet their obligations as and when they fall due.
As at
The directors have prepared a cash flow forecast for the period ending
In
The group would need to refinance the FSDEA facility that matures in
The parent company is well advanced in its main financing workstreams on the
The forecast indicates that funding is required to settle existing project-related contractor balances in the
On the
In assessing the going concern basis of preparation, the directors have also considered supply chain challenges, inflation, the availability of funding and its impact on the progression of the
The directors have continued to actively engage with institutional investors and financing institutions in the
As
noted
earlier,
on
the
Saltend
Project,
the
Despite
the
ongoing
engagements,
the
directors
note
that the
required
funding
outlined
above to settle existing contractor balances in the
Critical accounting judgements and key sources of estimation uncertainty
In applying the Group’s accounting policies, management continually evaluates judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the group. All judgments, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgements, estimates and assumptions.
Significant judgements, estimates and assumptions made by management in the preparation of these financial statements are outlined below:
(i) Significant accounting judgements
Impairment assessment of development assets, assets under construction and Saltend intangibles
Impairment indicator assessment of development assets (note 10 and 11), as well as impairment assessment of assets under construction and Saltend intangibles (notes 10 and 11).
The ultimate recovery of the value of the Group’s development assets and assets under construction and Saltend intangibles as at
Judgement was exercised in assessing the extent to which impairment existed as at
Recognition of R&D tax credits (note 4)
R&D tax credits are recognised when reliable estimates of the future benefits have been made and when it is reasonably certain that the tax credit will be received. Management have considered the nature of the tax claims, the limited history of successful tax claims and receipt thereof. Management also do not recognise any tax credits before submissions have been made to the relevant tax authority.
(ii) Significant accounting estimates and assumptions
Share-based payment transactions (note 17)
The group measures the cost of equity-settled transactions with directors and others by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a stochastic model to value awards with market-based conditions and a Black-Scholes valuation model for awards that are not subject to market-based performance conditions. These models require estimates for inputs such as share price volatility and total shareholder return. The share-based payment arrangements are expensed on a straight-line basis over the vesting period, based on the group’s estimate of shares that will eventually vest. At each reporting date, vesting assumptions are reviewed to ensure they reflect current expectations and immediately recognise any impact of the revision to original estimates. Judgement is required as to the likelihood of the vesting conditions being met, such as the progress of financing of various projects, the lost time injury frequency rate, progress of construction of the projects, etc. If fully vested share options are not exercised and expire, then the accumulated expense in respect of these is reclassified to accumulated losses.
4. Restatement of prior year financial statements
As detailed in the Annual Report for the year ended
As detailed in the Annual Report for the year ended
An error was also identified in the prior year results (
(Previously reported) Restatement 1 31 December 2022
(Restated)
US$ US$
US$
Cash flows from operating (2,816,626) (1,256,296) (4,072,922)
activities
Cash flows from investing (8,615,868) 1,256,296 (7,359,572)
activities
(Previously reported) Restatement 30 June 2023 (Restated)
US$ US$ US$
30 June 2023
Property, plant and 45,594,650 2,374,604 47,969,254
equipment
Trade and other (14,865,091) (2,374,604) (17,239,695)
payables
5. Operating Segments
Description of segments
The group has identified its operating segments based on the internal reports that are used by the chief operating decision maker in assessing performance and determining the allocation of resources.
The group has identified that it has two operating segments being related to the activities in
Angola UK Unallocated Total
31 December 2023
US$ US$ US$ US$
Non-current assets – opening 43,846,788 17,942,784 - 61,789,572
balance1
Non-current assets – 4,911,580 458,580 - 5,370,160
additions
Non-current assets – closing 48,758,368 18,401,364 - 67,159,732
balance
Current and non-current (546,505) (15,552,410) ()(1,773,822) (17,872,737)
liabilities
Cash and cash equivalents 37,499 1,234,851 1,175,347 2,447,697
Six months ended 31 December
2023
Administration expenses (882,788) (2,435,620) (143,012) (3,461,420)
Depreciation (18,173) (3,430) - (21,603)
Operating (loss)/profit (842,884) (2,489,568) (125,040) (3,457,492)
(Loss)/profit before tax (842,884) (2,489,568) (125,040) (3,457,492)
(Loss)/profit for the period (842,884) (2,489,568) (125,040) (3,457,492)
Angola UK Unallocated Total
30 June 2023
US$ US$ US$ US$
Non-current assets – opening 30,228,932 6,466,270 – 36,695,202
balance
Non-current assets – 13,617,856 11,476,514 – 25,094,370
additions1
Non-current assets – closing 43,846,788 17,942,784 – 61,789,572
balance1
Current and non-current (4,205,215) (12,298,921) (735,559) (17,239,695)
liabilities1
Cash and cash equivalents 30,594 8,883,904 780,993 9,695,491
Six months ended 31 December
2022
Administration expenses (880,515) (2,908,816) (255,493) (4,044,824)
Depreciation (23,716) (2,955) - (26,671)
Operating loss (682,645) (3,123,432) (397,256) (4,203,333)
Loss before tax (682,645) (3,123,432) (397,256) (4,203,333)
Loss for the period (682,645) (3,123,432) (397,256) (4,203,333)
1 Refer to note 4 for details of the restatement of prior year results.
Non-current assets consist mainly of development assets, assets under construction and intangible assets. Additions and depreciation of property, plant and equipment are disclosed in note 10 and movements in intangible assets are disclosed in note 11
6. Other Expenses
Six months ended 31 Six months ended 31 December
December
2022
2023
US $
US $
Administration expenses:
General administration 702,820 964,719
costs
Audit fees 123,996 79,628
Consultant Fees 115,444 447,622
Travel expenses 63,180 211,551
Legal fees 35,101 216,559
Operating lease rental
expenses:
Lease payments (short life 80,433 69,827
leases)
Depreciation on non-current
assets:
Property, plant and 21,603 26,671
equipment
Employee Benefits
Performance rights and
options granted to 709,751 417,818
directors, officers and
employees
Directors’ fees and 1,513,705 1,516,450
employee benefits
Social security costs 95,387 93,979
Total administration 3,461,420 4,044,824
expenses
Foreign currency exchange gains/losses:
Foreign exchange gain of
7. Income Taxes
Consolidated
6 months ending 31 December 6 months ending 31 December
2023 2022
US $ US $
Current taxation
Current tax charge/ - -
(credit)
No Liability to corporation tax arose in ordinary activities for the half year ended
The tax assessed for the year utilised the standard rate of tax in the
Tax rate reconciliation:
Six months ended 31 Six months ended 31 December
December
2022
2023
US $
US $
Loss from continuing (3,457,492) (4,203,333)
operations before tax
Loss on continuing
activities multiplied by (864,373) (798,633)
the rate of corporation tax
in the UK of 25% (2022:19%)
Tax effects of:
Different tax rates in 571 (67,778)
overseas jurisdictions
Permanent differences 177,965 8,557
Deferred tax assets not 685,837 857,854
recognised
Total tax charge/(credit) - -
8. Cash and Cash Equivalents
As at As at
31 December 30 June
2023 2023
US$ US$
Cash at bank and on hand 2,447,697 9,695,491
2,447,697 9,695,491
9. Trade and Other Receivables
As at As at
31 December 30 June
2023 2023
US$ US$
Trade receivables 43,795 34,756
Prepayments 323,610 184,744
R&D tax receivables - 1,037,336
VAT receivables 1,008,835 934,641
Other receivables 701,582 323,757
2,077,822 2,515,234
4 105
10. Property, plant and equipment
Plant and Develop- Assets under Motor Office Computer
Buildings equipment construction1 vehicles equipment equipment Total
ment asset
US$ US$ US$ US$ US$ US$ US$ US$
Cost
Balance at 1 28,310 33,021 43,504,012 4,272,967 214,239 7,325 34,092 48,093,966
July 2023
Additions 2,590 1,488 5,491,923 34,603 - 557 422 5,531,583
R&D
government (560,725) (560,725)
grant
deferred
Adjustment
on currency - - (41,832) 2,744 - - (97) (39,185)
translation
Balance at
31 December 30,900 34,509 48,393,378 4,310,314 214,239 7,882 34,417 53,025,639
2023
Depreciation
Balance at 1 6,460 10,359 - - 88,538 3,628 15,727 124,712
July 2023
Charge for 900 1,733 - - 13,687 399 4,884 21,603
the year
Adjustment
on currency - - - - - - 20 20
translation
Balance at
31 December 7,360 12,092 - - 102,225 4,027 20,631 146,335
2023
Net Book
Value
At 1 July 21,849 22,662 43,504,012 4,272,967 125,701 3,697 18,366 47,969,254
2023
At 31
December 23,540 22,417 48,393,378 4,310,314 112,014 3,855 13,786 52,879,304
2023
Refer to note 4 for details of the restatement of prior year results.
11. Intangible assets
As at
As at
31 December
30 June 2023
2023
US$
US$
Carrying value
Saltend intangible assets
Balance as at 1 July 2023 13,820,318 5,236,226
20
Additions1 428,690 9,514,342
-R&D government grant deferred - (1,037,336)
Adjustment on currency translation 31,420 107,086
Total intangibles 14,280,428 13,820,318
1Includesbridging loan interest capitalised
12. Trade and Other Payables
As at As at
31 December 30 June
2023 2023
US$ US$
Trade and other payables 1 10,624,495 13,003,570
Accrued expenses 2,330,731 4,186,457
Statutory liabilities 50,400 49,668
13,005,626 17,239,695
1 There has been no interest charged on the trade payables.
Refer to note 4 for restatement of prior period results.
13. Loans and borrowings
As at As at
31 December 30 June
2023 2023
US$ US$
Interest bearing liabilities (current)
Bridging loan facility 4,867,111 -
Total interest-bearing liabilities (current) 4,867,111 -
Interest bearing liabilities (non-current)
Bridging loan facility - -
Total interest-bearing liabilities (non-current) - -
Total 4,867,111 -
On
By
14.
As at 31 December As at 31 December As at 30 June As at 30 June
2023 2023 2023 2023
No. US$ No. US$
Fully paid
ordinary shares
Balance at 1 285,180,873 356,898 235,599,539 295,425
July
Shares issued -
conversion of - - - -
performance
rights
Share Placement - - 49,581,334 61,473
Balance at 285,180,873 356,898 285,180,873 356,898
period end
There were no shares issued during the half year ending
Placements during half year ending
On
Share options on issue
During the period, 750,000 options vested (
Performance rights on issue
There are no performance rights outstanding as at period end.
15. Commitments for Expenditure
The group has certain obligations to perform exploration work on mineral exploration tenements.
No provision has been made in the accounts for minimum expenditure requirements in respect of tenements, as no liability has been incurred as at
(i) Exploration Commitments
Commitments for payments under exploration permits and mineral leases in existence at the reporting date but not recognised as liabilities payable are as follows:
As at
As at
30 June
31 December 2023
2023
US$
US$
Exploration and evaluation expenditure
Not longer than 1 year 5,670 5,718
Longer than 1 year and not longer than 5 years - -
Longer than 5 years - -
5,670 5,718
(ii) Capital Commitments
Capital expenditure contracted for at the reporting date but not yet incurred was as follows:
As at
As at
30 June
31 December 2023
2023
US$
US$
Capital expenditure 1,013,800 3,784,108
The expenditure relates primarily to the
16. Contingent Liabilities and Contingent Assets
The Directors are not aware of any other contingent liabilities or contingent assets that are likely to have a material effect on the results of the Group as disclosed in these financial statements.
17. Share-based Payments
Half year ended
During the period 3,050,000 share awards were issued to directors, senior management and employees.
During the period 1,342,000 short-term bonus share awards were also issued to directors, senior management and employees.
During the period, the remainder of the 750,000 legacy awards vested.
Half year ended
During the period no new share awards were issued.
During the period, 750,000 of the outstanding 1,500,000 legacy awards vested.
Reconciliation of options outstanding
The following reconciles outstanding share options provided as share-based payments at the beginning and end of the financial period:
Six months ended Six months ended
31 December 2023 31 December 2022
Number of Weighted average Number of options Weighted average
options exercise price exercise price
Balance at
beginning of the 750,000 - 1,500,000 -
financial year
Vested during
the financial (750,000) $0.001 (750,000) $0.001
period
Expired during
the financial - - - -
period
Exercised during
the financial - - - -
period
Balance at end
of the financial - - 750,000 -
period
18. Loss per share
2023 2022
cents per share cents per share
Basic loss per share
From continuing operations 1.21 1.72
Total basic loss per share 1.21 1.72
Diluted loss per share
From continuing operations 1.21 1.72
Total diluted loss per share 1.21 1.72
Basic loss per share
The net loss and weighted average number of ordinary shares used in the calculation of basic loss per share are as follows:
Unaudited
Unaudited
As at
As at
31 December
31 December 2023
2022
US$
US$
Net loss (3,457,492) (4,203,333)
Losses used in the calculation of basic loss per (3,457,492) (4,203,333)
share from continuing operations
Losses used in the calculation of diluted loss (3,457,492) (4,203,333)
per share attributable to ordinary shareholders
As at As at
31 December 2023 31 December
2022
No.
No.
Weighted average number of ordinary shares for the
purposes of calculating basic loss per share and 285,180,873 244,654,098
diluted loss per share
No options (
19. Related party transactions
Transactions with Key Management Personnel and Related Parties
On
20. Notes to the Consolidated Statement of Cashflows
Reconciliation of loss for the period to net cash flows from operating activities
Six months ended Six months ended
31 December 31 December 2022
2023
US$
US$
Net loss (3,457,492) (4,203,333)
Add/less non-cash items
Depreciation 21,603 26,671
Share based payments 709,751 417,818
Impairment of assets 46,543 116,041
Foreign exchange (gains)/ losses (50,471) 42,468
Changes in Trade and other receivables (646,467) (775,219)1
Changes in Trade and other payables 153,039 300,632
Net cash used in operating activities (3,223,494) (4,074,922)1
Refer to note 4 for details of the restatement of prior year results.
Reconciliation of additions to property, plant and equipment to payments for property, plant and equipment used in investing activities
Six months ended Six months ended
31 December 31 December 2022
2023
US$
US$
Additions to property, plant and equipment 10 (5,531,583) (9,352,769)
Additions to Saltend intangible assets and
exploration and evaluation assets (428,690) (4,268,786)
11
Adjustment for borrowing cost on bridging 82,260 -
loan
Total additions (5,878,013) (13,621,555)
Capital items included in working capital (4,547,880) 5,005,687
Payments for property, plant and equipment
and intangibles (10,425,893) (8,615,868)
(cash flow investing activities)
21. Subsequent events
Repayment of the bridging loan facility from FSDEA has subsequently been extended to
On
Refer to note 3 for details of developments regarding funding.
No other matters or circumstances have arisen since
-- The Group’s operations in future financial years; or
-- The results of those operations in future financial years; or
-- The Group’s state of affairs in future financial years.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge: a. the Condensed Interim Report have been prepared in accordance with IAS 34 Interim Financial Reporting and give a true and fair view of the assets, liabilities, financial position and profit of the Group; and b. the Interim Management Report includes a fair review of the information required by FCA’s Disclosure and Transparency Rules (DTR 4.2.7 R and 4.2.8 R).
By order of the Board
Mr
