Ironveld PLC

Final Results for the year ended 30 June 2020

RNS Number : 8819J
Ironveld PLC
29 December 2020
 

Ironveld Plc

("Ironveld" or the "Company")

Final Results for the year ended 30 June 2020

Ironveld plc, the owner of a High Purity Iron ("HPI"), Vanadium and Titanium project located on the Northern Limb of the Bushveld Complex in Limpopo Province, South Africa (the "Project") announces its final results for the 12 months ended 30 June 2020 ("the Period").

Operational and Financial Highlights

· Strategic Review launched in July 2019 resulted in announcement of Option Agreement and intended strategic partnership with Inclusive Investment Group ("IIG") in March 2020 for up to US$3.2 million;

· The Company and IIG worked together for eight months to secure a complete project financing package, which included a conditional offer of finance from a South African development institution,  but agreed post period end in November 2020 that the Option Agreement would lapse;

· Placing and Broker Option to raise gross proceeds of £1,150,000 completed post period end in December 2020; and

· Appointment of Martin Eales as CEO in December 2019, with Peter Cox being appointed Technical Director.

Outlook

· The Company continues to engage with a range of parties with a view to an alternative funding transaction or strategic partnership and expects to conclude this in 2021.

 

Martin Eales, CEO, said:

"The year to June 2020 was dominated by the Strategic Review process and led to the announcement of the intended strategic partnership with IIG in March 2020.  Whilst, ultimately, the parties agreed to allow IIG's Option to lapse in November 2020 discussions continue with IIG and other parties with a view to concluding a strategic or project financing transaction.

"The recently completed placing gives us a strengthened financial base from which to negotiate an alternative project funding transaction and we are focused on delivering this in 2021. We thank all our shareholders for their continued support in Ironveld."

 

 

For further information, please contact:

Ironveld plc

Giles Clarke, Chairman

Martin Eales, Chief Executive Officer

 

 

c/o Blytheweigh

+44 20 7138 3204

 

finnCap (Nomad and Broker)

Christopher Raggett / Charlie Beeson

 

 

+44 20 7220 0500

Turner Pope (Joint Broker)

Andrew Thacker

 

 

+44 20 3657 0050

Blytheweigh

Tim Blythe / Megan Ray

 

+44 20 7138 3204

 

 

 

NOTES TO EDITORS

 

Ironveld (IRON.LN) is the owner of Mining Rights over approximately 28 kilometres of outcropping Bushveld magnetite with a SAMREC compliant ore resource of some 56 million tons of ore grading 1,12% V2O5, 68,6% Fe2O3 and 14,7% TiO2.

The Definitive Feasibility Study published in April 2014 confirms the project's viability to deliver a Vanadium slag product for which the company has an offtake agreement as well a High Purity Iron product which commands a premium in the market place and Titanium slag containing commercial grades of titanium.

Ironveld is an AIM traded company. For further information on Ironveld please refer to www.ironveld.com .

 

CHAIRMAN'S STATEMENT

During the Period, we continued to undertake various activities focused on realising the value of the Company's assets.

 

In July 2019, we announced that finnCap had been engaged to lead a review of the strategic alternatives for Ironveld's mining assets (the "Strategic Review"). These assets include unfettered rights to 56.4 million tonnes of magnetite ore, which the JORC compliant mineral resources demonstrates holds 1.4 billion pounds weight of Vanadium - equivalent to four times annual global Vanadium demand; 27 million tons of High Purity Iron in situ; and 8.3 million tonnes of titanium. 

 

In December 2019 we announced the appointment of Martin Eales as the new Chief Executive Officer of the Company, with Peter Cox moving to the position of Technical Director.

 

The Strategic Review led to a number of engagements with parties potentially interested in making an offer to fund all or part of the development of Ironveld's mining assets and led to the announcement in March 2020 that the Company and Inclusive Investment Group ("IIG") had signed a conditional Option Agreement envisaging an investment in the Company by IIG of US$3.2 million (approximately £2.7 million).  The Option Agreement was extended in June 2020 and September 2020, with IIG advancing a total of US$650,000 in bridge funding to the Company, before ultimately lapsing post period end in November 2020.

 

During the period of the Option Agreement the Company and IIG worked hard to deliver a complete project funding solution, including IIG obtaining a conditional offer of project finance from a South African funding institution, and the parties remain in discussions about a possible future partnership.

 

Following the announcement of the agreed lapse of the IIG Option Agreement the Company announced a conditional share placing at 0.30 pence per share to raise gross proceeds of £1,150,000, whilst at the same time capitalising various loans and accrued salary/fees owed to IIG, Directors and other lenders.  The net proceeds of the placing have been used to strengthen the Company's financial position and cover its overheads whilst it seeks to conclude an alternative development funding transaction.

 

We remain committed to operating responsibly, working closely with stakeholders and local communities at grassroots level to improve standards of living. We continue to support our 'Keep a Girl in School' initiative working alongside our local partners, The Imbumba Foundation and the Nelson Mandela Foundation, to provide hygiene support to approximately 600 female students at school in the local area. Additionally we plan a new scheme in 2021 which will provide facilities and support to children with maths and science homework outside of school. We were delighted to note that Ironveld's first sponsored graduate mining engineer from the local community, Tebogo Mahoai (2018), completed his mine officials training program and obtained his blasting licence during the period.

 

Financial

 

The Group recorded a loss before tax of £1.0m (2019: £0.6m) and had cash balances of £0.03m (2019: £0.6m) at the end of the period. The Company does not plan to pay a dividend for the year ended 30 June 2020.

 

Going concern

 

Following approval of the share placing on 14 December 2020 and further rationalisation of the Company's cost base in both South Africa and the UK, the Group's present financial resources and existing facilities are considered sufficient to enable it to operate until the first half of 2022, by which time, the Board of Directors anticipates to have secured an alternative transaction focused on delivering value from the Group's principal assets.

 

Outlook

 

Ironveld's Board remains committed to delivering value to our shareholders. Following the recent lapse of the Option Agreement with IIG the Company has re-engaged in discussions with a number of parties which the Board expects to lead to an alternative transaction.

 

We would like to thank all of our shareholders for their continuing support for both the Company and the project and we look forward to providing further updates in the near future.

 

Giles Clarke

Chairman

 

 

 

 

CONSOLIDATED INCOME STATEMENT

   

 

Note

Year

ended 2020

£000

 

Year

ended 2019

£000

 

 

 

 

 

Administrative expenses

 

(695)

 

(629)

 

 

 

 

 

Operating loss

4

(695)

 

(629)

 

 

 

 

 

Other gains and losses

6

(326)

 

-

Investment revenues

7

4

 

6

Finance costs

8

(2)

 

(2)

Loss before tax

 

(1,019)

 

(625)

 

 

 

 

 

Tax

9

-

 

-

 

 

 

 

 

Loss for the year

 

(1,019)

 

(625)

 

 

 

 

 

Attributable to:

 

 

 

 

Owners of the Company

 

(1,017)

 

(624)

Non-controlling interests

 

(2)

 

(1)

 

 

(1,019)

 

(625)

 

 

 

 

 

Loss per share- Basic and diluted

10

(0.16p)

 

(0.10p)

 

 

 

 

 

 

 

 

 

There is no difference between the results as disclosed above and the results on a historical cost basis. The income statement has been prepared on the basis that all operations are continuing operations.
 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 

Year

ended

2020

£000

 

Year

ended

2019

£000

 

 

 

(1,019)

 

(625)

 

 

 

(3,654)

 

211

 

 

 

(4,673)

 

(414)

 

 

 

 

 

 

 

 

 

(4,061)

 

(448)

(612)

 

34

(4,673)

 

(414)

 

 

 

 

 

 

 




 

CONSOLIDATED BALANCE SHEET

 

 

Note

2020

£000

 

2019

£000

Non-current assets

 

 

 

 

Intangible assets

12

23,574

 

27,423

Property, plant and equipment

13

2

 

5

Investments

14

-

 

390

Other receivables

15

2

 

-

 

 

23,578

 

27,818

 

 

 

 

 

Current assets

 

 

 

 

Trade and other receivables

15

76

 

156

Cash and cash equivalents

 

28

 

566

 

 

104

 

722

Total assets

 

23,682

 

28,540

 

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

16

(805)

 

(610)

Borrowings

17

(210)

 

-

 

 

(1,015)

 

(610)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Deferred tax liabilities

18

(4,384)

 

(5,243)

 

 

 

 

 

Total liabilities

 

(5,399)

 

(5,853)

 

 

 

 

 

Net assets

 

18,283

 

22,687

 

 

 

 

 

Equity

 

 

 

 

Share capital

20

9,774

 

9,774

Share premium

21

19,691

 

19,691

Other reserve

21

189

 

-

Retained earnings

21

(14,480)

 

(10,499)

 

 

 

 

 

Equity attributable to owners of the Company

 

15,174

 

18,966

 

 

 

 

 

Non-controlling interests

24

3,109

 

3,721

 

 

 

 

 

Total equity

 

18,283

 

22,687

 

 

 

 

 

 

 

 

These financial statements were approved by the Board and authorised for issue on 28 December 2020

 

Signed on behalf of the Board

 

 

 

M Eales
Director  Company Registration No: 04095614

 

 

 

PARENT COMPANY BALANCE SHEET

 

 

Note

 

2020

£000

 

2019

£000

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

Investments

14

 

24,654

 

24,074

 

 

 

 

 

 

Current assets

 

 

 

 

 

Trade and other receivables

15

 

30

 

25

Cash and cash equivalents

 

 

15

 

523

 

 

 

45

 

548

Total assets

 

 

24,699

 

24,622

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

16

 

(219)

 

(70)

Borrowings

17

 

(210)

 

-

 

 

 

 

 

 

Total liabilities

 

 

(429)

 

(70)

 

 

 

 

 

 

Net assets

 

 

24,270

 

  24,552

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Share capital

20

 

9,774

 

9,774

Share premium

21

 

19,691

 

19,691

Other reserve

21

 

189

 

-

Retained earnings

21

 

(5,384)

 

(4,913)

 

 

 

 

 

 

Total equity

 

 

24,270

 

24,552

(Attributable to owners of the Company)

 

 

 

 

 

 

 

 

 

 

 

 

 

The loss for the financial year dealt with in the financial statements of the parent Company was £551,000 (2019 - loss £382,000).

 

These financial statements were approved by the Board and authorised for issue on 28 December 2020.

 

Signed on behalf of the Board

 

 

 

 

M Eales

Director  Company Registration No: 04095614
 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

 

Equity attributable to owners of the Company:

 

 

Share Capital

£000

 

Share Premium

£000

 

Other Reserve

£000

 

Retained Earnings

£000

 

Total

£000

 

 

 

 

 

 

 

 

 

 

At 1 July 2018

8,903

 

19,161

 

-

 

(10,056)

 

18,008

 

 

 

 

 

 

 

 

 

 

Exchange difference on
translation of foreign operations

-

 

-

 

-

 

176

 

176

 

 

 

 

 

 

 

 

 

 

Issue of share capital

871

 

530

 

-

 

-

 

1,401

 

 

 

 

 

 

 

 

 

 

Credit for equity-settled

share based payments

-

 

-

 

-

 

5

 

5

 

 

 

 

 

 

 

 

 

 

Loss for the year

-

 

-

 

-

 

(624)

 

(624)

 

 

 

 

 

 

 

 

 

 

At 30 June 2019

9,774

 

19,691

 

-

 

(10,499)

 

18,966

 

 

 

 

 

 

 

 

 

 

Exchange difference on
translation of foreign operations

-

 

-

 

-

 

(3,044)

 

(3,044)

 

 

 

 

 

 

 

 

 

 

Issue of share option

-

 

-

 

189

 

-

 

189

 

 

 

 

 

 

 

 

 

 

Credit for equity-settled

share based payments

-

 

-

 

-

 

80

 

80

 

 

 

 

 

 

 

 

 

 

Loss for the year

-

 

-

 

-

 

(1,017)

 

(1,017)

 

 

 

 

 

 

 

 

 

 

At 30 June 2020

9,774

 

19,691

 

189

 

(14,480)

 

15,174

 

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) 

 

Total equity:

 

Owners of the Company

£000

 

Non-controlling Interest

£000

 

Total Equity

£000

 

 

 

 

 

 

At 1 July 2018

18,008

 

3,687

 

21,695

 

 

 

 

 

 

Exchange difference on translation of foreign operations

176

 

35

 

211

 

 

 

 

 

 

Issue of share capital

1,401

 

-

 

1,401

 

 

 

 

 

 

Credit for equity-settled share based payments

5

 

-

 

5

 

 

 

 

 

 

Loss for the year

(624)

 

(1)

 

(625)

 

 

 

 

 

 

At 30 June 2019

18,966

 

3,721

 

22,687

 

 

 

 

 

 

Exchange difference on translation of foreign operations

(3,044)

 

(610)

 

(3,654)

 

 

 

 

 

 

Issue of share option

189

 

-

 

189

 

 

 

 

 

 

Credit for equity-settled share based payments

80

 

-

 

80

 

 

 

 

 

 

Loss for the year

(1,017)

 

(2)

 

(1,019)

 

 

 

 

 

 

At 30 June 2020

15,174

 

3,109

 

18,283

 


 



 

COMPANY STATEMENT OF CHANGES IN EQUITY

 

Equity attributable to the equity holders of the Company:

 

 

Share Capital

£000

 

Share Premium

£000

 

Other Reserve

£000

 

Retained Earnings

£000

 

Total Equity

£000

 

 

 

 

 

 

 

 

 

 

At 1 July 2018

8,903

 

19,161

 

-

 

(4,536)

 

23,528

 

 

 

 

 

 

 

 

 

 

Credit for equity-settled
share based payments

-

 

-

 

-

 

5

 

5

 

 

 

 

 

 

 

 

 

 

Issue of share capital

871

 

530

 

-

 

-

 

1,401

 

 

 

 

 

 

 

 

 

 

Loss for the year

-

 

-

 

-

 

(382)

 

(382)

 

 

 

 

 

 

 

 

 

 

At 30 June 2019

9,774

 

19,691

 

-

 

(4,913)

 

24,552

 

 

 

 

 

 

 

 

 

 

Credit for equity-settled

share based payments

-

 

-

 

-

 

80

 

80

 

 

 

 

 

 

 

 

 

 

Issue of share option

-

 

-

 

189

 

-

 

189

 

 

 

 

 

 

 

 

 

 

Loss for the year

-

 

-

 

-

 

(551)

 

(551)

 

 

 

 

 

 

 

 

 

 

At 30 June 2020

9,774

 

19,691

 

189

 

(5,384)

 

24,270

 

 

 

 

 

 

 

 

 

 

 
 

CONSOLIDATED CASH FLOW STATEMENT

 

 

Note

 

Year

ended

2020

£000

 

Year ended

2019

£000

 

 

 

 

 

 

Net cash used in operating activities

22

 

(397)

 

(420)

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of property, plant and equipment

 

 

-

 

(4)

Purchase of exploration and evaluation assets

 

 

(555)

 

(1,202)

Contributions to exploration and evaluation assets

 

 

-

 

268

Interest received

 

 

4

 

6

 

 

 

 

 

 

Net cash used in investing activities

 

 

(551)

 

(932)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds on issue of equity (net of costs)

 

 

-

 

1,401

Proceeds on issue of share options and warrants

 

 

189

 

-

Proceeds from new loans

 

 

210

 

-

 

 

 

 

 

 

Net cash generated by financing activities

 

 

399

 

1,401

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

 

(549)

 

49

 

 

 

 

 

 

Cash and cash equivalents at beginning
 of year

22

 

566

 

517

 

 

 

 

 

 

Effects of foreign exchange rates

 

 

11

 

517

 

 

 

 

 

 

Cash and cash equivalents at end of yea

22

 

28

 

566


 

 
 

 

COMPANY CASH FLOW STATEMENT

 

Note

 

Year

ended

2020

£000

 

Year ended

2019

£000

 

 

 

 

 

 

Net cash from operating activities

22

 

(350)

 

(381)

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Payments to acquire investments

 

 

(557)

 

(961)

 

 

 

 

 

 

Net cash used in investing activities

 

 

(557)

 

(961)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Proceeds on issue of equity (net of costs)

 

 

-

 

1,401

Proceeds on issue of share options and warrants

 

 

189

 

-

Proceeds from new loans

 

 

210

 

-

 

 

 

 

 

 

Net cash generated by financing activities

 

 

399

 

1,401

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

 

(508)

 

59

 

 

 

 

 

 

Cash and cash equivalents at beginning of year

22

 

523

 

464

 

 

 

 

 

 

Cash and cash equivalents at end of year

22

 

15

 

523

 
 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

1. General information

 

Ironveld Plc is a public company incorporated and domiciled in the United Kingdom under the Companies Act 2006 whose shares are listed on the Alternative Investment Market of the London Stock Exchange. The address of the registered office is given on page 2. The nature of the Group's operations and its principal activities are set out in note 3 and in the Directors report on page 5.

 

Adoption of new and revised Standards

 

In the current year, the Group has applied a number of new or amended standard for the first time which are mandatory for accounting periods commencing on or after 1 January 2019. None of the standards adopted had a material impact on the financial statements. The significant new and amended standards adopted were as follows:-

 

IFRS 16 - Leases

Annual Improvements to IFRSs 2015-2017 Cycle

 

At the date of authorisation of these financial statements, the following accounting standards, amendments to existing standards and interpretations are not yet effective and have not been adopted early by the Group.

 

IFRS 17 - Insurance contracts

Amendments to references to the conceptual Framework in IFRS Standards

Annual Improvements to IFRSs 2018-2020 Cycle.

 

The adoption of these standards, amendments and interpretations is not expected to have a material impact on the Group and Company's results or equity.

 

 

2.1 Significant accounting policies

 

The financial statements are based on the following policies which have been consistently applied:

 

Basis of preparation

 

The financial statements of the Group and Parent Company have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Companies Act 2006.

 

Under section 408 of the Companies Act 2006 the Parent Company is exempt from the requirement to present its own profit and loss account.

 

The financial statements have been prepared on the historical cost basis. The financial statements are presented in pounds sterling because that is considered to be the currency of the primary economic environment.

 

The principal accounting policies are set out below:

 

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the Company and all entities controlled by the Company (its subsidiaries) made up to the year-end. Control is achieved where the Company has power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

 

Subsidiaries are consolidated from the date of their acquisition, being the date on which the Company obtains control and ceases when the Company loses control of the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

2.1 Significant accounting policies (continued)

 

Basis of consolidation (continued)

 

Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. Those interests of non-controlling shareholders are initially measured at their proportionate share of the fair value of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying value of the non-controlling interests is the amount of initial recognition plus the non-controlling interests' share of the subsequent changes in equity.

 

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

 

Business combinations

 

Acquisitions of subsidiaries are accounted for using acquisition accounting. The consideration for each acquisition is measured at the fair value of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control in the acquiree. Acquisition-related costs are recognised in the income statement as incurred.

 

Exploration and evaluation

 

Costs incurred prior to acquiring the rights to explore are charged directly to the income statement.

 

Licence acquisition costs and all other costs incurred after the rights to explore an area have been obtained, such as the direct costs of exploration and appraisal (including geological, drilling, trenching, sampling, technical feasibility and commercial viability activities) are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets, pending determination. Amounts charged to project partners in respect of costs previously capitalised are deducted as contributions received in determining the accumulated cost of E&E assets.

 

E&E assets are not amortised prior to the conclusion of the appraisal activities. At completion of appraisal activities, if financial and technical feasibility is demonstrated and commercial reserves are discovered then, following development sanctions, the carrying value of the relevant E&E asset will be reclassified as a development and production asset in intangible assets after the carrying value has been assessed for impairment and, where appropriate adjusted. If after completion of the appraisal of the area it is not possible to determine technical and commercial feasibility or if the legal rights have expired or if the Group decide to not continue activities in the area, then the cost of unsuccessful exploration and evaluation are written off to the income statement in the relevant period.

 

The Group's definition of commercial reserves for such purposes is proved and probable reserves on an entitlement basis. Proved and probable reserves are the estimated quantities of minerals which geological, geophysical and engineering data demonstrate with a specified degree of certainty to be recoverable in future years from the known reserves and which are considered to be commercially producible.

 

Such reserves are considered commercially producible if management has the intention of developing and producing them and such intention is based upon:

 

-  a reasonable expectation that there is a market for substantially all of the expected production;

-   a reasonable assessment of the future economics of such production;

-        evidence that the necessary production, transmission and transportation facilities are available or can be made available; and

-  agreement of appropriate funding; and

-   the making of the final investment decision.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

2.1 Significant accounting policies (continued)

 

Exploration and evaluation (continued)

 

On an annual basis a review for impairment indicators is performed. If an indicator of impairment exists an impairment review is performed. The recoverable amount is then considered to be the higher of the fair value less costs of sale or its value in use. Any identified impairment is written off to the income statement in the period identified.

 

Development and production assets

 

Development and production assets, classified within property, plant and equipment, are accumulated generally on a field basis and represents the cost of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditure incurred in finding the commercial reserves transferred from intangible assets.

 

Depreciation of producing assets

 

The net book values of producing assets are depreciated generally on the field basis using the unit or production method by reference to the ratio of production in the period and the related commercial reserves of the field, taking into account the future development expenditure necessary to bring those reserves to production.

 

Research and development

 

Research expenditure is recognised as an expense in the period in which it is incurred.

 

An internally-generated asset arising from any development is recognised only if all of the following conditions are met:

  -   an asset is created that can be identified;

  -   it is probable that the asset created will generate future economic benefits; and

  -   the development cost of the asset can be measured reliably.

 

Non-current assets held for sale

 

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and the fair value less costs to sell.

 

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the asset and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after sale.

 

Revenue

 

Revenue is measured based on the consideration to which the Group expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer. The Group reported no revenue for the year.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

2.1 Significant accounting policies (continued)

 

Taxation

 

The tax expense represents the sum of the tax payable and deferred tax.

 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in the calculation of the taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised on all appropriate taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible timing differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date.

 

Deferred tax is calculated at the tax rates that are expected to be applicable in the period when the liability or asset is realised and is based on tax laws and rates substantially enacted at the balance sheet date. Deferred tax is charged in the income statement except where it relates to items charged/credited in other comprehensive income, in which case the tax is also dealt with in other comprehensive income.

 

Leases

 

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed. All of the Groups leases has a lease term of 12 months or less.

 

Property, plant and equipment

 

Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less the estimated residual value of each asset over its expected useful life, as follows:

 

Plant and machinery  10% - 25% straight line basis or reducing balance basis

 

Foreign currencies

 

The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.

 

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences are recognised in the income statement in the period in which they arise.

 

When presenting the consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at the exchange rates prevailing at the balance sheet date. Income and expense items are translated at average exchange rates for the period, unless exchange rates have fluctuated significantly in which case the rates at the date of the transactions are used. Exchange differences arising are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests where appropriate).

 

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated using the closing rate.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

2.1 Significant accounting policies (continued)

 

Financial instruments

 

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

 

Other receivables

Other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method except for short-term receivables when recognition of interest would be immaterial. The Group recognises appropriate allowances for expected credit losses in the income statement based on a historical credit loss experience, adjusted for factors that are specific to the debtors and general economic conditions.

 

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.

 

Financial liability and equity

Interest bearing bank and other loans and bank overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

 

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial instruments are initially recognised at fair value and are subsequently amortised using the effective interest method. Fair value is estimated from available market data and reference to other instruments considered to be substantially the same.

 

Trade and other payables

Trade payables and other financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method.

 

The Group's activities expose it primarily to the financial risks of changes in interest rates on borrowings and foreign exchange risk.

 

Investments

 

Investments in subsidiaries are stated at cost less any provision for the permanent diminution in value.

 

Share-based payments

 

The Group issues equity-settled share-based payments to certain employees and other parties. Equity settled share-based payments are measured at fair value at the date of grant. In respect of employee related share based payments, the fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest. In respect of other share based payments, the fair value is determined at the date of grant and recognised when the associated goods or services are received.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

2.1 Significant accounting policies (continued)

 

Operating segments

 

The Group considers itself to have one operating segment in the year and further information is provided in note 3.

 

Going concern

 

The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group has adequate resources to continue in operating existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. Further details are provided in the note 2.2 and in the Strategic Report on pages 3 to 4. The financial statements therefore do not include the adjustments that would result if the Group and Company were unable to continue as a going concern.

 

2.2 Critical accounting estimates and judgements

 

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

 

Fair value of acquisition

 

On acquisition of a subsidiary, the Company is required to estimate the fair value of the assets and liabilities acquired and the consideration paid. The estimate in respect of exploration and evaluation assets is affected by many factors including the future viability of commercial reserves which have been based on the judgement of Directors supported by third party technical reports.

 

Going concern

 

As announced on 12 November 2020, the Company and IIG agreed that the Option Agreement originally announced on 30 March would be allowed to lapse on 30 November 2020.  On 26 November 2020, alongside the announcement of a share placing to raise up to £1,150,000, the Company agreed that the majority of the bridging funds provided by IIG (US$650,000 plus interest) would be capitalised at a price of 0.42 pence per share alongside a cash repayment of approximately £112,000.

 

Discussions with alternative financial and development funding institutions to secure the project funding required continue.

 

Following shareholder approval of the of the share placing on 14 December 2020, the Group's present financial facilities are considered sufficient to enable the Company to operate at present levels until the first half of 2022, by which time, the Board of Directors anticipates to have secured the further finance to develop the Project.

 

Whilst the impact of the global COVID-19 pandemic including the associated travel restrictions has hampered the Company's attempts to secure project development funding to some extent, as the Group is presently not currently undertaking any operations at the project then no significant impact is anticipated over the next 12 months.

 

Therefore, whilst the existing resources are not sufficient to develop the mining asset, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future, being twelve months from the date of the approval of the financial statements. The Group is committed to developing its Project and is actively engaged with interested parties.  For this reason, the Board continues to adopt the going concern basis in the preparation of these financial statements.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

2.2 Critical accounting estimates and judgements (continued)

 

 

Exploration and evaluation assets

 

The Group has adopted a policy of capitalising the costs of exploration and evaluation and carrying the amount without impairment assessment until impairment indicators exist (as permitted by IFRS 6). The Directors consider that the Group remains in the exploration and evaluation phase and therefore, under IFRS 6, the Directors have to make judgements as to whether any indicators of impairment exist and the future activities of the Group. No such indicators of impairment were identified and therefore, in accordance with IFRS 6, no impairment review has been carried out. The Directors remain committed to development of the asset.

 

Investment impairment indicators

 

The Company balance sheet includes an investment in subsidiary companies of £24,654,000 which is underpinned and reflects the underlying subsidiary exploration and evaluation assets discussed above. As no indicators of impairment have been identified in the exploration and evaluation asset then subsequently no indicators or impairment in the investment in subsidiary have been identified and as is consistent with the exploration and evaluation assets, no impairment review has been carried out in the period.

 

Deferred tax assets

 

The Directors must judge whether the future profitability of the Group is likely in making the decision whether or not to recognise a deferred tax asset in respect of taxation losses. No deferred tax assets have been recognised in the year.

 

3.  Business and geographical segments

 

Information reported to the Group Directors for the purposes of resource allocation and assessment of segment performance is focused on the activity of each segment and its geographical location. The Directors consider that there is only one business segment, which is the activity of prospecting, exploration and mining based in South Africa.

 

 

4.  Operating loss    

 

Year ended

2020

£000

 

Year ended

2019

£000

 

 

 

 

Operating loss for the year is shown after charging:

 

 

 

 

 

 

 

Depreciation on tangible assets

2

 

3

Short term lease payments under operating leases

26

 

53

Impairment of receivables

-

 

-

Share based payment charge

80

 

-

 

 

 

 

 

 

 

 

Auditors' remuneration

 

 

 

 

 

 

 

Fees payable to the auditors for the audit of the Company's accounts

37

 

37

 

 

 

 

Fees payable to the Company's auditors and its associates for other services:-

 

 

 

The audit of the Company's subsidiaries

13

 

14

Tax compliance services

7

 

7

Other assurance services

10

 

12

Other non-audit services

3

 

3

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

   

5.  Staff costs

 

Group

 

Year ended 2020

£000

 

Year ended 2019

£000

 

 

 

 

Wages and salaries

350

 

438

Social security costs

28

 

15

Pension costs

8

 

-

Share based payments

80

 

5

Directors other fees

305

 

382

 

771

 

840

 

 

 

 

The average monthly number of employees, including Directors, during the period was as follows:

2020 Number

 

2019 Number

 

 

 

 

Administration and management

12

 

20

 

 

 

 

 

2020

£000

 

2019

£000

 

 

 

 

Directors remuneration and other fees

594

 

517

 

 

 

 

The aggregate remuneration and fees paid to the highest paid Director was

185

 

251

 

 

 

 

 

Further details of the Directors' remuneration are given in the Directors' Remuneration Report on pages 10 and 11.

 

Company

 

Year ended 2020

£000

 

Year ended 2019

£000

 

 

 

 

Wages and salaries - Directors

202

 

135

Social security costs

26

 

12

Share based payments

80

 

-

Pension costs

7

 

-

 

315

 

147

 

 

 

 

 

 

 

 

The average monthly number of employees, including Directors, during the period was as follows:

2020 Number

 

2019 Number

 

 

 

 

Directors

5

 

5


 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

6.  Other gains and losses

 

Year ended 2020

£000

 

Year ended 2019

£000

 

 

 

 

Impairment of other investments

326

 

-

 

 

 

 

 

7.  Investment revenues

 

Year ended 2020

£000

 

Year ended 2019

£000

 

 

 

 

Interest on financial deposits

4

 

6

 

 

 

 

 

8.  Finance costs

 

Year ended 2020

£000

 

Year ended 2019

£000

 

 

 

 

Loan interest and similar charges

2

 

2

 

 

 

 

 

9. Tax

 

Year ended 2020

£000

 

Year ended 2019

£000

 

 

 

 

a) Tax charge for the period

 

 

 

 

 

 

 

Corporation tax:

 

 

 

Current period

-

 

-

Deferred tax (note 18)

-

 

-

 

-

 

-

 

 

 

 

b) Factors affecting the tax charge for the period

 

 

 

 

 

 

 

Loss on ordinary activities for the period before taxation

(1,019)

 

(625)

 

 

 

 

Loss on ordinary activities for the period before taxation multiplied by
effective rate of corporation tax in the UK of 19% (2019 - 19%)

(194)

 

(119)

 

 

 

 

Effects of:

 

 

 

Unused tax losses not recognised

194

 

119

 

 

 

 

Tax expense for the period

-

 

-

 

 

 

 

 

 

 

 

 

c) Factors that may affect future tax charges - The Group has estimated unutilised tax losses amounting to £5,194,000 (2019 - £4,235,000) the values of which are not recognised in the balance sheet. The losses represent a potential deferred taxation asset of £1,123,000 (2019 - £831,000) which would be recoverable should the Group make sufficient suitable taxable profits in the future.

 

In addition, the Group has pooled exploration costs incurred of £7,445,000 (2019 - £8,082,000) which are expected to be deductible against future trading profits of the Group.
 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

10. (Loss)/earnings per share 

 

2020

£000

 

2019

£000

 

 

 

 

Loss attributable to the owners of the Company

(1,019)

 

(625)

 

 

 

 

Loss per share - Basic and diluted

  Continuing operations

(0.16p)

 

(0.10p)

 

 

 

 

   

The calculation of basic earnings per share is based on 654,990,841 (2019 - 602,782,339) ordinary shares, being the weighted average number of ordinary shares in issue during the year. Where the Group reports a loss for the current period, then in accordance with IAS 33, the share options are not considered dilutive. Details of such instruments which could potentially dilute basic earnings per share in the future are included in note 20.

 

 

11.  Loss attributable to owners of the parent Company

 

As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent Company is not presented as part of these accounts. The parent Company's loss for the financial year amounted to £551,000 (2019 - £382,000).

 

 

12. Intangible assets

 

Exploration and evaluation assets

£000

Group

 

Cost:

 

At 1 July 2018

26,218

Additions

1,225

Contributions received

(268)

Exchange differences

248

 

 

At 30 June 2019

27,423

 

 

Additions

645

Exchange differences

(4,494)

 

 

At 30 June 2020

23,574

 

 

Amortisation:

 

 

 

At 1 July 2018, 30 June 2019 and at 30 June 2020

-

 

 

Net book value at 30 June 2020

23,574

 

 

Net book value at 30 June 2019

27,423

 

 


 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

12. Intangible assets (continued)

 

The Group's exploration and evaluation assets all relate to South Africa.

 

In respect of the exploration and evaluation assets which remain in the appraisal phase, the Group has performed a review for impairment indicators, as required by IFRS 6 and in the absence of such indicators no impairment review was carried out. During the period contributions of £Nil (2019 - £268,000) were received from the project partner in respect of the mineral ore testing.

 

13. Property, plant and equipment      

 

Plant and machinery

£000

Group

 

Cost:

 

At 1 July 2019

41

Exchange differences

(7)

 

 

At 30 June 2020

34

 

 

Depreciation:

 

At 1 July 2019

36

Charge for the period

2

Exchange differences

(6)

 

 

At 30 June 2020

32

 

 

Net book value at 30 June 2020

2

 

 

Net book value at 30 June 2019

5

 

 

Plant and machinery

£000

Cost:

 

At 1 July 2018

37

Additions

4

 

 

At 30 June 2019

41

 

 

Depreciation:

 

At 1 July 2018

33

Charge for the period

3

 

 

At 30 June 2019

36

 

 

Net book value at 30 June 2019

5

 

 

Net book value at 30 June 2018

4

 

 

 

All non-current assets in 2020 and 2019 were located in South Africa.
 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

14. Investments

 

Group - Loans to other entities 

 

2020

£000

 

2019

£000

Cost:

 

 

 

At 1 July

390

 

386

Exchange differences

(64)

 

4

 

 

 

 

At 30 June

326

 

390

 

 

 

 

Impairment:

 

 

 

At 1 July

-

 

-

Recognised in the year

326

 

-

 

 

 

 

At 30 June

326

 

-

 

 

 

 

Book value at 30 June

-

 

390

 

 

 

 

 

The investment represented the Rand 7million refundable deposit to Siyanda Smelting and Refining Proprietary Limited which the Group paid in exchange for a period of exclusivity to conclude a potential acquisition of the company. The deposit is interest free and becomes refundable should the acquisition not proceed. The investment was considered to be fully impaired as at 30 June 2020 whilst the Directors pursued other alternatives and £326,000 was charged to the income statement.

 

Company - Subsidiary undertakings

 

Loans

£000

 

Equity

£000

 

Total

£000

Cost:

 

 

 

 

 

At 1 July 2018

2,762

 

20,329

 

23,091

Additions

978

 

5

 

983

 

 

 

 

 

 

At 30 June 2019

3,740

 

20,334

 

24,074

 

 

 

 

 

 

Additions

580

 

-

 

580

 

 

 

 

 

 

At 30 June 2020

4,320

 

20,334

 

24,654

 

 

 

 

 

 

Net book value at 30 June 2020

4,320

 

20,334

 

24,654

 

 

 

 

 

 

Net book value at 30 June 2019

3,740

 

20,334

 

24,074

 

 

 

 

 

 

 

 

The loans represent loans to Ironveld Holdings (Propriety) Limited of £4,215,000 which incur interest at a rate not exceeding the base lending rate applicable in England and Wales. Under the initial terms of the loan, £2,500,000 is repayable 31 December 2019 with the remainder due 31 December 2020 however further agreement in the year has extended the loan period when project finance is agreed. Also included in loans are working capital loans to Ironveld Mauritius Limited of £105,000 which are interest free.

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

14. Investments (continued)

 

The Company has investments in the following principal subsidiaries. To avoid a statement of excessive length, details of the investments which are not significant have been omitted:

 

  Proportion of  Nature of

Name of company   Shares  voting rights  business 

  and shares held

Subsidiary undertakings

Ironveld Mauritius Limited  Ordinary    *100%  Holding Company

Ironveld Holdings (Proprietary) Limited  Ordinary  100%  Holding Company

Ironveld Mining (Proprietary) Limited  Ordinary  100%  Mining and exploration

Ironveld Middelburg (Proprietary) Limited  Ordinary  100%  Ore processing and smelting

Ironveld Smelting (Proprietary) Limited  Ordinary  74%  Ore processing and smelting

HW Iron (Proprietary) Limited  Ordinary  68%    Prospecting and mining

Lapon Mining (Proprietary) Limited  Ordinary  74%  Prospecting and mining

Luge Prospecting and
Mining (Proprietary) Limited  Ordinary  74%  Prospecting and mining

 

* Held directly by Ironveld Plc all other holdings are indirect.

 

All subsidiary undertakings are incorporated and domiciled in South Africa, other than Ironveld Mauritius Limited, which is incorporated and domiciled in Mauritius.

 

Further details of non-wholly owned subsidiaries of the Group are provided in note 24.

 

 

15. Trade and other receivables      

 

 

Group

 

Company

 

2020

£000

 

2019

£000

 

2020

£000

 

2019

£000

 

 

 

 

 

 

 

 

Other receivables

58

 

138

 

16

 

11

Amounts owed by related parties

2

 

-

 

-

 

-

Prepayments and accrued income

18

 

18

 

14

 

14

 

78

 

156

 

30

 

25

Due within 12 months

(76)

 

(156)

 

(30)

 

(25)

 

 

 

 

 

 

 

 

Due after more than 12 months

2

 

-

 

-

 

-

 

Amounts owed by related parties represent expenses paid on behalf of the non-controlling interest shareholders by the company and are expected to be recovered in more than 12 months. The amounts are unsecured and interest free.

 

Credit risk

The Group's principal financial assets are bank balances, cash balances, and other receivables. The Group's credit risk is primarily attributable to its other receivables of which £27,000 (2019 - £109,000) is due from a third party financial institution and further information is provided in note 19. The remaining receivable relates to recoverable VAT. The amounts presented in the balance sheet are net of allowances for doubtful receivables.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

16. Trade and other payables        

 

Group

 

Company

 

2020

£000

 

2019

£000

 

2020

£000

 

2019

£000

 

 

 

 

 

 

 

 

Trade payables

48

 

8

 

48

 

8

Taxation and social security costs

13

 

18

 

13

 

14

Other payables

6

 

10

 

5

 

5

Accruals and deferred income

738

 

574

 

153

 

43

 

805

 

610

 

219

 

70

Due within 12 months

(805)

 

(610)

 

(219)

 

(70)

 

 

 

 

 

 

 

 

Due after more than 12 months

-

 

-

 

-

 

-

 

 

17. Borrowings    

 

Group

 

Company

 

2020

£000

 

2019

£000

 

2020

£000

 

2019

£000

 

 

 

 

 

 

 

 

Other loans

210

 

-

 

210

 

-

 

 

 

 

 

 

 

 

Due within 12 months

(210)

 

-

 

(210)

 

-

 

 

 

 

 

 

 

 

Due after more than 12 months

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Further details on loans is provided in note 19.

 

 

18. Deferred tax

 

Group

 

2020

£000

 

2019

£000

 

 

 

 

Balance at 1 July

5,243

 

5,194

 

 

 

 

Exchange differences

(859)

 

(49)

 

 

 

 

Balance at 30 June

4,384

 

5,243

   

The Group has unrelieved tax losses carried forward which represent a deferred tax asset of £1,122,000 (2019 - £831,000). This asset is not recognised in these financial statements.

 

The deferred tax liability is made up as follows:  

 

Group

 

2020

£000

 

2019

£000

 

 

 

 

Fair value adjustments

4,384

 

5,243

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

19. Financial instruments

 

The Group's policies as regards derivatives and financial instruments are set out in the accounting policies in note 2. The Group does not trade in financial instruments.

 

Capital risk management

 

The Group manages its capital to ensure that they will be able to continue as a going concern whilst maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall strategy remains unchanged from 2019.

 

The capital structure of the Group consist of cash and cash equivalents and equity attributable to equity holders of the parent Company.

 

The Group is not subject to any externally imposed capital requirements.

 

Interest rate risk profile

 

The Group is exposed to interest rate risk because the Group borrows funds for working capital at fixed and variable rates. The Group exposure to interest rates on financial assets and liabilities are detailed in the liquidity risk management section of this note.

 

Credit risk management

 

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of the transactions concluded is spread where possible.

 

Liquidity Risk Management

 

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Group's short, medium and long term funding and liquidity management requirements. The Group manages liquidity risk by assessing required reserves and banking facilities by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. Details of additional undrawn bank facilities that the Group has at its disposal to manage liquidity are set out below.

 

Financial facilities

 

The Group did not have any secured bank loan or overdraft facilities during the current or comparative period.

 

Financial assets

 

The Group has no financial assets, other than short-term receivables and cash deposits of £28,000 (2019 - £566,000). The cash deposits attract variable rates of interest. At the year end the effective rate was 0.8% (2019 - 0.7%). The cash deposits held were as follows:-

 

2020

£000

 

2019

£000

 

 

 

 

Sterling - United Kingdom banks

10

 

518

USD - United Kingdom banks

4

 

2

South African Rand - United Kingdom banks

1

 

5

South African Rand - South African banks

13

 

41

 

28

 

566

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

19. Financial instruments (continued)

 

Financial liabilities

 

Other loans

 

Other loans represents the Group's interest bearing financial liabilities. The others loans are due to a consortium of high net worth investors and existing shareholders with whom facilities of £260,000 were agreed on 3 February 2020. The loans mature six months after draw down and attract a fixed interest rate of 8% per annum. The Company issued 26,000,000 share warrants with a subscription price of 1p per share to the lenders, pro rata to the amount of each loan. These warrants have a two year life and the lenders may use the outstanding balances under the loan facilities to exercise the warrants.

 

At 30 June 2020, £210,000 had been drawn against this facility and therefore £50,000 remained undrawn.

 

On 11 June 2020, the Company arranged a bridging loan facility with Inclusive Investment Group Propriety Limited ("IIG") of ZAR 3,700,000 (approximately £170,000). At 30 June 2020 no amount had been drawn under this facility. On 3 September 2020, a further extension of these facilities of ZAR 3,300,000 (approximately £154,000) was agreed.

 

On 30 March 2020, the Company arranged a potential US$1 million facility with IIG which could be drawn down if IIG completed its share subscription under the outstanding option agreement and therefore no amounts were available to draw on this facility at the year-end and the facility lapsed on 30 November 2020.

 

Currency exposures

 

The Group undertakes transactions denominated in foreign currencies and is consequently exposed to fluctuations in exchange rates. The carrying amounts of the Group's foreign currency denominated monetary assets and monetary liabilities were as follows:-

 

 

Assets

£000

 

Liabilities

£000

As at 30 June 2020

 

 

 

 

 

 

 

British Pound Sterling (£)

31

 

417

USD ($)

1

 

21

South African Rand (R)

56

 

564

 

88

 

1,002

 

 

Assets

£000

 

Liabilities

£000

As at 30 June 2019

 

 

 

 

 

 

 

British Pound Sterling (£)

528

 

70

USD ($)

2

 

13

South African Rand (R)

564

 

527

 

1,094

 

610

 

Financial commitments and guarantee

Rehabilitation guarantees of £1,340,000 (R 24,278,412) have been issued to the Department of Mineral Resources for three subsidiaries, HW Iron Proprietary Limited, Lapon Mining Proprietary Limited and Luge Prospecting and Mining Company Proprietary Limited in order to comply with Section 41 of the Mineral and Petroleum Resources Development Act, 2002 (Act 28 of 2002). Under this agreement the Group will pay deposits to a third party financial institution to be held pending discharge of any potential claim on this guarantee. At 30 June 2020 £27,000 (R 577,000) (2019 - £109,000 (R 1,962,000)) had been deposited in respect of this agreement and is included in other receivables. As no significant activity had taken place on the Group's mineral resources then R 1,500,000 was withdrawn from the bond in the year. This receivable represents a concentration of credit risk and the Group is exposed to currency risk on these amounts. As the project has not yet commenced then no liability is considered to have arisen under this guarantee at the reporting date.

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

20. Share capital

 

Group and Company

 

2020

£000

 

2019

£000

Allotted, called up and fully paid

 

 

 

654,990,841 (2019 - 654,990,841) ordinary shares of 1p each

6,550

 

6,550

322,447,158 (2019 - 322,447,158) deferred shares of 1p each

3,224

 

3,224

 

9,774

 

9,774

 

As announced on 26 November 2020 and subsequently approved on 14 December 2020, the Company agreed to carry out a subdivision of the existing ordinary shares whereby each existing ordinary share of 1 pence each will be subdivided into one New Ordinary share of 0.1 pence each and nine deferred shares of 0.1 pence each to enable the placing at 0.30 pence per share to become unconditional. The New Ordinary shares will continue to carry the same rights as attached to the existing ordinary shares, save for the reduction in nominal value.

 

Unlike ordinary shares, the deferred shares have no voting rights, no dividend rights and on a return of capital or winding up are entitled to a return of amounts credited as paid. The deferred shares are not transferrable and beneficial interests in the deferred shares can be transferred to such persons as the Directors may determine as custodian for no consideration without sanction of the holder. For this reason the deferred shares are excluded from any Earnings per share calculations.

 

Share options

 

The Company has a share option scheme for certain employees and former employees of the Group. The share options in issue during the year were as follows:

Date

granted

Exercise price

As at 1 July 2019

No.

 

Granted in year

No.

 

Exercised in year No.

 

Lapsed/

Cancelled No.

 

As at 30 June 2020

No.

21 May 2010

10p

1,600,000

 

-

 

-

 

(1,600,000)

 

-

16 August 2012

1p

5,949,558

 

-

 

-

 

-

 

5,949,558

14 November 2012

1p

6,663,505

 

-

 

-

 

-

 

6,663,505

16 April 2013

1p

1,033,334

 

-

 

-

 

-

 

1,033,334

7 November 2013

1p

2,086,667

 

-

 

-

 

-

 

2,086,667

1 May 2014

1p

200,000

 

-

 

-

 

-

 

200,000

1 October 2015

1p

2,500,000

 

-

 

-

 

-

 

2,500,000

27 January 2016

1p

445,545

 

-

 

-

 

-

 

445,545

10 January 2020

1p

-

 

27,400,000

 

-

 

-

 

27,400,000

30 March 2020

0.42p

-

 

440,176,070

 

-

 

-

 

440,176,070

 

The exercise period of the options is as follows:


Date
granted    Expiry date
    Exercise period

 

16 August 2012  16 August 2022

14 November 2012  14 November 2022  The options are exercisable 1/3 on the first anniversary

16 April 2013  16 April 2023  of grant, 1/3 on the second anniversary of grant and the

7 November 2013  7 November 2023  final 1/3 on the third anniversary of grant

1 May 2014  1 May 2024

1 October 2015  1 October 2025

27 January 2016  27 January 2026

 

10 January 2020  9 January 2030  ½ on grant and the remaining ½ one year after the grant date.

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

20. Share capital (continued)

 

Of the options granted on 1 October 2015, 1,000,000 are exercisable following first commercial production from the proposed 15 MW smelter.

 

The Group recognised a share based payment expense of £80,000 (2019 - £5,000) in the year. No options were exercised in the year.

 

The aggregate of the estimated fair value of the employee related share options granted in the period amounted to £108,000 (2019 - £Nil). The inputs to the Black Scholes Model were as follows:-

 

Weighted average share price (pence)  0.75

Weighted average share price (pence)  1.00

Expected volatility  82%

Weighted average period to exercise  5 years

Risk free rate   0.7%

 

Expected volatility was determined by calculating the historical volatility of the Group's share price over the three years prior to the grant date. The expected period to exercise is based on management's best estimate.

 

 

Share options (continued)

 

On 30 March 2020, the Company announced that it had entered in a share Option Agreement with IIG pursuant to which IIG could subscribe for 440,176,070 new Ordinary shares in the capital of the Company at a price of 0.42 pence per share. The option agreement was issued in exchange for US$250,000.

 

The Option agreement had an initial expiry date of 17 June 2020 but in order to bring the timetable for the potential Option exercise in line with the proposed project financing application, the Company entered into an extension of the Agreement to 30 September 2020. In consideration of this extension IIG agreed to provide the Company with a bridging funding facility of up to ZAR3.7 million (approximately £170,000) which was intended to provide the Company with the requisite funds to continue in operations until such time as the funding application is reviewed.

Further to the above, on 3 September 2020, the exercise period Option Agreement was once again extended to 30 November 2020 in exchange for further bridging funding of ZAR 3.3 million (approximately £150,000). The option lapsed on 30 November 2020.

 

Share warrants

 

Pursuant to the loan facilities agreement, dated 3 February 2020 for £260,000 and referred to in note 19, the Company issued share warrants to the lenders over 26,000,000 shares at 1 pence per share. The warrants had a two years life and the lender was  able to use the outstanding balances under the loan facilities to exercise the warrants. Following the approval of the conditional placing on 14 December 2020 and the repayment of the associated loans, these share warrants lapsed.

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

21. Reserves      

 

Other reserve

£000

 

Share premium account

£000

 

Retained earnings

£000

Group

 

 

 

 

 

 

 

 

 

 

 

At 1 July 2019

-

 

19,691

 

(10,499)

Loss for the year

-

 

-

 

(1,017)

Exchange difference on translation of foreign operations

-

 

-

 

(3,044)

Issue of share options and warrants

189

 

 

 

-

Credit for equity settled share based payments

-

 

-

 

80

 

 

 

 

 

 

At 30 June 2020

189

 

19,691

 

(14,480)


 

Other reserves represent the equity component of share options and share warrants issued in the year.

 

The balance classified as share premium is the premium on the issue of the Group's equity share capital, comprising 1p ordinary shares and 1p deferred shares less any costs of issuing the shares.

 

Retained earnings is made up of cumulative profits and losses to date, share based payments, adjustments arising from changes in non-controlling interests and exchange differences on translation of foreign operations.

 

 

Other reserve

£000

 

Share premium account

£000

 

Retained earnings

£000

Company

 

 

 

 

 

 

 

 

 

 

 

At 1 July 2019

-

 

19,691

 

(4,913)

Loss for the period

-

 

-

 

(551)

Issue of share options and warrants

189

 

-

 

-

Credit for equity settled share based payments

-

 

-

 

80

 

 

 

 

 

 

At 30 June 2020

189

 

19,691

 

(5,384)

 

 

 

 

 

 

 

Other reserves represent the equity component of share options and share warrants issued in the year.

 

The balance classified as share premium is the premium on the issue of the Group's equity share capital, comprising 1p ordinary shares and 1p deferred shares less any costs of issuing the shares.

 

Retained earnings is made up of cumulative profits and losses to date, share based payments, adjustments arising from changes in non-controlling interests and exchange differences on translation of foreign operations.

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

22. Cash generated from operations

 

2020

£000

 

2019

£000

Group

 

 

 

 

 

 

 

Operating loss

(695)

 

(629)

Depreciation on property, plant and equipment

2

 

3

Share based payment charge

80

 

-

 

 

 

 

Operating cash flows before movements in working capital

(613)

 

(626)

 

 

 

 

Movement in receivables

61

 

22

Movement in payables

155

 

185

 

 

 

 

Cash used in operations

(397)

 

(419)

Interest paid

-

 

(1)

 

 

 

 

Net cash used in operations

(397)

 

(420)

 

Cash and cash equivalents   

 

2020

£000

 

2019

£000

 

 

 

 

Cash and bank balances

28

 

566

 

 

 

 

 

 

2020

£000

 

2019

£000

Company

 

 

 

 

 

 

 

Operating loss

(571)

 

(404)

Share based payment charge

80

 

-

 

 

 

 

Operating cash flows before movements in working capital

(491)

 

(404)

 

 

 

 

Movement in receivables

(6)

 

13

Movement in payables

147

 

10

 

 

 

 

Net cash used in operations

(350)

 

(381)

 

 

 

 

 

Cash and cash equivalents

 

2020

£000

 

2019

£000

 

 

 

 

Cash and bank balances

15

 

523

 

 

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

 

23. Related party transactions

 

Group

 

During the year the Group incurred £185,000 (2019 - £251,000) for consultancy services to Goldline Global Consulting (Pty) Limited, a company in which P Cox is materially interested. At 30 June 2020, £392,000 (2019 - £365,000) remained unpaid in accruals. Following the year end the accrued fees were settled by the issue of shares in the Company.

 

During the year the Group incurred £120,000 (2019 - £131,000) for consultancy services to Novem Consulting, a private company in which V von Ketelhodt is materially interested. At 30 June 2020, £171,000 (2019 - £145,000) remained unpaid in accruals. Following the year end the accrued fees were settled by the issue of shares in the Company.

 

Group and Company

 

The key management personnel of the Group are the Directors. Directors' remuneration is disclosed in Note 5.

 

During the year the Company paid £48,000 (2019 - £48,000) for accounting services to Westleigh Investments Limited, a company in which G Clarke and N Harrison are materially interested. During the year the Company paid £Nil (2019 - £20,000) for consultancy services to Merlin Partnership LLP, a company in which G Clarke is materially interested.

 

Included in other loans is a short term loan due to G Clarke of £10,000 (2019- £Nil). The loan attracts interest at 8% per annum and was repaid after the year-end by the issue of 3,333,333 shares and the interest waived.

 

Further Directors' remuneration of £96,805 (2019 - £Nil) was unpaid at the year-end and is included in accruals. Following the year end £60,000 of the accrued fees were settled by the issue of shares in the Company.

 

24. Non-controlling interest

 

2020

£000

 

2019

£000

 

 

 

 

At 1 July

3,721

 

3,687

 

 

 

 

Exchange adjustments

(610)

 

35

Share of loss for the period

(2)

 

(1)

 

 

 

 

At 30 June

3,109

 

3,721

 

The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests:

 

Proportion of voting rights and shares held

 

Profit/(loss) allocated to non-controlling interests

 

Accumulated non-controlling interests

 

2020

 

(2019)

 

2020

£000

 

2019

£000

 

2020

£000

 

2019

£000

 

 

 

 

 

 

 

 

 

 

 

 

HW Iron (Proprietary) Limited

32%

 

(32%)

 

-

 

-

 

989

 

1,184

Lapon Mining (Proprietary) Limited

26%

 

(26%)

 

-

 

-

 

2,124

 

2,540

Other non-controlling interests

 

 

 

 

(2)

 

(1)

 

(4)

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

(1)

 

3,109

 

3,721

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

24. Non-controlling interest (continued)

 

Summarised financial information in respect of each of the Group's subsidiaries that have material non-controlling interests is set out below. The summarised financial information below represents amounts before intragroup eliminations. The accounts of the subsidiaries have been translated from their presentational currency of South African Rand (R) using the R: GBP exchange rate prevailing at 30 June 2020 of 21.4676 (2019 - 17.9497).

 

HW Iron (Proprietary) Limited 

 

2020

£000

 

2019

£000

 

 

 

 

Non-current assets

6,261

 

7,261

Current assets

3

 

-

Current liabilities

(1,970)

 

(2,122)

Non-current liabilities

(1,205)

 

(1,441)

 

3,090

 

3,698

 

 

 

 

Equity attributable to owners of the Company

2,101

 

2,514

Non-controlling interest

989

 

1,184

 

 

 

 

Revenue

-

 

-

Expenses

(1)

 

-

 

 

 

 

Loss for the year

(1)

 

-

 

 

 

 

Attributable to the owners of the Company

(1)

 

-

Attributable to the non-controlling interests

-

 

-

 

 

 

 

Net cash outflow from operating activities

-

 

-

Net cash outflow from investing activities

(157)

 

(188)

Net cash inflow from financing activities

157

 

188

 

 

 

 

Net cash inflow

-

 

-

 

 

 

 

Net cash flow - Attributable to the non-controlling interests

-

 

-

 

 

 

 

 

 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

24. Non-controlling interest (continued)

 

Lapon Mining (Proprietary) Limited

 

2020

£000

 

2019

£000

 

 

 

 

Non-current assets

12,992

 

15,300

Current assets

2

 

-

Current liabilities

(1,647)

 

(1,728)

Non-current liabilities

(3,179)

 

(3,802)

 

8,168

 

9,770

 

 

 

 

Equity attributable to owners of the Company

6,044

 

7,230

Non-controlling interest

2,124

 

2,540

 

 

 

 

Revenue

-

 

-

Expenses

(1)

 

(1)

 

 

 

 

Loss for the year

(1)

 

(1)

 

 

 

 

Attributable to the owners of the Company

(1)

 

(1)

Attributable to the non-controlling interests

-

 

-

 

 

 

 

Net cash outflow from operating activities

(1)

 

(1)

Net cash outflow from investing activities

(153)

 

(183)

Net cash inflow from financing activities

153

 

184

 

 

 

 

Net cash inflow

(1)

 

-

 

 

 

 

Net cash flow - Attributable to the non-controlling interests

-

 

-

 

 

 

 

 

 

25. Financial commitments

 

At the year end the Group had no financial commitments under operating leases (2019 - £Nil).

 

26. Control
 

The Directors consider that there is no overall controlling party.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
FR ZZMZZRDNGGZM