TIDMPAL
RNS Number : 1025L
Equatorial Palm Oil plc
08 January 2021
8 January 2021
EQUATORIAL PALM OIL PLC
("EPO")
CAPITAL METALS LIMITED
Interim Results for the six months ended 30 September 2020
Equatorial Palm Oil plc (AIM: PAL), the AIM listed Rule 15 cash
shell, announces the unaudited interim results of Capital Metals
Limited ("CML" or "the Company") for the six months ended 30
September 2020.
For further information, please visit www.epoil.co.uk or
contact:
Equatorial Palm Oil plc:
Michael Frayne (Executive Chairman) + 44 (0) 20 7317 6800
SPARK Advisory Partners (Nominated Adviser):
Neil Baldwin +44 (0) 20 3368 3554
Brandon Hill Capital Limited (Broker):
Jonathan Evans/Oliver Stansfield +44 (0) 20 3463 5000
CML Chairman's Statement
The six months ended 30 September 2020 and subsequent period,
have been transformative for CML towards the achievement of its
objectives to list on a renowned international stock exchange for
resource companies, and procurement of funding to significantly
advance the Development Study and Work Programme of the Eastern
Minerals Project in Sri Lanka (the "Project"), the principal asset
of CML.
On 21 October 2020, EPO announced that it had reached
conditional agreement with parties holding a majority of the shares
(51.4 per cent.) ("CML Majority") in the Company, for EPO to
acquire their shares in CML in exchange for ordinary shares in EPO.
This proposed acquisition ("Proposed Acquisition") constitutes a
reverse takeover transaction pursuant to the AIM Rules for
Companies. Following the Proposed Acquisition, the Company's
business will constitute all of EPO's business.
EPO issued the same offer to the remaining shareholders in CML,
which if accepted, will result in the acquisition of up to 100 per
cent. of the entire issued share capital of the Company ("CML
Shares") for an aggregate total consideration of GBP15.84 million
by the issue of up to 132,000,000 new Ordinary Shares in EPO
("Consideration Shares"). This equates to a price of 12 pence per
Consideration Share to be issued following a proposed 20:1 share
consolidation of EPO (equivalent to 0.6 pence per existing Ordinary
Share of EPO).
The offer by EPO to all CML shareholders ("the Offer")
specified, inter alia, the following terms:
- In consideration for the acquisition of the CML Shares, EPO
proposed to issue 1.235 Consideration Shares for every 1 CML Share
sold.
- That completion of the Proposed Acquisition is conditional, amongst other things, on:
o the passing of resolutions at a general meeting which has been
convened by EPO for 11 January 2020, to approve: the Proposed
Acquisition, a 20:1 share consolidation, and a placing of, and
subscription for, new ordinary shares ("Placing Shares" and
"Subscription Shares") in EPO; and
o admission of the Placing Shares, Subscription Shares and
Consideration Shares to trading on AIM becoming effective on or
before 31 March 2021.
Completion of the Offer is conditional on acceptances being
received from the holders of CML Shares holding more than 75 per
cent. of the issued CML Shares (unless otherwise agreed between EPO
and the Company, with the approval of the EPO's Nominated
Adviser).
As at the date of publishing of these interim results of CML,
EPO had received acceptances from the holders of CML Shares holding
98.76 per cent. of the issued CML Shares.
EPO has conditionally raised GBP2,085,000 through an
oversubscribed placing and subscription (the "Placing") by its
broker, Brandon Hill Capital Ltd, to support the proposed
acquisition of CML and to provide funding for the Project.
Completion of the Proposed Acquisition is expected to take place
on 13 January 2021.
The Project has an established JORC Resource of 17.2Mt, of which
84% is in the Measured and Indicated categories, with an average
grade of 17.6% Total Heavy Minerals ("THM"), making it one of the
highest grade deposits in the global peer group. Less than 5% of
the Project area has been drilled to date and the JORC Resource is
from surface to a depth of 3m. Exploration work has shown
continuation beyond 3m and also returned grades in excess of 26%
THM. Accordingly, the Company expects to be able to upgrade the
size of the resource in due course. Additional adjoining
exploration licences are also under application.
Given the very high grades and simplicity of processing, no
blasting or chemicals are required, operating costs for development
are expected to be low, whilst existing infrastructure, including a
newly constructed port 32km away, is expected to ensure the capex
for development of the Project is relatively low.
The Project has undergone extensive work over the last few years
and permitting is at an advanced stage. The Environmental Impact
Assessment ("EIA") is completed and the Company expects it to be
released for public comment shortly. Based on detailed interaction
with the relevant Sri Lankan authorities, the Company believes the
EIA is likely to be granted in Q1 2021, with an industrial mining
license subsequently issued soon thereafter.
Upon the issuance of an Industrial Mining License, the Company
will look to finalise ongoing discussions with potential offtake
partners. The Company envisages a demand for its product, which
will primarily consist of ilmenite, rutile, zircon and garnet. Any
offtake agreements are expected to provide some form of prepayment
or financing initiatives, thereby mitigating any amounts required
to be sourced by the Company to bring the Project into production.
Construction is targeted to commence in Q4 2021, with first
production in 2022.
Financial Review
The CML Group loss for the six months ended 30 September 2020
was $353,588 compared to a loss of $508,704 for the corresponding
period in 2019, reflecting a significant reduction in
administrative expenditure.
For the six months ended 30 September 2020, the CML Group's net
cash used in operating activities was $28,894 (2019: net used of
$255,526), reflecting the issue of shares in lieu of cash
settlement of expenses in the amount of $195,000 during the period
(2019: $Nil). The net cash outflows from investing activities
decreased from $171,097 for the six months ending 30 September 2019
to $43,047 for the six months ended 30 September 2020, as the CML
Group prioritized the achievement of a listing on AIM and fund
raising to advance the Project. During the reporting period, the
CML Group did not have any cash flows from financing activities,
compared to $362,527 proceeds from the issue in equity in the
corresponding period in 2019.
Cash and cash equivalents as at 30 September 2020 was $22,547
(31 March 2020: $114,150).
The CML Group total assets and net assets as at 30 September
2020 were $5,207,660 and $701,177 respectively (31 March 2020:
$5,243,739 and $850,580 respectively).
Outlook
We are very pleased with the positive reception the Proposed
Acquisition has received, as evidenced by the success of the
oversubscribed Placing, as well as acceptances from over 98% of
existing CML shareholders to the Offer, and the overwhelming
support from EPO shareholders to date.
Following approval at the upcoming General Meeting of EPO on 11
January 2021, we will look to move through the final key permitting
stages and expect to provide an update towards the end of Q1 2021.
The Project is one of the highest grade mineral sands deposits
globally and also benefits from a low capital cost requirement to
production. These contribute to an attractive, high margin
development. As we progress in 2021, we look forward to publishing
further details on the expected economics and profitability of the
Project, as well as providing operational updates as we target
moving towards the commencement of construction in H2 2021 and
first production in 2022.
Greg Martyr
Chairman - Capital Metals Limited
8 January 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2020
Unaudited Audited
Six months
to Year to
30 Sep 2020 31 Mar 2020
$ $
---------------------------------------- --- -------------- --------------
Non-Current Assets
Exploration and evaluation expenditure 5,116,410 5,053,037
Property, plant & equipment 64,121 71,891
5,180,531 5,124,928
---------------------------------------- --- -------------- --------------
Current Assets
Trade and other receivables 4,582 4,661
Cash and cash equivalents 22,547 114,150
---------------------------------------- --- -------------- --------------
27,129 118,811
---------------------------------------- --- -------------- --------------
Total Assets 5,207,660 5,243,739
---------------------------------------- --- -------------- --------------
Non- Current Liabilities
Borrowings 480,847 453,060
Deferred tax 440,784 440,784
Trade and other payables 3,162,500 3,162,500
---------------------------------------- --- -------------- --------------
4,084,131 4,056,344
Current Liabilities
Trade and other payables 422,352 336,815
---------------------------------------- --- -------------- --------------
422,352 336,815
---------------------------------------- --- -------------- --------------
Total Liabilities 4,506,483 4,393,159
---------------------------------------- --- -------------- --------------
Net Assets 701,177 850,580
---------------------------------------- --- -------------- --------------
Equity
Share premium 3 7,213,112 7,018,112
Other reserves 576,857 567,672
Retained losses (7,088,792) (6,735,204)
---------------------------------------- --- -------------- --------------
Total Equity 701,177 850,580
---------------------------------------- --- -------------- --------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2020
Unaudited Audited
Unaudited Period
Period ended ended Year ended
30 Sep 30 Sep 31 Mar
2020 2019 2020
Note $ $ $
---------------------------------- ----- -------------- ---------- ------------
Administrative expenses (353,695) (509,460) (1,029,644)
Operating Loss (353,695) (509,460) (1,029,644)
---------------------------------- ----- -------------- ---------- ------------
Finance income 107 756 5,628
Loss Before Taxation (353,588) (508,704) (1,024,016)
---------------------------------- ----- -------------- ---------- ------------
Income tax expense - - -
---------------------------------- ----- -------------- ---------- ------------
Loss for the period (353,588) (508,704) (1,024,016)
---------------------------------- ----- -------------- ---------- ------------
Loss for the period attributable
to owners of the Parent (353,588) (508,704) (1,024,016)
---------------------------------- ----- -------------- ---------- ------------
Other comprehensive income:
Items that may be reclassified
to profit or loss
Currency translation differences 9,185 187,037 209,014
Expiry of options during
the year - - 43,881
---------------------------------- ----- -------------- ---------- ------------
Total comprehensive income
attributable to owners of
the Parent (344,403) (321,667) (771,121)
---------------------------------- ----- -------------- ---------- ------------
Basic & diluted earnings
per shares - cents 2 (0.33) (0.49) (0.96)
---------------------------------- ----- -------------- ---------- ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2020
Retained
Share premium Other reserves losses Total
$ $ $ $
--------------------------- ------------- -------------- ----------- -----------
Unaudited
Balance as at 31 March
2019 6,658,301 402,539 (5,755,069) 1,305,771
------------- -------------- ----------- -----------
Loss for the period - - (508,704) (508,704)
Currency translation
differences - 187,037 - 187,037
------------- -------------- ----------- -----------
Total comprehensive
loss for the period - 187,037 (508,704) (321,667)
------------- -------------- ----------- -----------
Transactions with owners
Issue of ordinary shares 372,152 - - 372,152
Share issue costs - - - -
------------- -------------- ----------- -----------
Total transactions
with owners 372,152 187,037 (508,704) 50,485
------------- -------------- ----------- -----------
Balance as at 30 September
2019 7,030,453 589,576 (6,263,773) 1,356,256
------------- -------------- ----------- -----------
Audited
Balance as at 31 March
2019 6,658,301 402,539 (5,755,069) 1,305,771
------------- -------------- ----------- -----------
Loss for the period - - (1,024,016) (1,024,016)
Currency translation
differences - 209,014 - 209,014
Total comprehensive
loss for the period - 209,014 (1,024,016) (815,002)
Transactions with owners
Issue of ordinary shares 372,152 - - 372,152
Share issue costs (12,341) - - (12,341)
Expiry of options during
the year - (43,881) 43,881 -
Total transactions
with owners 359,811 (43,881) 43,881 359,811
------------- -------------- ----------- -----------
Balance as at 31 March
2020 7,018,112 567,672 (6,735,204) 850,580
------------- -------------- ----------- -----------
Unaudited
Balance as at 31 March
2020 7,018,112 567,672 (6,735,204) 850,580
Loss for the period - - (353,588) (353,588)
Currency translation
differences - 9,185 - 9,185
Total comprehensive
loss for the period - 9,185 (353,588) (344,403)
Transactions with owners
Issue of ordinary shares 195,000 - - 195,000
Total transactions
with owners 195,000 - - 195,000
------------- -------------- ----------- -----------
Balance as at 30 September
2020 7,213,112 576,857 (7,088,792) 701,177
------------- -------------- ----------- -----------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2020
Unaudited Audited
Unaudited Period ended Year ended
Period ended 30 Sep 31 Mar
30 Sep 2020 2019 2020
Note $ $ $
----------------------------------------- ---- ------------- ------------- -----------
Cash flows from operating activities
Loss before taxation (353,588) (508,704) (1,024,016)
Adjustments for:
Depreciation 6,103 13,501 17,905
Foreign exchange (6,135) 221,107 275,199
Profit on sale of property, plant
and equipment - - (4,396)
Interest expense 43,217 - 15,429
Interest income (107) (74) (1,232)
Shares issued in lieu of cash
settlement of expenses 3 195,000 - -
Changes in working capital:
Increase in trade and other receivables 79 86,127 105,909
Increase / (decrease) in trade
and other payables 5 85,537 (67,483) 48,321
Net cash used in operating activities (29,894) (255,526) (566,881)
------------- ------------- -----------
Investing activities
Interest received 107 74 1,232
Disposal of property, plant and
equipment - - 20,042
Purchase of property, plant and
equipment 4 (144) (397) (530)
Cash used in exploration activities (43,010) (170,774) (215,153)
------------- ------------- -----------
Net cash used in investing activities (43,047) (171,097) (194,409)
------------- ------------- -----------
Financing activities
Proceeds from borrowings - - 428,472
Proceeds from issue of equity - 362,527 362,527
Cost of share issue - - (12,341)
Net cash from financing activities - 362,527 778,658
------------- ------------- -----------
Net (decrease)/increase in cash
and cash equivalents (72,941) (64,096) 17,368
Cash and cash equivalents at beginning
of period 114,150 85,468 85,468
Exchange differences on cash (18,662) 13,991 11,314
Cash and cash equivalents and
end of period 22,547 35,363 114,150
------------- ------------- -----------
Major non-cash transactions
On 3 July 2019, the Company issued and allotted 55,000 new
ordinary shares with no par value at a price of $0.175 each as
consideration for consultants' fees.
On 1 July 2020, the Company transferred 1,300,000 ordinary
shares from treasury to various consultants (500,000 shares) and
directors (800,000 shares) in consideration for consulting and
advisory services at a deemed issue price of $0.15 per share.
1. Basis of preparing of financial statements
These condensed interim consolidated financial statements have
been prepared using policies based on International Financial
Reporting Standards (IFRS and IFRIC interpretations) issued by the
International Accounting Standards Board ("IASB") as adopted for
use in the EU. As permitted, these interim financial statements
have not been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting'.
The interim financial statements do not include all disclosures
that would otherwise be required in a complete set of financial
statements and should be read in conjunction with the audited
consolidated financial statements for the year ended 31 March 2020,
which were prepared in accordance with IFRSs as adopted by the
European Union. The Independent Auditors' Report on the financial
statements for the year ended 31 March 2020 was unqualified, but
drawing attention to an emphasis of matter that the recoverable
value of intangible assets is dependent on the Group obtaining the
necessary licence renewals.
The interim financial statements have also been prepared under
the historical cost convention, other than liabilities measured at
fair value through profit or loss.
The interim financial statements are presented in United States
Dollars rounded to the nearest dollar.
The comparative financial information for the year ended 31
March 2020 included within this report does not constitute the full
statutory accounts for that period.
After making enquiries, the directors have a reasonable
expectation that the Company has adequate access to financial
resources and support from key shareholders to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the
half-yearly financial statements.
The condensed consolidated interim financial statements for the
period ended 30 September 2020 have not been audited, nor have they
been reviewed by the Company's auditors in accordance with the
International Standard on Review Engagements 2410 issued by the
Auditing Practices Board. The figures were prepared using
applicable accounting policies and practices consistent with those
adopted in the statutory annual financial statements for the year
ended 31 March 2020.
The Board of Directors of the Company approved these interim
financial statements on 8 January 2021.
2. Earnings per share
The calculation of the basic and diluted earnings per share is
calculated by dividing the loss for the period from continuing
operations for the Group by the weighted average number of ordinary
shares in issue during the period.
Period Period Year ended
ended 30 ended 30 31 Mar
Sept 2020 Sept 2019 2020
$ $ $
------------------------------------ ----------- ----------- -----------
Loss for the period (353,588) (508,704) (1,024,016)
Weighted average number of shares
in issue 106,912,451 104,785,866 106,912,451
Basic and diluted earnings per
share (0.33) (0.49) (0.96)
----------- ----------- -----------
There is no difference between the basic and diluted loss per
share for each period as the effect would be to decrease earnings
per share.
3. Share premium and other reserves
Number of shares Share premium
$
------------------------------------- ---------------- -------------
Issued and fully paid
As at 31 March 2019 104,785,866 6,658,301
------------------------------------- ---------------- -------------
Issue of new shares - 11 April 2019 382,300 66,902
Issue of new shares - 26 April 2019 300,000 52,500
Issue of new shares - 13 May 2019 810,714 141,875
Issue of new shares - 3 July 2019
(1) 633,571 110,875
Share issue costs - (12,341)
------------------------------------- ---------------- -------------
As at 31 March 2020 106,912,451 7,018,112
------------------------------------- ---------------- -------------
Transfer of treasury shares - 1 July
2020 (2) - 195,000
As at 30 September 2020 106,912,451 7,213,112
------------------------------------- ---------------- -------------
(1) 55,000 shares were issued as settlement of services to the
Company in lieu of cash for a value of $9,625
(2) 1,300,000 treasury shares were transferred to various
consultants and directors (800,000 shares) in consideration for
consulting and advisory services at a deemed issue price of $0.15
per share.
Share capital is the amount subscribed for share at nominal
value. The nominal value of shares is $0.00.
Share premium is the amount subscribed for share capital in
exercise of nominal value.
30 Sept 31 March
2020 2020
$ $
------------------------------------- ------- --------
Foreign currency translation reserve 295,547 286,362
Share option reserve 281,310 281,310
------- --------
576,857 567,672
------- --------
4. Events after the reporting period
On 13 October 2020, the Company agreed with director Michael
Frayne for the provision of a further $32,000 in funds to the
Company for working capital purposes, through an amendment to the
existing loan agreement, increasing the principal to $112,000.
On 17 October 2020, the Company transferred 975,000 shares from
treasury to the holders of 10 million options over 10 million
ordinary shares in the Company, with an exercise price of US$0.15
per share and an expiry date of 3 August 2021 ("the Options"), in
consideration for the cancellation of the Options.
On 17 October 2020, the Company cancelled 3,131,667 shares held
in treasury, resulting in nil shares being held in treasury.
On 21 October 2020, AIM quoted EPO announced that it had reached
conditional agreement with the CML Majority for EPO to acquire
their 51.4 per cent interest in the Company in exchange for
ordinary shares in EPO.
The Proposed Acquisition constitutes a reverse takeover
transaction pursuant to the AIM Rules for Companies. Following the
Proposed Acquisition, the Company's business will constitute all of
EPO's business.
EPO issued the same offer to the remaining shareholders in the
Company which, if accepted, will result in the acquisition of up to
100 per cent. of the entire issued share capital of the Company for
an aggregate total consideration of GBP15.84 million by the issue
of up to 132,000,000 new Ordinary Shares in EPO. This equates to a
price of 12 pence per Consideration Share to be issued following a
proposed 20:1 share consolidation of EPO (equivalent to 0.6 pence
per existing Ordinary Share of EPO).
The Offer by EPO to all CML shareholders specified, inter alia,
the following terms:
- In consideration for the acquisition of the CML Shares, EPO
proposed to issue 1.235 Consideration Shares for every 1 CML Share
sold.
- That completion of the Proposed Acquisition is conditional, amongst other things, on
o the passing of resolutions at a general meeting of EPO on 11
January 2021 to approve: the Proposed Acquisition, a 20:1 share
consolidation, and a placing of, and subscription for, the Placing
Shares and Subscription Shares in EPO; and
o admission of the Placing Shares, Subscription Shares and
Consideration Shares to trading on AIM becoming effective on or
before 31 March 2021.
Completion of the Offer is conditional on acceptances being
received from the holders of CML Shares holding more than 75 per
cent. of the issued CML Shares (unless otherwise agreed between EPO
and the Company, with the approval of EPO's Nominated Adviser).
As at the date these interim financial statements were approved
by the Board of Directors of the Company on 8 January 2021, EPO had
received acceptances from the holders of CML Shares holding 98.76
per cent. of the issued CML Shares.
Completion of the Proposed Acquisition is expected to take place
on 13 January 2021.
On 12 November 2020, the Company agreed with EPO for the
provision of a loan of $50,000 for working capital purposes. The
loan attracts an interest rate of 1% per month which if accrued
will compound monthly. The loan is repayable within 12 months of
the drawdown.
On 21 November 2020, convertible bonds issued by the Company in
the principal amount of $282,630 were converted into 1,906,713 CML
Shares together with interest of $7,718 which converted into 55,540
CML Shares. The balance of the convertible bonds issued by the
Company in the principal amount of $75,000 are due to be paid on
completion of the Proposed Acquisition, together with $33,705 of
the interest that accrued in respect of the convertible bonds.
5. General information
The principal activity of the Company and its subsidiaries is
the exploration and development of mineral sands resources in Sri
Lanka.
The Company is incorporated and domiciled in the British Virgin
Islands. The address of its registered office is Vistra Corporate
Services Centre, Wickhams Cay II, VG1110, Road Town, Tortola,
British Virgin Islands.
6. Availability of this announcement
Copies of this announcement is available from EPO's website
www.epoil.co.uk and from 13 January 2021 at
www.capitalmetals.com.
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IR FLFIFLSITIIL
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