TIDMBKY

RNS Number : 7658R

Berkeley Energia Limited

10 March 2021

BERKELEY EMERGIA LIIMITED

Interim Financial Report for the Half Year Ended 31 December 2020

Informe financiero provisional correspondiente al semestre terminado el 31 de diciembre de 2020

abn 40 052 468 569

CORPORATE DIRECTORY | DIRECTORIO CORPORATIVO

 
 Directors                                Solicitors 
  Mr Ian Middlemas Chairman                Spain 
  Mr Robert Behets Acting Managing         Herbert Smith Freehills, S.L.P 
  Director 
  Mr Adam Parker Non-Executive Director    United Kingdom 
  Mr Deepankar Panigrahi Non-Executive     Bryan Cave Leighton Paisner LLP 
  Director 
                                           Australia 
  Company Secretary                        Thomson Geer 
  Mr Dylan Browne 
                                           Bankers 
  Madrid Head Office                       Spain 
  Calle Capitán Haya 1                Santander Bank 
  Planta 15. Edificio Eurocentro. 
  28020 Madrid, Spain                      Australia 
                                           National Australia Bank Ltd 
  Project Office                           Australia and New Zealand Banking 
  Berkeley Minera España, S.A.        Group Ltd 
  Carretera SA-322, Km 30 
  37495 Retortillo                         Share Registry 
  Salamanca                                Spain 
  Spain                                    Iberclear 
  Telephone: +34 923 193 903               Plaza de la Lealtad, 1 
                                           28014 Madrid, Spain 
  Registered Office 
  Level 9, 28 The Esplanade                United Kingdom 
  Perth WA 6000                            Computershare Investor Services 
  Australia                                PLC 
  Telephone: +61 8 9322 6322               The Pavilions, Bridgewater Road, 
  Facsimile: +61 8 9322 6558               Bristol BS99 6ZZ 
                                           Telephone: +44 370 702 0000 
  Website 
  www.berkeleyenergia.com                  Australia 
                                           Computershare Investor Services 
  Email                                    Pty Ltd 
  info@berkeleyenergia.com                 Level 11, 172 St Georges Terrace 
                                           Perth WA 6000 
  Auditor                                  Telephone: +61 8 9323 2000 
  Spain 
  Ernst & Young España                Stock Exchange Listing 
                                           Spain 
  Australia                                Madrid, Barcelona, Bilboa and 
  Ernst and Young Australia - Perth        Valencia Stock Exchanges (Code: 
                                           BKY) 
 
                                           United Kingdom 
                                           London Stock Exchange (LSE Code: 
                                           BKY) 
 
                                           Australia 
                                           Australian Securities Exchange 
                                           (ASX Code: BKY) 
 
 
 
 CONTENTS | CONTENIDO 
 
 Directors' Report 
 Directors' Declaration 
 Consolidated Statement of Profit or Loss and Other Comprehensive 
  Income 
 Consolidated Statement of Financial Position 
 Consolidated Statement of Changes in Equity 
 Consolidated Statement of Cash Flows 
 Condensed Notes to the Financial Statements 
 To view the following sections as well as all illustrations and 
  figures, please refer to the the full version of the Interim 
  Financial Report on our website at www.berkeleyenergia.com : 
 Auditor's Independence Declaration 
 Auditor's Review Report 
 

DIRECTORS' REPORT

The Board of Directors of Berkeley Energia Limited present their report on the consolidated entity of Berkeley Energia Limited ("the Company" or "Berkeley") and the entities it controlled during the half year ended 31 December 2020 ("Consolidated Entity" or "Group").

DIRECTORS

The names of the Directors of Berkeley in office during the half year and until the date of this report are:

   Mr Ian Middlemas                               Chairman 
   Mr Robert Behets                                Non-Executive Director (Acting Managing Director) 

Mr Nigel Jones Non-Executive Director (resigned 25 November 2020)

   Mr Adam Parker                                  Non-Executive Director 
   Mr Deepankar Panigrahi                   Non-Executive Director 

Unless otherwise disclosed, Directors were in office from the beginning of the half year until the date of this report.

OPERATING AND FINANCIAL REVIEW

Summary

Summary for and subsequent to the half year end include:

   --       Permitting Update: 

Berkeley's focus continues to be on progressing the approvals required to commence construction of the Salamanca mine and bring it into production.

In August 2020, the Urbanism License ("UL") was granted by the Municipality of Retortillo under the terms established in the Urbanism Law and Urban Planning Regulations of Castilla y León. The UL is a land use permit needed for construction works at the Salamanca mine. The grant of the UL was a significant permitting milestone for Berkeley and a positive step in the development of the project.

Following the grant of the UL, the Company received formal notification from the Ministry for Ecological Transition and the Demographic Challenge ("MITECO") that it had been granted the renewal of the Initial Authorisation for the uranium concentrate plant as a radioactive facility at the Salamanca project ("NSC I") until there is a resolution on the Authorisation for Construction for the uranium concentrate plant as a radioactive facility ("NSC II"). This renewal follows the Nuclear Safety Council ("NSC") issuing a favourable report for the extension of the validity of NSC I in July 2020.

NSC I was granted in September 2015 by the then Ministry of Industry, Energy and Tourism, with a 5-year validity period. The favourable report issued by the NSC in July 2020 considered that the circumstances and characteristics of the uranium concentrate plant are the same as those contained in the Initial Authorisation issued in 2015.

The Company formally submitted updated official documentation in relation to the NSC II in March 2020. The Company has subsequently held numerous meetings with the NSC technical team to discuss and clarify minor queries on the updated documentation. As requested, the Company submitted written responses to these queries, along with additional technical information, to the NSC in September 2020 and more recently in early March 2021. The next step in the process is for the NSC technical team to finalise their report and submit it to the NSC Board for ratification.

With more than 120 previous permits and favourable reports granted by the relevant authorities at the local, regional, federal and European Union levels, NSC II is the only pending approval required to commence full construction of the Salamanca mine.

The Company continues to engage with the relevant authorities to advance the approvals process for the Salamanca mine and maintain strong engagement with all key stakeholders in Spain.

   --      Outstanding Contribution to Sustainable Mining - Europe 2020 Award : 

In December 2020, the Company was selected as the winner of the Outstanding Contribution to Sustainable Mining - Europe category in the 2020 Capital Finance International ("CFI.co") Sustainability Awards.

The CFI.co Sustainability Awards seek to recognise the best responses to sustainability issues by country or region, identifying companies that stand out as examples to others across the world.

Berkeley is extremely pleased to be recognised for its efforts in key area of Sustainable Mining. The Company's Salamanca mine is being developed to the highest international standards and the Company's commitment to health, safety and the environment is a priority. It holds certificates in Sustainable Mining (UNE 22470-80), Environmental Management (ISO 14001), and Health and Safety (ISO 45001) which were awarded by AENOR, an independent Spanish government agency.

   --      Uranium market: 

The uranium spot price closed 2020 at US$30.00 per pound having drifted slightly lower after a period of strong growth in the first half of 2020.

The market has however, been buoyed towards the end of the half year due to recent events including:

-- Utilities have increased their spot market purchases, especially in the US, subsequent to the finalisation of the amendment to the Russian Suspension Agreement in early October 2020;

-- The US Congress tabled the artisan legislation aimed at supporting the US' nuclear infrastructure. The proposed "American Nuclear Infrastructure Act of 2020", provides that a national strategic uranium reserve be funded and a carbon emissions avoidance programme be established to support continued operation of reactors at risk of premature shutdown;

-- The UK published an energy policy paper entitled "Ten Point Plan for a Green Industrial Revolution," which incorporated an Advanced Nuclear Fund. The goal of the fund is to provide financial support for small modular reactor development and advanced modular reactors; and

-- The Biden Administration has proposed a sweeping clean energy plan including funding for advanced nuclear reactors and small modular reactors.

   --      Spanish Regulatory Regime : 

During the half year, the Company noted that the Spanish Supreme Court had rejected an appeal filed by a group of opposition parties against NSC I.

In September 2019, the Spanish National Court fully dismissed a contentious-administrative appeal filed by the group of opposition parties against NSC I. Subsequent to the National Court ruling, the group of opposition parties appealed to the Supreme Court. The Supreme Court has confirmed all aspects of the ruling of the National Court and thus, has confirmed the legality of NSC I. As noted above, MITECO has granted renewal of NSC I through until there is a resolution on NSC II.

In October 2020, parliamentary groups of two political parties in the Spanish Government submitted a series of proposed amendments in October 2020 to a draft climate change and energy transition bill which was originally presented to the Spanish Parliament in May 2020.

Under one of the proposed amendments, investigation and exploitation of radioactive minerals (e.g. uranium) would be prohibited in the Spanish territory and any open proceedings related to the authorisation of radioactive facilities of the nuclear fuel cycle for the processing of such minerals would be closed.

Subsequent to the end of the half year end, the Company noted media reports following a meeting of the Ecological Transition 'Ponencia' ("Ponencia") held in February 2021 that discussed changes to the proposed amendment to the draft climate change and energy transition bill relating to the investigation and exploitation of radioactive minerals. Under the modified amendment proposed by the Ponencia:

-- New applications for exploration, investigation or direct exploitation concessions for radioactive materials, nor their extensions, would not be accepted as of the entry into force of this law.

-- Existing concessions, and open proceedings and applications related to these, would continue as per normal based on the current legislation.

Importantly under the modified amendment, existing rights for exploration, investigation and exploitation concessions would remain in force during their validity period. Existing proceedings underway would also continue under the legal framework set up by the current regulations.

The modified amendment proposed by the Ponencia must now be reviewed and approved or rejected by the Commission of Ecological Transition of the Parliament, and subsequently follow the same process in the Spanish Senate. Accordingly, the proposed modified amendment relating to the investigation and exploitation of radioactive minerals may or may not be included in the final draft of the climate change and energy transition bill.

Berkeley's position on any adverse changes that may be included in the final draft of the climate change and energy transition bill is clear: prohibition of economic activities in Spain with no justified reasons is contrary to the Spanish Constitution and to the legal rights recognised by other international instruments. In particular, it must be taken into account that the Company currently holds legal, valid and consolidated rights for the investigation and exploitation of its mining projects, including a valid 30-year mining licence (renewable for two further periods of 30 years) for the Salamanca mine. The approval of any amendment which would imply a retroactive measure which expropriates the legal rights of Berkeley with no justification is not acceptable.

Operations

Permitting Update

During the half year, the Company received formal notification from the MITECO that it had been granted the renewal of the NSC I until there is a resolution on NSC II. This renewal follows the NSC issuing a favourable report for the extension of the validity of NSC I in July 2020.

NSC I was granted in September 2015 by the then Ministry of Industry, Energy and Tourism, with a 5-year validity period. The favourable report issued by the NSC in July considered that the circumstances and characteristics of the uranium concentrate plant are the same as those contained in the Initial Authorisation issued in 2015.

The Company formally submitted updated official documentation in relation to the NSC II in March 2020. The Company has subsequently held numerous meetings with the NSC technical team to discuss and clarify minor queries on the updated documentation. As requested, the Company submitted written responses to these queries, along with additional technical information, to the NSC in September 2020 and more recently in early March 2021. The next step in the process is for the NSC technical team to finalise their report and submit it to the NSC Board for ratification.

This was proceeded by the grant of the UL by the Municipality of Retortillo under the terms established in the Urbanism Law and Urban Planning Regulations of Castilla y León. The UL is a land use permit needed for construction works at the Salamanca mine. The grant of the UL was a significant permitting milestone for Berkeley and a positive step in the development of the project.

With more than 120 previous permits and favourable reports granted by the relevant authorities at the local, regional, federal and European Union levels, NSC II is the only pending approval required to commence full construction of the Salamanca mine.

The Company continues to engage with the relevant authorities and maintain strong engagement with all key stakeholders in Spain, as it progresses the approval process required to commence full construction of the Salamanca mine and bring it into production .

In December 2020, the Company was selected as the winner of the Outstanding Contribution to Sustainable Mining - Europe category in the 2020 CFI.co Sustainability Awards.

The CFI.co Sustainability Awards seek to recognise the best responses to sustainability issues by country or region, identifying companies that stand out as examples to others across the world.

The CFI.co award selection panel uses a wide range of criteria to help inform decisions regarding the awards, in order to identify top performing companies not based on the size of the nominated organisation but rather on its excellence in sustainability.

Berkeley is extremely pleased to be recognised for its efforts in key area of Sustainable Mining. The Company's Salamanca mine is being developed to the highest international standards and the Company's commitment to health, safety and the environment is a priority. It holds certificates in Sustainable Mining (UNE 22470-80), Environmental Management (ISO 14001), and Health and Safety (ISO 45001) which were awarded by AENOR, an independent Spanish government agency.

These management systems ensure that Company procedures are compliant with current regulations, ensure that the environment is protected, the project is sustainable, and that all activities are carried out with respect for and in collaboration with the local communities.

The Company also strives to uphold the United Nation's Sustainable Development Goals ("SDGs"). A recent detailed review of the Company's business strategy and activities in Spain has shown a close alignment with the SDGs (compliance with 14 out of the 17 SDGs) demonstrating a commitment to the sustainable development that will continue throughout the execution of the entire project.

The Company's sustainability strategy is driven by a Programme of Objectives defined in 2020, which strongly contributes to the achievement of the SDGs. The Company is working according to the following key focuses:

Ecodesign: The choice of transfer mining that minimises the footprint of the project, the closed circuit of industrial water and zero discharge, as well as heap leaching (that does not generate tailings in the form of sludge) are some examples of ecodesign.

Eco-Innovation: The re-use of waste-water and sludge from municipalities for industrial use will minimise the flow of water captured from streams and produce materials for the revegetation of the site.

Circular Economy: Concerned with the Life Cycle perspective, the objective is maximum efficiency of resources used. This strategy focuses on responsible consumption, minimising waste, optimising important resources such as water and energy, as well as reducing CO(2) emissions. The objective is to minimise the environmental footprint of activities.

Eco-efficiency: Digitisation of the Company contributes to the optimisation of resources, which translates into minimising the environmental impact. Likewise, installing LED lighting and implementing Fleet Control for the optimisation of material movement will help protect the environment while improving economic performance.

Sustainable performance: Committed to creating employment in the province of Salamanca, the project will create 500 jobs during construction, and over 1000 direct and indirect jobs in the operational phase - compatible with existing activities (since 2012 the Company has allowed neighbours to make temporary use of its land for agricultural activity).

Environmental and sustainability training: Berkeley has set up a training centre for staff and local people to be trained in new skills. An interactive space will be created for environmental education and the dissemination of information regarding the importance of sustainability.

Spanish Regulatory Regime Update

During the half year, the Company noted that the Spanish Supreme Court had rejected an appeal filed by a group of opposition parties against NSC I.

In September 2019, the Spanish National Court fully dismissed a contentious-administrative appeal filed by the group of opposition parties against NSC I. Subsequent to the National Court ruling, the group of opposition parties appealed to the Supreme Court. The Supreme Court has now confirmed all aspects of the ruling of the National Court and thus, has confirmed the legality of NSC I. As noted above, MITECO has granted renewal of NSC I through until there is a resolution on NSC II.

In October 2020, Parliamentary groups of two political parties in the Spanish Government (Unidas Podemos and PSOE) submitted a series of proposed amendments to the draft climate change and energy transition bill which was originally presented to the Spanish Parliament in May 2020.

Under one of the proposed amendments, investigation and exploitation of radioactive minerals (e.g. uranium) would be prohibited in the Spanish territory and any open proceedings related to the authorisation of radioactive facilities of the nuclear fuel cycle for the processing of such minerals would be closed.

Subsequent to the end of the half year end, the Company noted media reports following a meeting of the Ponencia held in February 2021 that discussed changes to the proposed amendment to the draft climate change and energy transition bill relating to the investigation and exploitation of radioactive minerals. Under the modified amendment proposed by the Ponencia:

-- New applications for exploration, investigation or direct exploitation concessions for radioactive materials, nor their extensions, would not be accepted as of the entry into force of this law.

-- Existing concessions, and open proceedings and applications related to these, would continue as per normal based on the current legislation.

The modified text proposed by the Ponencia establishes that "As of the entry into force of this law, no new applications will be accepted for the granting of exploration permits, investigation permits or direct exploitation concessions, nor their extensions, regulated under Law 22/1973, of July 21, on mines of radioactive minerals, as defined in Law 25/1964, of April 29, on nuclear energy, when such resources are extracted for their radioactive, fissile or fertile properties. In addition, applications for the authorisation of new radioactive facilities of the nuclear fuel cycle for the processing of radioactive minerals, as defined in the Regulation on nuclear and radioactive facilities, will no longer be accepted." Importantly, existing rights for exploration, investigation and exploitation concessions would remain in force during their validity period. Existing proceedings underway would also continue under the legal framework set up by the current regulations.

It is important to note that this remains only a proposed amendment to the draft climate change and energy transition bill proposed by the Ponencia that must now be reviewed and approved or rejected by the Commission of Ecological Transition of the Parliament, and subsequently follow the same process in the Senate. The processes in both the Parliament and the Senate must be completed and consistent, and the proposed amendment supported by a majority of votes in both Commissions for it to be approved. Accordingly, the proposed modified amendment relating to the investigation and exploitation of radioactive minerals may or may not be included in the final draft of the climate change and energy transition bill.

Berkeley's position on the any adverse changes that may be included in the final draft of the climate change and energy transition bill is clear: prohibition of economic activities in Spain with no justified reasons is contrary to the Spanish Constitution and to the legal rights recognised by other international instruments. In particular, it must be taken into account that the Company currently holds legal, valid and consolidated rights for the investigation and exploitation of its mining projects, including a valid 30-year mining licence (renewable for two further periods of 30 years) for the Salamanca mine. The approval of any amendment which would imply a retroactive measure which expropriates the legal rights of Berkeley with no justification is not acceptable.

Uranium market:

The uranium spot price closed 2020 at US$30.00 per pound having drifted lower, after a period of strong growth in the first half of 2020.

The market has however been buoyed towards the end of the half year due to recent events, including:

-- Spot market purchases by utilities have increased, especially in the US, subsequent to the finalisation of the amendment to the Russian Suspension Agreement in early October 2020;

-- The US Congress tabled the artisan legislation aimed at supporting the US' nuclear infrastructure. The proposed "American Nuclear Infrastructure Act of 2020", provides that a national strategic uranium reserve be funded and a carbon emissions avoidance programme be established to support continued operation of reactors at risk of premature shutdown;

-- The UK published an energy policy paper entitled "Ten Point Plan for a Green Industrial Revolution," which incorporated an Advanced Nuclear Fund. The goal of the fund is to provide financial support for small modular reactor development and advanced modular reactors; and

-- The Biden Administration has proposed a sweeping clean energy plan including funding for advanced nuclear reactors and small modular reactors.

The COVID-19 pandemic has disrupted global uranium production, adding to the supply curtailments that have occurred in the industry for many years, creating uncertainty in the nuclear fuel supply chain.

Analysts expect further tightening of market conditions as the current structural supply deficit in the global uranium market is exacerbated by these, and possible other, COVID-19 supply disruptions. The current market uncertainty is also expected to heighten concerns about the security of future supply.

IBEX Small Cap Index

During the half year, the Technical Advisory Committee of the IBEX INDICES included Berkeley in the IBEX SMALL CAP(R) index. The index adjustment took effect on the Spanish Stock Exchanges on 19 October 2020.

The IBEX indices measure the performance of securities listed on the Spanish Stock Market. The IBEX SMALL CAP(R) index is a market capitalisation weighted index adjusted by free float. It is Euro-denominated and calculated in real-time within the European time zone.

The IBEX SMALL CAP(R) index is composed of 30 securities listed on the Spanish Stock Exchanges that follow certain requirements in terms of stock market capitalisation, free floating capital, and annual rotation of the free float capitalisation.

The Technical Advisory Committee of the IBEX INDICES reviews and adjusts the composition of IBEX SMALL CAP(R) index on a biannual basis.

COVID-19:

Authorities in Spain, following a second surge in COVID-19 cases during the half year, tightened measures imposed to stem the spread of the disease with many Spanish regions being subject to entry and exit restrictions, including Madrid, the nearest large city to the Salamanca project.

Many regional authorities have also implemented tighter restrictions on gatherings and businesses, including the requirement to implement strict hygiene and social distancing measures.

The ongoing nationwide state of emergency will remain in effect until at least 9 May 2021, which empowers the government to limit certain rights, including freedom of movement. Accordingly, social gatherings are limited to six people nationwide and a 11pm to 6am curfew is in effect throughout Spain.

International travel to and from Spain is still possible, subject to travellers possessing a negative COVID-19 test which must be taken within 72 hours prior to arrival.

All of the Berkeley team based in Spain are safe and well. Consistent with current Government guidelines, the Company has continued its 'work from home' policy. Regular communication has however, been maintained with the relevant officials from the NSC and the federal, regional and local governments to ensure the permitting processes continued to advance.

Corporate:

On 25 November 2020, Mr Nigel Jones resigned as a Director of Berkeley following the completion of the Company's Annual General Meeting in November 2020. Mr Jones currently holds the position of Managing Director of the Simandou iron ore project and corporate governance policies at Rio Tinto did not allow Mr Jones to continue to sit on other publicly listed boards.

The net loss of the Consolidated Entity for the half year ended 31 December 2020 was $32,579,000 (31 December 2019: profit of $5,680,000 Significant items contributing to the current half year loss and the substantial differences from the previous half year include the following:

(i) Exploration and evaluation expenses of $2,555,000 (31 December 2019: $2,580,000), which is attributable to the Group's accounting policy of expensing exploration and evaluation expenditure incurred subsequent to the acquisition of the rights to explore and up to and until a decision to develop or mine is made;

(ii) Business development expenses of $43,000 (31 December 2019: $772,000), which includes the Group's investor relations activities including but not limited to public relations costs, marketing and digital marketing, broker fees, travel costs, conference fees, business development consultant fees and stock exchange admission fees;

(iii) Non-cash fair value movement loss of $21,989,000 (31 December 2019: $1,380,000) on the convertible note and unlisted options issued to the Oman Investment Authority ("OIA") (the "OIA Options"). These financial liabilities increase or decrease in size as the share price of the Company fluctuates. The Company has determined that the convertible note will convert at the floor price of GBP0.27. This has resulted in the large fair value loss for the six month period and contributed to the increase in the financial liability at 31 December 2020. As the convertible note and OIA Options convert into shares, the liabilities will be reclassified to equity and will require no cash settlement by the Company.

Commercially, the intentions of both OIA and the Company prior to completing the convertible note transaction was to enter into an equity type deal. The Company has however complied with the accounting standards and accounted for the convertible note as a financial liability.

Under the ASX Listing Rules, the convertible note and OIA options are defined as equity securities.

Due to the conversion terms of the convertible note leading to the issuance of a variable number of ordinary shares in the Company in return for conversion of the convertible note, the Company is required under the accounting standards to account for the convertible note as a current financial liability at fair value through profit and loss, despite the Company having no obligation to extinguish the convertible note using its cash resources;

(iv) Recognition of interest income of $8,000 (31 December 2019: $829,000). The decrease in interest is a direct result of significantly lower interest rates being offered by the banks on USD term deposits due to current global market conditions and the impact of Covid-19; and

(v) Foreign exchange loss of $7,401,000 (31 December 2019: $998,000) largely attributable on the US$53 million held in cash by the Group following the strengthening of the AUD against the USD by some 12% during the half year period.

Financial Position

At 31 December 2020, the Group is in an extremely strong financial position with cash reserves of $79,760,000 (30 June 2020: $91,767,000).

The Group had net assets of $3,361,000 at 31 December 2020 (30 June 2020: $36,211,000), a decrease of 90% compared with 30 June 2020. The decrease is consistent and largely attributable to the increase in non-cash financial liabilities (the convertible note and OIA Options).

Berkeley's strategic objective is to create long-term shareholder value with the Company's primary focus continuing to be on progressing the approvals required to commence construction of the Salamanca mine and bring it into production.

To achieve its strategic objective, the Company currently has the following business strategies and prospects:

-- Continue to progress permitting and maintain the required licences to develop and operate at the Salamanca mine;

-- Advance the Salamanca mine through the development phase into the main construction phase and then into production;

-- Progress with seeking further offtake partners. The Company has maintained its preference to combine fixed and market related pricing across its contracts in order to secure positive margins in the early years of production whilst ensuring the Company remains exposed to potentially higher prices in the future; and

   --      Assess other mine development opportunities at the Salamanca mine. 

As with any other mining projects, all of these activities are inherently risky and the Board is unable to provide certainty that any or all of these activities will be able to be achieved. T he material business risks faced by the Company that are likely to have an effect on the Company 's future prospects , and how the Company manages these risks, include but are not limited to the following:

-- Mining licences and government approvals required - With the mining licence, environmental licence and the UL already obtained at the Salamanca mine, the only major approval to commence full construction at the Salamanca mine is NSC II.

However, various appeals have also been made against the permits and approvals discussed above, including the UL and NSC I, as allowed for under Spanish law. The Company expects that further appeals will be made against these and future authorisations and approvals in the ordinary course of events. Whilst none of these appeals have been finally determined, no precautionary or interim measures have been granted in relation to the appeals regarding the award of licences and authorisations at the Salamanca mine to date. However, the successful development of the Salamanca mine will be dependent on the granting of all permits and licences necessary for the construction and production phases, in particular the award NSC II which will allow for the construction of the plant as a radioactive facility.

The Company has to date received more than 120 favourable reports and permits for the development of the mine, however with any development project, there is no guarantee that the Company will be successful in applying for and maintaining all required permits and licences to complete construction and subsequently enter into production. If the required permits and licences are not obtained, then this could have a material adverse effect on the Group's financial performance, which may lead to a reduction in the carrying value of assets and may materially jeopardise the viability of the Salamanca mine and the price of its Ordinary Shares.

Further, the Company's exploration and any future mining activities are dependent upon the maintenance and renewal from time to time of the appropriate title interests, licences, concessions, leases, claims, permits, environmental decisions, planning consents and other regulatory consents which may be withdrawn or made subject to new limitations. The maintaining or obtaining of renewals or attainment and grant of title interests often depends on the Company being successful in obtaining and maintaining required statutory approvals for its proposed activities. The Company closely monitors the status of its mining permits and licences and works closely with the relevant Government departments in Spain to ensure the various licences are maintained and renewed when required. However, there is no assurance that such title interests, licenses, concessions, leases, claims, permits, decisions or consents will not be revoked, significantly altered or not renewed to the detriment of the Company or that the renewals and new applications will be successful;

-- The Company's activities are subject to Government regulations and approvals - Any material adverse changes in government policies or legislation of Spain that affect uranium mining, processing, development and mineral exploration activities, income tax laws, royalty regulations, government subsidies and environmental issues may affect the viability and profitability of the Salamanca mine. No assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could adversely impact the Group's mineral properties. As discussed above, a series of proposed amendments to the draft climate change and energy transition bill in Spain has been proposed whereby a meeting of the Ponencia was held in February 2021 that discussed changes to this proposed draft climate change and energy transition bill. Under the modified amendment proposed by the Ponencia:

(i) New applications for exploration, investigation or direct exploitation concessions for radioactive materials, nor their extensions, would not be accepted as of the entry into force of this law; and (ii) Existing concessions, and open proceedings and applications related to these, would continue as per normal based on the current legislation. It is important to note that this remains only a proposed amendment to the draft climate change and energy transition bill proposed by the Ponencia that must now be reviewed and approved or rejected by the Commission of Ecological Transition of the Parliament, and subsequently follow the same process in the Senate. Berkeley's position on any adverse changes that may be included in the final draft of the climate change and energy transition bill the content of this proposed amendment is clear: prohibition of economic activities in Spain with no justified reasons is contrary to the Spanish Constitution and to the legal rights recognised by other international instruments. In particular, it must be taken into account that the Company currently holds legal, valid and consolidated rights for the investigation and exploitation of its mining projects, including a valid 30-year mining licence (renewable for two further periods of 30 years) for the Salamanca mine. The approval of any amendment which would imply a retroactive measure which expropriates the legal rights of Berkeley with no justification is not acceptable. However, if the draft climate change and energy transition bill is approved and passed, then this may adversely effective the viability of the Salamanca mine and the price of the Company's Ordinary Shares;

-- Additional requirements for capital - The issue of the US$65 million Convertible Note and OIA Options to OIA has provided the Company the funds to complete the upfront capital items at the Salamanca mine, subject to the OIA Options being exercised early. Due to delays in the receipt of NSC II, the Company has been funding its ongoing working capital requirements which has reduced the amount available to fund full construction. This position will continue for so long as NSC II remains outstanding, unless the OIA Options are exercised early. As a result of the delay, the Company expects that following receipt of NSC II and in order to fully fund the full construction of the Salamanca mine into steady state production, it will be required to raise additional funding in order to meet the capital costs of the mine development and to fund working capital until positive cash flows are achieved ;

-- The Company may be adversely affected by fluctuations in commodity prices - The price of uranium has fluctuated widely since the Fukushima nuclear power plant disaster in March 2011 and is affected by further numerous factors beyond the control of the Company. Future production, if any, from the Salamanca mine will be dependent upon the price of uranium being adequate to make these properties economic. The Company currently does not engage in any hedging or derivative transactions to manage commodity price risk, but as the Company's Project advances, this policy will be reviewed periodically;

-- The Group's projects are not yet in production - As a result of the substantial expenditures involved in mine development projects, mine developments are prone to material cost overruns versus budget. The capital expenditures and time required to develop new mines are considerable and changes in cost or construction schedules can significantly increase both the time and capital required to build the mine; and

-- Global financial conditions may adversely affect the Company's growth and profitability - Many industries, including the mineral resource industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and energy markets, and a lack of market liquidity. A slowdown in the financial markets or other economic conditions may adversely affect the Company's growth and ability to finance its activities.

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD

(i) On 24 February 2021, the company announced that it had noted media reports following a meeting of the Ponencia that discussed changes to the proposed amendment to the draft climate change and energy transition bill relating to the investigation and exploitation of radioactive minerals. Under the modified amendment proposed by the Ponencia: (i) New applications for exploration, investigation or direct exploitation concessions for radioactive materials, nor their extensions, would not be accepted as of the entry into force of this law; and (ii) Existing concessions, and open proceedings and applications related to these, would continue as per normal based on the current legislation. It is important to note that this remains only a modified amendment to the draft climate change and energy transition bill proposed by the Ponencia that must now first be reviewed and approved or rejected under Spanish law.

Other than as disclosed above, there were no significant events occurring after balance date requiring disclosure.

ROUNDING

The amounts contained in the half year financial report have been rounded to the nearest $1,000 (where rounding is applicable) where noted ($000) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191. The Company is an entity to which this legislative instrument applies.

AUDITOR'S INDEPENCE DECLARATION

Section 307C of the Corporations Act 2001 requires our auditors, Ernst & Young, to provide the Directors of Berkeley Energia Limited with an Independence Declaration in relation to the review of the half year financial report. This Independence Declaration is on page 24 and forms part of this Directors' Report.

Signed in accordance with a resolution of Directors .

Robert Behets

Acting Managing Director

9 March 2021

DIRECTORS' DECLARATION

In accordance with a resolution of the Directors of Berkeley Energia Limited, I state that:

In the opinion of the Directors:

(a) the financial statements and notes are in accordance with the Corporations Act 2001, including:

(i) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

(ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2020 and of its performance for the half year ended on that date.

(b) The Directors Report, which includes the Operating and Financial Review, provides a fair review of:

(i) important events during the first six months of the current financial year and their impact on the half year financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

(ii) related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period, and any changes in the related party transactions described in the last annual report that could have such a material effect; and

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

On behalf of the Board

Robert Behets

Acting Managing Director

9 March 2021

Forward Looking Statement

Statements regarding plans with respect to Berkeley's mineral properties are forward-looking statements. There can be no assurance that Berkeley's plans for development of its mineral properties will proceed as currently expected. There can also be no assurance that Berkeley will be able to confirm the presence of additional mineral deposits, that any mineralisation will prove to be economic or that a mine will successfully be developed on any of Berkeley's mineral properties.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEARED 31 DECEMBER 2020

 
                                                             Half Year       Half Year 
                                                                 Ended           Ended 
                                                           31 December     31 December 
                                                                  2020            2019 
                                                 Note             $000            $000 
---------------------------------------------  -------  --------------  -------------- 
 
 Interest income                                                     8             829 
 Exploration and evaluation costs                              (2,555)         (2,580) 
 Corporate and administration costs                              (466)           (779) 
 Business development expenses                                    (43)           (772) 
 Share based payments expense                   10 (a)           (133)               - 
 Fair value movements on financial 
  liabilities                                     5           (21,989)         (1,380) 
 Foreign exchange movements                                    (7,401)           (998) 
 Loss before income tax                                       (32,579)         (5,680) 
 Income tax expense                                                  -               - 
---------------------------------------------  -------  --------------  -------------- 
 Loss after income tax                                        (32,579)         (5,680) 
---------------------------------------------  -------  --------------  -------------- 
 
 Other comprehensive income, net of 
  income tax: 
 Items that may be reclassified subsequently 
  to profit or loss: 
 Exchange differences arising on translation 
  of foreign operations                                          (402)           (948) 
 Other comprehensive loss, net of 
  income tax                                                     (402)           (948) 
---------------------------------------------  -------  --------------  -------------- 
 Total comprehensive loss for the 
  half year attributable to Members 
  of Berkeley Energia Limited                                 (32,981)         (6,628) 
=============================================  =======  ==============  ============== 
 
 Basic and diluted loss per share 
  (cents per share)                                             (7.31)          (1.28) 
 

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2020

 
                                     Note   31 December 2020   30 June 2020 
                                                        $000           $000 
----------------------------------  -----  -----------------  ------------- 
 
 ASSETS 
 Current Assets 
 Cash and cash equivalents                            79,760         91,767 
 Other receivables                                     1,411          1,436 
 Total Current Assets                                 81,171         93,203 
----------------------------------  -----  -----------------  ------------- 
 
 Non-current Assets 
 Exploration expenditure              6                8,221          8,293 
 Property, plant and equipment        7               12,432         12,855 
 Other financial assets                                  634            617 
----------------------------------  -----  -----------------  ------------- 
 Total Non-Current Assets                             21,287         21,765 
----------------------------------  -----  -----------------  ------------- 
 
 TOTAL ASSETS                                        102,458        114,968 
----------------------------------  -----  -----------------  ------------- 
 
 LIABILITIES 
 Current Liabilities 
 Trade and other payables                                971          1,158 
 Derivative financial liabilities     8               97,381         76,747 
 Other financial liabilities                             745            852 
 Total Current Liabilities                            99,097         78,757 
----------------------------------  -----  -----------------  ------------- 
 
 TOTAL LIABILITIES                                    99,097         78,757 
----------------------------------  -----  -----------------  ------------- 
 
 NET ASSETS                                            3,361         36,211 
==================================  =====  =================  ============= 
 
 EQUITY 
 Issued capital                       9              169,827        169,829 
 Reserves                             10             (1,385)        (1,116) 
 Accumulated losses                                (165,081)      (132,502) 
----------------------------------  -----  -----------------  ------------- 
 
 TOTAL EQUITY                                          3,361         36,211 
==================================  =====  =================  ============= 
 

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEARED 31 DECEMBER 2020

 
                                                              Foreign 
                                           Share Based       Currency 
                                  Issued      Payments    Translation   Accumulated 
                                 Capital       Reserve        Reserve        Losses      Total 
                                    $000          $000           $000          $000       $000 
 
 As at 1 July 2020               169,829           294        (1,410)     (132,502)     36,211 
 Total comprehensive income 
  for the period: 
 Net loss for the period               -             -              -      (32,579)   (32,579) 
 Other comprehensive loss: 
 Exchange differences 
  arising on translation 
  of foreign operations                -             -          (402)             -      (402) 
-----------------------------  ---------  ------------  -------------  ------------  --------- 
 Total comprehensive loss              -             -          (402)      (32,579)   (32,981) 
-----------------------------  ---------  ------------  -------------  ------------  --------- 
 Issue of ordinary shares              -             -              -             -          - 
 Share issue costs                   (2)             -              -             -        (2) 
 Share-based payment expense           -           133              -             -        133 
 As at 31 December 2020          169,827           427        (1,812)     (165,081)      3,361 
=============================  =========  ============  =============  ============  ========= 
 
 As at 1 July 2019               169,736           341          (872)      (89,557)     79,648 
 Total comprehensive income 
  for the period: 
 Net loss for the period               -             -              -       (5,680)    (5,680) 
 Other comprehensive loss: 
 Exchange differences 
  arising on translation 
  of foreign operations                -             -          (948)             -      (948) 
-----------------------------  ---------  ------------  -------------  ------------  --------- 
 Total comprehensive loss              -             -          (948)       (5,680)    (6,628) 
-----------------------------  ---------  ------------  -------------  ------------  --------- 
 Issue of ordinary shares            110             -              -             -        110 
 Share issue costs                   (2)             -              -             -        (2) 
 Lapse of performance 
  rights                               -         (109)              -             -      (109) 
-----------------------------  ---------  ------------  -------------  ------------  --------- 
 As at 31 December 2019          169,844           232        (1,820)      (95,237)     73,019 
=============================  =========  ============  =============  ============  ========= 
 

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEARED 31 DECEMBER 2020

 
                                             Half Year Ended  Half Year Ended 
                                                 31 December      31 December 
                                                        2020             2019 
                                                        $000             $000 
-------------------------------------------  ---------------  --------------- 
 
Cash flows from operating activities 
Payments to suppliers and employees                  (3,226)          (5,251) 
Interest received                                          8              752 
Net cash outflow from operating activities           (3,218)          (4,499) 
-------------------------------------------  ---------------  --------------- 
 
Cash flows from investing activities 
Payments for property, plant and equipment              (27)            (159) 
-------------------------------------------  ---------------  --------------- 
Net cash outflow from investing activities              (27)            (159) 
-------------------------------------------  ---------------  --------------- 
 
Cash flows from financing activities 
Transaction costs from issue of securities               (2)              (2) 
Net cash outflow from financing activities               (2)              (2) 
-------------------------------------------  ---------------  --------------- 
 
Net decrease in cash and cash equivalents 
 held                                                (3,247)          (4,660) 
Cash and cash equivalents at the beginning 
 of the period                                        91,767           96,587 
Effects of exchange rate changes on cash 
 and cash equivalents                                (8,760)              584 
-------------------------------------------  ---------------  --------------- 
Cash and cash equivalents at the end of 
 the period                                           79,760           92,511 
===========================================  ===============  =============== 
 

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

CONDENSED NOTES TO THE FINANCIAL STATEMENTS

FOR THE HALF YEARED 31 DECEMBER 2020

   1.       REPORTING ENTITY 

Berkeley Energia Limited is a company domiciled in Australia. The interim financial report of the Company is as at and for the six months ended 31 December 2020.

The annual financial report of the Company as at and for the year ended 30 June 2020 is available upon request from the Company's registered office or is available to download from the Company's website at www.berkeleyenergia.com .

   2.       STATEMENT OF COMPLIANCE 

The interim financial report is a general purpose condensed financial report which has been prepared in accordance with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the information of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of Berkeley Energia Limited for the year ended 30 June 2020 and any public announcements made by Berkeley Energia Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

   (a)        Basis of Preparation of Half Year Financial Report 

The amounts contained in the half year financial report have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191.

   (b)        Historical cost convention 

These financial statements have been prepared under the historical cost convention, as modified where applicable by the revaluation of certain financial assets and liabilities at fair value through profit or loss.

   3.       SIGNIFICANT ACCOUNTING POLICIES 

Accounting policies applied by the Consolidated Entity in this consolidated interim condensed financial report are the same as those applied by the Consolidated Entity in its consolidated financial report for the year ended 30 June 2020.

In the current period, the Group has adopted all of the new and revised Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2020.

New and revised Standards and amendments thereof and Interpretations effective for the current half year that are relevant to the Group include:

   --           AASB 2018-6 Amendments to Australian Accounting Standards - Definition of a Business 
   --           AASB 2018-7 Amendments to Australian Accounting Standards - Definition of Material 

-- 2019-1 Amendments to Australian Accounting Standards - References to the Conceptual Framework

   --           Conceptual Framework and Financial Reporting 

The adoption of the aforementioned standards have resulted in no impact on interim financial statements of the Group as at 31 December 2020.

   (a)        Issued standards and interpretations not early adopted 

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the reporting period ended 31 December 2020. Those which may be relevant to the Group are set out in the table below, but these are not expected to have any significant impact on the Group's financial statements:

 
 Standard/Interpretation                           Application   Application 
                                                     Date of       Date for 
                                                     Standard      Company 
 AASB 2020-2 Amendments to Australian Accounting     1 January   1 July 2022 
  Standards - Annual Improvements 2018-2020 and           2022 
  Other Amendments (AASB 1, 3, 9, 116, 137 & 
  141) 
                                                  ------------  ------------ 
 AASB 2020-1 Amendments to Australian Accounting     1 January   1 July 2023 
  Standards - Classification of Liabilities as            2023 
  Current or Non-Current 
                                                  ------------  ------------ 
 
   4.       SEGMENT INFORMATION 

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Consolidated Entity that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance.

The Consolidated Entity operates in one operating segment, being exploration for mineral resources within Spain. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Consolidated Entity. All material non-current assets excluding financial instruments are located in Spain.

   5.       FAIR VALUE MOVEMENTS 
 
                                              Consolidated    Consolidated 
                                               31 December     31 December 
                                                      2020            2019 
                                                      $000            $000 
------------------------------------------  --------------  -------------- 
 
 Fair value loss on financial liabilities 
  through profit and loss                         (21,989)         (1,380) 
------------------------------------------  --------------  -------------- 
 

The fair value movements are a result of the fair value measurements of the convertible note and unlisted options issued to the OIA. These financial liabilities increase or decrease in size as the share price of the Company fluctuates. The Company has determined that the convertible note will convert at the floor price of GBP0.27. This has resulted in a fair value loss for the period. As the convertible note and OIA Options convert into shares, the liabilities will be reclassified to equity and will require no cash settlement by the Company. Please refer to note 8 for further disclosure.

   6.       NON-CURRENT ASSETS - EXPLORATION EXPITURE 
 
                                           Consolidated     Consolidated 
                                            31 December     30 June 2020 
                                                   2020 
                                                   $000             $000 
---------------------------------------  --------------  --------------- 
 
   The group has mineral exploration 
   costs carried forward in respect of 
   areas of interest(1) : 
 Areas in exploration at cost: 
  Salamanca mine 
 Balance at the beginning of period               8,293            8,274 
 Foreign exchange differences                      (72)               19 
---------------------------------------  --------------  --------------- 
 Balance at end of period (1,2)                   8,221            8,293 
=======================================  ==============  =============== 
 

(1) The value of the exploration interests is dependent upon the discovery of commercially viable reserves and the successful development or alternatively sale of the respective tenements. An amount of EUR 6m was capitalised for the fees paid to ENUSA under the Co-operation Agreement relating to the tenements within the State Reserves. The Company reached agreement with ENUSA in July 2012 in the form of an Addendum to the Consortium Agreement signed in January 2009. The Addendum includes the following terms:

   --       The Consortium consists of the Addendum Reserves (State Reserves Salamanca 28 and 29); 
   --       Berkeley's stake in the Consortium increased to 100%; 

-- ENUSA will remain the owner of State Reserves 28 and 29, however, the exploitation rights have been assigned to Berkeley, together with authority to submit all applications for the permitting process;

-- The Company is now the sole and exclusive operator in the Addendum Reserves, with the right to exploit the contained uranium resources and have full ownership of any uranium produced;

-- ENUSA will receive a production fee equivalent to 2.5% of the net sale value (after marketing and transport costs) of any uranium produced within the Addendum Reserves;

-- Berkeley has waived its rights to mining in State Reserves 2, 25, 30, 31, Hoja 528-1 and the Saelices El Chico Exploitation Concession, and has waived any rights to management of the Quercus plant; and

   --       The Co-operation Agreement with ENUSA, signed on 29 January 2009, has been terminated. 

The Group's accounting policy is to account for contingent consideration on asset acquisitions as contingent liabilities.

(2) In June 2016, the Company completed an upfront royalty sale to major shareholder Resource Capital Funds ("RCF"). The royalty financing comprised the sale of a 0.375% fully secured net smelter royalty over the project for US$5 million (A$6.7million)

   7.       NON-CURRENT ASSETS - PROPERTY, PLANT AND EQUIPMENT 
 
                                               Land and Buildings   Plant and  Right-of-use assets    Total 
                                                                    equipment 
                                                             $000        $000                 $000     $000 
 
Carrying amount at 1 July 2020                             10,798       1,813                  244   12,855 
Additions                                                       -          27                    -       27 
Depreciation and amortisation                                (17)        (64)                 (48)    (129) 
Foreign exchange differences                                (276)        (45)                    -    (321) 
---------------------------------------------  ------------------  ----------  -------------------  ------- 
Carrying amount at 31 December 2020                        10,505       1,731                  196   12,432 
=============================================  ==================  ==========  ===================  ======= 
 - at cost                                                 10,779       3,409                  407   14,595 
 - accumulated depreciation and amortisation                (274)     (1,678)                (211)  (2,163) 
---------------------------------------------  ------------------  ----------  -------------------  ------- 
 
   8.       FINANCIAL LIABILITIES 
 
                                        Consolidated     Consolidated 
                                         31 December     30 June 2020 
                                                2020 
                                                $000             $000 
------------------------------------  --------------  --------------- 
  (a) Financial liabilities at fair 
   value through profit and loss: 
 
 Convertible note                             89,305           75,331 
 OIA Options                                   8,076            1,416 
------------------------------------  --------------  --------------- 
                                              97,381           76,747 
====================================  ==============  =============== 
 

On 30 November 2017, the Company issued an interest-free and unsecured US$65 million convertible note which can be converted into ordinary shares at GBP0.50 per share upon commissioning of the Salamanca mine, or by OIA at any time at their choosing. Should the Company raise further equity prior to conversion of the convertible note at a price below GBP0.50 then the conversion price of the convertible note will be reset to the issue price of the equity raising, subject to a floor price of GBP0.27 per share. If technical completion (mine commissioning) has not occurred by 30 November 2021, then the convertible note will automatically convert into shares at the floor price of GBP0.27 per share. The exchange rate fixed in the contract is US$1.00: GBP0.776. Given technical completion will not occur by 30 November 2021, the Company has formed a view that the convertible note will convert at the floor price of GBP0.27 on 30 November 2021.

Due to the conversion terms of the convertible note leading to the issuance of a variable number of ordinary shares in the Company in return for conversion of the convertible note, the Company is required under the accounting standards to account for the convertible note as a financial liability through profit and loss. The Company has no obligation to extinguish the convertible note using its cash reserves and it is only repayable in an event of breach of the terms of the investment agreement which includes a breach of a representation or warranty (at the date of signing the agreement), a breach of covenants, insolvency of the Company or the Company ceasing to conduct business or ceasing being listed on a recognised stock exchange.

As part of the convertible note transaction, the Company also issued OIA with 50,443,124 unlisted options which are exercisable at an average price of GBP0.85 per share contributing an additional US$55 million of funding if exercised in the future.

 
                            Consolidated                                   Consolidated 
                                 30 June                                    31 December 
                                    2020                                           2020 
----------------------  ----------------  -----------  -----------------  ------------- 
                                           Fair Value   Foreign Exchange 
                         Opening Balance       Change        Loss/(Gain)          Total 
                                    $000         $000               $000           $000 
----------------------  ----------------  -----------  -----------------  ------------- 
 
  (b) Reconciliation: 
 Convertible note                 75,331       15,179            (1,205)         89,305 
 OIA Options                       1,416        6,810              (150)          8,076 
----------------------  ----------------  -----------  -----------------  ------------- 
 Total fair value                 76,747       21,989            (1,355)         97,381 
======================  ================  ===========  =================  ============= 
 
   (c)        Fair Value Estimation 

The fair value of the OIA Options was determined using a binomial option pricing model. The fair value of the convertible note has been calculated using a probability-weighted payout approach on the basis that the convertible note will convert at 30 November 2021 (when automatic conversion occurs) using the floor price of GBP0.27 as the conversion price. The fair value movement of both the OIA Options and the convertible note has been recognised in the Statement of Profit and Loss. Both fair value measurements are Level 2 valuation in the fair value hierarchy.

The reporting date fair values of the convertible note and OIA Options were estimated using the following assumptions:

Convertible note:

 
                            31 December 2020 
-------------------------  ----------------- 
 Conversion price               GBP0.27 
 Number of shares ('000)      186,815,000 
 Fair value ($)                  $0.478 
-------------------------  ----------------- 
 

OIA Options:

 
 31 December 2020          Tranche 1     Tranche 2     Tranche 3 
-----------------------  ------------  ------------  ------------ 
 Exercise price            GBP0.600      GBP0.750      GBP1.000 
 Valuation date share                                  GBP0.325 
  price                    GBP0.325      GBP0.325 
 Dividend yield(1)             -             -             - 
 Volatility(2)                85%           85%           85% 
 Risk-free interest 
  rate                      (0.14%)       (0.13%)       (0.12%) 
 Number of OIA Options    10,088,625    15,132,973    25,221,562 
 Issue date               30 Nov 2017   30 Nov 2017   30 Nov 2017 
 Estimated Expiry                                     30 Nov 2023 
  date                    30 Nov 2022   31 May 2023 
 Fair value (GBP)          GBP0.091      GBP0.092      GBP0.089 
 Fair value ($)             $0.161        $0.164        $0.158 
-----------------------  ------------  ------------  ------------ 
 

(1) The dividend yield reflects the assumption that the current dividend payout will remain unchanged.

(2) The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome

   9.       CONTRIBUTED EQUITY 
   (a)        Issued and Paid Up Capital 
 
                                             Consolidated     Consolidated 
                                              31 December     30 June 2020 
                                                     2020 
                                                     $000             $000 
-----------------------------------------  --------------  --------------- 
 258,605,000 (30 June 2020: 258,605,000) 
  fully paid ordinary shares                      169,827          169,829 
-----------------------------------------  --------------  --------------- 
 
   (b)        Movements in Ordinary Share Capital during the Six Month Period ended 31 December 2020: 
 
                                   Number of 
                                      Shares 
 Date         Details                   '000      $000 
-----------  -------------------  ----------  -------- 
 
 1 Jul 20     Opening Balance        258,605   169,829 
 Jul 20 to 
  Dec 20      Share issue costs            -       (2) 
-----------  -------------------  ----------  -------- 
 31 Dec 20    Closing Balance        258,605   169,827 
===========  ===================  ==========  ======== 
 
   10.     RESERVES 
 
                                          Consolidated     Consolidated 
                                           31 December     30 June 2020 
                                                  2020 
                                                  $000             $000 
--------------------------------------  --------------  --------------- 
 
 Share based payments reserve (Note 
  10 (a))                                          427              294 
 Foreign currency translation reserve          (1,812)          (1,410) 
                                               (1,385)          (1,116) 
======================================  ==============  =============== 
 

(a) Movements in Options and Performance Rights during the Six Month Period ended 31 December 2020:

 
                                                    Number of Options   Number of Performance Rights 
 Date                Details                                     '000                           '000   $000 
------------------  -----------------------------  ------------------  -----------------------------  ----- 
 
 1 Jul 20            Opening Balance                            7,400                            200    294 
 Jul 20 to Dec 20    Share based payment expense                    -                              -    133 
 31 Dec 20           Closing Balance                            7,400                            200    427 
==================  =============================  ==================  =============================  ===== 
 
   11.     CONTINGENT LIABILITIES AND CONTINGENT ASSETS 

There was no material change in contingent liabilities or contingent assets from those previously disclosed at the last reporting period.

   12.     DIVIDENDS PAID OR PROVIDED FOR 

No dividend has been paid or provided for during the half year (2019: nil).

   13.     FAIR VALUE OF FINANCIAL INSTRUMENTS 

The majority of the Group's financial instruments consist of those which are measured at amortised cost including trade and other receivables, security bonds, trade and other payables and other financial liabilities. The carrying amount of these financial assets and liabilities approximate their fair value. Please refer to notes 5 and 8 for details on the fair value of non-cash settled financial liabilities classified as fair value through profit and loss.

   14.     RELATED PARTY DISCLOSURE 

Balances and transactions between the Company and its subsidiaries, which are related parties to the Company, have been eliminated on consolidation. There have been no other transactions with related parties during the half-year ended 31 December 2020, other than remuneration with Key Management Personnel.

   15.     SUBSEQUENT EVENTS AFTER BALANCE DATE 

(i) On 24 February 2021, the company announced that it had noted media reports following a meeting of the Ponencia that discussed changes to the proposed amendment to the draft climate change and energy transition bill relating to the investigation and exploitation of radioactive minerals. Under the modified amendment proposed by the Ponencia: (i) New applications for exploration, investigation or direct exploitation concessions for radioactive materials, nor their extensions, would not be accepted as of the entry into force of this law; and (ii) Existing concessions, and open proceedings and applications related to these, would continue as per normal based on the current legislation. It is important to note that this remains only a modified amendment to the draft climate change and energy transition bill proposed by the Ponencia that must now first be reviewed and approved or rejected under Spanish law.

Other than as disclosed above, there were no significant events occurring after balance date requiring disclosure.

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March 10, 2021 02:00 ET (07:00 GMT)