TIDMEML
RNS Number : 3125N
Emmerson PLC
31 May 2022
Emmerson Plc / Ticker: EML / Index: AIM / Sector: Mining
31 May 2022
Emmerson
("Emmerson" or "the Company")
Audited Results for the year ended 31 December 2021
Emmerson, which is developing the world class Khemisset Potash
Project in Morocco ('Khemisset' or the 'Project'), is pleased to
announce its audited results for the 12 months ended 31 December
2021. The Group's Annual Report, which includes an unqualified
audit report and audited Financial Statements for the year ended 31
December 2021, will be made available on the Company's website at
www.emmersonplc.com.
HIGHLIGHTS
-- Considerable operational, corporate and commercial progress
made towards delivering a "shovel ready" project, and establishing
Khemisset as Africa's first large-scale potash mine
-- Significant improvement in potash prices highlights potential
upside to Feasibility Study estimates (including NPV8 of US$1.4
billion)
-- Cornerstone investment secured in November 2021 of up to
US$46.8 million from strategic investor
-- Advancing negotiations with a range of international and
Moroccan institutions on both the debt and equity sides,
underscoring the attractive economics of the Project
-- Mining Licence granted in February 2021
-- Environmental and Social Impact Assessment completed to IFC
standards, and environmental approval process continuing to
progress towards the final awarding of the permit
-- Move to AIM completed in April 2021
-- Board strengthened by appointment of James Kelly as Chair,
and Rupert Joy as Non-executive Director, while Jim Wynn was
appointed in February 2022 as CFO
-- Operational and technical capabilities enhanced through the
appointment of Josh Mitchell as Project Controller, Haitam Ennadif
as Project Engineering Manager and Matt Wilmot as Technical
Services Manager.
CHAIRMAN'S STATEMENT
It gives me great pleasure to present the 2021 Annual Report for
Emmerson in my first full year as Chairman.
Just as the world was cautiously beginning to emerge from the
restrictions related to COVID-19, the war in Ukraine has unleashed
a fresh set of challenges, the full impact of which are not yet
known but will most likely affect us all for a considerable period
of time.
The humanitarian catastrophe that is unfolding is unquestionably
the most immediate concern and we all wish for a peaceful
conclusion as quickly as possible. The crisis has also brought into
sharp focus the fragility of the global supply chain for some of
our most basic commodities, including hydrocarbons for fuel and
energy, and foodstuffs to feed a growing global population.
The importance of food security has never been clearer, and
potash has a key role to play. Potassium is one of the three key
plant macronutrients (along with nitrogen and phosphorous), making
potash a critical raw material for fertiliser.
Around 40% of global potash production in 2021 came from Russia
and Belarus, and these supplies are likely to be constrained by
sanctions of various natures for some time to come. Against this
backdrop, the need to bring new sources of potash on stream is of
paramount importance; arguably more urgent than the widely
recognised challenges around critical metals.
Emmerson's Khemisset Potash Project is well-positioned to help
meet this need. It is a high-margin and low-capex project which has
a construction period of approximately two years. The Feasibility
Study completed in 2020 indicated a JORC Resource of 537 million
tonnes at 9.24% K2O, sufficient to supply 735k tonnes of Muriate of
Potash ("MOP") annually for a life of at least 19 years.
The project is situated in Morocco, which is a stable, mining-
and investor-friendly jurisdiction with excellent infrastructure.
The site is approximately 200km from the commercial port of
Casablanca, and transportation is likely to be by truck, using
high-quality public highways.
The geographic location of Morocco is also advantageous. Much of
the global potash demand growth is likely to be in the Atlantic
corridor between the Americas and Europe/Africa. Apart from the
potash from Russia/Belarus, the majority of current potash supplies
come from central Canada, with long haulage distances by road and
sea, a logistical challenge which is exacerbated by current high
shipping costs.
Morocco is an actor of growing importance in Africa, which has
the world's highest population growth, but yet uses just a small
fraction of the fertiliser per hectare of cultivated land of China,
North America, or Europe. Morocco is already an established
phosphate exporter and fertiliser hub, but currently imports its
potash. Khemisset will provide a local source which would offer
security of supply with significantly reduced transport costs.
We made some significant steps towards bringing the Khemisset
project into production during 2021 and have continued to make
progress during 2022. In February 2021, we received our mining
permit, and we have completed the work needed to obtain an
environmental permit. We have also undertaken various geological
and engineering works to bring us closer to being shovel-ready, and
we expect to complete these by the end of 2022.
Our financing discussions have also proceeded well. A crucial
step in this matter was securing a cornerstone investment of up to
US$46.8 million primarily from a strategic partner, the Global
Sustainable Minerals Pte Ltd group ("GSM"), a Singapore-domiciled
investment vehicle backed by a significant south-east Asian
investor, in November 2021. Since then, we have received
considerable interest from both debt and equity investors,
particularly since the Ukrainian crisis in February, from both
international and Moroccan financiers.
We have had extensive discussions with the Moroccan government
and other key stakeholders, and have been impressed by the high
levels of support for the Khemisset project. We are keen to
reciprocate this support by using Moroccan suppliers, contractors,
and financiers wherever possible, and by working with local
partners to optimise the project.
Getting this right is taking a little longer than we originally
anticipated, but it will be worth the time and effort, as the
outcome will be a better, more profitable and more efficient
project.
Global potash prices in early May 2022 were around three times
the levels of 2020, when the Feasibility Study was completed which
indicated a project with NPV8 of US$1.4 billion. While it is not
certain whether prices will remain at current levels, demand for
potash is likely to remain high and supply to be constrained for
the foreseeable future.
There were some changes to the Board in the year. On 27 April
2021, following the Company's listing on AIM, Mark Connelly retired
from the Board, and I took over his responsibilities as Chairman.
On 12 July 2021, Ed McDermott also stepped down from the Board. The
Company owes much to the efforts of both Mark and Ed during its
formative years, and we thank them and wish them the best in their
new endeavours.
I was delighted that we were able to strengthen our Board by
appointing Rupert Joy as a non-executive Director. Rupert is a
highly experienced diplomat and former Ambassador & Head of the
EU Delegation to Morocco, and has already proved invaluable in our
discussions with Moroccan authorities.
In February 2021, we announced the appointment of Jim Wynn as
Chief Financial Officer. Jim is an experienced finance professional
and chartered accountant with significant corporate experience,
particularly in the African resource sector, and is also a
French-speaker.
There remains much to do in 2022 and in many regards, I expect
the pace of work will only increase from this point forwards. The
entire Emmerson team remains focused on the key objectives of
putting in place the approvals and financing package that will
allow us to start construction of the Khemisset project. The
backdrop of the global food security crisis and the strength of the
potash market reinforces our belief in the Khemisset project and
our determination to deliver the project as soon as possible.
James Kelly
Chairman
30 May 2022
CHIEF EXECUTIVE OFFICER'S STATEMENT
There has never been a more important time to bring new sources
of potash from safe, secure jurisdictions into the market, such as
Emmerson's Khemisset project in Morocco.
The Feasibility Study completed in 2020 by Golder Associates
underlined the compelling economics of the project. Recent potash
price increases, driven by the combined impact of the war in
Ukraine on top of more long-term factors such as population growth,
land scarcity, and supply security for critical minerals, suggest
even those valuations are understated.
However, Khemisset's role in meeting the potash requirements of
the world should not be measured solely in financial terms. While
the priority of the Emmerson team is getting the Khemisset project
into production as efficiently as possible, we are determined to
keep our wider social and environmental responsibilities at the
forefront of our thinking: "doing the right things in the right
way".
Khemisset Project
The Company received a mining permit in January 2021, and
proceeded to submit an Environmental and Social Impact Assessment
("ESIA"), which is currently awaiting final approval. The Company
has addressed all of the ESIA issues raised by the relevant
authorities in a timely manner.
The ESIA approval is the last remaining authorisation step
required before construction can begin. In view of the importance
of the project to the country, the authorities have been careful to
ensure that the needs of the widest possible stakeholder group have
been fully taken into consideration. The Company continues to work
proactively with all the relevant parties and remains confident
that the approval will be forthcoming.
In the meantime, we are progressing with a number of workstreams
to move the project forward, which will ensure construction can
commence as soon as approval has been given, and financing has been
put in place.
Drilling & Site Exploration
In May 2021, Emmerson commenced an exploration campaign to
address areas that required further de-risking as outlined in the
Feasibility Study, to gain better knowledge of the Khemisset basin,
and to further detail geology along the route of the decline and in
the mine infrastructure area from a constructability perspective.
The exploration campaign was split into a drilling program and a
surface geological program.
The drilling program consists of a number of geological drill
holes with additional directionally drilled daughter holes to
provide data on lateral variability, geotechnical drill holes along
the decline route, and a deeper hole for evaluation of the
reservoir formation below with all holes logged and core samples
taken for testing purposes.
The surface geological program consists of a large number of
shallow holes for geotechnical characterization to feed into the
design of the ancillary infrastructure and foundation and over 15km
of electrical resistivity tomography surveys for definition of the
near surface strata.
The results so far have provided a significant amount of data to
feed into the on-going engineering and design work as well as
further confidence in the project location and the geological and
geotechnical conditions. The exploration campaign is envisaged to
be completed within Q3 2022.
Basic Engineering
A request for proposal was issued on 7 May 2021 for basic
engineering services regarding the mineral processing facility.
Following a commercial and technical bid analysis process, Barr
Engineering was selected. Barr Engineering, headquartered in
Minneapolis, has extensive experience in potash mineral processing
after providing services to North American clients since 1966.
On 29 November 2021, a basic engineering contract was signed,
and engineering works commenced shortly thereafter. These are
currently approximately 40% complete at the date of this
report.
Process modelling, process flow diagrams ("PFD") and piping and
instrumentation diagrams ("P&ID") have been completed, allowing
the electrical, mechanical and structural disciplines to commence
their scopes. The processing facility equipment list has also been
completed, allowing Barr Engineering to approach the market to
gather the most up to date costing information from world leading
suppliers of Potash processing equipment. The basic engineering
phase is expected to be complete by September 2022.
A separate request for proposal was issued on 22 October 2021
for basic engineering services regarding the balance of the
Khemisset potash project scope. Following a commercial and
technical bid analysis process, Reminex was selected. Reminex, a
subsidiary of Managem (a major Moroccan mining group), has
extensive experience of scoping, permitting, designing,
constructing and operating underground mines in Morocco and
Africa.
On 9 February 2022, a basic engineering contract was signed, and
engineering works started shortly thereafter (now approximately 20%
complete). The scope is being executed via six concurrent packages
(mine power supply, mine water supply, site access, portal and
declines, tailing storage facility and mine site infrastructure).
The basic engineering phase is expected to be complete by October
2022.
Land acquisition
The land acquisition process has commenced with the development
of a land acquisition plan. The first phase of this plan will be to
identify the areas and habitats likely to be affected by the
project, to collect socio-economic data, and to develop a
stakeholder engagement strategy.
Phase 2 of the land acquisition plan has also commenced, which
will be completed concurrent with basic engineering, and includes
final definition of the land parcels required, and their
acquisition or lease.
Permits
The mining permit awarded in 2021 has a 10-year life. The
Company is awaiting the final environmental permits, as mentioned,
while all 20 exploration permits have been renewed. These permits
cover 780km(2) , and will enable exploration works on the project
to continue.
In-principle approvals have been provided by the forestry
services for intersections of their domains with regards to the
power and water supply scopes to the mine site, which are being
developed as part of basic engineering.
Other Studies
In February 2022, Novec, a Moroccan engineering consultancy
specialising in infrastructure, was engaged to undertake a traffic
and logistics study to support the basic engineering phase on the
site access package, and to satisfy future anticipated permitting
requirements for construction. This scope is ongoing and
progressing on schedule in collaboration with our basic engineering
partner, Reminex.
In April 2022, SLR Consulting, an international environmental
and mining consultancy, was engaged as a technical geological
consultant to support decision-making based on the results from the
2021/22 exploration campaign from a constructability, mining method
and location perspective. Working collaboratively with our geology
team, the drilling contractors and our basic engineering partners,
SLR has started to update the geological model and propose optimal
solutions for project execution.
Financing
In November 2021, we were able to announce that we had secured a
strategic investment of up to US$46.8 million from Singaporean fund
GSM and Gold Quay Capital Pte Ltd ("GQC"). Of this funding, US$6.8
million was received by way of an equity subscription at a placing
price of 6 pence per share, to be used to complete the basic
engineering and design work, undertake additional resource and
geotechnical drilling, and to build out the technical team ahead of
the larger fundraise.
The remaining US$40.0 million will be allotted as part of, and
subject to, the larger fundraise for the Khemisset project at a
price of 8.2 pence per share. Although this funding was structured
as a convertible loan, it is more akin to a commitment to provide a
significant portion of the equity needed to build the mine.
Ongoing discussions with regard to the fundraising for the
Khemisset project have been progressing well.
The Company has received interest from a number of local
Moroccan and international banks, as well as support from Export
Credit Agencies, which have submitted formal Expressions of
Interest. Good progress has also been made towards securing
additional strategic equity partners, and we feel confident that,
subject to completing the necessary due diligence and technical
work, a complete financing structure will be announced later in the
year.
Corporate
In April 2021, the Company moved from the Standard segment on
the Main Market of the London Stock Exchange to the AIM market of
the London Stock Exchange ("AIM"), which we felt offered greater
flexibility, particularly with regard to fundraising and corporate
transactions. Shareholder approval for this transfer of listing was
granted at a general meeting on 25 March 2021, and the Company's
shares were admitted to trading on AIM on 27 April 2021.
In his Chairman's Statement, James mentioned the changes at
Board level, but we have also been adding bench strength to our
management and technical teams. During 2021, we appointed Josh
Mitchell as Project Controller, and Haitam Ennadif as Project
Engineering Manager based in Morocco. In 2022, we brought in Matt
Wilmot as Technical Services Manager, and we have a world-class
technical team with first class experience in constructing and
operating underground potash mines.
Graham Clarke
Chief Executive Officer
30 May 2022
For further information, please visit www.emmersonplc.com ,
follow us on Twitter (@emmerson_plc), or contact:
Emmerson Plc
Graham Clarke - CEO
Jim Wynn - CFO +44 (0) 20 7236
Charles Vaughan - Head of IR 1177
Shore Capital (Nominated Adviser and Joint Broker) +44 (0)20 7408
Toby Gibbs / John More 4090
Liberum Capital Limited (Joint Broker) +44 (0)20 3100
Scott Mathieson / Lydia Zychowska 2000
Shard Capital (Joint Broker) +44 (0)20 7186
Damon Heath / Isabella Pierre 9927
St Brides Partners (Financial PR/IR) +44 (0)20 7236
Susie Geliher / Charlotte Page 1177
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2021
2021 2020
Note US$'000 US$'000
Restated
Continuing Operations
Administrative expenses 3 (2,349) (1,034)
Share-based payment expense 12 (33) (991)
Net foreign exchange (loss)/gain (388) 78
Operating loss (2,770) (1,947)
Finance income - 5
Finance cost (7) -
Loss before tax (2,777) (1,942)
Income tax 5 - -
-------- ----------
Loss for the year attributable to equity owners (2,777) (1,942)
-------- ----------
Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Exchange (loss)/gain on translating foreign operations (693) 500
Total comprehensive income attributable to equity owners (3,470) (1,442)
-------- ----------
Earnings per share (cents)
Basic and diluted 6 (0.33) (0.28)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT
31 DECEMBER 2021
2021 2020
US$'000 US$'000
Note Restated
Non-current assets
Intangible assets 7 13,555 11,132
Property, plant and equipment 41 16
Total non-current assets 13,596 11,148
Current assets
Trade and other receivables 8 771 429
Cash and cash equivalents 10,032 1,563
--------- ----------
Total current assets 10,803 1,992
Total assets 24,399 13,140
--------- ----------
Current liabilities
Trade and other payables 9 (1,835) (681)
Total current liabilities (1,835) (681)
Net assets 22,564 12,459
--------- ----------
Shareholders equity attributable to equity owners
Share capital 11 28,774 15,755
Share-based payment reserve 12 2,048 1,499
Reverse acquisition reserve 2,198 2,198
Retained earnings (10,278) (7,508)
Translation reserve (178) 515
--------- ----------
Total equity 22,564 12,459
--------- ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2021
US$'000 Share Share-based payment Reverse Retained Translation Total
Capital(1) reserve(2) Acquisition earnings(4) reserve(5) equity
reserve(3)
Balance as at 1 January 2020
(as restated) 13,631 508 2,198 (5,566) 15 10,786
----------- --------------------- ------------- ------------ ------------ -----------
Loss for the year - - - (1,942) - (1,942)
Other comprehensive income:
Exchange loss on translating
foreign operations - - - - 500 500
Total comprehensive income - - - (1,942) 500 (1,442)
Issue of share options and
warrants - 991 - - - 991
Issue of shares 2,266 - - - - 2,266
Share issue costs (142) - - - - (142)
----------- --------------------- ------------- ------------ ------------ -----------
Balance as at 1 January 2021 15,755 1,499 2,198 (7,508) 515 12,459
----------- --------------------- ------------- ------------ ------------ -----------
Loss for the year - - - (2,777) - (2,777)
Other comprehensive income:
Exchange loss on translating
foreign operations - - - - (693) (693)
Total comprehensive income - - - (2,777) (693) (3,470)
Issue of share options and
warrants 90 (104) - - - (14)
Transfer - (7) - 7 - -
Issue of shares and warrants 14,345 660 - - - 15,005
Share issue costs (1,416) - - - - (1,416)
----------- --------------------- ------------- ------------ ------------ -----------
Balance as at 31 December 2021 28,774 2,048 2,198 (10,278) (178) 22,564
----------- --------------------- ------------- ------------ ------------ -----------
Notes
1 The Ordinary Shares issued by the Company have 4 The Retained earnings are cumulative earnings
a no par value and all fully paid. Further since incorporation less any dividends declared.
information
on share capital is in note 11 to the financial
statements.
2 The share reserve arises on the grant of share 5 The translation reserve comprises translation
options and warrants to Directors and employees differences arising from the translation
under the share option plan. Disclosures of of financial statements of the Group's foreign
share-based entities into US dollars.
payments to Directors and employees is in note
12.
3 The Reverse acquisition reserve arose from the
reverse takeover in 2018
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2021
Notes 2021 2020
US$ '000 US$'000
Restated
Cash flows from operating activities
Loss before tax (2,777) (1,942)
Adjustments
Foreign exchange (448) (214)
Share-based payment 12 33 991
Depreciation 5 9
Changes in working capital
Increase in trade and other receivables (351) (55)
Increase in trade and other payables 1,182 107
Net cash flows used in operating activities (2,356) (1,104)
-------- ---------
Cash flows from investing activities
Exploration expenditure 7 (2,671) (2,313)
Property, plant and equipment (purchase)/disposal (30) 25
Net cash flow used in investing activities (2,701) (2,288)
-------- ---------
Cash flows from financing activities
Proceeds from issuing shares and warrants 11 14,958 2,266
Cost of issuing shares 11 (1,416) (142)
Net cash flow generated from financing activities 13,542 2,124
-------- ---------
Increase/ (decrease) in cash and cash equivalents 8,485 (1,268)
Cash and cash equivalents at beginning of year 1,563 2,745
Foreign exchange on cash and cash equivalents (16) 86
-------- ---------
Cash and cash equivalents at end of year 10,032 1,563
-------- ---------
Significant non-cash transactions in respect of share issues are
disclosed within note 11.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARED 31 DECEMBER 2021
1. General information
Emmerson PLC (the "Company") is a company incorporated and
domiciled in the Isle of Man, whose shares were admitted to the
Standard Listing segment of the Main market of the London Stock
Exchange on 15 February 2017. On 27 April 2021, the Ordinary Shares
of the Company were admitted to trading on AIM and the listing of
the Company's ordinary shares on the Official List and their
trading on the Main Market were cancelled.
The principal activity of the Group is the exploration,
development and exploitation of a potash development project in
Morocco.
2. Basis of preparation
2.1. General
These financial statements have been prepared in accordance with
UK-adopted International Financial Reporting Standards (IFRS and
IFRIC interpretations) ("IFRS") in force at the reporting date, and
their interpretations issued by the International Accounting
Standards Board ("IASB"). The financial statements have been
prepared under the historical cost convention except for the
revaluation of certain financial instruments that are measured at
fair value.
2.2. Functional and presentational currency
The financial information of the Group is presented in US
dollars. The functional currency of the Company Emmerson PLC in the
period was GB Sterling. The individual financial statements of each
of the Company's wholly owned subsidiaries are prepared in the
currency of the primary economic environment in which they operate
(functional currency ).
2.3. Change in Presentation Currency
The Group is presenting its results in US Dollars for the first
time having previously reported in UK Sterling. This change should
help to provide a clearer understanding of the Group's financial
position as the future corporate development activity is likely to
be US focused.
In order to satisfy the requirements of IAS 21 with respect to a
change in presentation currency, the statutory financial
information as previously reported in the Group's Annual Reports
have been restated from UK Sterling into US Dollars using the
procedures outlined below:
-- Assets and liabilities were translated to US Dollars at the
closing rates of exchange at each respective balance sheet
date.
-- Share capital, share premium and other reserves were
translated at the historic rates prevailing at the dates of
transactions.
-- Income and expenses were translated to US Dollars at an
average rate at each of the respective reporting years. This has
been deemed to be a reasonable approximation.
-- Differences resulting from the retranslation were taken to reserves.
-- All exchange rates used were extracted from the Group's underlying financial records.
Please see Note 16 for further information on the procedures
used to restate comparative information and the impact on the prior
year results, closing balance sheet and the numerator for earnings
per share as originally reported.
A change in presentation currency represents a change in
accounting policy which is accounted for retrospectively.
2.4. Basis of consolidation
The Consolidated Financial Statements comprise the financial
statements of the Company, Moroccan Salts Limited and Moroccan
Salts Limited's subsidiaries (the "MSL Group") following the
business combination which took place on 4 June 2018.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee.
Generally, there is a presumption that a majority of voting
rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee;
-- Rights arising from other contractual arrangements; and
-- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Assets, liabilities, income and expenses of a subsidiary acquired
or disposed of during the period are included in the Group
Financial Statements from the date the Group gains control until
the date the Group ceases to control the subsidiary.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
All the Group's companies have 31 December as their year-end.
Consolidated financial statements are prepared using uniform
accounting policies for like transactions.
2.5. Going concern
The financial statements have been prepared on a going concern
basis. The Group has not yet earned revenues and is in the
pre-construction phase of its business. The operations of the Group
are currently financed from funds raised from shareholders and
strategic investors. In common with many pre-production entities,
the Group will need to raise further funds in order to progress the
Group from the feasibility phase into construction and eventually
into production of revenues.
The Group had cash and cash equivalents of US$5.3 million at 26
May 2022 and the Directors are of the view this is sufficient to
fund the Group's non-discretionary expenditure and maintain good
title to the exploration licences over the next 12 months from the
date of approval of these financial statements. The Company will
continue to work on advancing the Khemisset project and to commence
construction as soon as practicable, however the timing of these
activities will be dependent on availability of funds.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus, they continue to adopt the going concern
basis of accounting in preparing the financial statements.
2.6. Changes in accounting policies
Standards, interpretations and amendments to published standards
effective from 1 January 2021
There were no new standards or interpretations effective and
adopted for the first time for the year beginning on or after 1
January 2021 that had a significant effect on the Group's or
Company's financial statements.
Standards, interpretations and amendments to published standards
not yet effective
The Group has not early applied the following new and amendments
to IFRSs that have been issued but are not yet effective:
-- Amendments to IAS 1: Presentation of Financial Statements:
Classification of Liabilities as Current or Non-current and
Amendments to IAS 1: Classification of Liabilities as Current or
Non-current - Deferral of Effective Date - effective 1 January
2023
-- Amendments to IFRS 3: Business Combinations - Reference to
the Conceptual Framework - effective 1 January 2022
-- Amendments to IAS 16: Property, Plant and Equipment - effective 1 January 2022
-- Amendments to IAS 37: Provisions, Contingent Liabilities and
Contingent Assets - effective 1 January 2022
-- Annual Improvements to IFRS Standards 2018-2020 Cycle - 1 January 2022
The Directors anticipate that the application of all new and
amendments to IFRSs will have no material impact on the future
results of the Group or Company in the foreseeable future.
2.7. Segment reporting
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments. A
geographical segment is engaged in providing products or services
within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in
other economic environments.
The Directors are of the opinion that the Group is engaged in a
single segment of business being the exploration activity of potash
in one geographical area, being Morocco.
2.8. Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of on entity and a financial liability or equity
instrument of another.
(a) Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, and
subsequently measured at amortised cost, fair value through OCI, or
fair value through profit and loss.
The classification of financial assets at initial recognition
that are debt instruments depends on the financial asset's
contractual cash flow characteristics and the Group's business
model for managing them. The Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
In order for a financial asset to be classified and measured at
amortised cost or fair value through OCI, it needs to give rise to
cash flows that are 'solely payments of principal and interest
(SPPI)' on the principal amount outstanding. This assessment is
referred to as the SPPI test and is performed at an instrument
level.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in four categories:
-- Financial assets at amortised cost (debt instruments)
-- Financial assets at fair value through OCI with recycling of
cumulative gains and losses (debt instruments)
-- Financial assets designated at fair value through OCI with no
recycling of cumulative gains and losses upon derecognition (equity
instruments)
-- Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
This category is the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the
following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured
using the effective interest rate (EIR) method and are subject to
impairment. Interest received is recognised as part of finance
income in the statement of profit or loss and other comprehensive
income. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. The Group's financial
assets at amortised cost include trade receivables (not subject to
provisional pricing) and other receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is primarily
derecognised (i.e., removed from the Group's consolidated statement
of financial position) when:
-- The rights to receive cash flows from the asset have expired; or
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
'pass-through' arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
Impairment of financial assets
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held
For trade receivables (not subject to provisional pricing) and
other receivables due in less than 12 months, the Group applies the
simplified approach in calculating ECLs, as permitted by IFRS 9.
Therefore, the Group does not track changes in credit risk, but
instead, recognises a loss allowance based on the financial asset's
lifetime ECL at each reporting date.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group.
A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows and usually
occurs when past due for more than one year and not subject to
enforcement activity. At each reporting date, the Group assesses
whether financial assets carried at amortised cost are
credit-impaired. A financial asset is credit-impaired when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
(b) Financial liabilities
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, payables, or as derivatives designated as hedging
instruments in an effective hedge, as appropriate. All financial
liabilities are recognised initially at fair value and, in the case
of loans and borrowings and payables, net of directly attributable
transaction costs. The Group's financial liabilities include trade
and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. This category also includes
derivative financial instruments entered into by the Group that are
not designated as hedging instruments in hedge relationships as
defined by IFRS 9. Separated embedded derivatives are also
classified as held for trading unless they are designated as
effective hedging instruments. Gains or losses on liabilities held
for trading are recognised in the statement of profit or loss and
other comprehensive income.
Loans and borrowings and trade and other payables
After initial recognition, interest-bearing loans and borrowings
and trade and other payables are subsequently measured at amortised
cost using the EIR method. Gains and losses are recognised in the
statement of profit or loss and other comprehensive income when the
liabilities are derecognised, as well as through the EIR
amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees or costs that are an integral
part of the EIR. The EIR amortisation is included as finance costs
in the statement of profit or loss and other comprehensive income.
This category generally applies to trade and other payables.
Derecognition
A financial liability is derecognised when the associated
obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in
the respective carrying amounts is recognised in profit or loss and
other comprehensive income.
(c) Financial liabilities
Liabilities within the scope of IFRS 9 are classified as
financial liabilities at fair value through profit and loss or
other liabilities, as appropriate.
A financial liability is derecognised when the obligation under
the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are
recognised initially at fair value and subsequently at amortised
cost.
2.9. Taxation
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, determined using tax rates
that are expected to apply when the related deferred tax asset or
liability is realised or settled. Deferred tax assets are
recognised only to the extent that it is probable that future
taxable profit will be available against which the temporary
differences can be utilised.
2.10. Intangible assets - exploration and evaluation
expenditure
Exploration expenditure comprises all costs which are directly
attributable to the exploration of a project area.
When it has been established that a mineral deposit has
development potential, all costs (direct and applicable overheads)
incurred in connection with the exploration and development of the
mineral deposits are capitalised until either production commences,
or the project is not considered economically viable.
In the event of production commencing, capitalised costs in
respect of the asset are transferred into Tangible Fixed Assets,
and are depreciated over the expected life of the mineral reserves
on a unit of production basis. Other pre-trading expenses are
written off as incurred. For the purposes of impairment testing,
intangible assets are allocated to specific projects with each
licence reviewed annually. Where a project is abandoned or is
considered to be of no further interest, the related costs are
written off.
Intangible assets are not subject to amortisation and are tested
annually for impairment. The recoverability of all exploration
costs, licenses and mineral resources is dependent on the ability
of the Group to obtain necessary financing to complete the
development of reserves and future profitable production, or
proceeds from the disposition thereof.
2.11. Cash and cash equivalents
For the purpose of presentation in the statement of cash flows,
cash and cash equivalents includes cash on hand and deposits held
at call with financial institutions.
2.12. Foreign currencies
Assets and liabilities in foreign currencies are translated into
sterling at the rates of exchange ruling at the Statement of
Financial Position date. Transactions in foreign currencies are
translated into sterling at the rate of exchange ruling at the date
of the transaction. Exchange differences are taken into account in
arriving at the operating result.
On consolidation of a foreign operation, assets and liabilities
are translated at the closing rate at the date of the Statement of
Financial Position, income and expenses for each Statement of
Comprehensive Income presented are translated at average exchange
rates. All resulting exchange differences shall be recognised in
other comprehensive income and accumulated in equity.
2.13. Share-based payment arrangements
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of employee services received in exchange for the grant
of share options are recognised as an expense. The total expense to
be apportioned over the vesting period is determined by reference
to the fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions; and
-- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied. At the end of each reporting period the Group
revises its estimate of the number of options that are expected to
vest.
The Group recognises the impact of the revision of original
estimates, if any, in profit or loss, with a corresponding
adjustment to equity.
When options are exercised, the Company issues new shares. The
proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The fair value of goods or services received in exchange for
shares is recognised as an expense and included within
administrative expenses.
2.14. Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated
financial statements, are disclosed below:
a) Recoverability of intangible assets
The Group tests annually for impairment or more frequently if
there are indications that the intangible assets might be
impaired.
Determining whether the intangible assets are impaired requires
an estimation of the value in use of the cash generating units to
which the intangible assets belong. Where impairment indicators are
present, the Group is required to evaluate the future cash flows
expected to arise from the cash-generating unit and the suitable
discount rate in order to calculate the present value.
The carrying value of Group's exploration and evaluation
intangible assets at 31 December 2021 is US$13.6 million (2020:
US$11.1 million), which relates to the Khemisset project.
The Directors therefore undertook an assessment of the following
areas and circumstances that could indicate the existence of
impairment:
-- The Group's right to explore in an area has expired, or will
expire in the near future without renewal;
-- No further exploration or evaluation is planned or budgeted for;
-- A decision has been taken by the Board to discontinue
exploration and evaluation in an area due to the absence of a
commercial level of reserves; or
-- Sufficient data exists to indicate that the book value will
not be fully recovered from future development and production.
The Board has reviewed the project for indicators of impairment,
and are satisfied that the prospects of deriving economic value are
likely to be considerably in excess of the carrying value of the
asset in the accounts.
In arriving at this conclusion, the Directors considered the
ongoing commitment to the project, the economic metrics of the
project as set out in the 2020 Feasibility Study, and the increase
in potash prices over the last 12 months.
Following their assessment, the Directors concluded that no
impairment charge was necessary for the period ended 31 December
2021.
b) Share-based payments
The Group has made awards of options on its unissued share
capital to certain directors and employees as part of their
remuneration package.
The valuation of these options involved making a number of
critical estimates relating to price volatility, future dividend
yields, expected life of the options and interest rates. These
assumptions are described in more detail in note 12.
There was a charge to the Statement of Comprehensive Income
during the year in relation to share based payments of USD$33k
(2020: US$991k).
c) Valuation of warrants
The Group issued shares in November 2021 which included warrants
to investors. The fair value assigned to the warrants involved
making a number of critical estimates relating to price volatility,
future dividend yields and interest rates. The valuation of the
warrants was US$660k (2020: US$ nil)
d) Going concern
In their assessment of going concern, the Directors have
prepared cash flow forecast showing the Group's non-discretionary
expenditure obligations, as well as discretionary activities. The
discretionary activities relate largely to the project work at
Khemisset, which are either uncommitted in nature, or are the
subject of contracts which include clauses allowing the Company to
suspend activities without penalty.
The Group has sufficient cash reserves to cover
non-discretionary expenditure beyond the Going Concern horizon of
at least 12 months from the date of this report, and accordingly
the Board believe the Going Concern basis to be appropriate for the
preparation of the 2021 Financial Statements.
3. Expenses by nature
2021 2020
US$'000 US$'000
Project costs 7 20
Directors' fees (note 4) 635 192
Travel and accommodation 59 43
Auditors' remuneration including
associates 25 42
Employment costs 455 -
Professional and consultancy
fees 1,168 737
Total 2,349 1,034
----------------------------------- -------- --------
4. Directors' remuneration
Details of Directors' remuneration during the year are as
follows:
2021 2020
US$'000 US$'000
Graham Clarke 401 -
James Kelly 65 -
Rupert Joy 19 -
Edward McDermott 51 46
Hayden Locke 33 31
Mark Connelly 16 46
Robert Wrixon 50 69
Total 635 192
------------------- -------- --------
Graham Clarke, Hayden Locke and Robert Wrixon also received fees
for consultancy services which are disclosed within note 14. In
addition, the Directors received share options. Further details on
share options are in note 14. Directors' fees which are directly
attributable to the exploration of a project area have been
capitalised as intangible assets.
5. Income tax
2021 2020
US$'000 US$'000
Current tax:
Tax - -
Total tax - -
-------- --------
Reconciliation of income tax
2021 2020
US$'000 US$'000
Loss before tax (2,777) (1,942)
-------- --------
Loss before tax multiplied by domestic tax
rates applicable to losses in the respective
countries (464) (387)
Effects of:
Foreign tax attributes (33) (8)
Losses on which no deferred tax is recognised 497 395
Total tax - -
-------- --------
The weighted average applicable tax rate was 16.7% (2020:
19.9%). With effect from 2018, Emmerson PLC registered for taxation
in the United Kingdom, where the corporation tax rate is 19%. It is
also subject to taxation in the Isle of Man where the corporation
tax rate is 0%. Morocco has a 20% tax rate applicable to mining
companies, including Emmerson's Moroccan subsidiaries.
A deferred tax asset has not been recognised in respect of
deductible temporary differences relating to certain losses carried
forward at the year end, as there is insufficient evidence that
taxable profits will be available in the foreseeable future against
which the deductible temporary difference can be utilised.
The unrecognised deferred tax asset for the Group was
approximately US$1,456k (2020: US$983k). The unrecognised deferred
tax asset relating to Moroccan tax losses amounted to approximately
US$144k (2020: US$78k).
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
2021 2020
Earnings
Loss from continuing operations for the year attributable to the equity holders of the
Company
(US$'000) (2,777) (1,942)
Number of shares
Weighted average number of ordinary shares for the purpose of basic and diluted earnings
per
share 822,875,086 704,759,944
Basic and diluted loss per share 0.33 cents 0.28 cents
------------------------------------------------------------------------------------------ ------------ ------------
The potential number of shares which could be issued following
the exercise of options and warrants currently outstanding amounts
to 179,625,047 (see note 12). Dilutive earnings per share equals
basic earnings per share as, due to the losses incurred, there is
no dilutive effect from the existing share options and
warrants.
7. Intangible assets
The intangible assets consist of capitalised exploration and
evaluation expenditure in respect of the Company's potash interests
in Morocco (the Khemisset project).
2021 2020
US$'000 US$'000
Cost:
At the beginning of the year 11,132 8,180
Additions 2,671 2,313
Effects of changes in foreign
exchange rates (248) 639
Total 13,555 11,132
-------------------------------- -------- --------
Intangible assets are reviewed at each reporting date to
determine whether there is objective evidence of impairment. See
note 2.14 detailing the Company's judgement in this area.
8. Trade and other receivables
2021 2020
US$'000 US$'000
Other receivables 551 398
Prepayments 220 31
Total 771 429
-------------------- -------- --------
Other receivables include recoverable VAT and other taxes.
9. Trade and other payables
2021 2020
US$'000 US$'000
Other payables 934 227
Accruals 901 454
Total 1,835 681
----------------- -------- --------
Trade and other payables are obligations to pay for goods or
services that have been acquired in the ordinary course of
business. Accounts payable are classified as current liabilities if
payment is due within one year or less (or in the normal operating
cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade payables are recognised initially at
fair value, and subsequently measured at amortised cost using the
effective interest method. Other payables consist of supplier
invoices for administration expenses. Included within Accruals are
engineering costs of US$700k and bonus accruals of US$112k.
10. Financial instruments
Categories of financial instruments
2021 2020
US$'000 US$'000
Financial assets measured at amortised
cost
Other receivables 551 398
Cash and cash equivalents 10,032 1,563
---------------------------------------------- --------- ---------
10,583 1,961
---------------------------------------------- --------- ---------
Financial liabilities measured at amortised
cost
---------------------------------------------- --------- ---------
Other payables 934 227
---------------------------------------------- --------- ---------
Financial risk management objectives and policies
The Company is exposed through its operations to credit risk and
liquidity risk. In common with all other businesses, the Company is
exposed to risks that arise from its use of financial instruments.
This note describes the Company's objectives, policies and
processes for managing those risks and the methods used to measure
them. Further quantitative information in respect of these risks is
presented throughout this financial information.
General objectives, policies and processes
The Directors have overall responsibility for the determination
of the Company's risk management objectives and policies. Further
details regarding these policies are set out below:
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
The capital structure of the Group consists of issued capital,
reserves and retained earnings. The Directors reviews the capital
structure on a semi-annual basis. As a part of this review, the
Directors consider the cost of capital, the risks associated with
each class of capital and overall capital structure risk management
through the new share issues and share buy-backs as well as the
issue of new debt or the redemption of existing debt.
The management's strategy remained unchanged from 2020.
Market price risk
The development and success of any project of the Group will be
primarily dependent on the future price of potash. Potash prices
are subject to significant fluctuation and are affected by a number
of factors which are beyond the control of the Company. Future
production from the Khemisset Project is dependent on potash prices
that are adequate to make the project economic. Potash prices have
increases significantly during 2022, and sanctions on sources from
Russia and Belarus suggest supplies are likely to remain tight for
the foreseeable future.
Credit risk
The Company's credit risk arises from cash and cash equivalents
with banks and financial institutions. For banks and financial
institutions, only independently rated parties with minimum rating
"A" are accepted.
Liquidity risk
Liquidity risk arises from the Directors' management of working
capital. It is the risk that the Company will encounter difficulty
in meeting its financial obligations as they fall due.
The Directors' policy is to ensure that the Company will always
have sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, the Directors seek to maintain a
cash balance sufficient to meet expected requirements.
The Directors have prepared cash flow projections on a monthly
basis through to 30 September 2021. At the end of the period under
review, these projections indicated that the Group is expected to
have sufficient liquid resources to meet its obligations under all
reasonably expected circumstances.
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures. Foreign
exchange risk arises from future commercial transactions,
recognised monetary assets and liabilities and net investments in
foreign operations. It should be noted that although the
consolidated accounts use US$ as a presentational currency,
Emmerson PLC (the parent company) continued to have GBP as a
functional currency in 2021, and the Group's Moroccan entities have
MAD as their functional currency.
Net current assets denominated in US$ and MAD at the year-end
amounted to US$3.98 million and net liability of US$0.35 million
respectively.
At 31 December 2021, had the exchange rate between the Sterling
and US$ increased or decreased by 5% with all other variables held
constant, the increase or decrease respectively in net assets would
amount to approximately US$272k (2020: US$2k).
At 31 December 2021, had the exchange rate between the Sterling
and MAD increased or decreased by 5% with all other variables held
constant, the increase or decrease respectively in net assets would
amount to approximately US$1k (2020: US$1k).
The Group does not hedge against foreign exchange movements.
11. Share capital
The Ordinary Shares issued by the Company have a no par value
and all fully paid. Each Ordinary Share carries one vote on a poll
vote. The Company does not have a limited amount of authorised
capital.
Number US$'000
of shares
As at 31 December 2020 726,602,974 15,755
--------------------------------------------- ------------ ----------
Shares issue for cash 177,470,355 14,536
Shares issued as payment 600,000 47
Less share issue costs - (1,416)
Less fair value of investor warrants issued
in year - (660)
Warrants exercised for cash 10,389,333 422
Transfer from warrants reserve - 90
--------------------------------------------- ------------ ----------
As at 31 December 2021 915,062,662 28,774
--------------------------------------------- ------------ ----------
12. Share based payments
The following is a summary of the share options and warrants
outstanding as at 31 December 2021:
Date of Expiry date Vesting date Exercise No of Share price Risk Free Volatility Option
grant Price Options at grant rate Value
------------ ------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
08-May-18 07-May-23 08-May-18 GBP0.0300 7,250,000 GBP0.0225 1.30% 34% GBP0.0098
08-May-18 07-May-23 08-Nov-18 GBP0.0300 7,250,000 GBP0.0225 1.30% 34% GBP0.0098
08-May-18 07-May-23 08-May-19 GBP0.0300 10,750,000 GBP0.0225 1.30% 34% GBP0.0098
08-May-18 07-May-23 08-Nov-19 GBP0.0300 13,250,000 GBP0.0225 1.30% 34% GBP0.0098
26-Mar-19 24-Mar-24 26-Mar-20 GBP0.0350 6,900,000 GBP0.0400 2.10% 68% GBP0.0242
07-Aug-19 05-Aug-24 07-Aug-19 GBP0.0500 1,500,000 GBP0.0375 2.10% 58% GBP0.0192
01-Aug-20 31-Jul-25 01-Aug-21 GBP0.0010 20,333,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-22 GBP0.0010 7,333,333 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-23 GBP0.0010 3,333,334 GBP0.0435 1.10% 71% GBP0.0219
01-Aug-20 31-Jul-25 01-Aug-20 GBP0.0010 19,000,000 GBP0.0435 1.10% 71% GBP0.0219
96,900,000
-----------
Date of Expiry date Vesting date Exercise No of Share price Risk Free Volatility Warrant
grant Price Warrants at grant rate Value
------------ ------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
04-Jun-18 03-Jun-23 04-Jun-18 GBP0.0300 333,333 GBP0.0225 1% 34% GBP0.0089
9-Nov-21 9-Nov-22 9-Nov-21 GBP0.0830 82,391,714 GBP0.0565 0.8% 57% GBP0.0058
82,725,047
-----------
Total outstanding at 31 December 2021 179,625,047
===========
During the year 82,391,714 warrants were issued (2020: nil).
5,000,000 share options expired (2020: nil) and nil were exercised
(2020: nil). 333,333 warrants expired (2020: 333,333) and
10,000,000 warrants were exercised (2020: 389,333).
T he weighted average remaining contractual life of the options
and warrants at year-end is 1.8 years.
The options and warrants issued were valued using the
Black-Scholes valuation method and the assumptions used are
detailed above. The expected future volatility has been determined
by reference to the historical volatility.
The total share-based payment recognised in the Statement of
Changes in Equity during the year was a US$33k (2020: US$991k),
which included credits of US$14k in respect of cancelled and
unvested share options in the year.
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from Directors and
employees as consideration for equity instruments (options) of the
Group.
There were 77,850,000 (2020: 101,900,000) options at the
year-end held by current Directors, employees, and consultants.
Vesting of the options is subject to the option holder providing
continuous service during the vesting period and there are no other
performance conditions attached to the options.
Share options Number issued Expiry
Graham Clarke (Director) 17,500,000 5 years
Hayden Locke (Director) 22,000,000 5 years
Robert Wrixon (Director) 11,000,000 5 years
Other employees and consultants 27,350,000 5 years
--------------------------------- -------------- --------
Total 77,850,000
--------------------------------- -------------- --------
13. Future rental payments
The commitments arising from operating leases are largely rental
payments for buildings. The future minimum lease payments
(payables) under non-cancellable operating leases are:
2021 2020
US$'000 US$'000
Within one year 20 20
More than one year - -
--------------------- -------- --------
As at end of year 20 20
--------------------- -------- --------
14. Related party transactions
Directors' consultancy fees
Hayden Locke is a Director of the Company and is a director of
Benson Capital Limited, which provide consulting services to the
Company. During the year, Benson Capital Limited received total
fees of US$244k (2020: US$314k). The amount outstanding as at
year-end is US$ nil (2020: US$114k).
Robert Wrixon is a Director of the Company and also provides
consulting services to the Company. During the year, Robert Wrixon
received fees of US$116k (2020: US$115k). The amount outstanding as
at year-end is US$ nil (2020: US$ nil).
Graham Clarke is a Director of the Company and is a director of
GCUK Consulting Limited, which provide consulting services to the
Company. During the year, GCUK Consulting Limited received total
fees of US$99k (2020: US$232k). The amount outstanding as at
year-end is US$ nil (2020: US$ nil).
Details of directors' remuneration during the year are given in
note 4.
There are no other related party transactions.
15. Ultimate controlling party
The Directors consider that there is no controlling or ultimate
controlling party of the Company.
16. Change in Presentation Currency
The Directors believe that US dollars are a more appropriate
currency in which to present the Group's consolidated results, on
the basis that, along with most international mining groups, the
majority of financing and pricing discussions and presentations are
undertaken in that currency.
Consequently, the Group has opted for the financial results to
be presented in US dollars for the year ended 31 December 2021. The
change in presentation currency has been applied
retrospectively.
In re-presenting the Group Financial Statements for the year
ended 31 December 2021, the reported information was converted to
US dollars from GBGBP using the following procedures:
-- Assets and liabilities were translated to US dollars at the
closing rates of exchange at each respective balance sheet date (31
December 2021: GBGBP1: US$1:3532; 31 December 2020:
GBGBP1:US$1.367).
-- Share capital, share premium and other reserves were
translated at the historic rates prevailing at the dates of
transactions.
-- Income and expenses were translated to US dollars at an
average rate at each of the respective reporting periods. This has
been deemed to be a reasonable approximation (31 December 2021:
GBGBP1: US$1.377; 31 December 2020: GBGBP1: US$1.276).
-- Differences resulting from the retranslation were taken to reserves.
To assist shareholders during this change, the impact on the
prior period results, closing balance sheet and the numerator for
earnings per share as originally reported is set out below:
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (REPRESENTED)
As originally reported 2020 Re-presented 2020
Note GBP'000 US$'000
Continuing Operations
Administrative expenses 3 (810) (1,034)
Share-based payment expense 12 (776) (991)
Net foreign exchange gain/(loss) 61 78
Operating loss (1,525) (1,947)
Finance income 4 5
Finance cost - -
Loss before tax (1,521) (1,942)
Income tax 5 - -
---------------------------- ------------------
Loss for the year attributable to equity owners (1,521) (1,942)
---------------------------- ------------------
Other comprehensive income
Items that may be subsequently reclassified to profit or
loss:
Exchange gain on translating foreign operations 97 500
Total comprehensive income attributable to equity owners (1,424) (1,442)
---------------------------- ------------------
Earnings per share - Basic and diluted 6 (0.22 pence) (0.28 cents)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (REPRESENTED)
As originally presented Re-presented As originally presented Re-presented
2020 2020 2019 2019
Note GBP'000 US$'000 GBP'000 US$'000
Non-current assets
Intangible assets 7 8,142 11,132 6,172 8,180
Property, plant and
equipment 12 16 38 50
------------------------- -------------
Total non-current assets 8,154 11,148 6,210 8,230
Current assets
Trade and other
receivables 8 314 429 271 359
Cash and cash equivalents 1,143 1,563 2,071 2,746
------------------------- ------------- -------------------------- -------------
Total current assets 1,457 1,992 2,342 3,105
Total assets 9,611 13,140 8,552 11,335
------------------------- ------------- -------------------------- -------------
Current liabilities
Trade and other payables 9 498 681 414 549
------------------------- -------------
Total current liabilities 498 681 414 549
Net assets 9,113 12,459 8,138 10,786
------------------------- ------------- -------------------------- -------------
Shareholders equity
attributable to equity
owners
Share capital 11 12,030 15,755 10,408 13,631
Share reserve 12 1,163 1,499 386 508
Reverse acquisition
reserve 1,651 2,198 1,651 2,198
Retained earnings (5,740) (7,508) (4,219) (5,566)
Translation reserve 9 515 (88) (15)
------------------------- -------------
Total equity 9,113 12,459 8,138 10,786
------------------------- ------------- -------------------------- -------------
17. Events after the reporting date
There were no material events that took place after the
reporting date.
**ENDS**
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