TIDMPREM
RNS Number : 3709D
Premier African Minerals Limited
28 June 2021
Premier African Minerals Limited / Ticker: PREM / Index: AIM /
Sector: Mining
For immediate release
28 June 2021
Premier African Minerals Limited
Final Results
Premier African Minerals Limited, the AIM-traded,
multi-commodity mining and natural resource development company
focused in Southern and Western Africa, is pleased to announce
publication of its audited Annual Report and Accounts for the year
ended 31 December 2020 (the "Annual Report").
The Annual Report is available on the Company's website,
www.premierafricanminerals.com , and is in the process of being
posted to Shareholders.
The Annual Report for the year ended 31 December 2020 is set out
in full below.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018.
The person who arranged the release of this announcement on
behalf of the Company was George Roach.
Enquiries:
Premier African Minerals Tel: +27 (0) 100
George Roach Limited 201 281
Michael Cornish / Beaumont Cornish Limited Tel: +44 (0) 20 7628
Roland Cornish (Nominated Adviser) 3396
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Jerry Keen/Edward Shore Capital Stockbrokers Tel: +44 (0) 20 7408
Mansfield Limited 4090
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Chief Executive's Statement
In reviewing my previous commentary in advance of setting pen to
paper for this statement, I could not help but reflect on the
dramatic changes to Premier African Minerals Limited ("Premier" or
"Company") post year end, and at the same time acknowledge another
challenging and frustrating year.
Frustration as much from the difficulties of Covid-19, as from
the inability to progress either our Zulu Lithium and Tantalum
Project ("Zulu") or RHA Tungsten (Pvt) Limited ("RHA") and the
generally disappointing performance from the Otjozondu Manganese
Mine ("Otjozondu").
Negotiation and discussion with the Zimbabwe Government in
regard to RHA and the application for an Exclusive Prospecting
Order ("EPO") over an extended area surrounding Zulu continued
throughout the year and despite the travel restrictions associated
with Covid-19, I was able to make a number of visits to Zimbabwe,
Namibia, and Mozambique, all with the common objectives of
progressing our operations.
In the latter part of 2020, and as a generally better
appreciation for the needs to go green re-emerged, and liquidity
for development projects improved, our Company was able to extract
itself the lows of the last two years and in a step by step manner,
turn around.
Premier liquidated all historic debt and recapitalised our
operations. This set up the Company for either alternative
acquisitions or possible transactions and set us on a sound base to
progress Zulu should the EPO be granted, and to assist with the
expansion of Otjozondu operations and the potential return to
production of RHA.
Events subsequent to year end have since overtaken history and
with the granting of the EPO in Zimbabwe in late March 2021,
Premier has seen both a revival of our share price and our market
capitalisation and our Company is now set up for a most exciting
2021, in particular from midyear onward.
I deal in detail with each of our projects and areas of
operations in the body of this annual report, but it would be
remiss of me not to express my deep appreciation to our
shareholders, staff and directors who have weathered the storm of
the past few years with me.
We anticipate better times ahead.
George Roach
Chief Executive Officer
28 June 2021
Strategic Report
The strategic report provides a detailed assessment of the
activities of the Company during the period under review. It also
details the main objectives of the Company related to our portfolio
of assets. The principal risks and uncertainties associated with
our activities are outlined in a specific principal risks and
uncertainties section. This section of the annual report is
produced in accordance with Guidance on the Strategic Report, July
2018 issued by United Kingdom's independent regulator, the
Financial Reporting Council.
RHA
49% Interest owned by Premier
51% Locally indigenized owned by National Indigenisation and
Economic Empowerment Fund ("NIEEF")
Little changed in regard to NIEEF during the reporting period.
Despite this, Premier initiated the test work discussed in our
previous reports and at the time of writing finally expects a new
cash flow model based on a revised flow sheet and capex
estimates.
Premier has independently validated the underground resource at
RHA and is confident that with a positive cash flow forecast,
support from our offtake partners and in the present climate of
appreciating Tungsten prices, RHA has a future.
I cannot predict the intentions of NIEEF, but Premier is owed
more than US$ 20 million and provided finance to recapitalise RHA
is sourced other than from Premier, it makes business sense to
return this mine to operations. The plant is owned 100% by Premier
and it is entirely feasible that this plant could be utilised
elsewhere in Zimbabwe.
Recoverability of RHA Mine Assets
The RHA mine assets remain fully impaired at this time and are
likely to so remain until NIEEF either funds the operation or
another sustainable arrangement, as suggested above, is concluded
that allows the mine to be fully funded and returned to
operations.
Zulu Lithium and Tantalum Project
Nothing changed at Zulu during 2020. Everything is changing in
2021. All thanks to the final issuance of an EPO over the extended
area surrounding Zulu.
As I write this, camp construction is well advanced, utilities
for a camp that is likely to need to accommodate up to 100 persons
are largely installed and commissioned, first rigs are on site, the
Definitive Feasibility Study ("DFS") engineering team has been
appointed, and multipurpose drilling has commenced. Over the coming
months we expect to see resource definition and expansion,
attention to geotechnical and test work sample collection and
generally significant advancement into the DFS process. Premier
continues to field diverse approaches from prospective off take
partners and investors, however the Board remains of the opinion
that delaying any definitive decision until we are able to unlock
further value through progression into the DFS program, is likely
to present our Company with the best return.
Whilst Zulu remains fully impaired for the moment, improvements
in the price of spodumene concentrate and a re-evaluation of
country risk parameters, coupled to the worldwide demand for the
concentrates we expect to produce, will support a reversal of this
impairment in the near future.
Extended Lithium Portfolio
Premier acquired a portfolio of hard-rock lithium assets located
in Zimbabwe and Mozambique from Lithium Consolidated Ltd ("Li3") on
the 28 July 2020. Of real interest was a small licence in the
Zambezi province of Mozambique and this is prospective for gold.
Preliminary results from an early field trip, coupled to the extent
of artisanal activity, confirms this. Nevertheless, extensive
exploration of this licence in isolation of a larger area is not
indicated and Premier has therefore made application for additional
ground surrounding this licence.
We await grant of appropriate licences and will progress this at
that time.
MN Holdings Limited ("MNH")
In September 2020 Premier provided an update in respect of
Otjozondu and it is disappointing to note that the mine had not met
its original objectives agreed with Premier.
Independent assessment at a Competent Person level conducted in
the latter part of 2020 and earlier in 2021 has concluded that
Otjozondu has the resources necessary for a successful mining
operation and after a moderate recapitalisation and implementation
of new mining plans, should perform at least at the same level as
peer operations in neighbouring countries .
Whilst Covid related issues have impacted shipping to a much
greater extent than expected, it remains an imperative that Premier
continues to explore a basis for increasing its control over the
operational management of this mine. The last audited reported
accounts for Otjozondu are for the year ended 30 June 2020, for
which revenue amounted to N$80 million (equivalent to $5.6 million)
and operating profit before tax (and interest charges to group
companies) was N$10 million (equivalent to $0.7 million). Total
assets as at the same date amounted to N$108 million (equivalent to
$7.6 million).
In the unaudited management accounts for 6 months ended 31
December 2020, Otjozondu reported revenue of approximately N$39
million (equivalent to $2.7 million) and an operating profit before
tax (and interest charges to group companies) of approximately
N$22.1 million (equivalent to $1.5 million). Total assets as at the
same date amounted to approximately N$120 million (equivalent to
$8.4 million).
As further reported in Note 32, Premier has agreed to provide
Otjozondu with a small working and expansion capital facility.
Circum Minerals Limited ("Circum")
We continue to hold 5,010,333 Circum shares, currently valued in
total at $6,262,916. Circum provided Premier with a shareholder's
update on the 11 May 2021 whereby they had independently confirmed
the first phase 375 kilo-tonnes per annum production level is
appropriate and delivers a robust financial return with industry
leading OPEX. Their DFS is planned for completion in Q2/2021 with
the hydrology component being completed in Q4/2021 and they
continue their discussions with the various parties who were
previously engaged on offtake/marketing arrangements as well as
other new opportunities will recommence after completion of the
DFS. Together with the above shareholder update, a rights issue was
undertaken by Circum at $1.25 per share in which the company did
not participate.
Market intelligence continues to report good prospects for the
Sulphate of Potash market, showing a steady growth in demand for
the foreseeable future.
We maintain strong lines of communication with principal major
shareholders of Circum.
Funding
During the reporting period we raised net proceeds of $2.343
million (2019: $1.984 million).
Principal activities and strategic review of the business
The principal activity of Premier and its subsidiary companies
(the Group) during the year under review is the mining,
exploration, evaluation development and investment in natural
resource properties on the African continent.
Premier was incorporated on 21 August 2007 in the British Virgin
Islands (BVI) as a BVI business company with number 1426861. The
registered office is Craigmuir Chambers, PO Box 71, Road Town,
Tortola, British Virgin Islands. The Company was admitted to
trading on the London Stock Exchange's AIM Market on 10 December
2012.
Objectives
During the current year, the primary focus will be:
-- Look to acquire potentially cash generative assets.
-- To progress the DFS studies at Zulu.
-- Continue to engage directly with MNH.
-- Definitively settle the status at RHA and either reopen the mine or relocate our plant.
-- Identify and secure high value exploration targets in other jurisdiction.
Principal risks and uncertainties
The Group is subject to a number of risks and uncertainties
which could have a material effect on its business, operations, or
future performance, including but not limited to:
Credit Risk
Credit risk is the risk of potential loss to the Company if
counterparty to a financial instrument fails to meet its
contractual obligations. The Company's credit risk is primarily
attributable to its liquid financial assets, including cash,
receivables, and balances receivable from the government. The
Company limits the exposure to credit risk in its cash by only
investing its cash with high-credit quality financial institutions
in business and savings accounts, guaranteed investment
certificates and in government treasury bills which are available
on demand by the Company for its programs. The Company does not
invest in money market funds. The Company has no risk exposure to
asset backed commercial paper or auction rate securities.
Refer to note 29 for the company's exposure to credit risk.
Liquidity Risk
Liquidity risk is the risk that the Company will not have the
resources to meet its obligations as they fall due. The Company
manages this risk by closely monitoring cash forecasts and managing
resources to ensure that it will have sufficient liquidity to meet
its obligations. Also refer to the going concern section below.
Refer to note 29 for the company's exposure to liquidity
risk.
Operating Risks
The activities of the Group are subject to all of the hazards
and risks normally incidental to exploring and developing natural
resource projects. These risks and uncertainties include, but are
not limited to environmental hazards, industrial accidents, labour
disputes, geo-political risks, encountering unusual or unexpected
geologic formations or other geological or grade problems,
unanticipated changes in rock formation characteristics and mineral
recovery, encountering unanticipated ground or water conditions,
land slips, flooding, periodic interruptions due to inclement or
hazardous weather conditions and other acts of God or un-favourable
operating conditions and losses.
Should any of these risks and hazards affect the Group's
exploration, development or mining activities, it may cause the
cost of production to increase to a point where it would no longer
be economic to extract minerals from the Group's properties,
require the Group to write-down the carrying value of one or more
of its assets, cause delays or a stoppage of mining and processing,
result in the destruction of mineral properties or processing
facilities, cause death or personal injury and related legal
liability, any and all of which may have a material adverse effect
on the Group.
Early-stage Business Risk
The Group's success will depend on its ability to raise capital
and generate cash flows from production in the future at MNH and
potentially RHA should NIEEF meet their funding obligations. The
board of directors manages this risk by monitoring cash levels and
reviewing cash flow forecasts on a regular basis.
Market Risk (exchange rates, commodity, and equity)
Market risk is the risk of loss that may arise from changes in
market factors such as interest rates, foreign exchange rates, and
commodity and equity prices. These fluctuations may be
significant.
Interest Rate Risk: The Company is exposed to interest rate risk
to the extent that its cash balances bear variable rates of
interest. The interest rate risks on cash and short-term
investments and on the Company's, obligations are not considered
significant.
Foreign Currency Risk: The Company is exposed to the financial
risk related to the fluctuation of foreign exchange rates against
the Company's functional currency, which is the United States
dollar ("USD"). The Company expects to continue to raise funds in
the United Kingdom. The Company conducts its business in Zimbabwe
with a significant portion of expenditures in that country
historically denominated in USD and now also in RTGS Dollars
("RTGS$"). The introduction of the RTGS$ during the financial year
has resulted in the devaluation of the RTGS$ against the US Dollar.
This devaluation has also resulted in the Zimbabwean economy going
into hyperinflationary status. To a large extent this is beneficial
to Premier as its Zimbabwean assets are fully impaired. The
remaining liabilities are inflation adjusted at each reporting
period yielding foreign exchange gains on conversion to USD.
Additionally, a portion of the Company's business is conducted in
South African Rands ("ZAR"). As such, it is subject to risk due to
fluctuations in the exchange rates between the USD and each of the
RTGS$, ZAR and GBP. A significant change in the currency exchange
rates between the USD relative to foreign currencies could have an
effect on the Company's results of operations, financial position,
or cash flows. The Company has not hedged its exposure to currency
fluctuations.
Commodity Price Risk - While the value of the Company's core
mineral resource properties, RHA and Zulu are related to the price
of tungsten and lithium and the outlook for these minerals, the
Company currently does not have any substantially owned operating
mines and hence does not have any hedging or other commodity-based
risks in respect of its operational activities. The Company
minority interest in MNH results in limited control of how MNH
mitigate the risk associated with Manganese price fluctuations.
Refer to note 29 for the company's exposure to market risk.
Early-stage Project Risk
RHA moved into production during 2017, which was then suspended
on 9 January 2018. Zulu is at an early stage of development. In
advancing these projects to the stage where they may be cash
generative, many risks are faced, including the inherent
uncertainty of discovering commercially viable reserves, the
capital costs of exploration, competition from other projects
seeking financing and operating in remote and often politically
unstable environments. While discovery of a mineral deposit may
result in substantial rewards, few properties that are explored are
ultimately developed into economically viable operating mines.
Major expenditure may be required to establish reserves and it is
possible that even preliminary due diligence will show adverse
results, leading to the abandonment of projects. Whether a mineral
deposit will become commercially viable depends on a number of
factors, some of which are the particular attributes of the
deposit, proximity to infrastructure, financing costs and
governmental regulations. The effect of these factors can only be
estimated and cannot be accurately predicted.
Environmental Risks and Hazards
All phases of the Group's operations are subject to
environmental regulation in the areas in which it operates.
Environmental legislation is evolving in a manner that may require
stricter standards and enforcement, increased fines and penalties
for non-compliance, more stringent environmental assessments of
proposed projects and a heightened degree of responsibility for
companies and their officers, directors, and employees. There is no
assurance that existing or future environmental regulation will not
materially adversely affect the Group's business, financial
condition, and results of operations. Environmental hazards may
exist on the properties on which the Group holds interests that are
unknown to the Group at present. The Board manages this risk by
working with environmental consultants and by engaging with the
relevant governmental departments and other concerned
stakeholders.
Licencing Risk
The Company's exploration and development activities are
dependent upon the grant of appropriate licences, concessions,
leases, permits and regulatory consents which may be withdrawn or
made subject to limitations or performance criteria. Such licences
and permits are as a practical matter subject to the discretion of
the applicable Government or Government office. The Group must
comply with known standards, existing laws and regulations that may
entail greater or lesser costs and delays depending on the nature
of the activity to be permitted. The interpretations, amendments to
existing laws and regulations, or more stringent enforcement of
existing laws and regulations could have a material adverse impact
on the Group's results of operations and financial condition.
Whilst the Company continually seeks to do everything within its
control to ensure that the terms of each licence are met and
adhered to, third parties may seek to exploit any technical
breaches in licence terms for their own benefit. There is a risk
that negotiations with a Government in relation to the grant,
renewal or extension of a licence may not result in the grant,
renewal or extension taking effect prior to the expiry of the
previous licence period, and there can be no assurance of the terms
of any extension, renewal, or grant.
Political and Regulatory Risk
The Group's operating activities in Africa, notably in Zimbabwe,
are subject to laws and regulations governing expropriation of
property, health and worker safety, employment standards, waste
disposal, protection of the environment, mine development, land and
water use, prospecting, mineral production, exports, taxes, labour
standards, occupational health standards, toxic wastes, the
protection of endangered and protected species and other matters.
The Group is dependent on the political and economic situation in
these countries and may be adversely impacted by political factors
such as expropriation, war, terrorism, insurrection, and changes to
laws governing mineral exploration and operations.
Internal Control and Financial Risk Management
The Board has overall responsibility for the Group's systems of
internal control and for reviewing their effectiveness. The Group
maintains systems which are designed to provide reasonable but not
absolute assurance against material loss and to manage rather than
eliminate risk.
The key features of the Group's systems of internal control are
as follows:
Management structure with clearly identified
responsibilities.
Production of management information presented to the Board.
Day to day hands on involvement of the Executive Directors and
Senior Management.
Regular board meetings and discussions with the non-executive
directors.
The Group's activities expose it to a number of financial risks
including cash flow risk, liquidity risk and foreign currency risk.
The Group has identified certain short coming in the financial
control systems, which are currently in the process of being
addressed.
Disclosure of management's objectives, exposure, and policies in
relation to these risks can be found in note 29 to these financial
statements.
Environmental Policy
The Group is aware of the potential impact that its subsidiary
companies may have on the environment. The Group ensures that it
complies with all local regulatory requirements and seeks to
implement a best practice approach to managing environmental
aspects.
The RHA located in Zimbabwe was granted approval of its
Environmental Impact Assessment and was permitted to undertake
mining operations by the Environmental Management Agency of
Zimbabwe.
Health and Safety
The Group's aim is to achieve and maintain a high standard of
workplace safety. In order to achieve this objective, the Group
provides ongoing training and support to employees and sets
demanding standards for workplace safety.
Covid-19
The Board recognises that the emergence and spread of new
coronavirus strains represents a continuing risk to the Company's
operations. The Board has also received assurances from the
Company's key service providers and management in respect of their
ongoing activities with our operations and steps are being taken to
guarantee the ongoing efficiency of our operations while ensuring
the safety and well-being of our employees.
With expanding vaccine programme, the outlook is cautiously
positive, but the Board will continue to monitor developments as
they occur.
Going Concern
These consolidated financial statements are prepared on the
going concern basis. The going concern basis assumes that the Group
will continue in operation for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of business.
The Directors have prepared cash flow forecasts for the period
ending 31 December 2022, on the basis of the following
considerations, inter alia:
RHA
-- The Company has not funded any of the activities at RHA since
1 July 2019, apart from essential care and maintenance costs.
Zulu
-- During March 2021, the EPO was granted and subsequently a
definitive feasibility study (DFS) has commenced.
-- The Company is funding the DFS through ongoing capital raises.
-- The Company is actively seeking joint venture agreements with prospective partners.
MNH
-- The Group is anticipating deriving a return on its current
investment in MNH in the latter portion of 2021.
-- The Company has received the June 2020 audited financial
statements which reflects a profit of N$4.5 million for
the year.
The Group
-- During the course of the year ended 31 December 2020 the
Company issued 6,526,938 shares with a total value of $4.558
million. These funds were used to settle historic debt, fund
continuing operations and acquire the investments as listed in note
8 and 9.
-- In June 2021 the Group issued 625,000,000 shares at a price
of 0.16p per share raising a total of $1.416 million. This cash is
being used to commence the Zulu DFS. Additional capital raises are
planned for the second half of the year to fund the DFS.
-- The cash flow is dependent on additional capital being raised
and any cash flows derived from its investment in the trading
company. There remains an active and liquid market for the
Company's shares and the Company has historically been able to
raise funding through equity placements and the Board believes that
it will continue to be able to secure the funds required for
ongoing working capital needs going forward.
-- The Company will seek to diversify its operations and risk
profile and limit the funds that need to be raised through equity
placements to provide necessary funding for the Company's
significantly reduced fixed overhead.
In the event that the Company is unable to obtain additional
equity finance for the Group's working capital, a material
uncertainty exists which may cast significant doubt on the ability
of the Group to continue as a going concern and therefore be unable
to realise its assets and settle its liabilities in the normal
course of business.
Refer to note 5 for further information.
George Roach
Chief Executive Officer
28 June 2021
Directors' Report
Results
The audited financial statements for the year ended 31 December
2020 are set out on pages 30 to 78. The Group reported a loss
before and after tax of $1.334 million for the year ended 31
December 2020 (2019: $1.439 million).
The loss before and after tax includes:
-- A gross trading profit after depreciation and amortisation is $nil (2019: $nil).
-- Administration expenses amounting to $1.299 million (2019: $1.817 million).
-- Given that RHA is under care and maintenance, it was decided
to impair the carrying value in full of the RHA assets by $0.009
million (2019: $0.349 million).
-- Finance costs amounting to $0.119 million (2019: $0.114 million); and
-- Impairment of intangible assets - Zulu of $nil (2019: $nil).
The total comprehensive loss for the year amounted to $1.177
million (2019: $26,221 million)
Dividends
The Directors do not recommend the payment of a dividend in
respect of the year under review.
Fund-raising and capital
During the 2020 financial year net funds of $2.343 million were
raised through direct subscriptions from the issue of new ordinary
shares (2019: $1.984 million).
There remains an active and very liquid market for the Group's
shares.
Borrowings
During the financial year, all loans were settled by the issue
of shares. As at the year end, there are no loans outstanding.
Further information on these transactions is included in note 17
and 31.
Other key elements of financial position
Exploration and Evaluation costs of $nil (2019: $nil) were
capitalised on the Zulu in Zimbabwe.
The Company's holdings in Circum amount to $6.263 million (2019:
$6.263 million).
The Company's holdings in MNH amount to $2.079 million (2019:
$1.181 million).
The Company's investment in property, plant and equipment during
the year was $0.009 million (2019: $0.483 million).
Events after the reporting date
At the date these financial statements were approved, the
Directors were not aware of any significant events after the
reporting date other than those set out in note 32 to the financial
statements.
Directors
The Directors of Premier who served during the period or
subsequently were:
-- George Roach (appointed on incorporation April 2007)
-- Godfrey Manhambara (appointed 27 September 2017)
-- Wolfgang Hampel (appointed 10 April 2018)
-- Neil Herbert (appointed 28 August 2019)
Directors' Fiduciary Statement
The Directors acknowledge their fiduciary duties and consider
that they have, both individually and together, acted in the way
that, in good faith, would be most likely to promote the success of
the Company for the benefit of its members as a whole. In doing so,
they have had regard (amongst other matters) to:
-- The likely consequences of any decision in the long term. The
Group's long-term strategic objectives, including progress made
during the year and principal risks to these objectives, are shown
in the strategic report and the key performance indicators.
-- The interests of the Company's employees. Our employees are
fundamental to us achieving our long-term strategic objectives.
-- The impact of the Company's operations on the community and
the environment. The Group operates honestly and transparently. We
consider the impact on the environment on our day-to-day operations
and how we can minimise this.
-- The desirability of the Company maintaining a reputation for
high standards of business conduct. Our intention is to behave in a
responsible manner, operating within the high standard of business
conduct and good corporate governance.
-- The need to act fairly as between members of the Company. Our
intention is to behave responsibly towards our shareholders and
treat them fairly and equally so that they may benefit from the
successful delivery of our strategic objectives.
Share capital
Premier's shares are publicly traded on AIM with the stock
ticker of PREM. As at 31 December 2020, the Company's issued share
capital consists of 17 793 009 831 (note 18) Ordinary Shares of no
par value.
The company does not hold any Ordinary Shares in treasury.
Major Shareholders
As at 21 June 2021 the Company was aware of the following
persons who hold, directly or indirectly, voting rights
representing 3% or more of the issued share capital of the Company
to which voting rights are attached:
Name Number of Ordinary Shares % Issued Share Capital
George Roach* 1,597,514,207 8.6%
James Goozee(#) 1,015,545,497 5.5%
* George Roach and/or structures associated with G Roach.
(#) James Goozee and/or his wife Mrs. Elizabeth Goozee.
There are no restrictions on the transfer of the Company's AIM
securities.
George Roach
Chief Executive Officer
28 June 2021
Corporate Governance Statement
Premier is committed to maintaining the highest standards in
corporate governance throughout its operations and to ensure all
its practices are conducted transparently, morally, and
efficiently. Therefore, and in accordance with the AIM Rules for
Companies (March 2018), Premier will seek to comply with the
provisions of The UK Corporate Governance Code July 2016, as
published by the Financial Reporting Council Limited, to the extent
the Board consider appropriate, given the Company's size, stage of
development and resources (the "Code").
Throughout the Reporting Period, the Company has continued to
adhere to this Code and the following statement sets out how the
Company complies or otherwise departs from the principles of the
Code.
Premier constantly seeks to maintain the highest levels of
corporate governance whereby the Company ensures that a periodic
review of the Company's corporate governance is done. Following
this recent review, there have been no corporate governance issues
identified by Premier.
Accordingly, the Company has established specific committees and
implemented certain policies, to ensure that:
-- It is led by an experienced Board which is collectively
responsible for the long-term success of the Company.
-- The Board and the committees have the appropriate balance of
skills, experience, independence, and knowledge of the Company to
enable them to discharge their respective duties and
responsibilities effectively.
-- The Board establish a formal and transparent arrangement for
considering how it applies the corporate reporting, risk management
and internal control principles and for maintaining an appropriate
relationship with the Company's auditors.
-- There is a dialogue with shareholders based on the mutual understanding of objectives.
During the year, the board of directors held one formal board
meeting that was attended by all members in office. The board of
directors held a number of informal virtual board calls with the
attendance of all directors in office to discuss the operations of
the Company. Since the year end, the board of directors have held 3
formal board meetings and continue to implement the policy of
holding informal board calls as so required. The various committees
of the Company have continued to meet from time to time in
accordance with the requirements of the Company's ongoing
operations.
In addition, the Company has adopted a comprehensive suite of
policies including:
-- Anti-corruption and bribery.
-- Health and safety.
-- Environment and community.
-- IT, communications, and systems.
-- social media.
The Code followings 5 Main Principles, which are herein assessed
in accordance with Premier commitment to maintain the highest
levels of corporate governance.
1. Leadership
The Role of the Board of Directors
The Board is responsible for the management of the business of
the Company, setting its strategic direction and establishing
appropriate policies. It is the Directors' responsibility to
oversee the financial position of the Company and monitor its
business and affairs on behalf of the Shareholders, to whom they
are accountable. The primary duty of the Board is always to act in
the best interests of the Company. The Board also addresses issues
relating to internal control and risk management. The Non-executive
Directors bring a wide range of skills and experience to the
Company, as well as independent judgment on strategy, risk, and
performance. The Non-executive Directors are considered by the
Board to be independent at the date of this report. To achieve its
objectives, the Board strictly adheres to the Code.
The Board meets at least three times a year with supplementary
meetings held as required. The agenda for the Board meetings is
prepared jointly by the Chairman and CEO. The Board maintains
annual rolling plan ("Agenda") of items for discussion to ensure
that all matters reserved for the Board, with other items as
appropriate, are addressed. The Agenda, with all accompanying
documents, generally includes the following:
-- Review of previous minutes.
-- Discussion on various project activities and market conditions.
-- Management Accounts and Financial position.
-- Corporate Matters.
-- Other business matters that Board members can freely raise beyond the defined Agenda.
The Annual Accounts of Premier best reflects the Board key types
of decisions that the Board are required to take in their pursuant
of maintaining the highest levels of corporate governance. The
following matters are reserved for the Board.
-- Strategy, Policy and Management.
-- Group Structure and capital requirements.
-- Financial reporting and controls.
-- Internal and External controls.
-- Transactions and Commercial Contracts including delegation authority.
-- Board structure.
-- Corporate governance matters.
Premier has established varies committees to assist the Board in
maintain the highest levels of corporate governance. Of these
committees, the following two strongly assist the decision making
of the Board.
Audit Committee
The Audit Committee ("AC"), which comprises of George Roach,
Godfrey Manhambara and Neil Herbert, and is chaired by Neil
Herbert, is responsible for the appointment of auditors and the
audit fee, and for ensuring that the financial performance of the
Company is properly monitored and reported. The Audit Committee,
inter alia, meets with the Company's external auditor and its
senior financial management to review the annual and interim
financial statements of the Company, oversees the Company's
accounting and financial reporting processes, the Company's
internal accounting controls and the resolution of issues
identified by the Company's auditors.
Other key aspects of the AC include:
-- Reviewing the Company's accounting policies and reports
produced by internal and external audit functions.
-- Considering whether the Company has followed appropriate
accounting standards and made appropriate estimates and judgements,
considering the views of the external auditor.
-- Reporting its views to the board of directors if it is not
satisfied with any aspect of the proposed financial reporting by
the Company.
-- Reviewing the adequacy and effectiveness of the Company's
internal financial controls and internal control and risk
management systems.
-- Reviewing the adequacy and effectiveness of the Company's
anti-money laundering systems and controls for the prevention of
bribery and receive reports on non-compliance.
-- Overseeing the appointment of and the relationship with the external auditor.
Remuneration Committee
The Remuneration Committee comprises of Godfrey Manhambara and
Neil Herbert and is chaired by Godfrey Manhambara. The Remuneration
Committee assumes general responsibility for assisting the Board in
respect of remuneration policies for Premier. The Committee reviews
and recommends remuneration strategies for the Company and
proposals relating to compensation for the Company's officers,
directors and consultants and assesses the performance of the
officers of the Company in fulfilling their responsibilities and
meeting corporate objectives. It has the responsibility for, inter
alia, administering share and cash incentive plans and programmes
for Directors and employees and for approving (or making
recommendations to the Board on) share and cash awards for
Directors and employees.The Committee is satisfied that the advice
received has been objective and independent as at the date of this
report.
The Division of Responsibility of the Board of Directors
It is important that the Board itself contains the right mix of
skills and experience to deliver the strategy of the Company. The
roles of the Chairman and Chief Executive Officer ("CEO") are no
longer exercised by the same person. There is no one individual or
group of individuals on the Board that have unfettered powers of
discretion nor is there any undue influence in the collective
decision-making ability of the Board.
The responsibilities of the Chairman, CEO and Non-executive
director are set out in writing and are review by the Board
annually to ensure that it remains relevant and accurate. In brief
summary, they are responsible as follows:
-- The Chairman's role is to lead and manage the Board and play
a role in facilitating the discussion of the Company's
strategy, as set by the Board. And to effectively promote the
success of the Company.
-- The CEO's role, including the role of the Technical Director,
is the responsibility of the day-to-day management of the Company's
operational activities, and for the proper execution of the stagey
as set by the Board.
-- The Non-executive directors, act as a member of the unitary
Board, however, they are required to constructively
challenge performance of management and help develop proposals
on strategy, agreeing of goals and the
Company key objectives.
2. Effectiveness
The Composition of the Board
The Board and its committees should have the appropriate balance
of skills, experience, independence, and knowledge of the Company
to enable them to discharge their respective duties and
responsibilities effectively.
As such, the Board has been structured to ensure that correct
mix of skills and experience are in place to allow it to operate
effectively:
-- A Non-Executive Chairman (Neil Herbert), whose primary
responsibility to lead and manage the Board. This remains vital in
the delivery of the Company's corporate governance model. The
Chairman has a clear separation from the day-to-day business of the
Company which allows him to make independent decisions.
-- A CEO (George Roach), whose primary focus is communicating,
on behalf of the Company, with shareholders, government entities,
and the public. Leading the development of the Company's short- and
long-term strategy.
-- A Technical Director (Wolfgang Hampel), whose is responsible
for leading, co-ordinating and optimising the performance of both
mining and exploration services. With a further responsibility for
geological and mine planning activities, his role is critical in
ensuring the quality and efficiency of Premier geology, and
-- one independent Non-Executive Director (Godfrey Manhambara).
The Code requires that a smaller company (and which the Company
is under the Code) should have at least two independent
non-executive directors. Godfrey Manhambara is independent under
the Code. The Board also regards Neil Herbert as independent,
notwithstanding that he participates in the Company's share option
plan and had an interest in MNH. The Board is satisfied that Neil
Herbert acts independently irrespective of these interests. The
Board also notes that no single individual will dominate decision
making and further notes that there has been sufficient challenge
of executive management at meetings of the Board thereby confirming
that the Board is capable of operating effectively.
The Board has not appointed a senior Finance Director but is
actively seeking for the appropriate candidate. Additionally, the
Company has a Company Secretary in the UK who assists the Chairman
and CEO in preparing for and running effective board meetings,
including the timely dissemination of appropriate information. The
Company Secretary provides advice and guidance to the extent
required by the Board on the legal and regulatory environment.
The Nomination Committee ("NC") has been established to
regularly review and ensure that the Board has the appropriate
balance of skills, experience, and knowledge of the Company. NC
meets as required to consider the composition of and succession
planning for the Board, and to lead the process of appointments to
the Board. The Committee is made up of George Roach and Wolfgang
Hampel and is chaired by George Roach.
Other key aspects of the NC include:
-- regularly reviewing the structure, size, and composition
(including the skills, knowledge, experience, and diversity) of the
board and make recommendations to the board about any changes,
succession planning and vacancies; and
-- identifying suitable candidates from a wide range of
backgrounds to be considered for positions on the board.
Appointments to the Board
The appointment of new Directors to the Board is led by the NC
who has the responsibility for nominating candidates for
appointment. Both the NC and Board considers the need for
diversity, including equality, and that the new directors must
exhibit the required skills, experience, knowledge, and
independence.
The Board acknowledges that the Company is not in compliance
with the Code whereby the NC should comprise a majority of
independent directors. The Board considers that the NC has a strong
enough independent component with Godfrey Manhambara.
Commitment
The Board requires that all directors should be able to allocate
sufficient time to the Company to discharge their responsibilities
in accordance their letter of appointment. The Company maintains
records of each letter of appointment, which can be inspected at an
agreed time, at the Company's registered office.
The NC is responsible for considering on an annual basis,
whether each director is able to devote sufficient time to their
duties.
Development
All directors are required to familiarise themselves with the
Board and should regularly update and refresh their skills and
knowledge. The Company provides each joining director with an
induction on the Company. Each induction is tailored to the
specific background and requirements of the new director. In
general, the induction contains information on:
-- Structures and operations.
-- Board procedures.
-- Corporate Governance.
-- Details regarding their duties and responsibilities.
Information and Support
As Premier constantly seeks to maintain the highest levels of
corporate governance, it is imperative that information is supplied
to the Board in a form and of a quality appropriate to enable the
Board to discharge its duties in a timely manner. The supply of the
information is done by the Chairman with the assistance of the
Company Secretary.
Premier encourage all Board members to seek independent
professional advice (at the reasonable expense of the Company) in
the furtherance of their duties. The Board is given sufficient
opportunity to meet with any manager, consultant, or contractor to
gain further insight into Premier.
Evaluation
The Board recognises that it should undertake a formal and
rigorous annual evaluation of its own performance, that of its
committees and individual directors.
The evaluation of the Board's performance is an assessment of
the following key factors:
-- The Board structure.
-- The Board's performance.
-- The Board business strategy.
-- Financial reporting and controls.
-- Performance monitoring.
-- Supporting and advisory roles.
The Board is not in compliance with the Code as the evaluation
process is usually conducted internally due to the size and
complexity of the operations of the Company. Furthermore, the Board
believes that internal assessment best help identify the key
strength and weaknesses to allow for effective evaluation. The
Board will continue to assess the internal review process against
the growth of the Company as should the Company grow in size it may
consider getting an independent assessment.
The Chairman meets annually with the non-executive directors
without the executive directors to discuss the Board balance,
monitor the powers of individual executive directors and raise any
other appropriate issues. A similar review is also undertaken of
the Chairman whereby the senior executive director meets with the
non-executive directors.
Re-election
The Board believe that all directors should be submitted for
re-election at regular intervals, subject to the continued
satisfactory performance of the Company.
The Director longest in office since their last appointment is
required to retire by rotation or stand for reappointment at the
Annual General Meeting ("AGM").
3. Accountabiliy
Financial and Business reporting
A key duty of the Board is to oversee the financial affairs of
the Company. The Financial Statements is the Board's primary means
of presenting a fair, balanced and understandable assessment of the
Company's positions that also best provides the information
necessary to allow shareholders to assess the Company's
performance, business model and strategy for that period.
You can view Premier Annual Report and Financial Statements on
the Company's webpage at the following address,
www.premierafricanminerals.com . Under the Strategic Review section
of the Company's Annual Report and Financial Statements for the
year ended December 2019, the Board set outs the strategic
objectives of the Company, how these will be delivered, Premier
business model and how the Company will generate and preserve value
over the longer term for shareholders.
The Board have a reasonable expectation that the Group has
adequate resources to continue in operations or existence for the
foreseeable future thus continues to adopt the going concern basis
in preparing its Annual Report and Financial Statements. Refer to
note 5 to the financial statements.
Risk Management and Internal Control
The Board is responsible for determining the nature and extent
of the significant risks it is willing to take in achieving its
strategic objectives. The Board manages the risk through the
implementation of internal control systems.
The Board has identified the following as some of the risks and
their mitigation:
-- Credit Risk: Credit risk is the risk of potential loss to the
Company if counterparty to a financial instrument fails to meet its
contractual obligations. The Company's credit risk is primarily
attributable to its liquid financial assets, including cash,
receivables, and balances receivable from the government. The
Company limits the exposure to credit risk in its cash by only
investing its cash with high-credit quality financial institutions
in business and savings accounts, guaranteed investment
certificates and in government treasury bills which are available
on demand by the Company for its programs.
-- Liquidity Risk: Liquidity risk is the risk that the Company
will not have the resources to meet its obligations as they fall
due. The Company manages this risk by closely monitoring cash
forecasts and managing resources to ensure that it will have enough
liquidity to meet its obligations.
-- Operating Risks: The activities of the Company are subject to
all of the hazards and risks normally incidental to exploring and
developing natural resource projects. These risks and uncertainties
include, but are not limited to environmental hazards, industrial
accidents, Covid-19, labour disputes, geo-political risks,
encountering unusual or unexpected geologic formations or other
geological or grade problems, unanticipated changes in rock
formation characteristics and mineral recovery, encountering
unanticipated ground or water conditions, land slips, flooding,
periodic interruptions due to inclement or hazardous weather
conditions and other acts of God or un-favourable operating
conditions and losses. The Company manages the risk by closing
monitoring operations and maintaining adequate insurance cover.
-- Early-stage Business Risk: The Board manages this risk by
monitoring cash levels and reviewing cash flow forecasts on a
regular basis.
-- Market Risk (exchange rates, commodity, and equity): Market
risk is the risk of loss that may arise from changes in market
factors such as interest rates, foreign exchange rates, and
commodity and equity prices. The Company manages the risk by
closing monitoring exchange rates, commodity, and equity markets.
The Company further engages consultants to undertake commodity
forecasts.
-- Interest Rate Risk: The Company is exposed to interest rate
risk to the extent that its cash balances bear variable rates of
interest. The interest rate risks on cash and short-term
investments and on the Company's, obligations are not considered
significant and is not mitigated at this time.
-- Foreign Currency Risk: The Company is exposed to the
financial risk related to the fluctuation of foreign exchange rates
against the Company's functional currency, which is the United
States dollar ("USD"). The Company has not hedged its exposure to
currency fluctuations.
-- Environmental Risks and Hazards: All phases of the Company's
operations are subject to environmental regulation in the areas in
which it operates. The Board manages this risk by working with
environmental consultants and by engaging with the relevant
governmental departments and other concerned stakeholders.
-- Licencing Risk: The Company's exploration and development
activities are dependent upon the grant of appropriate licences,
concessions, leases, permits and regulatory consents which may be
withdrawn or made subject to limitations or performance criteria.
Such licences and permits are as a practical matter subject to the
discretion of the applicable Government or Government office. The
Group must comply with known standards, existing laws and
regulations that may entail greater or lesser costs and delays
depending on the nature of the activity to be permitted. The
interpretations, amendments to existing laws and regulations, or
more stringent enforcement of existing laws and regulations could
have a material adverse impact on the Group's results of operations
and financial condition. Whilst the Company continually seeks to do
everything within its control to ensure that the terms of each
licence are met and adhered to, third parties may seek to exploit
any technical breaches in licence terms for their own benefit.
There is a risk that negotiations with a Government in relation to
the grant, renewal or extension of a licence may not result in the
grant, renewal or extension taking effect prior to the expiry of
the previous licence period, and there can be no assurance of the
terms of any extension, renewal, or grant.
-- Political and Regulatory Risk: The Company operating
activities in Africa, notably in Zimbabwe, and Namibia, are subject
to laws and regulations governing expropriation of property, health
and worker safety, employment standards, waste disposal, protection
of the environment, mine development, land and water use,
prospecting, mineral production, exports, taxes, labour standards,
occupational health standards, toxic wastes, the protection of
endangered and protected species and other matters. The Group is
dependent on the political and economic situation in these
countries and may be adversely impacted by political factors such
as expropriation, war, terrorism, insurrection, and changes to laws
governing mineral exploration and operations.
-- Internal Control and Financial Risk Management: The Board has
overall responsibility for the Group's systems of internal control
and for reviewing their effectiveness. The Group maintains systems
which are designed to provide reasonable but not absolute assurance
against material loss and to manage rather than eliminate risk.
The Board has overall responsibility for maintaining and
reviewing the Group's system of internal control and ensuring that
the controls are robust and effective in enabling risks to be
appropriately assessed and managed.
Refer to the principal risks and uncertainties as set out in the
Strategic Report for additional information on these risks.
On behalf of the Board, the AC conducts an annual review of the
effectiveness of the systems of internal control including
financial, operational and compliance controls and risk management
systems.
Audit Committee and Auditors
The functions of the AC are clearly described as part of the
Leadership function in this note.
Whilst the Board sets the Company risk appetite, it reviews the
operations and effectiveness of the Company's risk management
activities through the AC, which undertake the day-to-day oversight
of the risk management framework on behalf of the Board. The
Chairman of the AC regularly provides an update on the work carried
out by the AC to the board.
It is noted that the AC follow the recommendations of the Code
whereby they monitor and review the effectiveness of the internal
audit activities. However, at this time, the Board have determined
that the appointment of internal auditor is not required due to the
size of the Company.
4. Remuneration
The Level and Components of Remuneration
Executive directors' remuneration should be designed to promote
the long-term success of the Company. Performance-related elements
should be transparent, stretching and rigorously applied. The Board
delegates the responsibility for setting the appropriate levels of
remuneration for its directors to the Remuneration Committee.
The levels of Remuneration to directors are disclosed to
shareholders in Premier Annual Report and Financial Statements.
Both the Board and Remuneration Committee seek to provide
appropriate reward for the skill and time commitment required so at
to retain the right calibre of director at a cost to the Company
and which reflects the current market rates.
Procedure
The Board have a formal and transparent procedure for developing
policy on the executive remuneration and for fixing the
remuneration packages of individual directors. As strict policy, no
director is involved in deciding their own remuneration.
The Remuneration Committee consider and approves the
remuneration and where applicable, incentives and benefits, and
makes recommendations to the Board. The Committee will also govern
employee share schemes. The Chairman of the Committee will be
consulted by the CEO in respect of the Company and director's
performance approvals, compensation and in respect of any
appointment/departures from roles.
The remuneration of non-executive directors shall be a matter
for the executive members of the Board.
The Company has adopted a share dealing code to ensure directors
and certain employees do not abuse, and do not place themselves
under suspicion of abusing inside information of which they are in
possession and to comply with its obligations under MAR which
applies to the Company by virtue of its shares being traded on AIM.
Furthermore, the Company's share dealing code is compliant with the
AIM Rules for Companies published by the London Stock Exchange (as
amended from time to time).
Under the share dealing code, the Company must:
-- Disclose all inside information to the public as soon as
possible by way of market announcement unless certain circumstances
exist in which the disclosure of the inside information may be
delayed.
-- Keep a list of each person who is in possession of inside
information relating to the Company.
-- Procure that all persons discharging managerial
responsibilities and certain employees are given clearance by the
Company before they are allowed to trade in Company securities;
and
-- Procure that all persons discharging managerial
responsibilities and persons closely associated to them notify both
the Company and the Financial Conduct Authority of all trades in
Company securities that they make.
Additionally, under the share dealing code, no person
discharging managerial responsibilities is permitted to deal in
Company securities (whether directly or through an investment
manager) during a closed period; being the period either: from the
end of the relevant financial year up to the release of the
preliminary announcement of the Company's annual results; from the
end of the relevant financial period up to the release of the
Company's half-yearly financial report or; 30 calendar days before
the release of each of the Company's first quarter report and third
quarter report.
For details of the directors' remuneration refer to note 27.
5. Relations with Shareholders
Dialogue with shareholders
The Company recognises that maintaining strong communications
with its shareholders promotes transparency and will drive value in
the medium to long-term. Accordingly, the Company has an
established programme to communicate with shareholders. This done
by providing regular updates on the progress of the Company,
detailing recent business and strategy developments, in news
releases which will be posted on the Company's website and through
certain social media channels.
The Disclosure Committee which comprises of George Roach and
Wolfgang Hampel and is chaired by Wolfgang Hampel is in place to
assist the Board with the dialogue between the Company and its
shareholders. The Disclosure Committee assumes general
responsibility for approval and monitoring compliance with the
Company's disclosure controls and procedures. It has the
responsibility, inter alia, determining whether information is
inside information, deciding whether the inside information is to
be announced as soon as possible and reviewing the scope, content,
and accuracy of disclosure. The Company has adopted a share dealing
code governing the share dealings of the Directors and applicable
employees during close periods and is in accordance with Rule 21 of
the AIM Rules.
The Chairman and CEO are contactable via email. Their email
address can be obtained at either the Company's registered office
or by requesting them at the below address. To continually improve
transparency, the Board would be delighted to receive feedback from
shareholders. Communications should be directed to
info@premierafricanminerals.com . The CEO has been appointed to
manage the relationship between the Company and its shareholders
and will review and report to the Board on any communications
received.
Constructive Use of General Meetings
The Company holds AGM each year, whereby all of the directors
aim to attend the AGM and value the opportunity of welcoming
individual shareholders and other investors to communicate directly
and address their questions.
In addition to the mandatory information required and procedures
to calling a general meeting, which can be found under the
Company's constitutional documents on the webpage, the Board ensure
that a full, fair, and balanced explanation of business of all
general meetings is sent in advance to shareholders.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report
and financial statements and have prepared the Group financial
statements in accordance with International Financial Reporting
Standards in order to give a true and fair view of the state of
affairs of the Group and of its profit or loss for that period, in
accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
In preparing these financial statements the directors are
required to:
-- select suitable accounting policies and then apply them consistently.
-- make judgements and accounting estimates that are reasonable and prudent.
-- state whether they have been prepared in accordance with
IFRSs, subject to any material departures disclosed and explained
in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and the
Group will continue in business.
The directors are responsible for keeping records that are
sufficient to show and explain the Group and Company's transactions
and will, at any time, enable the financial position of the Group
and Company to be determined with reasonable accuracy. They are
also responsible for safeguarding the assets of the Company and the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the British Virgin Islands
governing the preparation and dissemination of the Company's
financial statements and other information included in the annual
reports may differ from legislation in other jurisdictions.
The directors consider this Annual report and accounts, taken as
a whole, is fair, balanced, understandable, and provides the
information necessary for shareholders to assess the Company's
position, performance, business model and strategy.
Statement of disclosure to auditor
The directors who were in office at the date of approval of
these financial statements have confirmed that, as far as they are
aware, there is no relevant audit information of which the auditor
is unaware. Each of the directors has confirmed that they have
taken all the steps that they ought to have taken as directors in
order to make themselves aware of any relevant audit information
and to establish that it has been communicated to the auditor.
Viability statement and going concern
The Board has assessed the prospects of the Group over a period
of 12 months from the date of approval of these financial
statements, involving a review of the Group's forecast prepared for
the 12 months ending 30 June 2022. and taking account of the
Board's intentions for future activities after that date. As
explained further in note 5, taking account of the Group's current
position and principal risks, over a 12 month period, the Board has
a reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over that
period albeit additional funding will be required to enable the
Group to meet all of its objectives. The raising of additional
funding is fundamental to the future success of the business and
therefore gives rise to a material uncertainty, although the Board
notes the Group's successful track record in having raised finance
in the past as necessary to meet the Group's ongoing cash
requirements.
The Board considers these periods of assessment to be
appropriate because they contextualise the Company's financial
position, business model and strategy.
George Roach
Chief Executive Officer
28 June 2021
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF PREMIER AFRICAN
MINERALS LIMITED
Opinion
We have audited the consolidated financial statements of Premier
African Minerals Ltd (the 'Group') for the year ended 31 December
2020 which comprise the consolidated statement of financial
position, the consolidated statement of profit or loss and other
comprehensive income, the consolidated statement of changes in
equity, the consolidated statement of cash flows and the notes to
the consolidated financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in the preparation of the financial
statements is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union.
In our opinion the financial statements,
-- the Group financial statements give a true and fair view of
the state of the group's affairs as at 31 December 2020 and of the
group's loss for the year then ended; and
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going concern
We draw attention to note 5 in the financial statements, which
indicate that the group incurred losses of $1.177 million during
the year ended 31 December 2020 and, negative cash flows from
operations amounting to $0.744 million, at that date, the net
current assets of $0.227 million. As stated in note 5, these events
or conditions indicate that a material uncertainty exists that may
cast significant doubt on the Group's ability to continue as a
going concern. Our opinion is not modified in respect of this
matter.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting included a
critical assessment on budgets, including challenging models and
undertaking stress tests, and a detailed discussion with management
on the key cashflow pinch points, including loan repayments and
funding available to the Group.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
An overview of the scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made
subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all
of our audits we also addressed the risk of management override of
internal controls, including evaluating whether there was evidence
of bias by the directors that represented a risk of material
misstatement due to fraud.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in
which they operate.
The Group financial statements are a consolidation of 3
reporting units, comprising the Group's operating businesses. The
Group comprises the parent undertaking, incorporated in the British
Virgin Islands, its principal operating subsidiaries, RHA Tungsten
(Private) Limited and Zulu Lithium (Private) Limited, and fifteen
non-trading or intermediate holding companies, of which seven are
registered in Mauritius, seven in Zimbabwe, three in Australia and
one in Mozambique. A full scope audit to Group materiality levels
was performed on the parent undertaking and the trading companies
as well as their immediate holding companies. This resulted in 100%
coverage of consolidated expenditures and 100% of the Group's gross
assets.
We performed audits of the complete financial information of the
Group reporting units, which were individually financially
significant and accounted for 100% of the Group's absolute profit
before tax (i.e. the sum of the numerical values without regard to
whether they were profits or losses for the relevant reporting
units). We also performed specified audit procedures over certain
account balances and transaction classes that we regarded as
material to the Group at the 3 reporting units.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a
complete list of all risks identified by our audit.
Key audit matters How our audit addressed the key
audit matter
Valuation of the rehabilitation Valuation of the rehabilitation
provision provision
The Group has recognised a rehabilitation We have understood and assessed
provision, under IAS 37 - contingent the inputs in calculation of
liabilities and contingent assets, the liability. These were based
of $427,000 (2019: $388,000), on the original environmental
in relation to the future costs impact assessment as carried
to rehabilitate the current out in 2015. We have also verified
mines as per regulation. that there were no applicable
The directors are required to changes to the regulations which
assess the provision at the would increase the liability
end of each reporting period and have reviewed calculations
and adjust to reflect their for the unwinding of the provision.
best estimates of the liability.
The directors consider the liability
to be sufficient due to the
weakening of the RGTS (Zimbabwe
currency) against the Dollar.
-------------------------------------
Fair value of investments Fair value of investments
The Group has recognised Investments We have clarified that the Group's
of $8,342,000 (2019: $7,444,000) purchase of MNH and Circum shares
as at the reporting date. were the latest trade, Reviewed
Directors are required to assess management assessment of the
the fair value of investments fair values to support the value
at each reporting date under of the investments and traced
IFRS 9. existence and ownership to relevant
As neither Circum nor MNH are documents.
traded on an active market a
level 3 valuation technique
was used. The shareholding was
based on the most recent placing
of the shares in the respective
companies, as well as management's
best estimates of the fair values.
-------------------------------------
Our application of materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on
the financial statements as a whole.
Based on our professional judgment, we determined materiality
for the financial statements as a whole as follows:
Group financial statements
Overall materiality $90,000 (2019: $75,000)
-----------------------------------
How we determined 1% of Gross assets
it
-----------------------------------
Rationale for benchmark We believe that the gross
applied assets is a primary measure
used by shareholders in assessing
the performance of the Group,
as the group is at a pre-revenue
stage and is asset heavy.
-----------------------------------
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above $4,500 (2019:
$3,750) as well as misstatements below those amounts that, in our
view, warranted reporting for qualitative reasons.
Other information
The other information comprises the information included in the
annual report other than the financial statements and our auditor's
report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the
financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and
its environment obtained in the course of the audit, we have not
identified material misstatements in the strategic report or the
directors' report.
We have nothing to report in respect of the following matters
that we are required to report to you if, in our opinion:
-- adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the financial statements are not in agreement with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement as set out on page 19, the directors are responsible for
the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent
company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below.
The extent to which the audit was considered capable of
detecting irregularities including fraud
Our approach to identifying and assessing the risks of material
misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, was as follows:
-- the senior statutory auditor ensured the engagement team
collectively had the appropriate competence, capabilities and
skills to identify or recognise non-compliance with applicable laws
and regulations;
-- we focused on specific laws and regulations which we
considered may have a direct material effect on the financial
statements or the operations of the Group.
-- we assessed the extent of compliance with the laws and
regulations identified above through making enquiries of management
and inspecting legal correspondence; and
-- identified laws and regulations were communicated within the
audit team regularly and the team remained alert to instances of
non-compliance throughout the audit.
We assessed the susceptibility of the Group's financial
statements to material misstatement, including obtaining an
understanding of how fraud might occur, by:
-- making enquiries of management as to where they considered
there was susceptibility to fraud, their knowledge of actual,
suspected and alleged fraud; and
-- considering the internal controls in place to mitigate risks
of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and
override of controls, we:
-- performed analytical procedures to identify any unusual or unexpected relationships;
-- tested journal entries to identify unusual transactions;
-- assessed whether judgements and assumptions made in
determining the accounting estimates set out in Note 2 were
indicative of potential bias; and
-- investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance
with laws and regulations, we designed procedures which included,
but were not limited to:
-- agreeing financial statement disclosures to underlying supporting documentation;
-- reading the minutes of meetings of those charged with governance;
-- enquiring of management as to actual and potential litigation and claims; and
-- Obtaining confirmation of compliance from the Company's legal advisors.
There are inherent limitations in our audit procedures described
above. The more removed that laws and regulations are from
financial transactions, the less likely it is that we would become
aware of non-compliance. Auditing standards also limit the audit
procedures required to identify non-compliance with laws and
regulations to enquiry of the directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to
detect than those that arise from error as they may involve
deliberate concealment or collusion.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor's report.
Use of this report
This report is made solely to the Company's members, as a body,
in accordance with our engagement letter. Our audit work has been
undertaken so that we might state to the Company's members those
matters we are required to state to them in an auditor's report and
for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company and the Company's members as a body, for our audit work,
for this report, or for the opinions we have formed.
Sanjay Parmar
Senior Statutory Auditor
For and on behalf of
Jeffreys Henry LLP, Statutory Auditor
Finsgate, 5-7 Cranwood Street,
London EC1V 9EE
28 June 2021
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 DECEMBER 2020
2020 2019
EXPRESSED IN US DOLLARS $ 000 $ 000
Notes
ASSETS
Non-current assets
Intangible assets 8 120 -
Investments 9 8 342 7 444
Property, plant and equipment 10 - -
8 462 7 444
--------- ---------
Current assets
Inventories 11 - 1
Trade and other receivables 12 8 18
Cash and cash equivalents 13 727 40
735 59
--------- ---------
TOTAL ASSETS 9 197 7 503
--------- ---------
LIABILITIES
Non-current liabilities
Finance lease liabilities 14 - -
Deferred tax 25 - -
Provisions - rehabilitation 15 427 388
427 388
--------- ---------
Current liabilities
Trade and other payables 16 508 1 388
Finance lease liabilities 14 - 35
Borrowings 17 - 715
508 2 138
--------- ---------
TOTAL LIABILITIES 935 2 526
NET ASSETS 8 262 4 977
--------- ---------
EQUITY
Share capital 18 52 504 48 042
Share based payment and warrant reserve 19 2 366 2 366
Revaluation reserve 711 711
Foreign currency translation reserve 7 (14 040) (14 118)
Accumulated loss (21 413) (20 525)
--------- ---------
Total equity attributed to the owners
of the parent company 20 128 16 476
Non-controlling interest 20 (11 866) (11 499)
--------- ---------
TOTAL EQUITY 8 262 4 977
--------- ---------
These financial statements were approved and authorised for
issue by the Board on 28 June 2021 and are signed on its
behalf.
George Roach
Chief Executive Officer
The notes on pages 30 to 78 are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
FOR THE YEARED 31 DECEMBER 2020
2020 2019
Continuing operations Notes
EXPRESSED IN US DOLLARS $ 000 $ 000
Revenue 21 - -
Cost of sales excluding depreciation
and amortisation 22 - -
Depreciation and amortisation 8, 10 - -
-------- ---------
Gross profit / (loss) - -
Administrative expenses 23 (1 299) (1 817)
-------- ---------
Operating profit / (loss) (1 299) (1 817)
Other income 21 93 841
Impairment of PPE - RHA 10 (9) (349)
Finance charges 24 (119) (114)
-------- ---------
(35) 378
-------- ---------
Loss before income tax (1 334) (1 439)
Income tax expense 25 - -
-------- ---------
Loss from continuing operations (1 334) (1 439)
Loss for the year (1 334) (1 439)
-------- ---------
Other comprehensive income:
Items that are or may be reclassified
subsequently to profit or loss:
Foreign exchange loss on translation 7 157 (24 782)
157 (24 782)
-------- ---------
Total comprehensive income for the
year (1 177) (26 221)
-------- ---------
Loss attributable to:
Owners of the Company (888) (1 337)
Non-controlling interests (445) (102)
-------- ---------
(1 333) (1 439)
-------- ---------
Total comprehensive income attributable
to:
Owners of the Company (810) (15 455)
Non-controlling interests (367) (10 766)
-------- ---------
Total comprehensive income for the
year (1 177) (26 221)
-------- ---------
Loss per share attributable to owners
of the parent (expressed in US cents)
Basic loss per share 26 (0.01) (0.01)
Diluted loss per share 26 (0.01) (0.01)
The notes on pages 30 to 78 are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 31
DECEMBER 2020
Share
option Foreign Total
and currency attributable Non-controlling
warrant Revaluation translation Accumulated to owners interest Total
Share capital reserve reserve reserve loss of parent ("NCI") equity
EXPRESSED IN
US DOLLARS $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
At 1 January
2019 45 873 2 366 711 - (34 423) 14 527 (12 704) 1 823
Effect of
change in the
functional
currency of 27
subsidiaries - - - - 15 235 15 235 11 971 206
Loss for the (1
period - - - - (1 337) (1 337) (102) 439)
Other
comprehensive
income
for the (24
period - - - (14 118) - (14 118) (10 664) 782)
Total
comprehensive
income
for the (26
period - - - (14 118) (1 337) (15 455) (10 766) 221)
Transactions
with Owners
Issue of
equity shares 2 237 - - - - 2 237 - 2 237
Share issue
costs (68) - - - - (68) - (68)
At 31 December
2019 48 042 2 366 711 (14 118) (20 525) 16 476 (11 499) 4 977
Loss for the (1
period - - - - (888) (888) (445) 333)
Other
comprehensive
income
for the
period - - - 78 - 78 78 156
Total
comprehensive
income
for the (1
period - - - 78 (888) (810) (367) 177)
Transactions
with Owners
Issue of
equity shares 4 558 - - - - 4 558 - 4 558
Share issue
costs (96) - - - - (96) - (96)
At 31 December
2020 52 504 2 366 711 (14 040) (21 413) 20 128 (11 866) 8 262
The notes on pages 30 to 78 are an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 DECEMBER 2020
2020 2019
EXPRESSED IN US DOLLARS $ 000 $ 000
Notes
Net cash outflow from operating activities 28 (793) (404)
-------- --------
Investing activities
Acquisition of property plant and
equipment 10 (9) (483)
Acquisition of intangible assets 8 - -
Acquisition of subsidiaies, net of
cash acquired 30 (120) -
Acquisition of investment 9 (898) (1 181)
Proceeds on sale of investment 9 - -
Net cash used in investing activities (1 027) (1 664)
-------- --------
Financing activities
Proceeds from borrowings granted 17 200 468
Net proceeds from issue of share capital 18 2 343 1 984
Finance charges 14 (1) (12)
Repayment of finance lease 14 (35) (60)
Net cash from financing activities 2 507 2 380
-------- --------
Net decrease in cash and cash equivalents 687 312
Cash and cash equivalents at beginning
of year 40 (272)
Effect of foreign exchange rate variation - -
Net cash and cash equivalents at end
of year 727 40
-------- --------
The notes on pages 30 to 78 are an integral part of these
consolidated financial statements.
1. Reporting entity
Premier African Minerals Limited ('Premier' or 'the Company'),
together with its subsidiaries (the 'Group'), was incorporated in
the Territory of the British Virgin Islands under the BVI Business
Companies Act, 2004. The address of the registered office is
Craigmuir Chambers, PO Box 71, Road Town, Tortola, British Virgin
Islands.
The Group's operations and principal activities are the mining
and development of mineral reserves on the African continent.
Premier's shares were admitted to trading on the London Stock
Exchange's AIM market on 10 December 2012.
2. Basis of accounting
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
in issue and as endorsed by the European Union ("EU"). They were
authorised for issue by the Company's board of directors on 28 June
2021.
Details of the Group's accounting policies are detailed
below.
The preparation of financial statements in conformity with EU
adopted 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 accounting policies set out below are applied consistent
across the Group and to all periods presented in these consolidated
financial statements.
Functional and presentation currency
The Group's presentation currency and the functional currency of
the majority of the group's entities is
US dollars. All amounts have been rounded to the nearest
thousand, unless otherwise indicated. The Zimbabwean subsidiaries'
functional currency was changed by the Zimbabwean government from
USD to RTGS dollar during the 2019 financial year. Refer to note 7
for detailed information.
Use of judgements and estimates
In preparing these consolidated financial statements, management
has made judgements, estimates and assumptions that affect the
application of the Group's accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
For details of the use of judgments and estimates refer to note
4 and detailed notes on the Intangible assets and goodwill (note
8), Investments (note 9), Property, plant and equipment (note 10),
Inventories (note 11), Trade and other receivables (note 12),
Provision for rehabilitation (note 15) and Share based payment and
warrant reserve (note 19).
3. Significant accounting policies
3.1 Change in significant accounting policies
There are no IFRSs or IFRIC interpretations that are effective
for the first time for the financial year beginning that would be
expected to have a material impact on the Group. The new IFRSs
adopted during the year are as follows:
-- IFRS 3 Business Combinations
-- IAS 1 Presentation of Financial Statements
-- IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors
-- IAS 1 amendments Presentation of Financial Statements:
Classification of Liabilities as Current or
Non-Current - Deferral of Effective Date: Effective 1 January
2023
-- IFRS 3 amendments Business Combinations - Reference to the
Conceptual Framework: Effective
1 January 2022
-- IAS 16 amendments Property, Plant and Equipment: Effective 1 January 2022
-- IAS 37 amendments Provisions, Contingent Liabilities and
Contingent Assets: Effective date 1 January 2022
The following new standards, amendments to standards and
interpretations have been issued, but are not effective for the
financial period beginning 1 January 2020 and have not been early
adopted. The Directors anticipate that the adoption of these
standard and the interpretations in future periods will have no
material impact on the financial statements of the Group.
The new standards include:
-- IFRS 17 Insurance Contracts: Effective for annual periods
beginning on or after 1 January 2023
3.2 Basis of consolidation
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when it is exposed to, or has the
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The Group also
assesses existence of control where it does not have more than 50%
of the voting power but is able to govern the financial and
operating policies by virtue of de-facto control. This is evidenced
with RHA Tungsten (Private) Limited which the Group owns 49% of but
is consolidated into the Group (note 4.7).
Subsidiaries are consolidated, using the acquisition method,
from the date that control is gained and non-controlling interests
are apportioned on a proportional basis.
When necessary, amounts reported by subsidiaries have been
adjusted to conform to the Group's accounting policies.
3.3 Business combinations and goodwill
The Group applies the acquisition method to account for business
combinations. The consideration transferred for the acquisition of
a subsidiary is the fair values of the assets transferred, the
liabilities incurred to the former owners of the acquiree, and the
equity interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired
and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date.
3.4 Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control
commences until the date on which control ceases.
3.5 Non-controlling interests ("NCI")
Non-controlling interests are measured initially at their
proportionate share of the acquiree's identifiable net assets at
the date of acquisition.
Changes in the Group's interest in a subsidiary that do not
result in a loss of control are accounted for as equity
transactions.
3.6 Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity accounted
investees are eliminated against the investment to the extent of
the Group's interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
3.7 Foreign currency
Transactions in foreign currencies are translated into the
respective functional currencies of Group companies at the exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and
liabilities that are measured at fair value in a foreign currency
are translated into the functional currency at the exchange rate
when the fair value was determined. Non-monetary items that are
measured based on historical cost in a foreign currency are
translated at the exchange rate at the date of the transaction.
Foreign currency differences are generally recognised in profit or
loss.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are
translated into dollars at the exchange rates at the reporting
date. The income and expenses of foreign operations are translated
into dollars at the exchange rates at the dates of the
transactions.
Foreign currency differences are recognised in Other
Comprehensive Income ("OCI") and accumulated in the translation
reserve, except to the extent that the translation difference is
allocated to NCI.
Where the functional currency of a company is in a
hyperinflationary economy IAS 29 Financial Reporting in
Hyperinflationary Economies is applied. Under this standard the
results are restated to reflect the current cost of the various
elements of the financial statements. For the Statement of
comprehensive income the cost of sales and depreciation are
recorded at current costs at the time of consumption; sales and
other expenses are recorded at their money amounts when they
occurred. Therefore all amounts need to be restated into the
measuring unit current at the end of the reporting period by
applying a general price index.
Monetary items stated in the Statement of financial position
that are stated at current cost are not restated because they are
already expressed in terms of the measuring unit current at the end
of the reporting period. All non-monetary items in the statement of
financial position are restated by applying an index at the time of
their acquisition to the reporting date. Any resulting gain or loss
on the net monetary position is included in profit or loss
reserve.
In accordance with IAS29, corresponding figures for the previous
reporting period, whether they were based on a historical cost
approach or a current cost approach, are restated by applying a
general price index so that the comparative financial statements
are presented in terms of the measuring unit current at the end of
the reporting period. Information that is disclosed in respect of
earlier periods is also expressed in terms of the measuring unit
current at the end of the reporting period.
When a foreign operation is disposed of in its entirety or
partially such that control, significant influence or joint control
is lost, the cumulative amount in the translation reserve related
to that foreign operation is reclassified to profit or loss as part
of the gain or loss on disposal. If the Group disposes of part of
its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to NCI. When
the Group disposes of only part of an associate or joint venture
while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to
profit or loss.
3.8 Discontinued operation
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of operations;
or
-- is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale.
When an operation is classified as a discontinued operation, the
comparative statement of profit or loss and OCI is re-presented as
if the operation had been discontinued from the start of the
comparative year.
3.9 Revenue
Performance obligations and service recognition policies
Revenue is measured based on the consideration specified in a
contract with a customer in line with IFRS 15. The Group recognises
revenue when it transfers control over of goods or services to a
customer.
The following table provides information about the nature and
timing of the satisfaction of performance obligations in contracts
with customers, including significant payment terms, and the
related revenue recognition policies.
Nature and timing of satisfaction
Type of product/ of performance obligations, including Revenue recognition
service significant payment terms under IFRS 15
Revenue
--------------------------------------- ------------------------
Wolframite Customers obtain control of the Revenue is recognised
sales wolframite ore when the ore has when the goods
been delivered to and have been are delivered and
accepted at their premises or have been accepted
the agreed point of delivery. by the customers
Invoices are generated at that at their premises
point in time based on the agreed or the agreed point
upon weight of the ore. Invoices of delivery.
are generally payable within
30 days. No discounts are provided
for.
The sale of the ore is not subject
to a return policy.
--------------------------------------- ------------------------
Scrap sales Customers obtain control of the Revenue is recognised
scrap when the scrap has been when the goods
delivered to and have been accepted are delivered and
at their premises or the agreed have been accepted
point of delivery. Invoices are by the customers
generated at that point in time at their premises
based upon the agreed upon weight or the agreed point
of the scrap. Invoices are generally of delivery.
payable within 30 days. No discounts
are provided for.
The sale of the scrap is not
subject to a return policy.
--------------------------------------- ------------------------
Reserve Bank The Export Incentive is provided The Group gains
of Zimbabwe on an individual basis and has control over the
Export Incentive to be applied for. It is based export incentive
on the export sales of the company. when it is received
As such the revenue from the in the Group's
RBZ is not guaranteed. bank accounts.
--------------------------------------- ------------------------
Other Income
--------------------------------------- ------------------------
Government The Group has no control over The Group gains
Grants the timing of the grants nor control over the
any payment terms. Government grant
when it is received
in the Group's
bank accounts.
--------------------------------------- ------------------------
Prescription Management periodically reviews Debts are considered
of debts all outstanding payables and prescribed if the
identifies any potential debts creditor has not
that may have prescribed. claimed payment
for a period in
excess of the relevant
prescription period.
--------------------------------------- ------------------------
3.10 Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service
is provided. A liability is recognised for the amount expected to
be paid if the Group has a present legal or constructive obligation
to pay this amount as a result of past service provided by the
employee and the obligation can be estimated reliably.
Share-based payment arrangements
The Group operates an equity-settled share option plan and
issues warrants from time to time either with direct subscriptions
in equity or as finance related packages. The fair value of the
service received in exchange for the grant of options or issue of
warrants is recognised as an expense or recognised as a deduction
from equity or an addition to intangible assets depending on the
nature of the services received.
Share-based payments are measured at fair value at the date of
grant. The fair value determined at the grant date of
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of
shares that will eventually vest.
Fair value is measured by use of the Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
Any adjustments are recognised through the profit and loss. The
fair value is reassessed annually.
3.11 Finance income and finance costs
The Group's finance income and finance costs include:
-- interest income;
-- Interest expense;
-- dividend income;
Interest income and expense is recognised using the effective
interest method. Dividend income is recognised in profit or loss on
the date on which the Group's right to receive payment is
established.
The "effective interest rate" is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument to:
-- the gross carrying amount of the financial asset; or
-- the amortised cost of the financial liability.
In calculating interest income and expense, the effective
interest rate is applied to the gross carrying amount of the asset
(when the asset is not credit-impaired) or to the amortised cost of
the liability. However, for financial assets that have become
credit-impaired subsequent to initial recognition, interest income
is calculated by applying the effective interest rate to the
amortised cost of the financial asset, if the asset is no-longer
credit-impaired, then the calculation of interest income reverts to
the gross basis.
3.12 Income tax
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity
or in OCI.
3.12.1 Current tax
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
3.12.2 Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and -- taxable temporary differences arising on
the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
3.13 Intangible assets and goodwill
All costs of Exploration and Evaluation ("E&E") are
initially capitalised as intangible assets, such as payments to
acquire the legal right to explore, costs of technical services and
studies, seismic acquisition, exploratory drilling and testing. The
costs include directly attributable overheads together with the
cost of other materials consumed during the exploration and
evaluation phases.
Costs incurred prior to having obtained the legal rights to
explore an area are expensed directly to profit or loss as they are
incurred.
E&E assets are not amortised.
Intangible assets related to each exploration licence or pool of
licences are carried forward, until the existence (or otherwise) of
commercial reserves has been determined. Once the technical
feasibility and commercial viability of extracting a mineral
resource is demonstrable, the related E&E assets are assessed
for impairment on an individual licence or cost pool basis, as
appropriate, as set out below and any impairment loss is recognised
in profit or loss.
The Group considers each licence, or where appropriate, a pool
of licences, separately, for the purposes of determining whether
impairment of E&E assets has occurred.
Intangible assets are assessed for impairment when facts and
circumstances suggest that the carrying amount may exceed its
recoverable amount. Such indicators include, but are not limited
to, those situations outlined in paragraph 20 of IFRS 6 Exploration
for and Evaluation of Mineral Resources and include the point at
which a determination is made as to whether or not commercial
reserves exist.
When impairment indicators exist, the aggregate carrying value
is compared against the expected recoverable amount, generally by
reference to the present value of the future net cash flows
expected to be derived from production of commercial reserves.
When a licence or pool of licences is abandoned or there is no
planned future work, the costs associated with the respective
licences are written off in full and recognised in profit or
loss.
Any impairment loss is recognised in profit or loss and
separately disclosed.
3.14 Impairment
3.14.1 Non-derivative financial assets
Credit-impaired financial assets
At each reporting date, the Group assesses whether financial
assets carried at amortised cost and debt securities at FVOCI 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 assets have occurred.
Evidence that a financial asset is credit-impaired includes the
following observable data:
-- significant financial difficulty of the borrower or issuer;
-- a breach of contract such as a default or being more than 90 days past due;
-- the restructuring of a loan or advance by the Group on terms
that the Group would not consider otherwise;
-- it is probable that the borrower will enter bankruptcy or
other financial reorganisation; or
-- the disappearance of an active market for a security because of financial difficulties.
A 12 months approach is followed in determining the Expected
Credit Loss ("ECL").
Presentation of allowance for ECL in the statement of financial
position
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the assets.
For debt securities at FVOCI, the loss allowance is charged to
profit or loss and is recognised in OCI.
Write-off
The gross carrying amount of a financial asset is written off
when the Group has no reasonable expectations of recovering a
financial asset in its entirety or a portion thereof. For corporate
customers, the Group individually makes an assessment with respect
to the timing and amount of write-off based on whether there is a
reasonable expectation of recovery from the amount written off.
However, financial assets that are written off could still be
subject to enforcement activities in order to comply with the
Group's procedures of recovery of the amounts due.
3.14.2 Financial assets measured at amortised cost
The Group considers evidence of impairment for these assets at
both an individual asset and a collective level. All individually
significant assets are individually assessed for impairment. Those
found not to be impaired are then collectively assessed for any
impairment that has been incurred but not yet individually
identified. Assets that are not individually significant are
collectively assessed for impairment. Collective assessment is
carried out by grouping together assets with similar risk
characteristics.
In assessing collective impairment, the Group uses historical
information on the timing of recoveries and the amount of loss
incurred, and makes an adjustment if current economic and credit
conditions are such that the actual losses are likely to be greater
or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an
asset's carrying amount and the present value of the estimated
future cash flows discounted at the asset's original effective
interest rate. Losses are recognised in profit or loss and
reflected in an allowance account. When the Group considers that
there are no realistic prospects of recovery of the asset, the
relevant amounts are written off. If the amount of impairment loss
subsequently decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, then the
previously recognised impairment loss is reversed through profit or
loss.
3.14.3 Available for sale financial asset
Impairment losses on available-for-sale financial assets are
recognised, only when fair value is less than carrying value and
this is significant over a prolonged period, by reclassifying the
losses accumulated in the fair value reserve to profit or loss. The
amount reclassified is the difference between the acquisition cost
(net of any principal repayment and amortisation) and the current
fair value, less any impairment loss previously recognised in
profit or loss.
3.14.4 Non-financial assets
At each reporting date, the Group reviews the carrying amounts
of its non-financial assets (other than inventories) to determine
whether there is any indication of impairment. If any such
indication exists, then the asset's recoverable amount is
estimated. Goodwill is tested annually for impairment.
For impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or CGUs. Goodwill arising from a business combination
is allocated to CGUs or groups of CGUs that are expected to benefit
from the synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less cost of disposal. Value in use
is based on the estimated future cash flows, discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset or CGU.
An impairment loss is recognised if the carrying amount of an
asset or CGU exceeds its recoverable amount.
Impairment losses are recognised in profit or loss. They are
allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts of
the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For
other assets, an impairment loss is reversed only to the extent
that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or
amortisation, if no impairment loss had been recognised.
3.15 Cash and cash equivalents
The Cash and cash equivalents comprises of cash at bank, cash on
hand and other highly liquid investments with short term
maturities. Cash and cash equivalents are measured at amortised
cost. For the purposes of the Statement of Cash Flows, cash and
cash equivalents consist of cash and cash equivalents as defined
above, net of outstanding bank overdrafts.
3.16 Inventory
Inventory is measured at the lower of cost and net realisable
value. The cost of inventories is based on the first-in, first-out
principle. The cost of inventories includes the cost of consumables
and cost of production. Net realisable value is the estimated
selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses.
Inventory consists of mining consumables.
3.17 Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost,
which includes capitalised borrowing costs, less accumulated
depreciation and any accumulated impairment losses.
If significant parts of an item of property, plant and equipment
have different useful lives, then they are accounted for as
separate items (major components) of property, plant and
equipment.
Any gain or loss on disposal of an item of property, plant and
equipment is recognised in profit or loss.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable
that the future economic benefits associated with the expenditure
will flow to the Group.
Depreciation
Depreciation is calculated to write off the cost of items of
property, plant and equipment less their estimated residual values
using the straight-line method over their estimated useful lives,
and is generally recognised in profit or loss. Leased assets are
depreciated over the shorter of the lease term and their useful
lives unless it is reasonably certain that the Group will obtain
ownership by the end of the lease term. Land is not
depreciated.
The estimated useful lives of property, plant and equipment for
current and comparative periods are as follows:
-- Land - indefinite useful life
-- Buildings - 10 years
-- Plant & equipment - 4/6 years
-- Mine development - depreciated over the life of the mine currently assessed at 10 years
Depreciation methods, useful lives and residual values are
reviewed at each reporting date and adjusted if appropriate.
3.18 Financial instruments
The Group classifies non-derivative financial assets into the
following categories: loans and receivables and FVTPL and FVTOCI
financial assets.
The Group classifies non-derivative financial liabilities into
the following category: other financial liabilities.
3.18.1 Non-derivative financial assets and financial liabilities
- Recognition and derecognition
The Group initially recognises loans and receivables on the date
when they are originated. All other financial assets and financial
liabilities are initially recognised on the trade date when the
entity becomes a party to the contractual provisions of the
instrument.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of
the financial asset are transferred, or it neither transfers nor
retains substantially all of the risks and rewards of ownership and
does not retain control over the transferred asset. Any interest in
such derecognised financial assets that is created or retained by
the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or expire.
Gains or losses on derecognition of financial liabilities are
recognised in profit or loss as a finance charge.
Financial assets and financial liabilities are offset, and the
net amount presented in the statement of financial position when,
and only when, the Group currently has a legally enforceable right
to offset the amounts and intends either to settle them on a net
basis or to realise the asset and settle the liability
simultaneously.
3.18.2 Loans and receivables- Measurement
These assets are initially measured at fair value plus any
directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the
effective interest method.
3.18.3 Assets at FVOCI - Measurement
These assets are initially measured at fair value plus any
directly attributable transaction costs. Subsequent to initial
recognition, they are measured at fair value and changes therein,
other than impairment losses, are recognised in OCI and accumulated
in the revaluation reserve.
When these assets are derecognised, the gain or loss accumulated
in equity is reclassified to profit or loss.
3.18.4 Non-derivative financial liabilities - Measurement
Other non-derivative financial liabilities are initially
measured at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these liabilities are
measured at amortised cost using the effective interest method.
3.18.5 Convertible loan notes and derivative financial instruments
The presentation and measurement of loan notes for accounting
purposes is governed by IAS 32 and IAS 39. These standards require
the loan notes to be separated into two components:
-- A derivative liability, and
-- A debt host liability.
This is because the loan notes are convertible into an unknown
number of shares, therefore failing the 'fixed-for-fixed' criterion
under IAS 32. This requires the 'underlying option component' of
the loan note to be valued first (as an embedded derivative), with
the residual of the face value being allocated to the debt host
liability (refer financial liabilities policy above).
Compound financial instruments issued by the Group comprise
convertible notes denominated in dollars that can be converted to
ordinary shares at the option of the holder, when the number of
shares to be issued is fixed and does not vary with changes in fair
value.
The liability component of compound financial instruments is
initially recognised at the fair value of a similar liability that
does not have an equity conversion option. The equity component is
initially recognised at the difference between the fair value of
the compound financial instrument as a whole and the fair value of
the liability component. Any directly attributable transaction
costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a
compound financial instrument is measured at amortised cost using
the effective interest method. The equity component of a compound
financial instrument is not remeasured.
Interest related to the financial liability is recognised in
profit or loss. On conversion at maturity, the financial liability
is reclassified to equity and no gain or loss is recognised.
3.19 Provisions - Rehabilitation
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
An obligation to incur environmental restoration, rehabilitation
and decommissioning costs arises when disturbance is caused by the
development or on-going production of a mining property. Such costs
arising from the decommissioning of plant and other site
preparation work, discounted to their net present value, are
provided for and capitalised at the start of each project, as soon
as the obligation to incur such costs arises. These costs are
recognised in profit or loss over the life of the operation,
through the depreciation of the asset and the unwinding of the
discount on the provision. Costs for restoration of subsequent site
damage which is created on an ongoing basis during production are
provided for at their net present values and recognised in profit
or loss as extraction progresses.
Changes in the measurement of a liability relating to the
decommissioning of plant or other site preparation work (that
result from changes in the estimated timing or amount of the cash
flow, or a change in the discount rate) are added to or deducted
from the cost of the related asset in the current period. If a
decrease in the liability exceeds the carrying amount of the asset,
the excess is recognised immediately in profit or loss. If the
asset value is increased and there is an indication that the
revised carrying value is not recoverable, an impairment test is
performed in accordance with the accounting policy above.
Provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to
the liability. The unwinding of the discount is recognised as
finance cost in profit or loss.
3.20 Equity
Equity comprises the following:
-- Share capital - ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the
proceeds.
-- Share-options and warrant reserve - represents equity-settled share-based payments.
-- Accumulated loss represents retained profits less retained losses.
-- Revaluation reserve represents the difference between the
nominal value of shares issued by the Company to the shareholders
of ZimDiv Holdings Limited ("Zimdiv") and the nominal value of the
ZimDiv shares taken in exchange.
-- Non-controlling interests represents the share of retained profits less retained losses of the non-controlling interests.
-- Foreign currency translation reserve represents the other
comprehensive income gains or losses arising on the conversion of
the functional currencies of the subsidiaries to the holding
company's functional currency of USD.
3.21 Leases
Determining whether an arrangement contains a lease.
At inception of an arrangement, the Group determines whether the
arrangement is or contains a lease.
At inception or on reassessment of an arrangement that contains
a lease, the Group separates payments and other consideration
required by the arrangement into those for the lease and those for
other elements on the basis of their relative fair values. If the
Group concludes for a finance lease that it is impracticable to
separate the payments reliably, then an asset and a liability are
recognised at an amount equal to the fair value of the underlying
asset; subsequently, the liability is reduced as payments are made
and an imputed finance cost on the liability is recognised using
the Group's incremental borrowing rate.
Assets held under leases are recognised as assets of the Group
at the fair value at the inception of the lease or, if lower, at
the present value of the minimum lease payments. Lease payments are
apportioned between interest expense and capital redemption of the
liability. Interest is recognised immediately in the statement of
comprehensive income unless attributable to qualifying assets, in
which case they are capitalised to the cost of those assets.
Exemptions are applied for short life leases and low value
assets made under operating leases charged to the statement of
comprehensive income on a straight line basis over the period of
the lease.
Payments made under non-capitalised leases are recognised in
profit or loss on a straight-line basis over the term of the lease.
Lease incentives received are recognised as an integral part of the
total lease expense, over the term of the lease.
Minimum lease payments made are apportioned between the finance
expense and the reduction of the outstanding liability. The finance
expense is allocated to each period during the lease term so as to
produce a constant periodic rate of interest on the remaining
balance of the liability.
3.22 Operating segments
Segmental information is provided for the Group on the basis of
information reported internally to the chief operating
decision-maker for decision-making purposes. The Group considers
that the role of chief operating decision-maker is performed by the
Group's board of directors.
4. Significant accounting judgements, estimates and assumptions
In preparing these consolidated financial statements, management
has made judgements, estimates and assumptions that affect the
application of the Group's accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to estimates are recognised prospectively.
4.1. Judgements
Information about judgements made in applying accounting
policies that have the most significant effects on the amounts
recognised in the consolidated financial statements is included in
the following notes:
- Note 4.7 - consolidation: whether the Group has de facto control over an investee; and
- Note 14 - leases: whether an arrangement contains a lease.
4.2. Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment to
the carrying amounts of assets and liabilities within the year
ended 31 December 2020 is included in the following notes:
-- Note 25 - recognition of deferred tax assets: availability of
future taxable profit against which tax losses carried forward
can be used;
-- Note 4.4 - Recoverability of exploration and evaluation
assets: key assumptions underlying recoverable amounts;
-- Note 4.5 - Recoverability of RHA Cash-Generating Unit "CGU":
key assumptions underlying recoverable amounts;
-- Note 15 - recognition and measurement of provisions and
contingencies: key assumptions about the likelihood and
magnitude of an outflow of resources; and
-- Note 19 - share based payments assumptions regarding the
various inputs into the Black Scholes model used to
determine the option value.
4.3. Measurement of fair values
A number of the Group's accounting policies and disclosures
require the measurement of fair values, for both financial and
non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Fair values
are categorised into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows.
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a
liability fall into different levels of the fair value hierarchy,
then the fair value measurement is categorised in its entirety in
the same level of the fair value hierarchy as the lowest level
input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value
hierarchy at the end of the reporting period during which the
change occurred.
Further information about the assumptions made in measuring fair
values is included in the following notes:
-- Note 19 - share-based payment arrangements;
-- Note 29 - financial instruments.
4.4 Recoverability of exploration and evaluation assets
Determining whether an exploration and evaluation asset is
impaired requires an assessment of whether there are any indicators
of impairment, including by reference to specific impairment
indicators prescribed in IFRS 6 Exploration for and Evaluation of
Mineral Resources. If there is any indication of potential
impairment, an impairment test is required based on value in use of
the asset or fair value less cost to sell.
The carrying amount of exploration and evaluation assets at 31
December 2020 amounted to nil (2019: $nil). Refer to note 8 for the
assumptions used.
4.5 Recoverability of RHA Cash-Generating Unit "CGU"
Determining whether a CGU is impaired requires an assessment of
whether there are any indicators of impairment, including by
reference to specific impairment indicators prescribed in IAS36
Impairment of Assets. If there is any indication of potential
impairment, an impairment test is required based on the greater of
fair value less cost of disposal, and, value in use of the asset.
The value in use calculation requires the entity to estimate the
future cash flows expected to arise from the cash-generating unit
and a suitable discount rate in order to calculate the present
value.
During 2017 the operating losses at RHA were higher than
predicted due to operations in the open pit and underground failing
to deliver both the ore volumes and the anticipated grade. The
operating losses are an indicator of potential impairment. In
December 2017, due to the lower ore delivery, anticipated grade and
operating losses, the Board of Directors decided to place the RHA
Tungsten mine under care and maintenance.
As a result, management completed an impairment review.
The impairment review concluded that four months further capex
will be required in order to open the existing underground mining
of 6 000 tons per month run of mine ore. Concurrently additional
plant upgrades and a connection to the national grid would result
in a 40 000 ton per month run of mine ore operation. A further
option to construct a new decline vehicle access was not considered
during this review.
Key assumptions used in calculating the initial impairment
included:
-- 7 265 mtu concentrate production per month; 10 year mine
plan; APT price of $275 per metric ton unit ('mtu');
-- 20% discount rate; and a zero growth rate in operating cash
flow after the plant is fully operational, forecast to be for the
full year 2019. Other key factors include attainment of forecast
grade as set out in our resource statement and plant operating
parameters being achieved.
-- The XRT sorter installation is a significant element in
increasing confidence in RHA in that 70% of the anticipated run of
mine feed target of 40 000 ton per month is passed through the
sorter, which is able to recover approximately 90% of the
mineralisation in a mass pull of some 5%.
-- The model assumes annual revenues of $13.1m from 2020.
Revenue generation is dependent on a number of inter-linked
assumptions and a combination of negative changes in those
assumptions would result in further impairment charges.
As the mine is not operating, these assumptions were not
revisited and the mine remains fully impaired.
Sensitivity analysis was conducted on the volume, grade,
concentrate production per month and APT price assumptions in the
model.
The management of RHA continue to engage with Nieef about the
future of RHA.
4.6 Estimation of useful life for mine assets
Mine assets are depreciated /amortised on a straight-line basis
over the life of the mine concerned. Judgement is applied in
assessing the mine's useful life and in the case of RHA, the
Group's only operating concern, is based on the initial Preliminary
Economic Assessment ('PEA') first published in August 2013 that
initially modelled an 8 year life of mine. The life of mine
reassessed annually based on levels of production.
4.7 Basis of consolidation
RHA
During 2013, Premier concluded a shareholders' agreement with
NIEEF whereby NIEEF acquired 51% of the shares of RHA. The
principal terms of the agreement are as follows:
-- ZimDiv Holdings Limited ('ZimDiv'), a wholly owned
subsidiary, is appointed as the Manager of the project for an
initial 5 year term.
-- On 7 May 2019 ZimDiv were reappointed as the manager for another 5 year term.
-- ZimDiv has marketing rights to the product.
-- Each shareholder can appoint up to two directors each, with a
5(th) director who is rotated between each shareholder. The 5(th)
director will not have a vote.
-- Although the local Zimbabwean company is responsible for
financing and repayment of such. Premier has secured the funding to
advance RHA to production.
-- There has been no operational change since the agreements
were signed and Premier continues to fund RHA until it becomes cash
generative.
At the financial year-end, one director of RHA was from the
Premier Group and one director from NIEEF. There is no majority
vote at board level and Premier still retains operational and
management control through its shareholders' agreement. Following
the assessment, the Directors concluded that Premier, through its
wholly owned subsidiary ZimDiv, retained control and should
continue to consolidate 100% of RHA and recognise non-controlling
interests of 51% in the consolidated financial statements.
4.8 Valuations
-- Investments - Premier's investment in Circum is classified as
an FVOCI as such is required to be measured at fair value at the
reporting date. As Circum is unlisted there are no quoted market
prices. In previous years the fair value of the Circum shares was
derived using the most recent placing price. The Fair value of the
Circum shares as at 31 December 2020 was derived using the most
recent placing price in May 2021.
-- Investments - Premier's investment in MNH is classified as an
FVOCI as such is required to be measured at fair value at the
reporting date. As MNH is unlisted there are no quoted market
prices. The Fair value of the MNH shares as at 31 December 2020 was
derived using the purchase price in July 2019.
-- Valuation of warrants, share options and ordinary shares
issued as consideration - judgement is applied in determining
appropriate assumptions to be used in calculating the fair value of
the warrants, shares and share options issued. Refer accounting
policy note and note 19.
-- Provision for Rehabilitation - A provision is recognised for
site rehabilitation and decommissioning of current mining
activities based on current environmental and regulatory
requirements. The net present value of the provision is calculated
at a discount rate of 10% over an 8 year life of mine.
-- The life of mine has subsequently been reassessed to a total
of 10 years. The corresponding rehabilitation assets was
capitalised to property, plant and equipment and is depreciated
over the life of the mine.
5. Going Concern
These consolidated financial statements are prepared on the
going concern basis. The going concern basis assumes that the Group
will continue in operation for the foreseeable future and will be
able to realise its assets and discharge its liabilities and
commitments in the normal course of business.
The Group has incurred operating losses from continuing
operations amounting to $1.299 million (2019: $1.817 million) and
negative cash flows from operations amounting to $0.744 million for
the year ended 31 December 2020 (2019: $0.404 million) as the Group
continued to maintain RHA in care and maintenance, attempted to
advance Zulu through the EPO and external partners joint venture
processes described above in this report and explored new
opportunities to diversify and mitigate general risks associated
with its Zimbabwe based projects.
As at 31 December 2020, current assets exceeded current
liabilities by $0.227 million (2019: current liabilities exceeded
current assets by $2.079 million). The Group raised $2.343 million
(2019: $1.984 million) in net funding through share subscriptions
to fund holding costs at RHA, general group maintenance and
preservation of assets and to investigate and assess potential
diversification, through potential investments in cash generating
assets, as discussed above.
The Directors have prepared cash flow forecasts for the period
ending 31 December 2022, on the basis of the following
considerations.
RHA
-- The Company has not funded any of the activities at RHA since
1 July 2019, apart from essential care and maintenance costs.
Zulu
-- During March 2021, the EPO was granted and subsequently a DFS has commenced.
-- The Company is funding the DFS through ongoing capital raises.
-- The Company is actively seeking joint venture agreements with prospective partners.
MNH
-- The Group is anticipating deriving a return on its current
investment in MNH in the latter portion of 2021.
-- The Company has received the June 2020 audited financial
statements which reflects a profit of N$4.4 million for the
year.
The Group
-- During the course of the year ended 31 December 2020 the
Company issued 6,526,938 shares with a total value of $4.558
million. These funds were used to settle historic debt, fund
continuing operations and acquire the investments as listed in note
8 and 9.
-- In June 2021 the Group issued 625,000,000 shares at a price
of 0.16p per share raising a total of $1.416 million. This cash is
being used to commence the Zulu DFS. Additional capital raises are
planned for the second half of the year to fund the DFS.
-- The cash flow is dependent on additional capital being raised
and any cash flows derived from its investment in the trading
company. There remains an active and liquid market for the
Company's shares and the Company has historically been able to
raise funding through equity placements and the Board believes that
it will continue to be able secure the funds required for ongoing
working capital needs going forward.
-- The Company will seek to diversify its operations and risk
profile and limit the funds that need to be raised through equity
placements to provide necessary funding for the Company's
significantly reduced fixed overhead.
In the event that the Company is unable to obtain additional
equity finance for the Group's working capital, a material
uncertainty exists which may cast significant doubt on the ability
of the Group to continue as a going concern and therefore be unable
to realise its assets and settle its liabilities in the normal
course of business.
6. Operating segments
The group has the following three reportable segments that are
managed separately due to the different jurisdictions.
Segmental results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis.
Reportable segments Operations
------------------------ ---------------------------
RHA and RHA Mauritius Development and mining of
Wolframite
Zulu and Zulu Mauritius Development of Lithium and
Tantalite
Head office General administration and
control
Exploration
RHA Tungsten Zulu Lithium
Mine Zimbabwe Zimbabwe
Unallocated and RHA and Zulu Total continued
By operating segment Corporate Mauritius* Mauritius operations
2020 $ 000 $ 000 $ 000 $ 000
Result
Revenue - - - -
Operating loss / (income) 952 285 62 1 299
------------ --------------- -------------- ----------------
Other income - (93) - (93)
Fair value movement on
investment - - - -
Impairment of RHA - 9 - 9
Finance charges 65 54 - 119
Impairment of Zulu - - - -
------------ --------------- -------------- ----------------
Loss before taxation 1 017 255 62 1 334
------------ --------------- -------------- ----------------
Assets
Exploration and evaluation
assets 120 - - 120
Investments 8 342 - - 8 342
Trade and other receivables 2 6 - 8
Cash 722 5 - 727
Total assets 9 186 11 - 9 197
------------ --------------- -------------- ----------------
Liabilities
Other financial liabilities - - - -
Borrowings - - - -
Bank overdraft - - - -
Trade and other payables (355) (148) (5) (508)
Provisions - (427) - (427)
------------ --------------- -------------- ----------------
Total liabilities (355) (575) (5) (935)
------------ --------------- -------------- ----------------
Net assets 8 831 (564) (5) 8 262
Other information
Depreciation and amortisation - - - -
Property plant and equipment
additions - 9 - 9
Costs capitalised to intangible
assets 120 - - 120
Exploration
RHA Tungsten Zulu Lithium
Mine Zimbabwe Zimbabwe
Unallocated and RHA and Zulu Total continued
By operating segment Corporate Mauritius* Mauritius operations
2019 $ 000 $ 000 $ 000 $ 000
Result
Revenue - - - -
Operating loss / (income) 1 293 476 48 1 817
------------ --------------- -------------- ----------------
Other income (612) (229) - (841)
Fair value movement on
investment - - - -
Impairment of RHA - 349 - 349
Finance charges 34 80 - 114
Impairment of Zulu - - - -
------------ --------------- -------------- ----------------
Loss before taxation 715 676 48 1 439
------------ --------------- -------------- ----------------
Assets
Exploration and evaluation - - - -
assets
Investments 7 444 - - 7 444
Inventories - 1 - 1
Trade and other receivables 16 2 - 18
Cash 19 20 1 40
Total assets 7 479 23 1 7 503
------------ --------------- -------------- ----------------
Liabilities
Other financial liabilities - (35) - (35)
Borrowings (715) - - (715)
Bank overdraft - - - -
Trade and other payables (1 085) (300) (3) (1 388)
Provisions - (388) - (388)
------------ --------------- -------------- ----------------
Total liabilities (1 800) (723) (3) (2 526)
------------ --------------- -------------- ----------------
Net assets 5 679 (700) (2) 4 977
Other information
Depreciation and amortisation - - - -
Property plant and equipment
additions - 483 - 483
Costs capitalised to intangible - - - -
assets
*Represents 100% of the results and financial position of RHA
Tungsten (Private) Limited ("RHA") whereas the Group owns 49%.
Non-controlling interests are disclosed in note 20.
RHA Revenue is generated from sales to Noble Minerals, in line
with RHA's off-take agreement.
7. Hyper-inflationary accounting
In terms of IAS29, Hyperinflation is indicated by
characteristics of the economic environment of a country which
include, but are not limited to, the following:
a) the general population prefers to keep its wealth in non --
monetary assets or in a relatively stable foreign currency. Amounts
of local currency held are immediately invested to maintain
purchasing power;
b) the general population regards monetary amounts not in terms
of the local currency but in terms of a relatively stable foreign
currency. Prices may be quoted in that currency;
c) sales and purchases on credit take place at prices that
compensate for the expected loss of purchasing power during the
credit period, even if the period is short;
d) interest rates, wages and prices are linked to a price index; and
e) the cumulative inflation rate over three years is approaching, or exceeds, 100%.
As stated in the 2018 annual financial statements, with effect
of the 21(st) of February 2019 Zimbabwe implemented the Real Time
Gross Settlement of US Dollars ("RTGS") at an official exchange
rate of 1:1. At that time the official inflation rate was 0%. At
the year end the official exchange rate has moved to : RTGS 81.7866
: $1 (2019: RTGS 17.2322 : $1) whilst the official inflation rate
has moved to 348.59% (2019: 521.2%) on a year on year basis. The
table below details the exchange rates and inflation rates, as
published by https://tradingeconomics.com/zimbabwe/inflation-cpi ,
on a monthly basis for the year ended 31 December 2020.
Exchange Exchange
Inflation Rate RTGS Inflation Rate RTGS
Rate : US$ Rate : US$
2020 2020 2019 2019
---------- ----------- ---------- -----------
January 175.66% 17.3531 0.00% 1.0000
---------- ----------- ---------- -----------
February 540.16% 17.9594 0.00% 1.0000
---------- ----------- ---------- -----------
March 676.39% 25.0000 0.00% 3.0120
---------- ----------- ---------- -----------
April 765.57% 25.0000 75.86% 3.2635
---------- ----------- ---------- -----------
May 785.55% 25.0000 97.85% 5.2635
---------- ----------- ---------- -----------
June 737.26% 57.3582 175.66% 6.6220
---------- ----------- ---------- -----------
July 837.53% 76.7596 230.54% 9.1856
---------- ----------- ---------- -----------
August 761.02% 83.3994 288.50% 10.7139
---------- ----------- ---------- -----------
September 659.40% 81.4439 353.00% 15.1979
---------- ----------- ---------- -----------
October 471.25% 81.3531 440.10% 16.1152
---------- ----------- ---------- -----------
November 401.66% 81.8151 480.70% 16.7012
---------- ----------- ---------- -----------
December 348.59% 81.7866 521.20% 17.2322
---------- ----------- ---------- -----------
Two of the group's subsidiaries, namely RHA and Zulu, operate in
Zimbabwe.
In accordance with IAS29 the group has implemented the
Historical Cost approach in restating the subsidiary accounts as at
the 31 December 2020 and the corresponding comparative figures for
the year ended 31 December 2019.
The financial statements reflect the reduction in the purchasing
power of RTGS which have been remeasured, in terms of IAS 29, as at
31 December 2020.
8. Intangible assets
2020 2019
$ 000 $ 000
Exploration and evaluations assets 120 -
-------------- --------------
Total intangible assets 120 -
-------------- --------------
Exploration Exploration
& Evaluation & Evaluation
assets assets
$ 000 $ 000
Opening carrying value 2019 - -
Expenditure on Exploration and - -
evaluation
Impairment of Exploration and evaluation - -
assets
Closing carrying value 2019 - -
-------------- --------------
Expenditure on Exploration and 120 -
evaluation
Impairment of Exploration and evaluation - -
assets
Closing carrying value 2020 120 -
-------------- --------------
During the year the company acquired a portfolio of hard-rock
lithium assets located in Zimbabwe and Mozambique from Lithium
Consolidated Ltd ("Li3").
The impairment loss amounted to $nil (2019 $nil) Exploration and
evaluation assets at 31 December 2020 comprise of Zulu located in
Zimbabwe. In the prior year the exploration and evaluation assets
comprised the Zulu and the limestone licence in Mozambique.
Zulu Lithium and Tantalite Project
During the year $nil (2019: $nil) exploration costs were
incurred and capitalised to Zulu. The Group views this project as
strategic and exploration work will be continued in the future,
cash flow permitting. For additional information on events after
the reporting date, refer to note 32.
The drop in the price of Spodumene in 2018 to $400/t coupled
with the political uncertainty and resulting country risk included
in the discount rate applied to Zimbabwe resulted in the directors
impairing Zulu in full for the year ended 31 December 2018. The
impairment amounted to $nil million (2019 - $nil).
Key assumptions applied in calculating the discounted cash flow
analysis included:
-- Targeted annual production of spodumene concentrate 84 000
tonnes
-- Targeted annual production of petalite concentrate 32 500
tonnes
-- Price of spodumene concentrate $800/t
-- Price of petalite concentrate $400/t
-- Discount rate 10%
-- Operating costs per combined tonnage of concentrate
$486/t
-- Estimated 15 year life of mine
-- Average strip ratio of 5.5:1
As at the year end the EPO as discussed above was not granted,
accordingly the above assumptions did not warrant reassessment.
During March 2021, the EPO was granted and a DFS is being
undertaken.
9. Investments
Circum Manganese Total
Minerals Namibian
Holdings
$ 000 $ 000 $ 000
Opening carrying value 2019 6 263 - 6 263
Shares acquired - 1 181 1 181
Fair value adjustment - - -
Closing carrying value 2019 6 263 1 181 7 444
--------- ---------- ------
Shares acquired - 898 898
Fair value adjustment - - -
Closing carrying value 2020 6 263 2 079 8 342
--------- ---------- ------
Reconciliation of movements in
investments
Opening carrying value 2019 (1)
(2) 6 263 - 6 263
Acquisition at fair value 2019
(3) - 1 181 1 181
Opening carrying value 2019 6 263 1 181 7 444
Acquisition of shares (4) - 898 898
Acquisition at fair value 2019 - - -
Closing carrying value 2020 6 263 2 079 8 342
--------- ---------- ------
(1) Represents 2 million shares in unlisted entity Circum.
(2) As Circum is unlisted there are no quoted market The fair
value of the Circum shares was derived using the previous issue
price and validating it against the most recent placing price on 11
May 2021 of $1.25 per share.
(3) Represents a purchase of 11% interest in MNH.
(4) Represents the purchase of 8.9% interest in MNH.
The shares are considered to be level 3 financial assets under
the IFRS 13 categorisation of fair value measurements.
Premier continues to hold 5,010,333 shares in Circum currently
valued in total at $6.263 million. Circum has published a general
update to shareholders in May 2021 and the major shareholders and
directors are now fully coordinated in their intention to generate
a liquidity event for shareholders. Novopro has been appointed to
complete a DFS for an initial production of +/- 375ktpa of Sulphate
of Potash which will be scaled up to 750Ktpa over time. To this
effect a fully subscribed rights issue raised $12.5 million.
The fair value of these investments on 31 December 2020 amounted
to $8.342 million (2019: $7.444 million).
Premier's investment in Circum is classified as FVOCI and as
such is required to be measured at fair value at each reporting
date. As Circum is unlisted there are no quoted market prices. The
fair value of the Circum shares was derived using the previous
issue price and validating it against the most recent placing price
on 11 May 2021.
Premier's investment in MNH is classified as FVOCI and as such
is required to be measured at fair value at each reporting date. As
MNH is unlisted there are no quoted market prices. The fair value
of the MNH shares was based on the latest transactions and
supported by an external evaluation conducted by Bara
Consulting.
Sensitivity analysis
The investments are subject to changes in market prices. A 10%
reduction in market prices would result in a $0.834 million (2019:
$0.744 million) charge to Other Comprehensive Income.
10. Property, plant and equipment
Property plant and equipment
Plant and Land and
Mine Development Equipment Buildings Total
$ 000 $ 000 $ 000 $ 000
Cost
At 1 January 2019 8 409 4 310 852 13 571
Exchange differences (1) (5 755) (1 280) (632) (7 667)
Transfer from Capital Work
in Progress 62 (62) - -
Additions 31 452 - 483
Disposals - - - -
At 31 December 2019 2 747 3 420 220 6 387
Exchange differences (1) (1 576) (623) (143) (2 342)
Transfer from Capital Work - - - -
in Progress
Additions - 9 - 9
Disposals - - - -
At 31 December 2020 1 171 2 806 77 4 054
----------------- ----------- ----------- --------
Accumulated Depreciation and Impairment
Losses
At 1 January 2019 8 409 4 310 852 13 571
Exchange differences (1) (5 755) (1 280) (632) (7 667)
Charge for the year - - - -
Impairment of RHA 93 390 - 483
At 31 December 2019 2 747 3 420 220 6 387
Exchange differences (1) (1 576) (623) (143) (2 342)
Charge for the year - - - -
Impairment of RHA - 9 - 9
At 31 December 2020 1 171 2 806 77 4 054
----------------- ----------- ----------- --------
Net Book Value
At 31 December 2019 - - - -
At 31 December 2020 - - - -
(1) Refer to note 7 Hyperinflationary Accounting.
The impairment assessment is detailed in note 4, Significant
accounting judgements, estimates and assumptions.
Refer note 14, Other financial liabilities for capitalised lease
assets.
11. Inventories
2020 2019
$ 000 $ 000
Mine consumables - 1
-------------------------- -------------------------
- 1
-------------------------- -------------------------
12. Trade and other receivables
2020 2019
$ 000 $ 000
Indirect tax receivable 3 2
Other receivables 2 -
Prepayments 3 16
------ ------
8 18
------ ------
Current 8 18
Non-current - -
------ ------
8 18
------ ------
The receivables are considered to be held within a
held-to-collect business model consistent with the Group's
continuing recognition of the receivables.
As at 31 December 2020 the Group does not have any contract
assets nor any contract liabilities arising out of contracts with
customers relating to the Group's right to receive consideration
for work completed but not billed.
Credit and market risks, and impairment losses
The Group did not impair any of its trade receivables as at 31
December 2020, as all trade receivables generated during the
financial year were settled in full prior to the year-end.
Information about the Group's exposure to credit and market
risks and impairment losses for trade receivables is included in
Note 29.
The Directors consider that the carrying amount of trade and
other receivables approximates their fair value.
13. Cash and cash equivalents
2020 2019
$ 000 $ 000
Bank balances 727 40
Bank overdrafts - -
Cash and cash equivalents per the statement
of cash flows 727 40
------ ------
14. Finance lease liabilities
Finance lease
During 2015, the Group entered into a finance lease with Board
Market Trading 258 (Pty) Ltd for the purchase of two generators
with a net book value of $0.124 million to be used at RHA. The
finance lease is for a term of 48 months with interest charged at
19.5% per annum with monthly repayments of $0.006 million beginning
from 1 August 2016. Depreciation of leased assets amounted to nil
(2019: $nil) due to the assets being fully impaired in a prior
period.
The agreement is classified as a finance lease as the rental
period equal the estimated useful life of the assets concerned and
the Group has the right to purchase the assets outright at the end
of the minimum lease term by paying a nominal amount.
In terms of IFRS 16 Leases, short term lease agreements which
are less than one month or with total present value of lease
payments not exceeding $0.005 million are excluded from
capitalisation.
Future lease payments are due as follows:
Present
value of
Minimum minimum
lease payments Interest lease payments
2020 $ 000 $ 000 $ 000
Not later than one year - - -
Between one year and five years - - -
- - -
---------------- --------- ----------------
Present
value of
Minimum minimum
lease payments Interest lease payments
2019 $ 000 $ 000 $ 000
Not later than one year 36 1 35
Between one year and five years - - -
36 1 35
---------------- --------- ----------------
Present
value of
Minimum minimum
lease payments Interest lease payments
Balance as at 31 December 2018 108 14 94
Payments made during the year 72 13 59
---------------- --------- ----------------
Balance as at 31 December 2019 36 1 35
Payments made during the year 36 1 35
Balance as at 31 December 2020 - - -
---------------- --------- ----------------
2020 2019
$ 000 $ 000
Finance lease liability - 35
- 35
------ ------
Other financial liabilities
Current - 35
Non-current - -
- 35
------ ------
Non-Capitalised lease payments during
the year
Short term non-capitalised lease
payments - 114
------ ------
15. Provisions - rehabilitation
2020 2019
$ 000 $ 000
As at 1 January 388 983
Foreign Exchange variation on translation - (684)
Unwinding of discount 39 89
As at 31 December 427 388
------ ------
A provision is recognised for site rehabilitation and
decommissioning of current mining activities based on current
environmental and regulatory requirements. The gross provision was
based upon an environmental impact assessment ("EIA") conducted and
calculated in 2014 and discounted to a net present value using a
discount rate of 10% over a life of mine of 8 years. The
corresponding rehabilitation assets was capitalised to property,
plant and equipment and is depreciated over the life of the mine.
The initial provision for rehabilitation was performed in the then
functional currency of USD. With the implementation of RTGS this
provision was restated in terms of note 7 on Hyperinflationary
accounting. With RHA currently under care and maintenance the
directors reassessed the final provision based upon actual volumes
extracted versus projected volumes. This reassessment will be done
annually taking into consideration the remaining volume of ore to
be extracted, the current level of mining that has already been
conducted and the estimated costs involved in rehabilitating the
land.
16. Trade and other payables
2020 2019
$ 000 $ 000
Trade payables * 238 1 065
Accrued expenses 256 285
Payroll liabilities 14 38
508 1 388
------ ------
All trade and other payables at 31 December 2020 are due within
one year, non-interest bearing, and comprise amounts outstanding
for mine purchases and on-going costs, except as described further
below. The Directors consider that the carrying amount of trade and
other payables approximates their fair value.
17. Borrowings
2020 2019
$ 000 $ 000
Loan G. Roach - see related party transactions - 219
Loan B. Roach - see related party transactions - 128
Loan Regent Mercantile - 368
- 715
------ ------
Reconciliation of movement in borrowings
As at 1 January 715 213
Loans received (1) 200 468
Loans repaid through conversion to equity
(1) (2) (3) (965) -
Repayment - -
Implementation fee 15 -
Accrued interest 35 34
As at 31 December - 715
------ ------
Current - 715
Non-current - -
- 715
------ ------
Borrowings comprise loans from a related party and a non-related
party. Loans from a related party are further disclosed in Note 31,
Related Party Transactions.
(1) As at 31 December 2019 $0.219 million including accrued
interest at 3% was outstanding to George Roach. In March 2020 the
Company entered into a secured $0.200 million Loan Agreement and
related Subscription Agreement with a company owned by a Trust of
which George Roach is a beneficiary at 10% interest per annum. In
July 2020 $0.206 million was settled by issue of 232,647,763
ordinary shares and in October 2020 the balance of $0.237 million
was settled by issue of 456,291,154 ordinary shares.
This loan was unsecured with no fixed terms or repayment and
bearing interest at 3% per annum.
(2) As at 31 December 2019 $0.128 million including accrued
interest at 8% was outstanding to Brendan Roach. In October 2020
$0.132 million including interest was settled by issue of
241,117,500 ordinary shares.
This loan was unsecured with no fixed terms of repayment and
bearing interest at 8% per annum.
(3) As at 31 December 2019 $0.368 million including accrued
interest of 10% per annum was outstanding to Regent Mercantile
Holdings Limited. In July 2020 $0.0.390 million including interest
was settled by issue of 431,241,920 ordinary shares. The principal
amount (plus any accrued interest) under the loan agreement was
initially repayable in two equal instalments on 1 August 2019 and 1
September 2019.
Failing direct repayment of the loan by Premier, Regent at its
sole discretion may convert any percentage of a repayment within
applicable share authorities into new Premier shares at a
conversion price equal to 90 per cent of the daily volume weighted
average price during the five days trading days immediately prior
to the relevant repayment date. The loan was secured by 350 000
shares in Circum held by Premier.
18. Share capital
Authorised share capital
17.79 billion (2019: 11.26 billion) ordinary shares of no par
value.
Issued share capital
Number of
Shares Value
'000 $ 000
----------- --------
As at 1 January 2019 7 383 679 48 798
----------- --------
Shares issued under subscription agreement
(1) 444 444 525
Shares issued on conversion for fees
(2) 161 986 185
Shares issued on conversion of loan (3) 1 009 890 569
Shares issued on conversion of loan (4) 753 779 306
Shares issued under subscription agreement
(5) 1 250 000 310
Shares issued under subscription agreement
(6) 262 293 342
As at 31 December 2019 11 266 071 51 035
----------- --------
Shares issued on conversion of loan (7) 171 074 199
Shares issued on conversion of loan (8) 498 230 699
Shares issued on conversion of loan (9) 431 242 390
Shares issued on conversion of loan (10) 70 427 56
Shares issued under subscription agreement
(11) 124 513 120
Shares issued on conversion of loan (12) 232 648 206
Shares issued on conversion of loan (13) 64 470 51
Shares issued on conversion for fees
(14) 374 921 437
Shares issued on conversion of loan (15) 62 450 50
Shares issued on conversion of loan (16) 125 905 76
Shares issued on conversion of loan (17) 120 915 65
Shares issued under subscription agreement
(18) 2 750 000 1421
Shares issued on conversion for fees
(19) 1 500 143 787
As at 31 December 2020 17 793 009 55 592
----------- --------
Less cumulative share costs (3 088)
Net share capital as at 31 December 2020 52 504
--------
(1) On the 07 March 2019, the Company issued 444 444 444 shares
under a subscription agreement at a price of 0.9p per share.
(2) On the 29 May 2019, the company issued 161 985 963 shares
for a total value of $ 0.185 million for conversion of fees.
(3) On 07 July 2019, the Company issued 1 009 889 850 shares at
an issue price of 0.45p per share for a total value of $0.569
million for conversion of loan.
(4) On 28 August 2019, the Company issued 753 778 580 shares at
an issue price of 0.45p per share for a total value of $0.306
million for conversion of loan.
(5) On the 03 October 2019, the Company issued 1 250 000 000
shares under a subscription agreement for a total value of $0.310
million
(6) On the 19 December 2019, the Company issued 262 293 000
shares under a subscription agreement at a price of 0,01p for a
total value of $0.343 million
(7) On the 06 February 2020, the Company issued 171 074 444
shares under a subscription agreement at a price of 0.9p per
share.
(8) On the 11 June 2020, the Company issued 498 229 730 shares
under a subscription agreement at a price of 0.111p per share.
(9) On 24 July 2020, the Company issued 431 241 920 shares at an
issue price of 0.07092p per share for a total value of $0.390
million for conversion of loan.
(10) On 27 July 2020, the Company issued 70 426 740 shares at an
issue price of 0.06264p per share for a total value of $0.056
million for conversion of loan.
(11) On the 28 July 2020, the Company issued 124 512 702 shares
under a subscription agreement at a price of 0,0744p for a total
value of $0.120 million.
(12) On the 30 July 2020, the Company issued 232 647 763 shares
for a total value of $ 0.206 million for conversion of fees.
(13) On the 11 August 2020, the Company issued 64 470 222 shares
for a total value of $ 0.051 million for conversion of fees.
(14) On the 11 August 2020, the Company issued 374 920 533
shares for a total value of $ 0.437 million for conversion of
fees.
(15) On the 18 August 2020, the Company issued 62 450 479 shares
for a total value of $ 0.050 million for conversion of fees.
(16) On the 21 September 2020, the company issued 125 905 202
shares for a total value of $ 0.076 million for conversion of
fees.
(17) On the 02 October 2020, the Company issued 120 915 045
shares for a total value of $ 0.065 million for conversion of
fees.
(18) On the 21 October 2020, the Company issued 2 750 000 000
shares under a subscription agreement at a price of 0,04p for a
total value of $1.421 million.
(19) On the 22 October 2020, the Company issued 1 500 143 471
shares at an issue price of 0.04p per share for a total value of
$0.787 million for conversion of fees.
Reconciliation to balance as stated in the consolidated
statement of financial position
2020 2019
$ 000 $ 000
As at 1 January 48 042 45 873
Shares issued under subscription agreements
- cash flow 1 541 1 177
Shares issued to settle trade payables 1 225 185
Shares issued on conversion of loans and
loan notes (note 17) - non-cash 894 -
Shares issued to purchase Investment in
MNH 898 875
Share issue costs - cash flow (96) (68)
As at 31 December 52 504 48 042
------- -------
19. Share based payment and warrant reserve
2020 2019
$ 000 $ 000
Share options and warrants reserve beginning
of year 2 366 2 366
Warrants granted - -
Share options - -
Warrants cancelled - -
Share options and warrants reserve end of
year 2 366 2 366
------ ------
Share options and warrant arrangements are set out below.
Equity-settled Share base payment arrangement
The Company adopted an incentive share option plan (the 'Plan')
during 2012. The essential elements of the Plan provide that the
aggregate number of common shares of the Company's capital stock
issuable pursuant to options granted under the Plan may not exceed
15% of the issued and outstanding Ordinary Shares at the time of
any grant of options. Options granted under the Plan will have a
maximum term of 10 years. All options granted to Directors and
management are subject to vesting provisions of one to two
years.
All options are to be settled by the physical delivery of
shares.
The fair value of all the share options has been measured using
the Black-Scholes Model.
Issued to Date Granted Vesting Number Exercise Expiry Estimated
Term of Options Price Date Fair
Granted Value
'000
Employees and
consultants 10/02/2011 1 year 2 250 1.135p 09/02/2014 0.87p
See 1
Directors 04/12/2012 below 20 386 Nil 03/12/2022 1.11p
See 2
Directors 04/12/2012 below 20 386 2p 03/12/2022 1.85p
Employees and
associates
See 3
04/12/2012 below 5 536 Nil 03/12/2022 1.85p
See 4
Directors 29/07/2014 below 6 000 1.15p 28/07/2024 1.15p
See 5
Directors 29/07/2014 below 6 000 1.50p 28/07/2024 1.15p
See 4
Management 29/07/2014 below 6 500 1.15p 28/07/2024 1.15p
See 5
Management 29/07/2014 below 6 500 1.50p 28/07/2024 1.15p
See 4
Directors 13/03/2015 below 2 000 0.9p 12/03/2025 0.67p
See 5
Directors 13/03/2015 below 2 000 1.17p 12/03/2025 0.64p
See 4
Management 13/03/2015 below 3 250 0.9p 12/03/2025 0.67p
See 5
Management 13/03/2015 below 3 250 1.17p 12/03/2025 0.64p
See 5
Directors 19/01/2017 below 30 500 0.28p 18/01/2027 0.278p
See 5
Consultants 19/01/2017 below 50 439 0.28p 18/01/2027 0.278p
See 5
Directors 19/01/2017 below 30 500 0.40p 18/01/2027 0.28p
See 5
Consultants 19/01/2017 below 50 439 0.40p 18/01/2027 0. 28p
------------
Totals options
issued 245 936
------------
Issued to:
- Directors 111 772
- Employees and consultants 114 664
- Management 19 500
--------
Total options
issued 245 936
Less:
- Options exercised in
prior years 27 257
- Options cancelled in
prior years 18 330
--------
Total options in issue at 31
December 2020 200 349
--------
Expected volatility has been based on an evaluation of the
historical volatility of the Company's share price, particularly
over the historical period commensurate with the expected term. The
expected term of the instruments has been based on historical
experience and general option holder behaviour
The Company has granted the following share options during the
years up to 31 December 2020:
1. These share options vest on the two-year anniversary of the
grant date. The options are exercisable at any time after vesting
during the grantee's period as an eligible option holder, and must
be exercised no later than 10 years after the date of grant, after
which the options will lapse.
2. These share options vest in equal instalments annually on the
anniversary of the grant date over a two year period. The options
are exercisable at any time after vesting during the grantee's
period as an eligible option holder, and must be exercised no later
than 10 years after the date of grant, after which the options will
lapse.
3. These share options vested on the grant date. The options are
exercisable at any time after vesting during the grantee's period
as an eligible option holder, and must be exercised no later than
10 years after the date of grant, after which the options will
lapse.
4. These share options vest on the one-year anniversary of the
grant date. The options are exercisable at any time after vesting
during the grantee's period as an eligible option holder, and must
be exercised no later than 10 years after the date of grant, after
which the options will lapse.
5. These share options vest on the two-year anniversary of the
grant date. The options are exercisable at any time after vesting
during the grantee's period as an eligible option holder, and must
be exercised no later than 10 years after the date of grant, after
which the options will lapse.
No share options were granted during the year ended 31 December
2020 (2019 - none issued).
The fair value of the options granted during the year ended 31
December 2020 was $nil (2019: $nil). The assessed fair value of
options granted to directors and management was determined using
the Black-Scholes Model that takes into account the exercise price,
the term of the option, the share price at grant date, the expected
price volatility of the underlying share, the expected dividend
yield and the risk-free rate interest rate for the term of the
option.
In issue Exercised Cancelled Granted In issue
prior / as at
to 1 January during lapsed during 31 December
the during the
2020 year the year year 2020
Directors:
- G. Roach 21 517 - - - 21 517
- G. Manhambara - - - - -
- N. Herbert 4 000 - - - 4 000
- W. Hampel 8 000 - - - 8 000
- M. Foster
(resigned) 18 000 - - - 18 000
- Resigned
directors 40 941 - - - 40 941
Other option
holders 107 891 - - - 107 891
------------- ---------- ---------- -------- ------------
200 349 - - - 200 349
------------- ---------- ---------- -------- ------------
The Group has the following share options outstanding:
Grant Date Expiry Date Exercise Price Number of options Number of options
outstanding vested and
'000 exercisable
'000
04/12/2012 03/12/2022 Nil 2 013 2 013
04/12/2012 03/12/2022 2p 12 458 12 458
29/07/2014 28/07/2024 1.15p 3 000 3 000
29/07/2014 28/07/2024 1.50p 10 500 10 500
13/03/2015 12/03/2025 0.9p 5 250 5 250
13/03/2015 12/03/2025 1.17p 5 250 5 250
19/01/2017 18/01/2027 0.28p 80 939 80 939
19/01/2017 18/01/2027 0.40p 80 939 80 939
----------------- -----------------
200 349 200 349
----------------- -----------------
The following table lists the inputs into the valuation
model.
19 Jan 19 Jan 13 Mar 13 Mar 29 Jul 29 Jul 4 Dec
2017 2017 2015 2015 2014 2014 2012
Issue Issue Issue Issue Issue Issue Issue
Dividend yield
(%) - - - - - - -
Expected volatility
(%) 236.0 236.0 100.0 100.0 148.0 148.0 75.0
Risk-free interest
rate (%) 1.43 1.43 1.71 1.71 1.71 1.71 1.81
Share price at
grant date 0.28p 0.28p 0.9p 0.9p 1.15p 1.15p 1.85p
2p and
Exercise price 0.28p 0.40p 0.9p 1.17p 1.15p 1.5p nil
The shares that the options are based on are quoted in GBP and
so the option agreement is stated in GBP. As such they are
presented in GBP despite the presentational currency of the Group
being USD.
The number and weighted-average exercise prices of share options
under the share option programmes and replacement awards were as
follows:
2020 2019
--------------------------- --------------------------
Weighted Weighted Average
Shares Average Exercise Shares Exercise Price
'000 Price '000
-------- ----------------- -------- ----------------
Options outstanding, beginning
of year 200 349 0.55p 200 349 0.55p
Granted - - - -
-------- ----------------- -------- ----------------
Options outstanding, end
of year 200 349 0.55p 200 349 0.55p
-------- ----------------- -------- ----------------
The weighted-average life of the options in issue as at 31
December 2020 is 4 years and 27 days (2019 - 5 years and 27
days.)
Warrants
The Company did not grant warrant options during the year (2019:
nil)
A summary of the status of the Company's share warrants as of 31
December 2019 and changes during the year are as follows:
2020 2019
'000 '000
Warrants outstanding, beginning of year - 23 000
Granted - -
Expired - (23 000)
Exercised - -
Cancelled * - -
----- ---------
Warrants outstanding, end of year - -
----- ---------
During the year ending 31 December 2020 nil (2019 - 23 million)
warrants granted to an advisor expired.
There are no warrants outstand in favour of the Directors.
Premier's share price opened at 0.09p in January 2020, traded at
an average of 0.08p, with a high of 0.16 and low of 0.04p during
the year and closed at 0.05p on 31 December 2020.
20. Non-controlling interest
2020 2019
RHA Tungsten Limited (51% Non-controlling
interest) $ 000 $ 000
At 1 January (11 499) (12 704)
Effect of change in the functional currency
of subsidiaries - 11 971
Non-controlling interest in share of profit
/ (losses) for the year - RHA (445) (102)
Non-controlling interest in share of other
comprehensive income for the period 78 (10 664)
At 31 December (11 866) (11 499)
-------------------------- ---------
The following table summarises the information relating to each
of the Group's subsidiaries that has material Non-controlling
interest, before any intra-group eliminations.
2020 2019
RHA RHA
Non-controlling Interest percentage 51% 51%
Non-current assets - -
Current assets 11 23
Non-current liabilities (18 315) (18 346)
Current liabilities (4 961) (4 223)
Net assets (23 265) (22 546)
--------- ---------
Net assets attributed to Non-controlling
Interest (11 866) (11 499)
--------- ---------
Revenue - -
Profit / (Loss) (871) (199)
Other Comprehensive Income /(Loss) 152 (20 910)
Total comprehensive income - -
Loss allocated to NCI (367) (10 766)
--------- ---------
The share of losses in the year represents the losses
attributable to non-controlling interests in RHA for the year.
21. Revenue
2020 2019
$ 000 $ 000
Major product/service lines
Sale of Wolframite - -
Sale of scrap - -
Reserve Bank of Zimbabwe Export Incentive - -
Total revenue - -
NIEEF refund of expenses 18 209
Prescription of debts 75 632
Total other income 93 841
Gross revenue 93 841
------ ------
Primary Geographical Markets
Africa 93 841
93 841
------ ------
Timing of revenue recognition
Products transferred at a point in time 93 841
93 841
------ ------
22. Cost of sales excluding depreciation and amortisation
2020 2019
$ 000 $ 000
Mining contractor - -
Staff costs - -
Consumables - -
Equipment hire and maintenance - -
Mining services - -
Plant services - -
Selling costs - -
Net realisable value adjustment of cost of - -
inventory sold
Inventory write-down / (write-up) - -
- -
------ ------
RHA mine is under care and maintenance and accordingly there are
no cost of sales.
23. Administrative expenses
2020 2019
$ 000 $ 000
Audit fees - Holding company 23 36
- Under provision prior year - 62
- Over provision prior year (6) -
Staff costs 30 69
Consulting and advisory fees 830 1 060
Directors' fees 35 57
Accounting and legal fees 144 174
Marketing and public relations 17 6
Travel 40 168
Costs incurred to cease operations - -
Security costs 6 7
Vehicle operating costs 11 (8)
Insurance 9 35
Short term non-capitalised lease payments
(note 14) 114 94
Foreign exchange losses - 1
Share based payment (note 20) - -
1 299 1 817
------ ------
Number of staff 2020 2019
Directors of the Holding Company 4 4
Administrative staff 0 0
Total Holding Company staff 4 4
Directors of subsidiaries 1 1
Subsidiary administrative and operating
staff 6 6
Total staff 11 11
----- -----
24. Finance charges
2020 2019
$ 000 $ 000
Interest charged by suppliers - -
Interest on borrowings 79 38
Derivative financial liability transaction
costs - -
Unwinding of discount on provisions 39 64
Loss on extinguishment of debt - -
Interest on finance lease 1 12
119 114
------ ------
25. Taxation
Deferred tax 2020 2019
$ 000 $ 000
As at 1 January - -
As at 31 December - -
------ ------
Income Tax
Taxation charge for the year - -
------ ------
There is no taxation charge for the year ended 31 December 2020
(2019: Nil) because the Group is registered in the British Virgin
Islands where no corporate taxes or capital gains tax are charged.
However, the Group may be liable for taxes in the jurisdictions of
the underlying operations.
The Group has incurred tax losses in West Africa and Zimbabwe;
however a deferred tax asset has not been recognised in the
accounts due to the unpredictability of future profit streams. The
accumulated tax losses not recognised at RHA amount to RTGS 52.342
million (2019: RTGS 27.932 million).
Reconciliation of effective
tax rate 2020 2020 2019 2019
$ 000 $ 000
Loss before tax from continuing
operations (1 334) - (1 439) -
-------- ------ -------- ------
Tax using the Zimbabwean
company tax rate 25% 334 25% 360
-------- ------ -------- ------
Tax effect of:
Effects of tax rates in
foreign jurisdictions (25%) (334) (25%) (360)
-------- ------ -------- ------
Contingent liability
The Group operates across different geographical regions and is
required to comply with tax legislation in various jurisdictions.
The determination of the Group's tax is based on interpretations
applied in terms of the respective tax legislations and may be
subject to periodic challenges by tax authorities which may give
rise to tax exposures.
26. Loss per share
The calculation of loss per share is based on the loss after
taxation attributable to shareholders, divided by the weighted
average number of shares in issue during the year:
2020 2019
Net loss attributable to owners of the company
($ 000) (888) (1 337)
Weighted average number of Ordinary Shares 13 167
in calculating basic earnings per share ('000) 281 8 902 140
Basic loss per share (US cents) (0.01) (0.01)
Diluted loss per share (US cents) (0.01) (0.01)
Weighted average number of ordinary shares
11 266
Issued ordinary shares at 1 January ('000) 071 7 383 679
Weighted average of shares issued during
the year ('000) 1 901 210 1 518 461
Weighted average number of ordinary shares 13 167
at 31 December ('000) 281 8 902 140
---------- ----------
As the Group incurred a loss for the year, there is no dilutive
effect from share options and warrants in issue or the shares
issued after the reporting date.
2020 2019
Potential dilutive effect on earnings per
share $ 000 $ 000
Options issued 200 349 200 349
Warrants issued - -
Convertible loan notes - 587 000
Total potentially dilutive shares 200 349 787 349
------------------------ ------------------------
Refer to note 32 Post balance sheet events for additional
potentially dilutive transactions.
27. Directors' remuneration
Directors' Consultancy Share Options Total
fees Fees
2020 $ 000 $ 000 $ 000 $ 000
Executive Directors
George Roach - 240 - 240
Non-Executive Directors
Godfrey Manhambara 19 - - 19
Wolfgang Hampel 16 - - 16
Neil Herbert (*) - 33 - 33
35 273 - 308
----------- ------------ -------------- ------
Directors' Consultancy Share Options Total
fees Fees
2019 $ 000 $ 000 $ 000 $ 000
Executive Directors
George Roach - 230 - 230
Non-Executive Directors
Michael Foster (*) 22 - - 21
Godfrey Manhambara 25 - - 25
Wolfgang Hampel - 33 - 33
Neil Herbert (*) - 10 - 10
47 273 - 320
----------- ------------ -------------- ------
(*) These directors were not employed during the full financial
year.
The Directors' fees disclosed in note 23 include nil (2019:
$0.013 million) being the fees paid to Directors of RHA, who are
not directors of the parent company.
28. Notes to the statement of cash flows
Cash and cash equivalents comprise cash at bank, bank overdrafts
and short-term bank deposits with an original maturity of three
months or less. The carrying value of these assets is approximately
equal to their fair value.
2020 2019
$ 000 $ 000
Loss before tax (1 334) (1 439)
Adjustments for:
Finance charges 119 114
Foreign exchange variations 157 2 543
Settlement agreement on Finance lease (74) -
Impairment of PPE - RHA 9 483
Operating cash flows before movements
in working capital (1 123) 1 701
(Increase)/decrease in inventories 1 25
(Increase)/decrease in receivables 10 35
Increase/(decrease) in provisions
from mine de-establishment - (595)
Increase/(decrease) in payables 319 (1 570)
Net cash (outflow) from operating
activities (793) (404)
-------- --------
2020 2019
$ 000 $ 000
Reconciliation of Non-Cash Transactions
Share Capital
Shares issued 4 558 2 237
Less: Share issue costs (96) (68)
Less: Settlement of payables (2 119) (185)
2 343 1 984
-------- ------
Finance Charges
Finance charge expense 119 114
Less: Unwinding of discount on the Provision
for rehabilitation (39) (89)
Less: Interest accrued on loans and
other payables (79) (13)
1 12
-------- ------
29. Financial Instruments - Fair values and risk management
The following table shows the carrying amounts and fair values
of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value
information for financial assets and financial liabilities not
measured at fair value if the carrying amount is a reasonable
approximation of fair value.
Trade and other receivables and trade and other payables
classified as held-for-sale are not included in the table below. As
at 31 December 2020 the Group did not have any trade and other
receivables nor any trade and other payables that were classified
as held-for-sale.
The Group has not disclosed the fair values of financial
instruments such as short-term trade receivables and payables,
because their carrying amounts are a reasonable approximation of
their fair value.
Carrying Value Fair Value
Financial
FVOCI assets Other
- equity at amortised financial Level Level
31 December 2020 instruments cost liabilities Total 1 2 Level 3 Total
$
Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 000
Financial assets measured
at fair value
8
FVOCI 8 342 - - 8 342 - - 8 342 342
8 342 - - 8 342
Financial assets not measured at fair value
Trade and other receivables - 8 - 8
Cash and cash
equivalents - - - -
- 8 - 8
Financial liabilities
measured at fair value
- - - -
- - - -
Financial liabilities not measured at fair value
Bank overdrafts - - - -
Unsecured loans from
shareholders - - - -
Secured loan - - - -
Trade and other payables - - (508) (508)
- - (508) (508)
Carrying Fair
value Value
Financial
FVOCI assets Other
- equity at amortised financial Level Level Level
31 December 2019 instruments cost liabilities Total 1 2 3 Total
Note $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
Financial assets
measured at fair
value
FVOCI 7 444 - - 7 444 - - 7 444 7 444
7 444 - - 7 444
Financial assets not measured at fair value
Trade and other
receivables - 18 - 18
Cash and cash
equivalents - - - -
- 18 - 18
Financial liabilities
measured at fair
value
- - - -
- - - -
Financial liabilities not measured at fair value
Bank overdrafts - - - -
Unsecured loans from
shareholders - - (347) (347)
Secured loan - - (368) (368)
Trade and other
payables - - (1 388) (1 388)
- - (2 103) (2 103)
Financial instruments - Fair values and risk management
B. Measurement of fair values
i. Valuation techniques and significant unobservable inputs
The following tables show the valuation techniques used in
measuring Level 3 fair values for financial instruments measured at
fair value in the statement of financial position, as well as the
significant unobservable inputs used. Related valuation processes
are described in Note 4.8.
Financial instruments measured at fair value
Inter-relationship
between significant
Significant unobservable unobservable inputs
Type Valuation technique inputs and fair value measurement
Unlisted Current market value None None
Equity technique:
investments The valuation model
is based upon the
latest price at
which the unlisted
entity raised capital.
------------------------ ------------------------- ----------------------------
ii. Transfers between Levels 1 and 2
There were no transfers between Levels 1 and 2 in either the
current financial year or in the prior financial year.
C. Financial Risk Management
The Group has exposure to the following risks arising from
financial instruments:
- credit risk;
- liquidity risk; and
- market risk.
Risk management framework
The Company's board of directors has overall responsibility for
the establishment and oversight of the Group's risk management
framework.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's
activities.
The Group's audit committee oversees how management monitors
compliance with the Group's risk management policies and
procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group. The Group's
audit committee undertake ad hoc reviews of risk management
controls and procedures, the results of which are reported to the
audit committee.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables from customers and investments in debt securities.
The carrying amounts of financial assets represent the maximum
credit exposure.
In the current year there was no impairment loss, nor 2019, for
unrecoverable sundry debtors.
Trade receivables
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, management
also considers the factors that may influence the credit risk of
its customer base, including the default risk associated with the
industry and country in which its customers operate. Details of
concentration of revenue are included in Note 21.
The Group has established a credit policy under which each new
customer is analysed individually for creditworthiness before the
Group's standard payment terms and conditions are offered. The
Group's review includes external ratings, if they are available,
financial statements, credit agency information, industry
information and in some cases bank references. Sales limits are
established for each customer and are reviewed regularly.
The Group limits its exposure to credit risk from trade
receivables by establishing a maximum payment period of one
month.
The Group is monitoring the economic environment in Zimbabwe,
where its exploration and mining operations are based.
The Group does not require collateral in respect of trade and
other receivables. The Group does not have trade receivables for
which a no allowance is recognised because of collateral.
2020 2019
$ 000 $ 000
The exposure to credit risk for
trade receivables
by geographic region was as follows:
Zimbabwe 8 18
Other - -
8 18
------ ------
The exposure to credit risk for
trade receivables
by counterparty was as follows:
Zimbabwe Revenue Authority 3 2
Other 2 -
5 2
------ ------
The exposure to credit risk for
trade receivables
by credit rating was as follows:
External credit ratings - -
Other 8 18
8 18
------ ------
Expected credit loss assessment for corporate customers as at 1
January 2020 and 31 December 2020
The Group allocates each exposure to a credit risk grade based
on data that is determined to be predictive of the risk of loss
(including but not limited to external ratings, audited financial
statements, management accounts and cash flow projections and
available press information about customers) and applying
experienced credit judgement. Credit risk grades are defined using
qualitative and quantitative factors that are indicative of the
risk of default.
The company had no exposure to credit risk for the year ended 31
December 2020 (2019 - nil)
Movements in the allowance for impairment in respect of trade
receivables
The movement in the allowance for impairment in respect of trade
receivables during the year amounted to nil (2019 - nil).
Cash and cash equivalents
As at 31 December 2020, the Group held $0.727 million in cash
and cash equivalents (2019: $0.040 million). The cash and cash
equivalents are held with bank and financial institution
counterparties which are rated BB to BAA (according to Standard and
Poor's).
Impairment on cash and cash equivalents has been measured on a
12-month expected loss basis and reflects the short maturities of
the exposures. The Group considers that its cash and cash
equivalents have low credit risk based on the external credit
ratings of the counterparties. On the implementation of IFRS 9 the
Group did not impair any of its cash and cash equivalents.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will have sufficient liquidity
to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation.
Exposure to liquidity risk
The following table presents the remaining contractual
maturities of financial liabilities at the reporting date. The
amounts are gross and undiscounted and include contractual interest
payments and exclude the impact of netting agreements.
Contractual
cash flows
--------- ------ --------- ------------------- --------- ---------
More
31 December Carrying 2 Months 2 to 12 1 to 2 to than
2020 value Total or less Months 2 Years 5 Years 5 years
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
--------- ------ --------- -------- --------- --------- ---------
Non- derivative financial
liabilities
Bank overdrafts - - - - - - -
Unsecured shareholder's
loan - - - - - - -
Unsecured loans - - - - - - -
Secured loans - - - - - - -
Trade payables 508 (508) (508) - - - -
508 (508) (508) - - - -
--------- ------ --------- -------- --------- --------- ---------
Derivative
financial - - - - - - -
liabilities - - - - - - -
- - - - - - -
--------- ------ --------- -------- --------- --------- ---------
Contractual
cash flows
--------- -------- --------- ------------------- --------- ---------
More
31 December Carrying 2 Months 2 to 12 1 to 2 to than
2019 value Total or less Months 2 Years 5 Years 5 years
$ 000 $ 000 $ 000 $ 000 $ 000 $ 000 $ 000
--------- -------- --------- -------- --------- --------- ---------
Non- derivative financial
liabilities
Bank overdrafts - - - - - - -
Unsecured shareholder's
loan 219 (219) (219) - - - -
Unsecured loans 128 (128) (128) - - - -
Secured loans 368 (368) (368) - - - -
Trade payables 1 388 (1 388) (1 388) - - - -
2 103 (2 103) (2 103) - - - -
--------- -------- --------- -------- --------- --------- ---------
Derivative
financial - - - - - - -
liabilities - - - - - - -
- - - - - - -
--------- -------- --------- -------- --------- --------- ---------
The interest payments on the financial liabilities represent the
fixed interest rates as per the respective contracts.
The Group aims to maintain the level of its cash and cash
equivalents and other highly marketable debt investments at an
amount in excess of expected cash outflows on financial liabilities
other than trade payables. The Group also monitors the level of
expected cash inflows on trade and other receivables together with
expected cash outflows on trade and other payables.
Market risk
Market risk is the risk that changes in market prices - such as
foreign exchange rates, interest rates and equity prices - will
affect the Group's income or the value of its holdings of financial
instruments. The objective of market risk management is to manage
and control market risk exposures within acceptable parameters,
while optimising the return.
Currency risk
The Group is exposed to transactional foreign currency risk to
the extent that there is a mismatch between the currencies in which
sales, purchases, receivables and borrowings are denominated and
the respective functional currencies of Group companies. The
functional currencies of Group companies are primarily Pound
Sterling and the US Dollar. The Zimbabwean trading companies
functional currency is RTGS. The currencies in which these
transactions are primarily denominated are Euro, US Dollar, South
African Rand, RTGS and Pound Sterling.
The Company conducts its business in Zimbabwe with a significant
portion of expenditures in that country historically denominated in
USD and now also in RTGS. The introduction of the RTGS$ during the
financial year has resulted in the devaluation of the RTGS$ against
the US Dollar. This devaluation has also resulted in the Zimbabwean
economy going into hyperinflationary status. To a large extent this
is beneficial to Premier as its Zimbabwean assets are fully
impaired. The remaining liabilities are inflation adjusted at each
reporting period yielding foreign exchange gains on conversion to
USD.
All transactions are subject to spot rates and with no hedging
transactions taking place.
Exposure to currency risk
31 December 2020 31 December 2019
EUR GBP USD ZAR RTGS EUR GBP USD ZAR RTGS
'000 '000
'000 '000 '000 '000 000 '000 '000 '000 '000 000
------ ------ -------- ------ -------- ------ ------ -------- -------- ------
Trade receivables - - 8 - - - - 18 - -
Unsecured
loans - - - - - - - (715) - -
Trade payables (77) (11) (205) (540) (13) (77) (352) (763) (1 282) (73)
------ ------ -------- ------ -------- ------ ------ -------- -------- ------
Net statement
of financial
position exposure (77) (11) (197) (540) (13) (77) (352) (1 460) (1 282) (73)
------ ------ -------- ------ -------- ------ ------ -------- -------- ------
Next 6 months
forecast
sales - - - - - - - - - -
Next 6 months
forecast purchases - (126) (1 186) - (2 988) - - (1 245) (1 205) (15)
Net forecast
transaction
exposure - (126) (1 186) - (2 988) - - (1 245) (1 205) (15)
------ ------ -------- ------ ------ ------ -------- -------- ------
Net exposure (77) (137) (1 383) (540) (3 001) (77) (352) (2 705) (2 487) (88)
------ ------ -------- ------ -------- ------ ------ -------- -------- ------
The summary quantitative data about the Group's exposure to
currency risk as reported to the management of the Group is as
follows:
The following significant exchange rates in relation to the
reporting currency are applicable:
Average rate for Year end spot
the year rate
------------------------------------- ------------------------------------
2020 2019 2020 2019
Euro 1.1751 1.1201 1.2282 1.1220
GBP 1.3350 1.2769 1.3577 1.3263
ZAR 0.0699 0.0693 0.0682 0.0714
RTGS 50.4253 8.1792 81.7877 17.2322
The carrying amounts of the Group's foreign currency denominated
monetary assets and monetary liabilities at the reporting date are
as follows:
Liabilities Assets
-------------------- ----------------------
2020 2019 2020 2019
'000 ' 000 '000 '000
Sterling (GBP) 11 352 - -
Euro (EUR) 77 77 - -
South African Rand (ZAR) 540 1 282 - -
Real Time Gross Settlement
of USD (RTGS) 12 707 72 500 429 25
The presentation currency of the Group is US dollars.
The Group is exposed primarily to movements in USD for trade,
RTGS for the Zimbabwean companies and GBP for all fund raising
activities.
Sensitivity analysis
Financial instruments affected by foreign currency risk include
financial investments (see note 9) cash and cash equivalents, other
receivables, trade and other payables and convertible loan notes.
The following analysis, required by IFRS 7 Financial Instruments:
Disclosures, is intended to illustrate the sensitivity of the
Group's financial instruments (at year end) to changes in market
variables, being exchange rates.
The following assumptions were made in calculating the
sensitivity analysis:
All income statement sensitivities also impact equity
Translation of foreign subsidiaries and operations into the
Group's presentation currency have been excluded from this
sensitivity as they have no monetary effect on the results.
Income Statement / Equity
2020 2019
$ 000 $ 000
Exchange rates:
+10% $ Sterling (GBP) (1) (35)
-10% $ Sterling (GBP) 1 35
+10% $ RTGS (1 253) (87 764)
-10% $ RTGS 1 253 87 764
The above sensitivities are calculated with reference to a
single moment in time and will change due to a number of factors
including:
-- Fluctuating other receivable and trade payable balances
-- Fluctuating cash balances
-- Changes in currency mix
Interest rate risk
The Group has entered into fixed rate agreements for its finance
leases and shareholders loans. The Group does not hedge its
interest rate exposure by entering into variable interest rate
swaps.
Exposure to interest rate risk
The interest rate profile of the Group's interest-bearing
financial instruments as reported to the management of the Group is
as per the table below.
2020 2019
$ 000 $ 000
Fixed rate instruments
Financial assets - -
Financial liabilities - 310
- 310
------ ------
Fair value sensitivity analysis for fixed-rate instruments
The Group does not account for any fixed-rate financial assets
of financial liabilities at FVTPL. Therefore, a change in interest
rates at the reporting date would not affect profit or loss.
Other market price risk
The Group is exposed to equity price risk, which arises from
equity securities at FVOCI are held as a long-term investment.
The Group's investments in equity securities comprise small
shareholdings in unlisted companies. The shares are not readily
tradable and any monetisation of the shares is dependent on finding
a willing buyer.
Valuation techniques and assumptions applied for the purposes of
measuring fair value
Due to the short term nature, the fair value of cash and
receivables and liabilities approximates the carrying values
disclosed in the financial statements.
The fair value of financial assets is estimated by using other
readily available information. As the Circum and MNH shares are in
privately held exploration companies, the fair values were
estimated using observable placing prices where available.
Circum and MNH are unlisted and there are no quoted market
prices. The fair value of the Circum shares was derived using the
previous issue price and validating it against the most recent
placing price on 11 May 2021. The fair value of MNH shares was
derived from the latest placing and supported by an external
valuation conducted by Bara Consulting.
Capital management
The Group manages its capital resources to ensure that entities
in the Group will be able to continue as a going concern, while
maximising shareholder return.
The capital structure of the Group consists of equity
attributable to shareholders, comprising issued share capital and
reserves. The availability of new capital will depend on many
factors including a positive mineral exploration environment,
positive stock market conditions, the Group's track record, and the
experience of management. There are no externally imposed capital
requirements. The Directors are confident that adequate cash
resources exist or will be made available to finance operations but
controls over expenditure are carefully managed.
30. Subsidiaries
Premier had investments in the following subsidiary undertakings
as at 31 December 2020, which principally affected the losses and
net assets of the Group:
30.1 Subsidiaries held during the year
Country of Proportion of
Name incorporation voting interest
and operation % A ctivity
2020 2019
Zulu Lithium Mauritius
Holdings Limited Mauritius 100 100 Holding Company
RHA Tungsten Mauritius
Limited Mauritius 100 100 Holding Company
Kavira Minerals Holdings
Limited Mauritius 100 100 Holding Company
Tinde Fluorspar Holdings
Limited Mauritius 100 100 Holding Company
Lubimbi Minerals Holdings
Limited Mauritius 100 100 Holding Company
Gwaaii River Minerals Limited Mauritius 100 100 Holding Company
Zulu Lithium (Private)
Limited Zimbabwe 100 100 Exploration
RHA Tungsten (Private)
Limited Zimbabwe 49* 49* Care and maintenance
Katete Mining (Private)
Limited Zimbabwe 100 100 Exploration
Tinde Fluorspar (Private)
Limited Zimbabwe 100 100 Exploration
LM Minerals (Private) Limited Zimbabwe 100 100 Exploration
BM Mining & Exploration
(Private) Limited Zimbabwe 100 100 Exploration
Licomex (Pty) Ltd Zimbabwe 100 - Exploration
Li3 Mozambique (Pty) Ltd Australia 100 - Holding Companies
Li3B Mozambique (Pty) Ltd Australia 100 - Holding Companies
Li3C Mozambique (Pty) Ltd Australia 100 - Holding Companies
Lithium B S.A. Mozambique 100 - Exploration
* Accounted as a controlled subsidiary, refer note 4 -
Significant accounting policies, estimates and assumptions and note
4.7 - Basis of consolidation.
30.2 Acquisition of subsidiaries
During the year the Group acquired 100% of the following
companies:
Number
of shares Purchase Country of
Company Name purchased Consideration Incorporation Main Activity
LiComex (Pty) Ltd, 100 $99,864 Zimbabwe Exploration
----------- --------------- --------------- ----------------
Holding company
- Owning
33.33% of
Li3 Mozambique (Pty) Lithium B
Ltd 10,000 $6,634 Australia S.A.
----------- --------------- --------------- ----------------
Holding company
- Owning
33.33% of
Li3B (Mozambique) Lithium B
(Pty) Ltd 10,000 $6,633 Australia S.A.
----------- --------------- --------------- ----------------
Holding company
- Owning
33.33% of
Li3C (Mozambique) Lithium B
(Pty) Ltd 10,000 $6,633 Australia S.A.
----------- --------------- --------------- ----------------
Lithium B S.A. 30,000 $nil Mozambique Exploration
----------- --------------- --------------- ----------------
Total purchase consideration $119,764
--------------- ---------------------------------
In acquiring the above group of companies, the Group acquired a
total of 56 tenements in Zimbabwe and Mozambique with the view of
expanding the Group's Lithium bearing ore exploration.
Details of the net assets acquired are set out below:
Fair Value
(US$)
------------------------ -----------
Lithium tenements 111,968
Vat refundable 292
Loan from third party 7,504
------------------------ -----------
Total interest 119,764
------------------------ -----------
Purchase Consideration 119,764
------------------------ -----------
31. Related party transactions
Ultimate controlling party
There is no single ultimate controlling party.
Transactions with key management personnel
Loans from directors
During the year all loans to directors were settled by the issue
of shares. The amount outstanding at year end is nil (2019: $0.516
million). Refer to note 17 for detailed information.
Supplies and Services
During 2020, administration fees of $0.114 (2019: $0.114
million) were paid by Premier to a trading business in which George
Roach, Director, is the beneficial owner. Administration fees
comprised allocated rental costs and administrative support
services. At the financial year-end the amount outstanding is nil
(2019: $0.115 million).
The amount outstanding at 31 December 2020 for Brendan Roach for
directors fees of RHA is nil (2019 - $0.062 million).
The amount outstanding at 31 December 2020 for Godfrey
Manhambara for directors fees of is nil (2019 - $0.030
million).
The amount outstanding at 31 December 2020 for Wolfgang Hampel
for directors fees of is $0.002 million (2019 - $0.080
million).
The amount outstanding at 31 December 2020 for Neil Herbert for
directors fees of is nil (2019 - $0.010 million).
Borrowings
In April 2018 Brendan Roach loaned the company GBP 0.084
million. The outstanding loan balance as at 31 December 2019 is
$0.128 million. During the year the loan was settled by the issue
of shares. The amount outstanding at year end is nil. Refer to note
17 for detailed information.
Remuneration of key management personnel
The remuneration of the Directors and other key management
personnel of the Group are set out below for each of the categories
specified in IAS 24 Related Party Disclosures.
2020 2019
$ 000 $ 000
Consulting Fees (Note 27) 273 230
Staff costs 160 129
Directors' fees (Note 27) 35 47
468 406
------ ------
32. Events after the reporting date
32.1 Zulu
On the 12 March 2021, Premier announced the formal grant of EPO
number 1779 over the area that encompasses the Zulu claims in the
Fort Rixon district of Zimbabwe for a period of three years with
effect immediate effect until the 11 March 2024.
In the latter part of March 2021, Premier appointed Bara Consul
􀆟 ng as principal engineers for the Zulu DFS, Geodrill
Private Limited as principal drilling contractor for Zulu resource
extensions and technical drilling for DFS, Hains Engineering
Company Limited as an independent resource and technical consultant
and Mr. CJ Male was appointed as the site exploration manager for
Zulu.
32.2 Corporate matters
On the 22 February 2021, Premier engaged EAS Advisors LLC (" EAS
") as US corporate advisor. Premier agreed to issue, conditional on
EAS raising at least US$5 million of new funding, a total of
360,000,000 warrants in favour of EAS.
In June 2021, Premier concluded a direct equity raise of
GBP1,000,000 before expenses at an issue price of 0.16 pence per
new ordinary share for ongoing use at the Zulu DFS and general
working capital.
In June 2021, the Board agreed to provide Otjozondu Mining
(Proprietary) Limited with $260,000 Facility Agreement with an
interest rate of 20% per annum and is repayable in $25,000
instalments on each shipment of Manganese commencing from the
beginning of September 2021.
32.3 Ultimate Controlling Company
There is no single ultimate controlling company for Premier.
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END
FR DKFBBQBKDBAB
(END) Dow Jones Newswires
June 28, 2021 12:01 ET (16:01 GMT)
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