TIDMEML

RNS Number : 3125N

Emmerson PLC

31 May 2022

Emmerson Plc / Ticker: EML / Index: AIM / Sector: Mining

31 May 2022

Emmerson

("Emmerson" or "the Company")

Audited Results for the year ended 31 December 2021

Emmerson, which is developing the world class Khemisset Potash Project in Morocco ('Khemisset' or the 'Project'), is pleased to announce its audited results for the 12 months ended 31 December 2021. The Group's Annual Report, which includes an unqualified audit report and audited Financial Statements for the year ended 31 December 2021, will be made available on the Company's website at www.emmersonplc.com.

HIGHLIGHTS

-- Considerable operational, corporate and commercial progress made towards delivering a "shovel ready" project, and establishing Khemisset as Africa's first large-scale potash mine

-- Significant improvement in potash prices highlights potential upside to Feasibility Study estimates (including NPV8 of US$1.4 billion)

-- Cornerstone investment secured in November 2021 of up to US$46.8 million from strategic investor

-- Advancing negotiations with a range of international and Moroccan institutions on both the debt and equity sides, underscoring the attractive economics of the Project

   --    Mining Licence granted in February 2021 

-- Environmental and Social Impact Assessment completed to IFC standards, and environmental approval process continuing to progress towards the final awarding of the permit

   --    Move to AIM completed in April 2021 

-- Board strengthened by appointment of James Kelly as Chair, and Rupert Joy as Non-executive Director, while Jim Wynn was appointed in February 2022 as CFO

-- Operational and technical capabilities enhanced through the appointment of Josh Mitchell as Project Controller, Haitam Ennadif as Project Engineering Manager and Matt Wilmot as Technical Services Manager.

CHAIRMAN'S STATEMENT

It gives me great pleasure to present the 2021 Annual Report for Emmerson in my first full year as Chairman.

Just as the world was cautiously beginning to emerge from the restrictions related to COVID-19, the war in Ukraine has unleashed a fresh set of challenges, the full impact of which are not yet known but will most likely affect us all for a considerable period of time.

The humanitarian catastrophe that is unfolding is unquestionably the most immediate concern and we all wish for a peaceful conclusion as quickly as possible. The crisis has also brought into sharp focus the fragility of the global supply chain for some of our most basic commodities, including hydrocarbons for fuel and energy, and foodstuffs to feed a growing global population.

The importance of food security has never been clearer, and potash has a key role to play. Potassium is one of the three key plant macronutrients (along with nitrogen and phosphorous), making potash a critical raw material for fertiliser.

Around 40% of global potash production in 2021 came from Russia and Belarus, and these supplies are likely to be constrained by sanctions of various natures for some time to come. Against this backdrop, the need to bring new sources of potash on stream is of paramount importance; arguably more urgent than the widely recognised challenges around critical metals.

Emmerson's Khemisset Potash Project is well-positioned to help meet this need. It is a high-margin and low-capex project which has a construction period of approximately two years. The Feasibility Study completed in 2020 indicated a JORC Resource of 537 million tonnes at 9.24% K2O, sufficient to supply 735k tonnes of Muriate of Potash ("MOP") annually for a life of at least 19 years.

The project is situated in Morocco, which is a stable, mining- and investor-friendly jurisdiction with excellent infrastructure. The site is approximately 200km from the commercial port of Casablanca, and transportation is likely to be by truck, using high-quality public highways.

The geographic location of Morocco is also advantageous. Much of the global potash demand growth is likely to be in the Atlantic corridor between the Americas and Europe/Africa. Apart from the potash from Russia/Belarus, the majority of current potash supplies come from central Canada, with long haulage distances by road and sea, a logistical challenge which is exacerbated by current high shipping costs.

Morocco is an actor of growing importance in Africa, which has the world's highest population growth, but yet uses just a small fraction of the fertiliser per hectare of cultivated land of China, North America, or Europe. Morocco is already an established phosphate exporter and fertiliser hub, but currently imports its potash. Khemisset will provide a local source which would offer security of supply with significantly reduced transport costs.

We made some significant steps towards bringing the Khemisset project into production during 2021 and have continued to make progress during 2022. In February 2021, we received our mining permit, and we have completed the work needed to obtain an environmental permit. We have also undertaken various geological and engineering works to bring us closer to being shovel-ready, and we expect to complete these by the end of 2022.

Our financing discussions have also proceeded well. A crucial step in this matter was securing a cornerstone investment of up to US$46.8 million primarily from a strategic partner, the Global Sustainable Minerals Pte Ltd group ("GSM"), a Singapore-domiciled investment vehicle backed by a significant south-east Asian investor, in November 2021. Since then, we have received considerable interest from both debt and equity investors, particularly since the Ukrainian crisis in February, from both international and Moroccan financiers.

We have had extensive discussions with the Moroccan government and other key stakeholders, and have been impressed by the high levels of support for the Khemisset project. We are keen to reciprocate this support by using Moroccan suppliers, contractors, and financiers wherever possible, and by working with local partners to optimise the project.

Getting this right is taking a little longer than we originally anticipated, but it will be worth the time and effort, as the outcome will be a better, more profitable and more efficient project.

Global potash prices in early May 2022 were around three times the levels of 2020, when the Feasibility Study was completed which indicated a project with NPV8 of US$1.4 billion. While it is not certain whether prices will remain at current levels, demand for potash is likely to remain high and supply to be constrained for the foreseeable future.

There were some changes to the Board in the year. On 27 April 2021, following the Company's listing on AIM, Mark Connelly retired from the Board, and I took over his responsibilities as Chairman. On 12 July 2021, Ed McDermott also stepped down from the Board. The Company owes much to the efforts of both Mark and Ed during its formative years, and we thank them and wish them the best in their new endeavours.

I was delighted that we were able to strengthen our Board by appointing Rupert Joy as a non-executive Director. Rupert is a highly experienced diplomat and former Ambassador & Head of the EU Delegation to Morocco, and has already proved invaluable in our discussions with Moroccan authorities.

In February 2021, we announced the appointment of Jim Wynn as Chief Financial Officer. Jim is an experienced finance professional and chartered accountant with significant corporate experience, particularly in the African resource sector, and is also a French-speaker.

There remains much to do in 2022 and in many regards, I expect the pace of work will only increase from this point forwards. The entire Emmerson team remains focused on the key objectives of putting in place the approvals and financing package that will allow us to start construction of the Khemisset project. The backdrop of the global food security crisis and the strength of the potash market reinforces our belief in the Khemisset project and our determination to deliver the project as soon as possible.

James Kelly

Chairman

30 May 2022

CHIEF EXECUTIVE OFFICER'S STATEMENT

There has never been a more important time to bring new sources of potash from safe, secure jurisdictions into the market, such as Emmerson's Khemisset project in Morocco.

The Feasibility Study completed in 2020 by Golder Associates underlined the compelling economics of the project. Recent potash price increases, driven by the combined impact of the war in Ukraine on top of more long-term factors such as population growth, land scarcity, and supply security for critical minerals, suggest even those valuations are understated.

However, Khemisset's role in meeting the potash requirements of the world should not be measured solely in financial terms. While the priority of the Emmerson team is getting the Khemisset project into production as efficiently as possible, we are determined to keep our wider social and environmental responsibilities at the forefront of our thinking: "doing the right things in the right way".

Khemisset Project

The Company received a mining permit in January 2021, and proceeded to submit an Environmental and Social Impact Assessment ("ESIA"), which is currently awaiting final approval. The Company has addressed all of the ESIA issues raised by the relevant authorities in a timely manner.

The ESIA approval is the last remaining authorisation step required before construction can begin. In view of the importance of the project to the country, the authorities have been careful to ensure that the needs of the widest possible stakeholder group have been fully taken into consideration. The Company continues to work proactively with all the relevant parties and remains confident that the approval will be forthcoming.

In the meantime, we are progressing with a number of workstreams to move the project forward, which will ensure construction can commence as soon as approval has been given, and financing has been put in place.

Drilling & Site Exploration

In May 2021, Emmerson commenced an exploration campaign to address areas that required further de-risking as outlined in the Feasibility Study, to gain better knowledge of the Khemisset basin, and to further detail geology along the route of the decline and in the mine infrastructure area from a constructability perspective. The exploration campaign was split into a drilling program and a surface geological program.

The drilling program consists of a number of geological drill holes with additional directionally drilled daughter holes to provide data on lateral variability, geotechnical drill holes along the decline route, and a deeper hole for evaluation of the reservoir formation below with all holes logged and core samples taken for testing purposes.

The surface geological program consists of a large number of shallow holes for geotechnical characterization to feed into the design of the ancillary infrastructure and foundation and over 15km of electrical resistivity tomography surveys for definition of the near surface strata.

The results so far have provided a significant amount of data to feed into the on-going engineering and design work as well as further confidence in the project location and the geological and geotechnical conditions. The exploration campaign is envisaged to be completed within Q3 2022.

Basic Engineering

A request for proposal was issued on 7 May 2021 for basic engineering services regarding the mineral processing facility. Following a commercial and technical bid analysis process, Barr Engineering was selected. Barr Engineering, headquartered in Minneapolis, has extensive experience in potash mineral processing after providing services to North American clients since 1966.

On 29 November 2021, a basic engineering contract was signed, and engineering works commenced shortly thereafter. These are currently approximately 40% complete at the date of this report.

Process modelling, process flow diagrams ("PFD") and piping and instrumentation diagrams ("P&ID") have been completed, allowing the electrical, mechanical and structural disciplines to commence their scopes. The processing facility equipment list has also been completed, allowing Barr Engineering to approach the market to gather the most up to date costing information from world leading suppliers of Potash processing equipment. The basic engineering phase is expected to be complete by September 2022.

A separate request for proposal was issued on 22 October 2021 for basic engineering services regarding the balance of the Khemisset potash project scope. Following a commercial and technical bid analysis process, Reminex was selected. Reminex, a subsidiary of Managem (a major Moroccan mining group), has extensive experience of scoping, permitting, designing, constructing and operating underground mines in Morocco and Africa.

On 9 February 2022, a basic engineering contract was signed, and engineering works started shortly thereafter (now approximately 20% complete). The scope is being executed via six concurrent packages (mine power supply, mine water supply, site access, portal and declines, tailing storage facility and mine site infrastructure). The basic engineering phase is expected to be complete by October 2022.

Land acquisition

The land acquisition process has commenced with the development of a land acquisition plan. The first phase of this plan will be to identify the areas and habitats likely to be affected by the project, to collect socio-economic data, and to develop a stakeholder engagement strategy.

Phase 2 of the land acquisition plan has also commenced, which will be completed concurrent with basic engineering, and includes final definition of the land parcels required, and their acquisition or lease.

Permits

The mining permit awarded in 2021 has a 10-year life. The Company is awaiting the final environmental permits, as mentioned, while all 20 exploration permits have been renewed. These permits cover 780km(2) , and will enable exploration works on the project to continue.

In-principle approvals have been provided by the forestry services for intersections of their domains with regards to the power and water supply scopes to the mine site, which are being developed as part of basic engineering.

Other Studies

In February 2022, Novec, a Moroccan engineering consultancy specialising in infrastructure, was engaged to undertake a traffic and logistics study to support the basic engineering phase on the site access package, and to satisfy future anticipated permitting requirements for construction. This scope is ongoing and progressing on schedule in collaboration with our basic engineering partner, Reminex.

In April 2022, SLR Consulting, an international environmental and mining consultancy, was engaged as a technical geological consultant to support decision-making based on the results from the 2021/22 exploration campaign from a constructability, mining method and location perspective. Working collaboratively with our geology team, the drilling contractors and our basic engineering partners, SLR has started to update the geological model and propose optimal solutions for project execution.

Financing

In November 2021, we were able to announce that we had secured a strategic investment of up to US$46.8 million from Singaporean fund GSM and Gold Quay Capital Pte Ltd ("GQC"). Of this funding, US$6.8 million was received by way of an equity subscription at a placing price of 6 pence per share, to be used to complete the basic engineering and design work, undertake additional resource and geotechnical drilling, and to build out the technical team ahead of the larger fundraise.

The remaining US$40.0 million will be allotted as part of, and subject to, the larger fundraise for the Khemisset project at a price of 8.2 pence per share. Although this funding was structured as a convertible loan, it is more akin to a commitment to provide a significant portion of the equity needed to build the mine.

Ongoing discussions with regard to the fundraising for the Khemisset project have been progressing well.

The Company has received interest from a number of local Moroccan and international banks, as well as support from Export Credit Agencies, which have submitted formal Expressions of Interest. Good progress has also been made towards securing additional strategic equity partners, and we feel confident that, subject to completing the necessary due diligence and technical work, a complete financing structure will be announced later in the year.

Corporate

In April 2021, the Company moved from the Standard segment on the Main Market of the London Stock Exchange to the AIM market of the London Stock Exchange ("AIM"), which we felt offered greater flexibility, particularly with regard to fundraising and corporate transactions. Shareholder approval for this transfer of listing was granted at a general meeting on 25 March 2021, and the Company's shares were admitted to trading on AIM on 27 April 2021.

In his Chairman's Statement, James mentioned the changes at Board level, but we have also been adding bench strength to our management and technical teams. During 2021, we appointed Josh Mitchell as Project Controller, and Haitam Ennadif as Project Engineering Manager based in Morocco. In 2022, we brought in Matt Wilmot as Technical Services Manager, and we have a world-class technical team with first class experience in constructing and operating underground potash mines.

Graham Clarke

Chief Executive Officer

30 May 2022

For further information, please visit www.emmersonplc.com , follow us on Twitter (@emmerson_plc), or contact:

 
 Emmerson Plc 
  Graham Clarke - CEO 
  Jim Wynn - CFO                                       +44 (0) 20 7236 
  Charles Vaughan - Head of IR                                    1177 
 Shore Capital (Nominated Adviser and Joint Broker)     +44 (0)20 7408 
  Toby Gibbs / John More                                          4090 
 Liberum Capital Limited (Joint Broker)                 +44 (0)20 3100 
  Scott Mathieson / Lydia Zychowska                               2000 
 Shard Capital (Joint Broker)                           +44 (0)20 7186 
  Damon Heath / Isabella Pierre                                   9927 
 St Brides Partners (Financial PR/IR)                   +44 (0)20 7236 
  Susie Geliher / Charlotte Page                                  1177 
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEARED 31 DECEMBER 2021

 
                                                                             2021        2020 
                                                                   Note   US$'000     US$'000 
                                                                                     Restated 
 Continuing Operations 
 Administrative expenses                                            3     (2,349)     (1,034) 
 Share-based payment expense                                        12       (33)       (991) 
 Net foreign exchange (loss)/gain                                           (388)          78 
 Operating loss                                                           (2,770)     (1,947) 
 
 Finance income                                                                 -           5 
 Finance cost                                                                 (7)           - 
 Loss before tax                                                          (2,777)     (1,942) 
 Income tax                                                         5           -           - 
                                                                         --------  ---------- 
 Loss for the year attributable to equity owners                          (2,777)     (1,942) 
                                                                         --------  ---------- 
 
 Other comprehensive income 
 Items that may be subsequently reclassified to profit or loss: 
 Exchange (loss)/gain on translating foreign operations                     (693)         500 
 Total comprehensive income attributable to equity owners                 (3,470)     (1,442) 
                                                                         --------  ---------- 
 
 Earnings per share (cents) 
  Basic and diluted                                                 6      (0.33)      (0.28) 
 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT

31 DECEMBER 2021

 
                                                                 2021        2020 
                                                              US$'000     US$'000 
                                                      Note               Restated 
 Non-current assets 
 Intangible assets                                     7       13,555      11,132 
 Property, plant and equipment                                     41          16 
 Total non-current assets                                      13,596      11,148 
 
 Current assets 
 Trade and other receivables                           8          771         429 
 Cash and cash equivalents                                     10,032       1,563 
                                                            ---------  ---------- 
 Total current assets                                          10,803       1,992 
 
 Total assets                                                  24,399      13,140 
                                                            ---------  ---------- 
 
 Current liabilities 
 Trade and other payables                              9      (1,835)       (681) 
 Total current liabilities                                    (1,835)       (681) 
 
 Net assets                                                    22,564      12,459 
                                                            ---------  ---------- 
 
 Shareholders equity attributable to equity owners 
 Share capital                                         11      28,774      15,755 
 Share-based payment reserve                           12       2,048       1,499 
 Reverse acquisition reserve                                    2,198       2,198 
 Retained earnings                                           (10,278)     (7,508) 
 Translation reserve                                            (178)         515 
                                                            ---------  ---------- 
 Total equity                                                  22,564      12,459 
                                                            ---------  ---------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEARED 31 DECEMBER 2021

 
 US$'000                               Share    Share-based payment        Reverse      Retained   Translation        Total 
                                  Capital(1)             reserve(2)    Acquisition   earnings(4)    reserve(5)       equity 
                                                                        reserve(3) 
 Balance as at 1 January 2020 
  (as restated)                       13,631                    508          2,198       (5,566)            15       10,786 
                                 -----------  ---------------------  -------------  ------------  ------------  ----------- 
 Loss for the year                         -                      -              -       (1,942)             -      (1,942) 
 Other comprehensive income: 
 Exchange loss on translating 
  foreign operations                       -                      -              -             -           500          500 
 Total comprehensive income                -                      -              -       (1,942)           500      (1,442) 
 Issue of share options and 
  warrants                                 -                    991              -             -             -          991 
 Issue of shares                       2,266                      -              -             -             -        2,266 
 Share issue costs                     (142)                      -              -             -             -        (142) 
                                 -----------  ---------------------  -------------  ------------  ------------  ----------- 
 Balance as at 1 January 2021         15,755                  1,499          2,198       (7,508)           515       12,459 
                                 -----------  ---------------------  -------------  ------------  ------------  ----------- 
 Loss for the year                         -                      -              -       (2,777)             -      (2,777) 
 Other comprehensive income: 
 Exchange loss on translating 
  foreign operations                       -                      -              -             -         (693)        (693) 
 Total comprehensive income                -                      -              -       (2,777)         (693)      (3,470) 
 Issue of share options and 
  warrants                                90                  (104)              -             -             -         (14) 
 Transfer                                  -                    (7)              -             7             -            - 
 Issue of shares and warrants         14,345                    660              -             -             -       15,005 
 Share issue costs                   (1,416)                      -              -             -             -      (1,416) 
                                 -----------  ---------------------  -------------  ------------  ------------  ----------- 
 Balance as at 31 December 2021       28,774                  2,048          2,198      (10,278)         (178)       22,564 
                                 -----------  ---------------------  -------------  ------------  ------------  ----------- 
 
   Notes 
 1 The Ordinary Shares issued by the Company have       4 The Retained earnings are cumulative earnings 
  a no par value and all fully paid. Further             since incorporation less any dividends declared. 
  information 
  on share capital is in note 11 to the financial 
  statements. 
 2 The share reserve arises on the grant of share       5 The translation reserve comprises translation 
  options and warrants to Directors and employees        differences arising from the translation 
  under the share option plan. Disclosures of            of financial statements of the Group's foreign 
  share-based                                            entities into US dollars. 
  payments to Directors and employees is in note 
  12. 
 3 The Reverse acquisition reserve arose from the 
  reverse takeover in 2018 
 
 

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEARED 31 DECEMBER 2021

 
                                                    Notes      2021       2020 
                                                           US$ '000    US$'000 
                                                                      Restated 
Cash flows from operating activities 
Loss before tax                                             (2,777)    (1,942) 
Adjustments 
Foreign exchange                                              (448)      (214) 
Share-based payment                                  12          33        991 
Depreciation                                                      5          9 
Changes in working capital 
Increase in trade and other receivables                       (351)       (55) 
Increase in trade and other payables                          1,182        107 
 
Net cash flows used in operating activities                 (2,356)    (1,104) 
                                                           --------  --------- 
 
Cash flows from investing activities 
Exploration expenditure                               7     (2,671)    (2,313) 
Property, plant and equipment (purchase)/disposal              (30)         25 
 
Net cash flow used in investing activities                  (2,701)    (2,288) 
                                                           --------  --------- 
 
Cash flows from financing activities 
Proceeds from issuing shares and warrants            11      14,958      2,266 
Cost of issuing shares                               11     (1,416)      (142) 
Net cash flow generated from financing activities            13,542      2,124 
                                                           --------  --------- 
 
Increase/ (decrease) in cash and cash equivalents             8,485    (1,268) 
Cash and cash equivalents at beginning of year                1,563      2,745 
Foreign exchange on cash and cash equivalents                  (16)         86 
                                                           --------  --------- 
Cash and cash equivalents at end of year                     10,032      1,563 
                                                           --------  --------- 
 
 

Significant non-cash transactions in respect of share issues are disclosed within note 11.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEARED 31 DECEMBER 2021

   1.      General information 

Emmerson PLC (the "Company") is a company incorporated and domiciled in the Isle of Man, whose shares were admitted to the Standard Listing segment of the Main market of the London Stock Exchange on 15 February 2017. On 27 April 2021, the Ordinary Shares of the Company were admitted to trading on AIM and the listing of the Company's ordinary shares on the Official List and their trading on the Main Market were cancelled.

The principal activity of the Group is the exploration, development and exploitation of a potash development project in Morocco.

   2.      Basis of preparation 
   2.1.    General 

These financial statements have been prepared in accordance with UK-adopted International Financial Reporting Standards (IFRS and IFRIC interpretations) ("IFRS") in force at the reporting date, and their interpretations issued by the International Accounting Standards Board ("IASB"). The financial statements have been prepared under the historical cost convention except for the revaluation of certain financial instruments that are measured at fair value.

   2.2.    Functional and presentational currency 

The financial information of the Group is presented in US dollars. The functional currency of the Company Emmerson PLC in the period was GB Sterling. The individual financial statements of each of the Company's wholly owned subsidiaries are prepared in the currency of the primary economic environment in which they operate (functional currency ).

   2.3.    Change in Presentation Currency 

The Group is presenting its results in US Dollars for the first time having previously reported in UK Sterling. This change should help to provide a clearer understanding of the Group's financial position as the future corporate development activity is likely to be US focused.

In order to satisfy the requirements of IAS 21 with respect to a change in presentation currency, the statutory financial information as previously reported in the Group's Annual Reports have been restated from UK Sterling into US Dollars using the procedures outlined below:

-- Assets and liabilities were translated to US Dollars at the closing rates of exchange at each respective balance sheet date.

-- Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of transactions.

-- Income and expenses were translated to US Dollars at an average rate at each of the respective reporting years. This has been deemed to be a reasonable approximation.

   --      Differences resulting from the retranslation were taken to reserves. 
   --      All exchange rates used were extracted from the Group's underlying financial records. 

Please see Note 16 for further information on the procedures used to restate comparative information and the impact on the prior year results, closing balance sheet and the numerator for earnings per share as originally reported.

A change in presentation currency represents a change in accounting policy which is accounted for retrospectively.

   2.4.    Basis of consolidation 

The Consolidated Financial Statements comprise the financial statements of the Company, Moroccan Salts Limited and Moroccan Salts Limited's subsidiaries (the "MSL Group") following the business combination which took place on 4 June 2018.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

   --    The contractual arrangement with the other vote holders of the investee; 
   --    Rights arising from other contractual arrangements; and 
   --    The Group's voting rights and potential voting rights 

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the Group Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions that are recognised in assets, are eliminated in full.

All the Group's companies have 31 December as their year-end. Consolidated financial statements are prepared using uniform accounting policies for like transactions.

   2.5.    Going concern 

The financial statements have been prepared on a going concern basis. The Group has not yet earned revenues and is in the pre-construction phase of its business. The operations of the Group are currently financed from funds raised from shareholders and strategic investors. In common with many pre-production entities, the Group will need to raise further funds in order to progress the Group from the feasibility phase into construction and eventually into production of revenues.

The Group had cash and cash equivalents of US$5.3 million at 26 May 2022 and the Directors are of the view this is sufficient to fund the Group's non-discretionary expenditure and maintain good title to the exploration licences over the next 12 months from the date of approval of these financial statements. The Company will continue to work on advancing the Khemisset project and to commence construction as soon as practicable, however the timing of these activities will be dependent on availability of funds.

The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they continue to adopt the going concern basis of accounting in preparing the financial statements.

   2.6.    Changes in accounting policies 

Standards, interpretations and amendments to published standards effective from 1 January 2021

There were no new standards or interpretations effective and adopted for the first time for the year beginning on or after 1 January 2021 that had a significant effect on the Group's or Company's financial statements.

Standards, interpretations and amendments to published standards not yet effective

The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:

-- Amendments to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Amendments to IAS 1: Classification of Liabilities as Current or Non-current - Deferral of Effective Date - effective 1 January 2023

-- Amendments to IFRS 3: Business Combinations - Reference to the Conceptual Framework - effective 1 January 2022

   --    Amendments to IAS 16: Property, Plant and Equipment - effective 1 January 2022 

-- Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets - effective 1 January 2022

   --    Annual Improvements to IFRS Standards 2018-2020 Cycle - 1 January 2022 

The Directors anticipate that the application of all new and amendments to IFRSs will have no material impact on the future results of the Group or Company in the foreseeable future.

   2.7.    Segment reporting 

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

The Directors are of the opinion that the Group is engaged in a single segment of business being the exploration activity of potash in one geographical area, being Morocco.

   2.8.    Financial instruments 

A financial instrument is any contract that gives rise to a financial asset of on entity and a financial liability or equity instrument of another.

(a) Financial assets

Initial recognition and measurement

Financial assets are classified, at initial recognition, and subsequently measured at amortised cost, fair value through OCI, or fair value through profit and loss.

The classification of financial assets at initial recognition that are debt instruments depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. The Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.

In order for a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.

The Group's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

   --    Financial assets at amortised cost (debt instruments) 

-- Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)

-- Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments)

   --    Financial assets at fair value through profit or loss 

Financial assets at amortised cost (debt instruments)

This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:

-- The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and

-- The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR) method and are subject to impairment. Interest received is recognised as part of finance income in the statement of profit or loss and other comprehensive income. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group's financial assets at amortised cost include trade receivables (not subject to provisional pricing) and other receivables.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e., removed from the Group's consolidated statement of financial position) when:

   --    The rights to receive cash flows from the asset have expired; or 

-- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held

For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group.

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity. At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

(b) Financial liabilities

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables and loans.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.

Loans and borrowings and trade and other payables

After initial recognition, interest-bearing loans and borrowings and trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income. This category generally applies to trade and other payables.

Derecognition

A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.

(c) Financial liabilities

Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.

   2.9.    Taxation 

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements, determined using tax rates that are expected to apply when the related deferred tax asset or liability is realised or settled. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

2.10. Intangible assets - exploration and evaluation expenditure

Exploration expenditure comprises all costs which are directly attributable to the exploration of a project area.

When it has been established that a mineral deposit has development potential, all costs (direct and applicable overheads) incurred in connection with the exploration and development of the mineral deposits are capitalised until either production commences, or the project is not considered economically viable.

In the event of production commencing, capitalised costs in respect of the asset are transferred into Tangible Fixed Assets, and are depreciated over the expected life of the mineral reserves on a unit of production basis. Other pre-trading expenses are written off as incurred. For the purposes of impairment testing, intangible assets are allocated to specific projects with each licence reviewed annually. Where a project is abandoned or is considered to be of no further interest, the related costs are written off.

Intangible assets are not subject to amortisation and are tested annually for impairment. The recoverability of all exploration costs, licenses and mineral resources is dependent on the ability of the Group to obtain necessary financing to complete the development of reserves and future profitable production, or proceeds from the disposition thereof.

2.11. Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand and deposits held at call with financial institutions.

2.12. Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the Statement of Financial Position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating result.

On consolidation of a foreign operation, assets and liabilities are translated at the closing rate at the date of the Statement of Financial Position, income and expenses for each Statement of Comprehensive Income presented are translated at average exchange rates. All resulting exchange differences shall be recognised in other comprehensive income and accumulated in equity.

2.13. Share-based payment arrangements

The Group operates equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of employee services received in exchange for the grant of share options are recognised as an expense. The total expense to be apportioned over the vesting period is determined by reference to the fair value of the options granted:

   --       including any market performance conditions; 
   --       excluding the impact of any service and non-market performance vesting conditions; and 
   --       including the impact of any non-vesting conditions. 

Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period the Group revises its estimate of the number of options that are expected to vest.

The Group recognises the impact of the revision of original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

When options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

The fair value of goods or services received in exchange for shares is recognised as an expense and included within administrative expenses.

2.14. Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below:

a) Recoverability of intangible assets

The Group tests annually for impairment or more frequently if there are indications that the intangible assets might be impaired.

Determining whether the intangible assets are impaired requires an estimation of the value in use of the cash generating units to which the intangible assets belong. Where impairment indicators are present, the Group is required to evaluate the future cash flows expected to arise from the cash-generating unit and the suitable discount rate in order to calculate the present value.

The carrying value of Group's exploration and evaluation intangible assets at 31 December 2021 is US$13.6 million (2020: US$11.1 million), which relates to the Khemisset project.

The Directors therefore undertook an assessment of the following areas and circumstances that could indicate the existence of impairment:

-- The Group's right to explore in an area has expired, or will expire in the near future without renewal;

   --    No further exploration or evaluation is planned or budgeted for; 

-- A decision has been taken by the Board to discontinue exploration and evaluation in an area due to the absence of a commercial level of reserves; or

-- Sufficient data exists to indicate that the book value will not be fully recovered from future development and production.

The Board has reviewed the project for indicators of impairment, and are satisfied that the prospects of deriving economic value are likely to be considerably in excess of the carrying value of the asset in the accounts.

In arriving at this conclusion, the Directors considered the ongoing commitment to the project, the economic metrics of the project as set out in the 2020 Feasibility Study, and the increase in potash prices over the last 12 months.

Following their assessment, the Directors concluded that no impairment charge was necessary for the period ended 31 December 2021.

   b)             Share-based payments 

The Group has made awards of options on its unissued share capital to certain directors and employees as part of their remuneration package.

The valuation of these options involved making a number of critical estimates relating to price volatility, future dividend yields, expected life of the options and interest rates. These assumptions are described in more detail in note 12.

There was a charge to the Statement of Comprehensive Income during the year in relation to share based payments of USD$33k (2020: US$991k).

c) Valuation of warrants

The Group issued shares in November 2021 which included warrants to investors. The fair value assigned to the warrants involved making a number of critical estimates relating to price volatility, future dividend yields and interest rates. The valuation of the warrants was US$660k (2020: US$ nil)

d) Going concern

In their assessment of going concern, the Directors have prepared cash flow forecast showing the Group's non-discretionary expenditure obligations, as well as discretionary activities. The discretionary activities relate largely to the project work at Khemisset, which are either uncommitted in nature, or are the subject of contracts which include clauses allowing the Company to suspend activities without penalty.

The Group has sufficient cash reserves to cover non-discretionary expenditure beyond the Going Concern horizon of at least 12 months from the date of this report, and accordingly the Board believe the Going Concern basis to be appropriate for the preparation of the 2021 Financial Statements.

   3.      Expenses by nature 
 
                                         2021      2020 
                                      US$'000   US$'000 
 
 Project costs                              7        20 
 Directors' fees (note 4)                 635       192 
 Travel and accommodation                  59        43 
 Auditors' remuneration including 
  associates                               25        42 
 Employment costs                         455         - 
 Professional and consultancy 
  fees                                  1,168       737 
 Total                                  2,349     1,034 
-----------------------------------  --------  -------- 
 
   4.      Directors' remuneration 

Details of Directors' remuneration during the year are as follows:

 
                         2021      2020 
                      US$'000   US$'000 
 
 Graham Clarke            401         - 
 James Kelly               65         - 
 Rupert Joy                19         - 
 Edward McDermott          51        46 
 Hayden Locke              33        31 
 Mark Connelly             16        46 
 Robert Wrixon             50        69 
 Total                    635       192 
-------------------  --------  -------- 
 

Graham Clarke, Hayden Locke and Robert Wrixon also received fees for consultancy services which are disclosed within note 14. In addition, the Directors received share options. Further details on share options are in note 14. Directors' fees which are directly attributable to the exploration of a project area have been capitalised as intangible assets.

   5.      Income tax 
 
                    2021      2020 
                 US$'000   US$'000 
 Current tax: 
  Tax                  -         - 
 
 Total tax             -         - 
                --------  -------- 
 

Reconciliation of income tax

 
                                                     2021      2020 
                                                  US$'000   US$'000 
 
 Loss before tax                                  (2,777)   (1,942) 
                                                 --------  -------- 
 
 Loss before tax multiplied by domestic tax 
  rates applicable to losses in the respective 
  countries                                         (464)     (387) 
 
 Effects of: 
 Foreign tax attributes                              (33)       (8) 
 Losses on which no deferred tax is recognised        497       395 
 
 Total tax                                              -         - 
                                                 --------  -------- 
 

The weighted average applicable tax rate was 16.7% (2020: 19.9%). With effect from 2018, Emmerson PLC registered for taxation in the United Kingdom, where the corporation tax rate is 19%. It is also subject to taxation in the Isle of Man where the corporation tax rate is 0%. Morocco has a 20% tax rate applicable to mining companies, including Emmerson's Moroccan subsidiaries.

A deferred tax asset has not been recognised in respect of deductible temporary differences relating to certain losses carried forward at the year end, as there is insufficient evidence that taxable profits will be available in the foreseeable future against which the deductible temporary difference can be utilised.

The unrecognised deferred tax asset for the Group was approximately US$1,456k (2020: US$983k). The unrecognised deferred tax asset relating to Moroccan tax losses amounted to approximately US$144k (2020: US$78k).

   6.      Earnings per share 

The calculation of the basic and diluted earnings per share is based on the following data:

 
                                                                                                    2021          2020 
 Earnings 
 Loss from continuing operations for the year attributable to the equity holders of the 
  Company 
  (US$'000)                                                                                      (2,777)       (1,942) 
 Number of shares 
 Weighted average number of ordinary shares for the purpose of basic and diluted earnings 
  per 
  share                                                                                      822,875,086   704,759,944 
 Basic and diluted loss per share                                                             0.33 cents    0.28 cents 
------------------------------------------------------------------------------------------  ------------  ------------ 
 

The potential number of shares which could be issued following the exercise of options and warrants currently outstanding amounts to 179,625,047 (see note 12). Dilutive earnings per share equals basic earnings per share as, due to the losses incurred, there is no dilutive effect from the existing share options and warrants.

   7.      Intangible assets 

The intangible assets consist of capitalised exploration and evaluation expenditure in respect of the Company's potash interests in Morocco (the Khemisset project).

 
                                      2021      2020 
                                   US$'000   US$'000 
 Cost: 
 At the beginning of the year       11,132     8,180 
 Additions                           2,671     2,313 
 Effects of changes in foreign 
  exchange rates                     (248)       639 
 Total                              13,555    11,132 
--------------------------------  --------  -------- 
 

Intangible assets are reviewed at each reporting date to determine whether there is objective evidence of impairment. See note 2.14 detailing the Company's judgement in this area.

   8.      Trade and other receivables 
 
                          2021      2020 
                       US$'000   US$'000 
 
 Other receivables         551       398 
 Prepayments               220        31 
 Total                     771       429 
--------------------  --------  -------- 
 

Other receivables include recoverable VAT and other taxes.

   9.      Trade and other payables 
 
                       2021      2020 
                    US$'000   US$'000 
 
 Other payables         934       227 
 Accruals               901       454 
 Total                1,835       681 
-----------------  --------  -------- 
 

Trade and other payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method. Other payables consist of supplier invoices for administration expenses. Included within Accruals are engineering costs of US$700k and bonus accruals of US$112k.

   10.    Financial instruments 

Categories of financial instruments

 
                                                     2021       2020 
                                                  US$'000    US$'000 
  Financial assets measured at amortised 
   cost 
  Other receivables                                   551        398 
  Cash and cash equivalents                        10,032      1,563 
----------------------------------------------  ---------  --------- 
                                                   10,583      1,961 
----------------------------------------------  ---------  --------- 
 
  Financial liabilities measured at amortised 
   cost 
----------------------------------------------  ---------  --------- 
  Other payables                                      934        227 
----------------------------------------------  ---------  --------- 
 

Financial risk management objectives and policies

The Company is exposed through its operations to credit risk and liquidity risk. In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments. This note describes the Company's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout this financial information.

General objectives, policies and processes

The Directors have overall responsibility for the determination of the Company's risk management objectives and policies. Further details regarding these policies are set out below:

Capital management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The capital structure of the Group consists of issued capital, reserves and retained earnings. The Directors reviews the capital structure on a semi-annual basis. As a part of this review, the Directors consider the cost of capital, the risks associated with each class of capital and overall capital structure risk management through the new share issues and share buy-backs as well as the issue of new debt or the redemption of existing debt.

The management's strategy remained unchanged from 2020.

Market price risk

The development and success of any project of the Group will be primarily dependent on the future price of potash. Potash prices are subject to significant fluctuation and are affected by a number of factors which are beyond the control of the Company. Future production from the Khemisset Project is dependent on potash prices that are adequate to make the project economic. Potash prices have increases significantly during 2022, and sanctions on sources from Russia and Belarus suggest supplies are likely to remain tight for the foreseeable future.

Credit risk

The Company's credit risk arises from cash and cash equivalents with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.

Liquidity risk

Liquidity risk arises from the Directors' management of working capital. It is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.

The Directors' policy is to ensure that the Company will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, the Directors seek to maintain a cash balance sufficient to meet expected requirements.

The Directors have prepared cash flow projections on a monthly basis through to 30 September 2021. At the end of the period under review, these projections indicated that the Group is expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures. Foreign exchange risk arises from future commercial transactions, recognised monetary assets and liabilities and net investments in foreign operations. It should be noted that although the consolidated accounts use US$ as a presentational currency, Emmerson PLC (the parent company) continued to have GBP as a functional currency in 2021, and the Group's Moroccan entities have MAD as their functional currency.

Net current assets denominated in US$ and MAD at the year-end amounted to US$3.98 million and net liability of US$0.35 million respectively.

At 31 December 2021, had the exchange rate between the Sterling and US$ increased or decreased by 5% with all other variables held constant, the increase or decrease respectively in net assets would amount to approximately US$272k (2020: US$2k).

At 31 December 2021, had the exchange rate between the Sterling and MAD increased or decreased by 5% with all other variables held constant, the increase or decrease respectively in net assets would amount to approximately US$1k (2020: US$1k).

The Group does not hedge against foreign exchange movements.

   11.    Share capital 

The Ordinary Shares issued by the Company have a no par value and all fully paid. Each Ordinary Share carries one vote on a poll vote. The Company does not have a limited amount of authorised capital.

 
                                                     Number     US$'000 
                                                  of shares 
 As at 31 December 2020                         726,602,974      15,755 
---------------------------------------------  ------------  ---------- 
 
 Shares issue for cash                          177,470,355      14,536 
 Shares issued as payment                           600,000        47 
 Less share issue costs                                   -     (1,416) 
 Less fair value of investor warrants issued 
  in year                                                 -       (660) 
 Warrants exercised for cash                     10,389,333         422 
 Transfer from warrants reserve                           -          90 
---------------------------------------------  ------------  ---------- 
 As at 31 December 2021                         915,062,662      28,774 
---------------------------------------------  ------------  ---------- 
 
   12.    Share based payments 

The following is a summary of the share options and warrants outstanding as at 31 December 2021:

 
  Date of     Expiry date   Vesting date    Exercise       No of     Share price   Risk Free   Volatility    Option 
   grant                                     Price        Options     at grant       rate                     Value 
------------  ------------  ------------  ------------  -----------  -----------  -----------  ----------  ----------- 
08-May-18     07-May-23     08-May-18     GBP0.0300       7,250,000    GBP0.0225        1.30%         34%    GBP0.0098 
08-May-18     07-May-23     08-Nov-18     GBP0.0300       7,250,000    GBP0.0225        1.30%         34%    GBP0.0098 
08-May-18     07-May-23     08-May-19     GBP0.0300      10,750,000    GBP0.0225        1.30%         34%    GBP0.0098 
08-May-18     07-May-23     08-Nov-19     GBP0.0300      13,250,000    GBP0.0225        1.30%         34%    GBP0.0098 
26-Mar-19     24-Mar-24     26-Mar-20     GBP0.0350       6,900,000    GBP0.0400        2.10%         68%    GBP0.0242 
07-Aug-19     05-Aug-24     07-Aug-19     GBP0.0500       1,500,000    GBP0.0375        2.10%         58%    GBP0.0192 
01-Aug-20     31-Jul-25     01-Aug-21     GBP0.0010      20,333,333    GBP0.0435        1.10%         71%    GBP0.0219 
01-Aug-20     31-Jul-25     01-Aug-22     GBP0.0010       7,333,333    GBP0.0435        1.10%         71%    GBP0.0219 
01-Aug-20     31-Jul-25     01-Aug-23     GBP0.0010       3,333,334    GBP0.0435        1.10%         71%    GBP0.0219 
01-Aug-20     31-Jul-25     01-Aug-20     GBP0.0010      19,000,000    GBP0.0435        1.10%         71%    GBP0.0219 
                                                         96,900,000 
                                                        ----------- 
 
  Date of     Expiry date   Vesting date    Exercise       No of     Share price   Risk Free   Volatility    Warrant 
   grant                                     Price       Warrants     at grant       rate                     Value 
------------  ------------  ------------  ------------  -----------  -----------  -----------  ----------  ----------- 
 
04-Jun-18     03-Jun-23     04-Jun-18     GBP0.0300         333,333    GBP0.0225           1%         34%    GBP0.0089 
9-Nov-21      9-Nov-22      9-Nov-21      GBP0.0830      82,391,714    GBP0.0565         0.8%         57%    GBP0.0058 
                                                         82,725,047 
                                                        ----------- 
 
Total outstanding at 31 December 2021                   179,625,047 
                                                        =========== 
 

During the year 82,391,714 warrants were issued (2020: nil). 5,000,000 share options expired (2020: nil) and nil were exercised (2020: nil). 333,333 warrants expired (2020: 333,333) and 10,000,000 warrants were exercised (2020: 389,333).

T he weighted average remaining contractual life of the options and warrants at year-end is 1.8 years.

The options and warrants issued were valued using the Black-Scholes valuation method and the assumptions used are detailed above. The expected future volatility has been determined by reference to the historical volatility.

The total share-based payment recognised in the Statement of Changes in Equity during the year was a US$33k (2020: US$991k), which included credits of US$14k in respect of cancelled and unvested share options in the year.

The Group operates equity-settled, share-based compensation plans, under which the entity receives services from Directors and employees as consideration for equity instruments (options) of the Group.

There were 77,850,000 (2020: 101,900,000) options at the year-end held by current Directors, employees, and consultants. Vesting of the options is subject to the option holder providing continuous service during the vesting period and there are no other performance conditions attached to the options.

 
 Share options                      Number issued    Expiry 
 
 Graham Clarke (Director)              17,500,000   5 years 
 Hayden Locke (Director)               22,000,000   5 years 
 Robert Wrixon (Director)              11,000,000   5 years 
 Other employees and consultants       27,350,000   5 years 
---------------------------------  --------------  -------- 
 Total                                 77,850,000 
---------------------------------  --------------  -------- 
 
   13.    Future rental payments 

The commitments arising from operating leases are largely rental payments for buildings. The future minimum lease payments (payables) under non-cancellable operating leases are:

 
                           2021      2020 
                        US$'000   US$'000 
 Within one year             20        20 
 More than one year           -         - 
---------------------  --------  -------- 
 As at end of year           20        20 
---------------------  --------  -------- 
 
   14.    Related party transactions 

Directors' consultancy fees

Hayden Locke is a Director of the Company and is a director of Benson Capital Limited, which provide consulting services to the Company. During the year, Benson Capital Limited received total fees of US$244k (2020: US$314k). The amount outstanding as at year-end is US$ nil (2020: US$114k).

Robert Wrixon is a Director of the Company and also provides consulting services to the Company. During the year, Robert Wrixon received fees of US$116k (2020: US$115k). The amount outstanding as at year-end is US$ nil (2020: US$ nil).

Graham Clarke is a Director of the Company and is a director of GCUK Consulting Limited, which provide consulting services to the Company. During the year, GCUK Consulting Limited received total fees of US$99k (2020: US$232k). The amount outstanding as at year-end is US$ nil (2020: US$ nil).

Details of directors' remuneration during the year are given in note 4.

There are no other related party transactions.

   15.    Ultimate controlling party 

The Directors consider that there is no controlling or ultimate controlling party of the Company.

   16.    Change in Presentation Currency 

The Directors believe that US dollars are a more appropriate currency in which to present the Group's consolidated results, on the basis that, along with most international mining groups, the majority of financing and pricing discussions and presentations are undertaken in that currency.

Consequently, the Group has opted for the financial results to be presented in US dollars for the year ended 31 December 2021. The change in presentation currency has been applied retrospectively.

In re-presenting the Group Financial Statements for the year ended 31 December 2021, the reported information was converted to US dollars from GBGBP using the following procedures:

-- Assets and liabilities were translated to US dollars at the closing rates of exchange at each respective balance sheet date (31 December 2021: GBGBP1: US$1:3532; 31 December 2020: GBGBP1:US$1.367).

-- Share capital, share premium and other reserves were translated at the historic rates prevailing at the dates of transactions.

-- Income and expenses were translated to US dollars at an average rate at each of the respective reporting periods. This has been deemed to be a reasonable approximation (31 December 2021: GBGBP1: US$1.377; 31 December 2020: GBGBP1: US$1.276).

   --      Differences resulting from the retranslation were taken to reserves. 

To assist shareholders during this change, the impact on the prior period results, closing balance sheet and the numerator for earnings per share as originally reported is set out below:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (REPRESENTED)

 
                                                                       As originally reported 2020   Re-presented 2020 
                                                                Note                       GBP'000             US$'000 
 Continuing Operations 
 Administrative expenses                                        3                            (810)             (1,034) 
 Share-based payment expense                                    12                           (776)               (991) 
 Net foreign exchange gain/(loss)                                                               61                  78 
 Operating loss                                                                            (1,525)             (1,947) 
 
 Finance income                                                                                  4                   5 
 Finance cost                                                                                    -                   - 
 Loss before tax                                                                           (1,521)             (1,942) 
 Income tax                                                     5                                -                   - 
                                                                      ----------------------------  ------------------ 
 Loss for the year attributable to equity owners                                           (1,521)             (1,942) 
                                                                      ----------------------------  ------------------ 
 
 Other comprehensive income 
 Items that may be subsequently reclassified to profit or 
 loss: 
 Exchange gain on translating foreign operations                                                97                 500 
 Total comprehensive income attributable to equity owners                                  (1,424)             (1,442) 
                                                                      ----------------------------  ------------------ 
 
 Earnings per share - Basic and diluted                         6                     (0.22 pence)        (0.28 cents) 
 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (REPRESENTED)

 
                                     As originally presented   Re-presented     As originally presented   Re-presented 
                                                        2020           2020                        2019           2019 
                             Note                    GBP'000        US$'000                     GBP'000        US$'000 
 Non-current assets 
 Intangible assets            7                        8,142         11,132                       6,172          8,180 
 Property, plant and 
  equipment                                               12             16                          38             50 
                                   -------------------------  ------------- 
 Total non-current assets                              8,154         11,148                       6,210          8,230 
 
 Current assets 
 Trade and other 
  receivables                 8                          314            429                         271            359 
 Cash and cash equivalents                             1,143          1,563                       2,071          2,746 
                                   -------------------------  -------------  --------------------------  ------------- 
 Total current assets                                  1,457          1,992                       2,342          3,105 
 
 Total assets                                          9,611         13,140                       8,552         11,335 
                                   -------------------------  -------------  --------------------------  ------------- 
 
 Current liabilities 
 Trade and other payables     9                          498            681                         414            549 
                                   -------------------------  ------------- 
 Total current liabilities                               498            681                         414            549 
 
 Net assets                                            9,113         12,459                       8,138         10,786 
                                   -------------------------  -------------  --------------------------  ------------- 
 
 Shareholders equity 
 attributable to equity 
 owners 
 Share capital                11                      12,030         15,755                      10,408         13,631 
 Share reserve                12                       1,163          1,499                         386            508 
 Reverse acquisition 
  reserve                                              1,651          2,198                       1,651          2,198 
 Retained earnings                                   (5,740)        (7,508)                     (4,219)        (5,566) 
 Translation reserve                                       9            515                        (88)           (15) 
                                   -------------------------  ------------- 
 Total equity                                          9,113         12,459                       8,138         10,786 
                                   -------------------------  -------------  --------------------------  ------------- 
 
   17.    Events after the reporting date 

There were no material events that took place after the reporting date.

**ENDS**

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

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

END

FR WPUBGAUPPGBU

(END) Dow Jones Newswires

May 31, 2022 02:01 ET (06:01 GMT)

Emmerson (LSE:EML)
Gráfica de Acción Histórica
De Jul 2022 a Ago 2022 Haga Click aquí para más Gráficas Emmerson.
Emmerson (LSE:EML)
Gráfica de Acción Histórica
De Ago 2021 a Ago 2022 Haga Click aquí para más Gráficas Emmerson.