TIDMGCAT
RNS Number : 7523F
Caracal Gold PLC
09 November 2022
Caracal Gold plc / EPIC: GCAT / Market: Main / Sector:
Mining
9 November 2022
Caracal Gold plc ('Caracal' or the 'Company')
Financial Results
Caracal Gold plc, the gold producer with operations in East
Africa, is pleased to announce its Financial Results for the
18-month period ending 30 June 2022.
The qualified opinion is only on the opening balances as at 1
January 2021 and not that of the final closing balances for the
Caracal Group.
The year-end of the Parent Company was changed in the period
from December to June to align with that of the operating
mines.
In order to ensure that the reporting period following the
acquisition of Kilimapesa mine was no longer than the permitted 18
months, financial figures for Kilimapesa were prepared for the 12
months to 31 December 2020.
These financial figures were unaudited as a mid-period
account.
CHAIRMAN'S STATEMENT
I am pleased to be writing to you as the new Chair of Caracal
Gold plc. The period under review has been a busy and
transformational period for the Company with the acquisition of the
Kilimapesa Mine on 31 August 2021 (acquired via a reverse
acquisition, see note 5 for further details) and the concurrent
placing to raise funds for the Group's ongoing working capital and
the satisfaction of acquisition-related liabilities. The Company
has continued to raise further funds through the issue of smaller
placings during the period under review. The Group have used these
proceeds to progress notably in the growth of the Kilimapesa mining
plant as well as the introduction of our Heap Leach Operations.
Production has increased substantially with the result in our
Revenue increasing to GBP7m for the period. However, the Group
still remains loss making for the period.
Having overcome the global challenges stemming from COVID-19
pandemic we are delighted to be readmitted to the London Stock
exchange and look forward to building future opportunities for our
new shareholders. Due to the hard work of our staff our operations
have both resumed and grown, and we have expanded and upgraded our
operations at Kilimapesa. As the world is returning to normal, we
remain focused on the continuing growth of our operations along
with the health and safety of our employees, suppliers and local
communities. Against the background of a global pandemic the gold
price has remained a supportive factor and offers the prospect of
stronger financial returns as our efficiency continues to
improve.
Strategic Focus
The Board is aware of the risk of having a single asset in
production and so we believe the acquisition in Tanzania will serve
to start to reduce that risk. There has been an extensive drilling
programme carried out at Kilimapesa which has supported the
increase in JORC resource to 1,300,000 ounces. Gold Production has
reached 12,000 ounces per annum and is on track to reach 16,000
ounces in 2023 and 24,000 by 2024.
Values and Culture
As the Board has been expanded through the appointment of new
Directors so has the breadth of the skill set available. We believe
in a strong corporate governance structure with management
accountability and active oversight from the Board.
Three Board Committees, Audit, ESG and Remuneration, provide
oversight and guidance in these areas, ensuring adoption of the
correct strategies with the highest standards available along with
protecting shareholder interests.
Caracal is committed to sustainable development and recognises
that the long-term sustainability of our business is dependent upon
responsible stewardship in both the protection of the environment
and the efficient management of the exploration and extraction of
mineral resources, and the sustainable use of resources for the
benefit of all our stakeholders.
The mine is located in an area of high unemployment and so we
are proud of the fact that we have created over 350 jobs for locals
and over a hundred further jobs for Kenyans from other Districts.
We liaise with the local community through our Community Liaison
Officer and we also try to purchase locally where possible. We view
our people as one of the key pillars of the company and are proud
of the fact that in 18 months we have delivered around 500 new job
opportunities.
Performance
The focus of the Board and Management is on the development of
the operations at Kilimapesa, the upgrading of plant and machinery,
grade improvement and the acquisition of further prospects. The
Company has invested in a new Laboratory and a new Elution Plant as
part of the programme of improvements which we believe will assist
in our drive to improve standards, improve grades and drive
returns. The company has also recently invested in a new fleet of
work vehicles to improve efficiency, reduce downtime and breakdowns
and offer a higher level of personal safety to the operators.
It is the intention of the Board to continue to invest in its
operations, assets, people, and community as the company continues
to grow whilst respecting the impact and influence of climate
change and continuing to operate in a responsible manner.
In May 2022 it was agreed to acquire 100% of Tyacks Gold Limited
('Tyacks'), the holder of the licences collectively referred to as
the Nyakafuru Project ('Nyakafuru' or the 'Project') in Tanzania.
The Project is located in the world-class Lake Victoria Gold Fields
in northern Tanzania, 140km southwest of Mwanza, Tanzania's second
largest city, and 60km from Barrick Gold's 18Moz Bulyanhulu Gold
Mine. This is an established high-grade shallow gold resources of
658,751oz at 2.08g/t contained within four deposits over 280 km2.
This resource is amenable to development as a large scale
conventional open pit operation and Carbon-in-Leach processing
plant.
This will double Caracal's total gold resources to 1,330,197
ounces prior to impending resource update at Kilimapesa -
delivering on the goal of building an emerging East African
focussed gold producer.
The future is extremely promising for the Caracal Group and let
me take this opportunity to thank all our shareholders for your
support in this expansion.
Simon Games-Thomas
Chairman
8 November 2022
CHIEF EXECUTIVE'S STATEMENT
2021 was a transformative year for Caracal Gold PLC and all of
its stakeholders. The standout event was the acquisition of the
Kilimapesa Gold Mine in Kenya which concluded with the successful
RTO on the LSE in September 2021.
This acquisition positioned Caracal as an established East
African based and focussed gold producer and explorer and provided
the Board and Management the platform to attract funding to
optimise and grow our Kilimapesa operations and pursue our strategy
of expanding our portfolio in the region.
In line with this strategy, in November 2021 we announced the
acquisition of Tyacks Gold Limited (Tyacks) in Tanzania (see note
13 for further details on this acquisition). This transaction
significantly grew our resource base with high quality ounces, it
made us a multiple asset company and diversified our physical and
geographic footprint. After a comprehensive legal and technical
review, a final SPA was signed with the shareholders of Tyacks for
the acquisition of 100% of Tyacks Gold and has begun work on the
ground with whilst awaiting completion of all regulatory approvals
which are in process.
At Kilimapesa work by the production team increased the number
of ounces and confidence in our resources at Kilimapesa.
Consequently, they finalised the strategy for increasing production
and optimising recoveries and costs at Kilimapesa and also made
significant progress on ESG and community related areas.
With Caracal's robust business fundamentals providing a strong
platform from which to grow, we go into the next year excited at
the opportunities in front of us, particularly the near-term
opportunity for Kilimapesa to become a 24,000oz per annum producer
during 2024 and for the ongoing increase of our resource base from
exploration activities in both Kenya and Tanzania.
Highlights
Kilimapesa Gold Mine
Progress at Kilimapesa is across the board.
On the exploration side drilling activities commenced in January
2022 and have continued through the period, the highlight of these
activities was the announcement of an updated MRE. This was the 1st
significant exploration to be done on the license area in over 11
years.
Being based in a significant gold producing greenstone belt the
project has significant exploration upside both within the mining
license, where we plan to grow confidence and extend mine life, and
within the wider exploration permit, where we continue to explore
for large, shallow, high grade, open pit projects.
The Kilimapesa expansion project commenced in March 2022.
An expansion to 24,000oz per annum is underway at Kilimapesa.
This expansion focusses on the processing of the lower grade ore
being mined from the Kilimapesa Hill deposit through a heap leach
processing facility with a capacity of 65,000tpm along with the
required expansion of mining activities and infrastructure to
support the expanded production.
The Kilimapesa Gold Mine employs 496 people, of which 470 are
Kenyan highlighting Caracal's commitment to developing in country
talent. Our investment is transforming the Trans Mara South region
and our ongoing community initiatives directly benefit the people
on the ground through investment into schools, roads, water
projects and environmental initiatives.
Tyacks Gold
During the year Caracal successfully acquired 100% of Tyacks,
which owns 11 exploration licenses in the Lake Victoria Gold
Fields. The licenses are collectively known as the Nyakafura
Project. The acquisition creates a major new gold mine development
opportunity for Caracal in one of Africa's largest gold producing
regions.
Nyakafura contains established high grade shallow gold resources
of 658,751oz within four known, closely located deposits. Work done
historically by major gold producer Resolute Mining have shown that
these projects are amenable to large scale, conventional open pit
mining and Carbon-in-Leach processing.
Looking forward to 2022, Caracal will commence with
rehabilitating the infrastructure (camp, offices, workshops,
vehicles etc), the existing core will be relogged and selected
samples sent away for assay all of this work culminating in the
preparation of a drilling plan which we expect to commence in the
4th QTR of 2022.
OUTLOOK
2022/2023 is set to be an exciting year for the group. Our
ongoing exploration programs in Kenya and Tanzania will play an
important role in growing our resource base and confidence in our
resources which will translate into improving returns for all
stakeholders from our shareholders to our social partners on the
ground. The construction of the Kilimapesa expansion will complete
and the production of 24,000oz will cement Caracal's profile as a
upcoming producer, the success of the expansion at Kilimapesa will
have a positive impact for all stakeholders including shareholders,
social partners and the Kenyan Govt to name a few. The development
plan for Tanzania and the next phase of Kilimapesa will also evolve
and become clear to all of us during the year.
I would like to take this opportunity to thank our shareholders,
employees, members of the Board, our local communities and all
stakeholders for their continued commitment to the Company and
ongoing support during the period. With the expansion at
Kilimapesa, the ongoing exploration we are excited by the near and
long-term prospects of becoming a diversified +50,000oz per annum
producer and +3moz resource owner.
Robbie McCrae
Chief Executive Officer
8 November 2022
STRATEGY AND BUSINESS MODEL
The Company's strategy is to become a mid-tier, leading
independent, diversified producer and explorer. We plan to develop
and exploit our portfolio of producing and advanced exploration
projects in Kenya and Tanzania. To this end we have developed and
are carrying out the work programs to deliver maximum value and
have recruited a management team with all the necessary experience
to deliver on the work programs and project potential.
In Kenya the clear plan and strategy is to deliver on the
expansion project increasing production to 24,000oz per month and
to continue to grow and increase confidence in the resources at the
project. Our regional exploration strategy to discover and prove
additional commercially viable, shallow open pit style deposits
within the license area is progressing well and will deliver
results.
In Tanzania the strategy is to confirm the historical results
and to carry out some additional exploration so that an updated
mineral resource estimate can be published and from that work on
the development plan for production can commence. With historic
resources and significant opportunity for additional resources we
are targeting 50,000oz per annum production from Nyakafura as our
base case.
Despite many challenges including COVID good progress was made
during 2021, including:
-- Gold production was uninterrupted for the entire period,
-- Expansion plan for Kilimapesa was finalized and work commenced,
-- Board of Directors was strengthened with 2 NED and 1 executive appointments,
-- Management was strengthened with key appointments across disciplines,
-- Tanzania project was acquired growing resources and securing future growth.
The Company continues to review opportunities to build the
company's portfolio particularly in the immediate region once these
include advanced projects that will provide immediate additional
resources ounces and production.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 18 MONTH PERIODING 30 JUNE 2022
Note 18 months 12 months
ended ended
30 June 31 December
2022 2020
GBP'000 GBP'000
Continuing operations
Revenue 7 6,858 1,399
Cost of sales (9,007) (2,353)
---------- -------------
Gross loss (2,149) (954)
Administrative expenses 8 (7,188) (10)
Listing costs (1,146) -
Share-based payments 24 (84) -
---------- -------------
Operating loss before finance
costs (10,567) (964)
Finance costs (net) 10 (744) (110)
Other income 2 -
Foreign exchange (941) (616)
Reverse acquisition expense 5 (3,298) -
Loss before taxation (15,548) (1,690)
Taxation 11 - -
Loss for the period (15,548) (1,690)
========== =============
Other comprehensive income
- items that may be reclassified
subsequently to profit and
loss account
Translation of foreign operations (65) 511
---------- -------------
Total other comprehensive
income (65) 511
---------- -------------
Total comprehensive income
for the period attributable
to the owners of the Parent
Company (15,613) (1,179)
========== =============
Earnings per share - basic
and diluted (pence) 12 (1.09p) (0.12p)
The notes below form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
Note As at As at
30 June 31 December
2022 2020
GBP'000 GBP'000
Non-Current Assets
Intangible assets 14 2,392 -
Property, plant and equipment 15 5,689 3,758
--------- -------------
Total Non-Current Assets 8,081 3,758
Current Assets
Inventories 16 712 575
Trade and other receivables 17 826 737
Cash and cash equivalents 18 80 121
--------- -------------
Total Current Assets 1,618 1,433
Total Assets 9,699 5,191
========= =============
Equity and Liabilities
Share capital 23 1,879 4,430
Share premium 23 14,306 -
Translation reserve 444 509
Reverse acquisition reserve 5 6,481 -
Share-based payment reserve 148 -
Retained earnings (25,321) (9,773)
--------- -------------
Total Equity (2,063) (4,834)
Non-Current Liabilities
Deferred tax liability 21 552 -
Provisions and contingent liabilities 22 1,989 -
Amount due to related parties - 8,433
Loans and borrowings - non-interest
bearing 20 - 48
Loans and borrowings - interest
bearing 20 167 142
Total Non-Current Liabilities 2,708 8,623
Current Liabilities
Trade and other payables 19 7,357 1,330
Loans and borrowings - non-interest
bearing - 63
Loans and borrowings - interest
bearing 20 1,697 9
Total Current Liabilities 9,054 1,402
Total Liabilities 11,762 10,025
Total Equity and Liabilities 9,699 5,191
========= =============
The notes below form part of these financial statements.
Approved by the Board and authorised for issue on 8 November
2022.
Director
PARENT COMPANY STATEMENT OF FINANCIAL POSITION
Company Registration No. 09829720
Note As at As at
30 June 31 December
2022 2020
GBP'000 GBP'000
Non-Current Assets
Investments 13 9,537 -
Property, plant and equipment 15 302 -
Total Non-Current Assets 9,839 -
Current Assets
Trade and other receivables 17 7,108 12
Cash and cash equivalents 18 26 -
--------- -------------
Total Current Assets 7,134 -
Total Assets 16,973 12
========= =============
Equity and Liabilities
Share capital 23 1,879 132
Share premium 23 14,306 602
Share-based payment reserve 148 -
Retained earnings (7,655) (2,595)
--------- -------------
Total Equity 8,678 (1,861)
Non-Current Liabilities
Provisions and contingent liabilities 22 619 -
Total Non-Current Liabilities 619 -
Current Liabilities
Trade and other payables 19 6,019 1,423
Convertible loan notes 20 1,657 450
Total Current Liabilities 7,676 1,873
Total Liabilities 8,295 1,873
Total Equity and Liabilities 16,973 12
========= =============
The Company has taken advantage of the exemption under section
408 of the Companies Act 2006 by choosing not to present its
individual Statement of Comprehensive Income and related notes that
form part of these approved financial statements.
The Company's loss for the period from operations is
GBP5,060,000 (2020: loss of GBP1,074,000).
Approved by the Board and authorised for issue on 8 November
2022.
Director
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 18 MONTH PERIODED 30 JUNE 2022
18 months 12 months
ended ended
30 June 31 December
2022 2020
GBP'000 GBP'000
Cash flows from operating activities
Operating loss - continuing operations (15,548) (1,690)
Adjustments for:
Depreciation/amortisation 825 456
Finance costs (net) 744 110
Other income (2) -
Foreign exchange movement 290 168
Shares issued in lieu of fees 856 -
Share-based payments 84 -
Reverse acquisition share-based
payment expense 3,298 -
---------- -------------
Operating cash outflows before
working capital movements (9,453) (956)
(Increase)/decrease in trade and
other receivables (19) 81
Increase in trade and other payables 2,223 195
Increase in inventories (137) (91)
---------- -------------
Net cash outflows from operating
activities (7,386) (771)
Net cash flows from investing activities
Cash acquired on acquisition 82 -
Expenditure on intangibles (548) -
Expenditure of fixed assets (1,094) -
Net cash outflows from investing
activities (1,560) -
Net cash flows from financing activities
(Repayments) on external loans (168) (25)
Proceeds from external loans 1,207 -
Increase in previous owners parent
company loan (eliminated in consolidation
in current year) - 1,027
Finance costs (net) (65) (110)
Proceeds from issue of share capital 8,378 -
Cost of share issues (442) -
Net cash inflows from financing
activities 8,910 892
Net (decrease)/ increase in cash
and cash equivalents (36) 121
Cash and cash equivalents at the
beginning of the period 121 11
Effect of exchange rates on cash (5) (11)
Cash and cash equivalents at the
end of the period 80 121
========== =============
Significant non-cash transactions
The only significant non-cash transactions were the issue of
shares and warrants detailed in notes 23 and 24.
PARENT COMPANY STATEMENT OF CASH FLOWS
FOR THE 18 MONTH PERIODED 30 JUNE 2022
18 months 12 months
ended ended
30 June 31 December
2022 2020
GBP'000 GBP'000
Cash flows from operating activities
Operating loss (5,060) (1,074)
Adjustments for:
Depreciation 27 -
Finance costs (net) 546 144
Share-based payment - incentives 84 -
Shares issued for services 856 -
---------- -------------
Operating cash outflows before
working capital movements (3,547) (930)
(Increase)/decrease in trade and
other receivables (98) 468
Increase in trade and other payables 2,201 631
Net cash outflows from operating
activities (1,444) 169
Net cash flows from investing activities
Purchase of tangible fixed assets (128) -
Purchase of Investments (548) -
Cash advanced to subsidiaries (6,997) -
Net cash outflows from investing
activities (7,673) -
Net cash flows from financing activities
Proceeds from external loans 1,207 -
Convertible loan note cash repayments - (25)
Finance costs (net) - (144)
Proceeds from issue of share capital 8,378 -
Cost of share issues (442) -
Net cash inflows from financing
activities 9,143 (169)
Net increase in cash and cash equivalents 26 -
Cash and cash equivalents at the
beginning of the period - -
Cash and cash equivalents at the
end of the period 26 -
========== =============
Significant non-cash transactions
The only significant non-cash transactions were the issue of
shares and warrants detailed in notes 23 and 24.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 18 MONTH PERIODED 30 JUNE 2022
Share Share Share-based Reverse Foreign Retained Total
capital premium payment acquisition currency earnings
reserve reserve reserve
GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at
31 December
2019 4,430 - - - (2) (8,083) (3,655)
--------- --------- ------------ ------------- ---------- ---------- ---------
Loss for the
year - - - - - (1,690) (1,690)
Other comprehensive
income - - - - 511 - 511
--------- --------- ------------ ------------- ---------- ---------- ---------
Total comprehensive
income for the
period - - - - 511 (1,690) (1,179)
Balance at
31 December
2020 4,430 - - - 509 (9,773) (4,834)
Loss for period - - - - - (15,548) (15,548)
Other comprehensive
income - - - - (65) - (65)
--------- --------- ------------ ------------- ---------- ---------- ---------
Total comprehensive
income for the
period - - - - (65) (15,548) (15,613)
Transfer to
reverse acquisition
reserve (4,430) - - 4,430 - - -
Recognition
of plc equity
at acquisition
date 132 602 - 6,443 - - 7,177
Issue of shares
for acquisition
of subsidiary 462 4,156 - (7,690) - - (3,072)
Issue of shares
for placings 946 7,682 - - - - 8,628
Issue of shares
to settle debt 159 1,429 - - - - 1,588
Issue of shares
in lieu of fees 143 1,285 - - - - 1,428
Warrants exercised 37 - - - - - 37
Share based-payment - - 148 3,298 - - 3,446
Cost of share
issues - (849) - - - - (849)
Total transactions
with owners (2,551) 14,306 148 6,481 - - 18,384
--------- --------- ------------ ------------- ---------- ---------- ---------
Balance at
30 June 2022 1,879 14,306 148 6,481 444 (25,321) (2,063)
========= ========= ============ ============= ========== ========== =========
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE 18 MONTH PERIODED 30 JUNE 2022
Share Share Share-based Loan Retained Total
capital premium payment note equity earnings
reserve reserve
GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
Balance at
31 December
2019 132 602 - 22 (1,543) (787)
--------- --------- ------------ ------------- ---------- ---------
Loss for the
period - - - - (1,074) (1,074)
Equity element
of the issue
of 10% convertible
loan notes - - - (22) 22 -
Total comprehensive
income for the
period - - - (22) (1,052) (1,052)
Balance at
31 December
2020 132 602 - - (2,595) (1,861)
Loss for period - - - - (5,060) (5,060)
Other comprehensive
income - - - - - -
--------- --------- ------------ ------------- ---------- ---------
Total comprehensive
income for the
period - - - - (5,060) (5,060)
--------- --------- ------------ ------------- ---------- ---------
Issue of shares
for acquisition
of subsidiary 462 4,156 - - - 4,618
Issue of shares
for placings 946 7,682 - - - 8,628
Issue of shares
to settle debt 159 1,430 - - - 1,589
Issue of shares
in lieu of fees 143 1,285 - - - 1,428
Warrants exercised 37 - - - - 37
Share based-payment - - 148 - - 148
Cost of share
issues - (849) - - - (849)
Total transactions
with owners 1,747 13,704 148 - - 15,599
--------- --------- ------------ ------------- ---------- ---------
Balance at
30 June 2022 1,879 14,306 148 - (7,655) 8,678
========= ========= ============ ============= ========== =========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 18 MONTH PERIODED 30 JUNE 2022
1 General information
Caracal Gold Plc ('the Company' or 'CGP') (formerly Papillon
Holdings plc) is a public limited company with its shares traded on
the Main Market of the London Stock Exchange. The address of the
registered office is 27-28 Eastcastle Street, London, W1W 8DN. The
Company was incorporated and registered in England and Wales on 19
October 2015 as a private limited company and re-registered on 24
June 2016 as a public limited company. It changed its name on 10
September 2021 to Caracal Gold Plc. The Company's registered number
is 09829720.
The principal activity of the Company and its subsidiaries (the
"Group") is the exploration, development and mining of gold in
Kenya and Tanzania, and the development of further projects to
expand its operations within this industry.
On 31 August 2021, the Company acquired the holding company of
Mayflower Gold Investments Limited (MGIL) and thus a 100% indirect
interest in Kilimapesa Gold Pty Ltd (KPGL), whose principal
activity is an established gold mine and gold processing operation
in Kenya. This was accounted for as a reverse acquisition - See
note 5 below for further details.
These consolidated financial statements were approved for issue
by the Board of directors on 5 November 2022.
2 Accounting policies
2.1 Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards and
requirements of the Companies Act 2006. The Financial Statements
have also been prepared under the historical cost convention, as
modified by the revaluation of financial assets at fair value
through profit or loss.
The functional currency for each entity in the Group is
determined as the currency of the primary economic environment in
which it operates. The functional currency of the parent company
CGP is Pounds Sterling (GBP) as this is the currency that finance
is raised in. The functional currency of its subsidiary KPGL is the
Kenyan Shilling and the functional currency of its subsidiary
Tyacks is the Tanzanian Shilling. For both subsidiaries these are
the currencies that mainly influences labour, material and other
costs of providing services. The Group has chosen to present its
consolidated financial statements in Pounds Sterling (GBP), as the
Directors believe it is a more convenient presentational currency
for users of the consolidated financial statements. Foreign
operations are included in accordance with the policies set out
below.
During the year the Company changed its accounting reference
date from 31 December to 30 June to align itself with its newly
acquired subsidiary. Consequently, the current year covers a 18
month period, whereas the prior year is a 12 month period and so is
not entirely comparable year on year.
The preparation of financial statements in conformity with
IFRS's 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 financial
information are disclosed in Note 3.
a) Going concern
The consolidated financial statements have been prepared on a
going concern basis. The Group's assets are not currently
generating substantial revenues and therefore an operating loss has
been reported. An operating loss is expected in the 12 months
subsequent to the date of these financial statements. As a result,
the Group will need to raise funding to provide additional working
capital within the next 12 months. The ability of the Group to meet
its projected expenditure is dependent on these further equity
injections and / or the raising of cash through bank loans or other
debt instruments. These conditions necessarily indicate that a
material uncertainty exists that may cast significant doubt over
the Group's ability to continue as a going concern and therefore
their ability to realise their assets and discharge their
liabilities in the normal course of business. Whilst acknowledging
this material uncertainty, the directors remain confident of
raising finance and therefore, the directors consider it
appropriate to prepare the consolidated financial statements on a
going concern basis. The consolidated financial statements do not
include the adjustments that would result if the Group were unable
to continue as a going concern. The auditors have made reference to
going concern by way of a material uncertainty within their audit
report.
b) Adoption of new and revised standards
i. New standards, amendments and interpretations adopted by the Group.
There were no new or amended accounting standards that required
the Group to change its accounting policies for the year ended 30
June 2022 and no new standards, amendments or interpretations were
adopted by the Group.
ii. New standards, amendments and interpretations not yet adopted by the Group.
The standards and interpretations that are relevant to the
Group, issued, but not yet effective, up to the date of the
Financial Statements are listed below. The Group intends to adopt
these standards, if applicable, when they become effective.
Standard Impact on initial application Effective
date
-------------------- ---------------------------------- ----------
IFRS 17 Insurance Contracts 1 January
2023
IFRS 10 and IAS Long term interests in associates Unknown
28 (Amendments) and joint ventures
Amendments to IAS Classification of Liabilities 1 January
1 as current or non- current 2023
Amendments to IFRS Reference to the Conceptual 1 January
3 Framework 2022
Amendments to IAS Property, Plant and Equipment 1 January
16 - Proceeds before intended use 2022
Amendments to IAS Onerous contracts - Cost of 1 January
37 fulfilling a contract 2022
Annual Improvements Amendments to IFRS 1 First time 1 January
to IFRS Standard adoption of IFR 2022
2018-2020 Cycle Standards, IFRS 9 Financial
Instruments, IFRS Leases
The Directors have evaluated the impact of transition to the
above standards and do not consider that there will be a material
impact of transition on the financial statements.
2.2 Basis of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group 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. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are deconsolidated from the date that control ceases.
Please refer to note 5 for information on the consolidation of KPGL
and the application of the reverse acquisition accounting
principles.
The Group applies the acquisition method to account for business
combinations. (There was an exception to this for the acquisition
of KPGL as discussed in note 5 below). 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.
The group recognises any non-controlling interest in the acquiree
on an acquisition-by-acquisition basis, either at fair value or at
the non-controlling interest's proportionate share of the
recognised amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised either in profit
or loss or as a change to other comprehensive income. Contingent
consideration that is classified as equity is not re-measured, and
its subsequent settlement is accounted for within equity.
Asset Acquisitions
Acquisitions of mineral exploration licences through the
acquisition of non-operational corporate structures that do not
represent a business, and therefore do not meet the definition of a
business combination, are accounted for as the acquisition of an
asset.
The consideration for the asset is allocated to the assets based
on their relative fair values at the date of acquisition.
Inter-company transactions, balances and unrealised gains on
transactions between group companies are eliminated. Unrealised
losses are also eliminated.
2.3 Financial assets and liabilities
The Company classifies its financial assets at fair value
through profit or loss or as loans and receivables and classifies
its financial liabilities and other financial liabilities.
Management determines the classification of it's investments at
initial recognition, A financial asset or liability is measured
initially at fair value. At inception transaction costs that are
directly attributable to the acquisition or issue, for an item not
at fair value through profit or loss, is added to the fair value of
the financial asset and deducted from the fair value of the
financial liabilities.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determined payments that are not quoted on an active
market. They arise when the Company provides money, goods or
services directly to a debtor with no intention of trading the
receivable. Loans are recognised when funds are advanced to the
recipient. Loans and receivables are carried at amortised cost
using the effective interest method (see below).
Other financial liabilities
Are non-derivative financial liabilities with fixed or
determined payments. Other financial liabilities are recognised
when cash is received from a depositor. Other financial liabilities
are carried at amortised cost using the effective interest method.
The fair value of the other liabilities repayable on demand is
assumed to be the amount payable on demand at the statement of
financial position date.
Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the
Company has transferred substantially all the risks and rewards of
ownership. In transactions in which the Company neither retains nor
transfers substantially all the risks and rewards of ownership of a
financial asset and retains control over the asset, the Company
continues to recognise the asset to the extent of it's continuing
involvement, determined by the extent to which it is exposed to
changes in the value of the transferred asset. There have not been
any instances where assets have only been partly derecognised. The
Company derecognises a financial liability when it's contractual
obligations are discharged, cancelled or expired.
Amortised cost measurement
The amortised cost of a financial asset or financial liability
is the amount at which the financial asset or liability is measured
at initial recognition, minus principal payments, plus or minus the
cumulative amortisation using the effective interest method of any
differences between the initial amount recognised and maturity
amount, minus any reduction to impairment.
Fair value measurement
Fair value is the amount for which an asset could be exchanged,
or a liability settled, between knowledgeable, willing parties in
an arm's length transaction on the measurement date. The fair value
of assets and liabilities in active markets are based on current
bid and offer prices respectively. If the market is not active the
Company establishes fair value by using other financial liabilities
appropriate valuation techniques. These include the use of recent
arm's length transactions, reference to other instruments that are
substantially the same for which market observable prices exist,
net of present value and discounted cash flow analysis.
2.4 Cash and cash equivalents
Cash and cash equivalents include cash in hand and on demand and
term deposits, with maturities of three months or less from the
date of acquisition, that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes
in value, net of bank overdrafts.
2.5 Investments and loans in subsidiaries
Subsidiary fixed asset investments are valued at cost less
provision for impairment. The Group applies the IFRS 9 simplified
approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all investment and loans in
subsidiaries.
2.6 Impairment of non-financial assets
The carrying amounts of the Group's assets, other than
inventories, are reviewed at each balance sheet date to determine
whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the Statement of
Comprehensive Income.
Impairment losses recognised in respect of cash-generating units
are allocated first to reduce the carrying amount of any goodwill
allocated to cash-generating units (group of units) and then, to
reduce the carrying amount of the other assets in the unit (group
of units) on a pro-rata basis.
In assessing value in use, the expected future cash flows from
the asset are discounted to their present value using a pre-tax
discount rate that reflects the current market assessments of the
time, value of money and the risks specific to the asset. An
impairment loss is recognised whenever the carrying amount of an
asset exceeds its recoverable amount.
For an asset that does not generate cash inflows that are
largely independent of those from other assets the recoverable
amount is determined for the cash-generating unit to which the
asset belongs. An impairment loss is recognised in the income
statement whenever the carrying amount of the cash-generating unit
exceeds its recoverable amount.
A previously recognised impairment loss is reversed if the
recoverable amount increases as a result of a change in the
estimates used to determine the recoverable amount, but not to an
amount higher than the carrying amount that would have been
determined (net of depreciation) had no impairment loss been
recognised in prior years. For goodwill, a recognised impairment
loss is not reversed.
2.7 Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of a Company after deducting all of its
liabilities. Equity instruments issued are recorded at the proceeds
received net of direct issue costs.
Share capital represents the amount subscribed for shares at
nominal value.
The share premium account represents premiums received on the
initial issuing of the share capital. Any transaction costs
associated with the issuing of shares are deducted from share
premium, net of any related income tax benefits. Any bonus issues
are also deducted from share premium.
The share-based payments reserve represents equity-settled
shared-based employee remuneration for the fair value of the
warrants issued. It also includes the warrants issued for services
rendered accounted for in accordance with IFRS 2.
The reverse acquisition reserve was recognised during the
formation of the Group when the legal acquiree was considered to be
the accounting acquirer under the rules of IFRS 3. As the
accounting acquiree was not a business under IFRS 3, a part of the
transaction was outside the scope of IFRS 3. This resulted in the
recognition of a 'reverse acquisition reserve' on consolidation and
is set out in more detail in note 5 below.
The convertible loan note reserve is used to account for the
equity component of the convertible notes.
The foreign exchange translation reserve policy is set out below
in 2.10.
Retained earnings include all current and prior period results
as disclosed in the Statement of Comprehensive Income, less
dividends paid to the owners of the Company.
2.8 Current and deferred income taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
There is no tax payable as the Company has made a taxable loss
for the year. Taxable loss differs from net loss as reported in the
statement of comprehensive income because it excludes items of
income and expense that are taxable or deductible in other years,
and it further excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of
the reporting period.
Deferred tax is recognised on temporary differences between the
carrying amount of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit or loss. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary differences arise
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries, except
where the Company is able to control the reversal of the temporary
difference and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with such
investments are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised. The measurement of
deferred tax assets and liabilities reflects the tax consequences
that would follow from the manner in which the Company expects, at
the end of the reporting period, to recover or settle the carrying
amount of its assets and liabilities.
Current or deferred tax for the year is recognised in profit or
loss, except when it relates to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax is also recognised in other comprehensive
income or directly in equity respectively.
2.9 Rehabilitation and Environmental Provision
The Group recognises a rehabilitation and environmental
provision where it has a legal and constructive obligation as a
result of past events, and it is probable that an outflow of
resources will be required to settle the obligation, and a reliable
estimate of the amount of the obligation can be made. The nature of
these restoration activities includes dismantling and removing
structures; rehabilitating the mine and tailings dam; dismantling
operating facilities; and restoring, reclaiming and revegetating
affected areas.
On initial recognition, the present value of the estimated costs
is capitalised by increasing the carrying amount of the related
mining asset to the extent that it was incurred as a result of the
development or construction of the mine. Any changes to or
additional rehabilitation costs are recognised as additions or
charges to the corresponding asset and rehabilitation liability
when they occur.
Over time, the discounted liability is increased for the change
in present value based on the discount rate that reflects current
market assessments and the risks specific to the liability. The
annual unwinding of the discount is recognised in the statement of
comprehensive income as part of finance costs. The Group does not
recognise a deferred tax asset in respect of the temporary
difference on the rehabilitation liability nor the corresponding
deferred tax liability in respect of the temporary difference on
the rehabilitation asset.
2.10 Foreign currency translation
In preparing the financial statements of the Group entities,
transactions in currencies other than the entity's functional
currency (foreign currencies) are recognised at the rates of
exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise except for:
-- exchange differences on foreign currency borrowings relating
to assets under construction for future productive use, which are
included in the cost of those assets when they are regarded as an
adjustment to interest costs on those foreign currency
borrowings;
-- exchange differences on transactions entered into to hedge
certain foreign currency risks (see below under financial
instruments/hedge accounting); and
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur in the foreseeable future (therefore
forming part of the net investment in the foreign operation), which
are recognised initially in other comprehensive income and
reclassified from equity to profit or loss on disposal or partial
disposal of the net investment.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated at exchange rates prevailing on the reporting date.
Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly
during that period, in which case the exchange rates at the date of
transactions are used. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in a
foreign exchange translation reserve (attributed to non-controlling
interests as appropriate).
2.11 Share-based payments
The Group issued warrants in the period which were accounted for
as equity settled share based payment transactions with employees.
The fair value of the employees services received in exchange for
these warrants is recognised as an expense in the profit and loss
account with a corresponding increase in equity in the Share-based
payment reserve. As there are no vesting conditions for these
warrants the expense was recognised immediately and will not be
subsequently revisited. Fair value is determined using
Black-Scholes option pricing models.
The Group has also adopted an incentive plan to issue its
management Performance Shares based on non-market based performance
conditions. These are valued by management using the fair value of
the equity instrument expected to be received and a judgement of
the likelihood for these conditions to be met. At the end of each
reporting period, the Group revises its estimate of the number of
shares that are expected to be awarded.
Where equity instruments are granted to persons other than
employees, the statement of comprehensive income is charged with
the fair value of the goods and services received.
2.12 Intangible assets
Exploration and evaluation assets
Intangible assets represent exploration and evaluation assets
(IFRS 6 assets), being the cost of acquisition by the Group of
rights, licences and know-how. Such expenditure requires the
immediate write-off of exploration and development expenditure that
the Directors do not consider to be supported by the existence of
commercial reserves.
All costs associated with mineral exploration and investments,
are capitalised on a project-by-project basis, pending
determination of the feasibility of the project. Costs incurred
include appropriate technical and administrative expenses but not
general overheads and these assets are not amortised until
technical feasibility and commercial viability is established. If
an exploration project is successful, the related expenditures will
be transferred to "mining assets" and amortised over the estimated
life of the commercial ore reserves on a unit of production basis.
Where a licence is relinquished or a project abandoned, the related
costs are written off. On 1 January 2020, all the exploration and
evaluation expenditure relating to the Kilimapesa Mine was
transferred to Mining assets as the mine is considered to be fully
operational and production has commenced.
The recoverability of all exploration and development costs is
dependent upon the discovery of economically recoverable reserves,
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.
Exploration and evaluation assets shall no longer be classified
as such when the technical feasibility and commercial viability of
extracting mineral resources are demonstrable. When relevant, such
assets shall be assessed for impairment, and any impairment loss
recognised, before reclassification to "Mine development".
2.13 Property, plant and equipment
i) initial recognition
Upon commencement of commercial production, the intangible
assets held under 'exploration and evaluation" are transferred into
Mining Assets. Items of property, plant and equipment and Mining
assets are stated at cost less accumulated depreciation and
accumulated impairment losses.
The initial cost of an asset comprises its purchase price or
construction cost, any costs directly attributable to bringing the
asset into operation, the initial estimate of the rehabilitation
obligation, and, for qualifying assets (where relevant), borrowing
costs. The purchase price or construction cost is the aggregate
amount paid and the fair value of any other consideration given to
acquire the asset.
Producing mines also consist of the value attributable to
mineral reserves and the portion of mineral resources considered to
be probable of economic extraction at the time of an acquisition.
When a mine construction project moves into the production phase,
the capitalisation of certain mine construction costs ceases, and
costs are either regarded as part of the cost of inventory or
expensed, except for costs which qualify for capitalisation
relating to mining asset additions, improvements or new
developments, underground mine development or mineable reserve
development.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
ii) Depreciation/amortisation
'Mining assets' are depreciated/amortised on a unit of
production (UOP) basis over the economically recoverable reserves
of the mine concerned. The unit of account used is the recoverable
ounces of gold. Rights and concessions are depleted on the UOP
basis over the economically recoverable reserves of the relevant
area. The UOP rate calculation for the depreciation/amortisation of
mine development costs takes into account expenditures incurred to
date, together with sanctioned future development expenditure.
Economically recoverable reserves include indicated reserves
only.
Depreciation on other plant and equipment is provided to write
off the cost of an asset, less its estimated residual value, evenly
over the expected useful economic life of that asset. Freehold
land, that has been acquired outright is not depreciated.
- Buildings 20 Years
- Plant and equipment 10 Years
- Motor vehicles 3- 5 Years
- Office equipment 6 Years
The residual value, if significant, is reassessed annually.
Surplus/(deficits) on the disposal of mining assets, plant and
equipment are credited/ (charged) to income. The surplus or deficit
is the difference between the net disposal proceeds and the
carrying amount of the asset.
The Group holds some Right-of Use Assets - see policy note 2.15
below.
2.13 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is determined using the weighted average cost method.
The cost of finished goods and work in progress comprises raw
material, direct labour, other direct costs, variable production
overheads and an allocation of fixed production overheads based on
normal operating capacity, but excluding borrowing costs. Net
realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
selling expenses.
Raw materials include costs incurred in acquiring the
inventories and bringing them to their existing location and
condition.
Broken ore comprises all ores extracted from the mine and
stockpiled awaiting processing. The ores are valued at the cost of
mining and transport to its current position.
Work-in-progress comprises materials in the process of being
converted from raw materials to finished goods.
Precious metals inventories include bullion on hand and gold in
process.
Bullion on hand and gold in process represent production on hand
after the smelting process, gold contained in the elution process,
gold loaded carbon in the Carbon in Leach (CIL), Carbon in Pulp
(CIP) process, gravity concentrates, and any form of precious metal
in process where the quantum of the contained metal can be
accurately determined. It is valued at the average production cost
for the period, including amortisation and depreciation.
2.14 Revenue
Revenue represents the fair value of consideration received or
receivable for the sale of precious metal. It is recognised in the
income statement when the significant risks and rewards of
ownership have been transferred to the buyer. It is stated net of
Value Added Tax, rebates and trade discounts. Cash discounts are
included as part of finance costs. No revenue is recognised if
there are significant uncertainties regarding, the recovery of the
consideration due, associated costs, the possible return of goods
or the continuing management involvement with goods.
2.15 Leases
The Group has entered into leases of land (Saris leases) and
field vehicles (additions in the current year). Lease liabilities
are initially measured at the present value of lease payments
unpaid at the commencement date. Lease payments are discounted
using the incremental borrowing rate (being the rate that the
lessee would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with
similar terms and conditions), unless the rate implicit in the
lease is available. The Group currently uses the incremental
borrowing rate as the discount rate for all leases. For the
purposes of measuring the lease liability, lease payments comprise
fixed payments and variable lease payments based on an index or
rate.
Right-of-use assets are measured at cost, which comprises the
initial measurement of the lease liability, plus any lease payments
made prior to lease commencement, initial direct costs incurred,
less any lease incentives received. These assets are depreciated
over the lease term (or useful life, if shorter). Right-of-use
assets are subject to an impairment test if events and
circumstances indicate that the carrying value may exceed the
recoverable amount.
Lease repayments made are allocated to capital repayment and
interest so as to produce a constant periodic rate of interest on
the remaining lease liability balance.
Right-of-use assets are presented within property, plant and
equipment. Lease liabilities are presented as separate line items
on the face of the Balance Sheet. In the Cash Flow Statement, lease
repayments (of both the principal and interest portions) are
presented within cash used in financing activities, except for
payments for leases of short-term and low-value assets and variable
lease payments, which are presented within cash flows from
operating activities or cash used in investing activities in
accordance with the relevant Group accounting policy.
2.16 Convertible loan notes
The component parts of convertible loan notes issued by the
Group are classified separately as financial liabilities and equity
in accordance with the substance of the contractual arrangements. A
conversion option that will be settled by the exchange of a fixed
amount of cash or another financial assets for a fixed number of
the Company's own equity instruments is an equity instrument.
At the date of issue, the fair value of the liability component
is estimated using the prevailing market interest rate for a
similar non-convertible instrument. This amount is recorded as a
liability on an amortised cost basis using the effective interest
method until extinguished upon conversion or at the instrument's
maturity date.
The conversion option classified as equity is determined by
deducting the amount of the liability component from the fair value
of the compound instrument as a whole. This is recognised and
included in equity, net of income tax effects, and is not
subsequently remeasured. In addition, the conversion option
classified as equity will remain in equity until the conversion
option is exercised, in which case, the balance recognised in
equity will be transferred to the convertible loan note reserve.
Where the conversion option remains unexercised at the maturity
date of the convertible loan note, the balance recognised in equity
will be transferred to retained earnings. No gain or loss is
recognised in profit or loss upon conversion or expiration of the
conversion option.
Transaction costs that relate to the issue of the convertible
loan notes are allocated to the liability and equity components in
proportion to the allocation of the gross proceeds. Transaction
costs relating to the equity component are recognised directly in
equity. Transaction costs relating to the liability component are
included in the carrying amount of the liability component and are
amortised over the lives of the convertible loan notes using the
effective interest method.
2.17 Net financing costs
Net financing costs comprise interest payable on borrowings
calculated using the effective interest rate method, interest
receivable funds invested, foreign exchange gains and losses, and
gains and losses on hedging instruments that are recognised in the
income statement.
Interest income is recognised in the income statement as it
accrues, using the effective interest method. The interest expense
component of finance lease payment is recognised in the income
statement using the effective interest rate method.
2.18 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers.
The chief operating decision maker, who are responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the executive Board of
Directors.
3 Critical accounting estimates and judgments
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year,
are discussed below.
Accounting for acquisitions and fair value (see Note 13)
Acquisitions are accounted for at fair value. The assessment of
fair value is subjective and depends on a number of assumptions.
These assumptions may include assessment of estimated resources,
cost of bringing these resources to commercial production levels,
discount rates, and the amount and timing of expected future cash
flows from assets and liabilities. In addition, the selection of
specific valuation methods for individual assets and liabilities
requires judgment. The specific valuation methods applied will be
driven by the nature of the asset or liability being assessed. The
consideration given to a seller for the purchase of a business or a
company is accounted for at its fair value. When the consideration
given includes elements that are not cash, such as shares or
options to acquire shares, the fair value of the consideration
given is calculated by reference to the specific nature of the
consideration given to the seller .
Impairment of investments and loans to subsidiaries (see Note
13)
The Group and the Company assess at each reporting date whether
there is any objective evidence that investments in and loans to
subsidiaries are impaired. To determine whether there is objective
evidence of impairment, a considerable amount of estimation is
required in assessing the ultimate realisation of these
investments/receivables, including valuation, creditworthiness and
future cashflows which are calculated from the Life of Mines
calculations. As at the year end the Directors do not assess there
to be any impairment of these amounts.
Share-based payments (see Note 24)
The Group issues shares and warrants to its employees,
directors, investors and suppliers. These are valued in accordance
with IFRS 2 "Share-based payments". In calculating the related
charge on issuing shares and warrants the Group will use a variety
of estimates and judgements in respect of inputs used including
share price volatility, risk free rate, and expected life. Changes
to these inputs may impact the related charge.
Valuation of deferred consideration payable (see Note 5)
The Group has recorded a contingent consideration liability of
GBP1.426m as at 30 June 2022 relating to the reverse acquisition of
the KPGL. An estimate must be made when determining the value of
contingent consideration to be recognised at each balance sheet
date. Changes in assumptions could cause an increase, or reduction,
in the amount of contingent consideration payable, with a resulting
charge or credit in the consolidated income statement.
The deferred consideration (in the form of both deferred
consideration shares and performance shares) is expected to be paid
within 2 years of the acquisition and no discount was applied due
to immateriality and immediacy of payment. It is based upon the
achievement of differing milestones of gold poured or sold in a
month from 300 ounces to 1,500 ounces. The Directors believe that
there is a high probability that these conditions will be met in
the next 12 months of operations.
Recoverable value of mining assets (see Note 15)
Costs capitalised in respect of the Group's mining assets are
required to be assessed for impairment under the provisions of IAS
36. Such an estimate requires the Group to exercise judgement in
respect of the indicators of impairment and also in respect of
inputs used in the models which are used to support the carrying
value of the assets. Such inputs include estimates of gold reserves
(see www.caracalgold.com), production profiles, gold price, capital
expenditure, inflation rates, and pre-tax discount rates that
reflect current market assessments of (a) the time value of money;
and (b) the risks specific to the asset for which the future cash
flow estimates have not been adjusted. The Directors concluded that
there was no impairment as at 30 June 2022.
Rehabilitation and environmental "decommissioning" provision
(see Note 22)
The Group's activities are subject to various laws and
regulations governing the protection of the environment. The Group
recognises management's best estimate of the asset decommissioning
costs in the period in which they are incurred. Such estimates of
costs include pre-tax discount rates that reflect current market
assessments of (a) the time value of money; and (b) the risks
specific to the asset for which the future cash flow estimates have
not been adjusted. Actual costs incurred in future periods could
differ materially from the estimates.
Additionally, future changes to environmental laws and
regulations, life of mining assets, estimates and discount rates
could affect the carrying amount of this provision. The Directors
provisionally assessed the extent of decommissioning required as at
31 August 2021 and concluded that a provision of GBP1.4m should be
recognised in respect of future decommissioning obligations at the
Kilimapesa Gold Mine.
Valuation of inventory (see Note 16)
As at 30 June 2022, inventory has been valued at GBP712,000.
This includes slow moving inventory but due to its nature the
Directors do not believe that any impairment of this balance is
necessary at year end.
4. Financial risk management
The Group's activities may expose it to some financial risks.
The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group's financial performance.
a) Liquidity risk
Liquidity risk arises from the possibility that the Group and
its subsidiaries might encounter difficulty in settling its debts
or otherwise meeting its obligations related to financial
liabilities. In addition to equity funding, additional borrowings
have been secured to finance operations. The Group manages this
risk by monitoring its financial resources and carefully plans its
expenditure programmes. Financial liabilities of the Group comprise
trade payables which mature in less than six months, convertible
loan notes as referenced in note 20 and deferred consideration that
is payable in shares.
b) Capital risk
The Group's objective when managing capital is to safeguard the
entity's ability to continue as a going concern and develop its
gold exploration, development and production activities to provide
returns for shareholders and benefits for other stakeholders.
The Group's capital structure comprises all the components of
equity (all share capital, share premium, retained earnings when
earned and other reserves). When considering the future capital
requirements of the Group and the potential to fund specific
project development via debt, the Directors consider the risk
characteristics of the underlying assets in assessing the optimal
capital structure.
c) Credit risk
Credit risk is the risk that the Group will suffer a financial
loss as a result of another party failing to discharge an
obligation and arises from cash and other liquid investments
deposited with banks and financial institutions. The Group
considers the credit ratings of banks and institutions in which it
holds funds to reduce exposure to credit risk. The Group considers
that it is not exposed to major concentrations of credit risk.
The currency profile of the Group's cash and cash equivalents is
as follows:
30 June 31 December
2022 2020
Cash and cash equivalents GBP'000 GBP'000
GBP - -
Kenyan Shillings 23 2
USD 57 119
On the assumption that all other variables were held constant,
and in respect of the Group's cash position, the potential impact
of a 20% increase in the GBP: USD foreign exchange rate would not
have a material impact on the Group's cash position and as such is
not disclosed.
d) Fair value hierarchy
All the financial assets and financial liabilities recognised in
the financial statements which are short-term in nature are shown
at the carrying value which also approximates the fair values of
those financial instruments. Therefore, no separate disclosure for
fair value hierarchy is required.
e) Market risk
Market risk arises from the Group's use of interest bearing and
foreign currency financial instruments. It is the risk that future
cash flows of a financial instrument will fluctuate because of
changes in interest rates (interest rate risk), and foreign
exchange rates (currency risk). The Convertible loan note held at
year end has a fixed interest rate and is denominated in US Dollars
and therefore a risk exists that repayment may be higher than
provided for if the foreign exchange rate significantly changes.
This is mitigated by the underlying assets which are also
denominated in US Dollar (ie the gold reserves).
A 10% movement in the strength of the US Dollar against Pound
Sterling would increase the repayment by GBP164,000.
f) Price risk
Price risk arises from the exposure to equity securities arising
from investments held by the Group. No such investments are held by
the Group and therefore no risk has been identified.
g) Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Pound sterling, US Dollar and Kenyan Shilling.
Foreign exchange risk arises from recognised monetary assets and
liabilities, where they may be denominated in a currency that is
not the Group's functional currency. One significant risk in Kenya
is a US Dollar risk as the loans to KPG are denominated in US
Dollars. A 10% movement in the strength of the US Dollar against
Pound Sterling would decrease the liability owed to the parent
company by GBP1.6m. The Directors consider that, for the time
being, no hedging or other arrangements are necessary to mitigate
this risk.
h) Categories of financial instruments
In terms of financial instruments, these solely comprise of
those measured at amortised costs and are as follows:
Group Company
30 June 31 Dec 30 June 31 Dec
2022 2020 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 7,357 1,330 6,019 1,423
-------- -------- -------- --------
Cash and cash equivalents
at amortised cost 80 121 26 -
Trade and other receivables 826 737 7,108 12
======== ======== ======== ========
906 858 7,134 12
======== ======== ======== ========
5. Reverse acquisition
On 31 August 2021, the Company acquired through an issue of
428,846,154 Consideration shares the entire share capital of MGIL
and thus a 100% indirect interest in Kilimapsea Gold Pty Ltd
(KPGL), whose principal activity is an established gold mine and
gold processing operation in Kenya. (On 2 November 2021, 32,867,800
further consideration shares were issued in lieu of an outstanding
cash payment of $450,000 to GMRL and a further payment of $150,000
in cash was made in accordance with the Prospectus).
Although the transaction resulted in KPGL becoming a wholly
owned subsidiary of the Company, the transaction constitutes a
reverse acquisition as in substance, it resulted in a fundamental
change in the business of the Company and the executive management
of KPGL were given the right to appoint two executive directors,
one non-executive director and a non-executive chairman to the
Company's board of directors, with the Company reserving the right
to appoint two non-executive directors. Thus the executive
management of KPGL effectively became the controlling executive
management of the Company.
The shareholders of KPGL acquired a controlling interest in the
Company, before further share issues to reduce debt and raise cash
diluted their ownership to 29.61%. The transaction has therefore
been accounted for as a reverse acquisition. As the Company's
activities prior to the acquisition were purely the maintenance of
the Main Market LSE Listing, acquiring KPGL and raising equity
finance to provide the required funding for the operations of the
acquisition the Directors determined that the Company did not meet
the definition of a business in accordance with IFRS 3.
Accordingly, this reverse acquisition does not constitute a
business combination. Although, the reverse acquisition is not a
business combination, the Company has become a legal parent and is
required to apply IFRS 10 and prepare consolidated financial
statements.
The Directors have prepared these financial statements using the
reverse acquisition methodology, but rather than recognising
goodwill, the difference between the equity value given up by the
KPGL shareholders and the share of the fair value of net assets
gained by the KPGL shareholders is charged to the statement of
comprehensive income as a share-based payment on reverse
acquisition, and represents in substance the cost of acquiring a
Main Market LSE listing.
In accordance with reverse acquisition accounting principles,
these consolidated financial statements represent a continuation of
the consolidated statements of MGIL and its subsidiaries and
include:
- The assets and liabilities of MGIL and its subsidiaries at
their pre-acquisition carrying value amounts and the results for
both periods; and
- The assets and liabilities of the Company as at 31 August 2021
and its results from the date of the reverse acquisition 31 August
2021 to 30 June 2022.
On 31 August 2021, the Company issued 428,846,154 ordinary
shares to acquire the entire share capital of MGIL and thus
indirectly KPGL. On the same date, the Company was readmitted to
the Main Market of the LSE, after completing its second Placing
round with a placing share price of GBP0.01. The Company was also
contracted to issue further cash and shares as part of the overall
consideration calculation bringing the value of the investment in
KPGL to GBP7,690,000 (see below for further details).
Because the legal subsidiary, KPGL, was treated on consolidation
as the accounting acquirer and the legal Parent Company, CGP, was
treated as the accounting subsidiary, the fair value of the shares
deemed to have been issued by KPGL was calculated at GBP1,138,000
based on an assessment of the purchase consideration for a 100%
holding of CGP of 132,400,000 shares at a weighted average placing
price of GBP0.0086 per share.
The fair value of the net assets of CGP at acquisition was as
follows:
GBP'000
Cash and cash equivalents 75
Other assets 6
Liabilities (2,241)
Net Liabilities (2,160)
---------------------------------- --------------------
The difference between the deemed cost (GBP1,138,000) and the
fair value of the net liabilities assumed per above of GBP2,160,000
resulted in GBP3,298,000 being expensed within "reverse acquisition
expenses" in accordance with IFRS 2, Share Based Payments,
reflecting the economic cost to KPGL shareholders of acquiring a
quoted entity.
The reverse acquisition reserve which arose from the reverse
takeover is made up as follows:
GBP'000
Pre-acquisition equity(1) (2,894)
KPGL share capital at acquisition (2) 4,430
Investment in KPGL (3) (7,690)
Loan assigned from GMR on acquisition(4) 9,337
Reverse acquisition expense (5) 3,298
6,481
------------------------------------------------ --------------------
1. Recognition of pre-acquisition equity of CGP as at 31 August 2021.
2. KPGL had issued share capital and share premium of
GBP4,430,000. As these financial statements present the capital
structure of the legal parent entity, the equity of KPGL is
eliminated.
3. The value of the shares and cash issued by the Company in
exchange for the entire share capital of KPGL. The above entry is
required to eliminate the balance sheet impact of this
transaction.*
4. The Loan held between GMR and KPGL was assigned to MGIL and
therefore is eliminated as part of the Reverse Acquisition.
5. The reverse acquisition expense represents the difference
between the value of the equity issued by the Company, and the
deemed consideration given by KPGL to acquire the Company.
*Value of the Shares issued by the Company to acquire KPGL is
made up as follows:
GBP'000
Consideration Shares 4,288
Deferred Consideration Shares 1,500
Cash Consideration 146
Share Consideration in lieu of cash 330
Performance Shares Awards 1,426
--------------------
7,690
====================
The Deferred Consideration shares were deemed payable before
year end and therefore their cost has been included in the cost of
the investment. GBP1m was payable on the recommencement of gold
being commercially produced and sold at the mine on 24 September
2021 and GBP500,000 became payable on the achievement of the first
5,000 ounces of gold commercially produced and sold by KGPL on 31
March 2021. These shares (to be valued at 1p per share as per the
Prosepectus) are still to be issued at year end and have been
included in the Other Creditors balance.
The Performance Share Awards which were granted at the date of
the Reverse Acquisition have been recognised as part of the cost of
investment as under IFRS 2 as they do not have any non-vesting
conditions and therefore should be recognised on grant.
Recognition has been based on an estimate of the number of
instruments which are expected to be issued based on the
achievement of the following milestones at a share price forecast
between 1.0p and 1.11p:
Management Ince ntives s hall vest in fi ve equal instalments
upon the o ccurrence of the following milestones:
1 . On the achievem e nt of 300 o u nces of go ld p o ured or s
old in a month (20%);
2 . On the achievem e nt of 600 o u nces of go ld p o ured or s
old in a month (20%);
3 . On the achievem e nt of 900 o u nces of go ld p o ured or s
old in a month (20%);
4 . On the achievem e nt of 1,2 00 ounces of gold po ured or s
old in a mo n th (2 0%); and
5 . On the achievem e nt of 1,5 00 ounces of gold po ured or s
old in a mon th (2 0%).
There is no expiry date set for the achievement of the
milestones with respect to the Performance Share Awards.
For the purposes of the current period of reporting, the values
related to the transaction accounting are considered provisional.
These fair values will be finalised within a period of twelve
months from the reverse acquisition date.
6. Segment reporting
For the purpose of IFRS 8, the Chief Operating Decision Maker
"CODM" takes the form of the board of directors. The Directors are
of the opinion that the business of the Group focused on two
reportable segments as follows:
-- Head office, corporate and administrative, including parent
company activities of raising finance and seeking new investment
opportunities, all based in the UK and;
-- Gold mining operations, all based in Kenya and Tanzania.
The geographical information is the same as the operational
segmental information shown below.
18 month period United
ending 30 June Kingdom Kenya Tanzania
2022 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- ----------
Revenue - 6,858 - 6,858
Cost of sales - (9,007) - (9,007)
--------- --------- --------- ----------
Gross Profit (2,149) - (2,149)
Operating expenses (3,411) (3,776) (1) (7,188)
--------- --------- --------- ----------
Operating Loss (3,411) (5,925) (1) (9,337)
Share-based payments (84) - - (84)
Listing costs (1,146) - - (1,146)
Other income/FX (19) (920) - (939)
Net finance costs (546) (198) - (744)
Reverse acquisition
expenses (3,298) - - (3,298)
--------- --------- --------- ----------
Loss before and
after tax (8,504) (7,073) (1) (15,548)
========= ========= ========= ==========
Net Assets
Assets 435 6,862 2,402 9,699
Liabilities (8,737) (2,471) (554) (11,762)
Net assets (liabilities) (8,302) 4,391 1,848 (2,063)
========= ========= ========= ==========
No segmental information has been provided for prior period as
there was only one segment, being the Operations in Kenya. As such
the prior year financial statements of the segment is the same as
that set out in the prior period consolidated statement of
comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity and the
consolidated statement of cash flows.
Major customer: all revenue in both periods came from one
customer located in Kenya in each period.
7. Revenue
18 months Year ended
ended 30 June 31 December
2022 2020
GBP'000 GBP'000
Sales of precious metals 6,858 1,384
Total revenue 6,858 1,384
=============== =============
8. Expenditure by nature
18 months Year ended
ended 30 June 31 December
2022 2020
GBP'000 GBP'000
Directors remuneration 866 24
Wages and salaries 2,068 210
Depreciation of PPE 824 439
Legal and professional fees 1,459 -
During the year the Group obtained the following services from
their auditors:
18 months ended Year ended
30 June 2022 31 December
2020
GBP'000 GBP'000
Fees payable to the Group's
auditors for the audit of the
Company 65 16
Fees payable to the Group's
auditors for other services
- Reporting Accountant services
in respect to the Reverse Acquisition 35 -
---------------- -------------
100 16
---------------- -------------
9. Directors and employees
The average monthly number of persons employed by the Group,
including Executive Directors, was:
18 months ended Year ended
30 June 2022 31 December
GBP'000 2020
GBP'000
Management 13 2
Operations 461 114
Administration 25 5
--------------------- ------------------
499 121
===================== ==================
Remuneration in respect of these Directors and Employees
was:
18 months ended Year ended
30 June 2022 31 December
GBP'000 2020
GBP'000
Wages and salaries 1,135 205
Pensions (National Social
Security Fund) 17 6
Directors' fees 772 -
---------------- -------------
1,924 206
================ =============
The share-based payments comprised the fair value of warrants
granted to directors and employees in respect of services
provided.
Wages and salaries include amounts that are capitalised as
development and production assets and others are administration
expenses.
Directors' remuneration is disclosed in the Remuneration Report
of these consolidated financial statements.
10. Finance costs
18 month period Year ended
ended 30 June 2022 31 December
GBP'000 2020
GBP'000
Interest on loans 609 110
Unwinding of discount on provisions 135 -
-------------------- -------------
744 110
==================== =============
11. Taxation
No charge to taxation arises due to the losses incurred.
GROUP 18 months 12 months
period ended ended 31
30 June December
2022 2020
GBP'000 GBP'000
Loss on ordinary activities before
taxation (15,548) (1,690)
-------------- ----------
Tax at the applicable rate of 24.5%
(2020:30%) (3,810) (507)
Disallowed expenses 2,068 714
Losses for which no deferred tax
is recognised 13,480 976
Total tax charge - -
-------------- ----------
The weighted average applicable tax rate of 24.5% (2021: 30%)
used is a combination of the 19% standard rate of corporation tax
in the UK and 30% Kenyan corporation tax.
The Group has total tax losses of GBP20,845,000 to carry forward
against future profits. There are GBP1,230,000 of UK tax losses
brought forward and GBP6,135,000 Kenyan tax losses brought
forward.
No deferred tax asset on losses carried forward has been
recognised on the grounds of uncertainty as to when profits will be
generated against which to relieve said amount.
12. Earnings per share
Basic and diluted loss per share is calculated by dividing the
earnings attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the
period.
18 months 12 months
ended ended
30 June 31December
2022 2020
Loss for the period (GBP'000) 15,548 1,690
Weighted average number of shares
in issue 1,423,204,110 1,429,487,180
Basic and Diluted loss per share
(pence) (1.09p) (0.12)p
The weighted average number of shares is adjusted for the impact
of the reverse acquisition as follows: Prior to the reverse
takeover, the number of shares is based on KPGL, adjusted using the
share exchange ratio arising on the reverse takeover; and from the
date of the reverse takeover, the number of share is based on the
Company. The prior year number of shares is also adjusted using the
share exchange ratio.
There is no difference between the diluted loss per share and
the basic loss per share presented. Warrants could potentially
dilute basic earnings per share in the future but were not included
in the calculation of diluted earnings per share as they are
anti-dilutive for the period presented.
13. Investment in subsidiaries
COMPANY GBP'000
Cost and net book amount
At 1 January 2020, 2021 -
Additions - KPGL 7,690
Additions - Tyacks 1,847
Additions - Other subsidiaries -
--------
At 30 June 2022 9,537
--------
Information about the composition of the Group at the end of the
reporting period is as follows:
Name Principal Place of incorporation % owned
activity and operation subsidiary
---------------------------- ------------------ ------------------------- -------------
Kilimapesa Gold Pty Precious metals
Ltd ("KPGL") production Kenya 100*
Tyacks Gold Limited Exploration
("Tyacks") and Mining Tanzania 100
Mayflower Gold Investments Precious metals
Ltd ("MGIL") production England and Wales 100
Caracal Investments
Ltd Holding company Mauritius 100
*held indirectly through Mayflower Gold Investments Limited
On 31(st) August 2021, the Company acquired the entire share
capital of KPGL. Further details regarding this reverse acquisition
and its accounting can be found in Note 5 above. The registered
office of KPGL is L.R. No.209/8342/3, First Ngong Avenue, PO Box
7478, Nairobi, Kenya.
MGIL was incorporated on 9(th) December 2020 and its registered
office is 165 Fleet Street, London, UK, EC4A 2DY. On 16(th) August
2022, the company changed its name to Caracal Holdings Limited.
The registered office of Caracal Investments is c/o Dale
International Trust Company Limited, 3(rd) Floor Tower A, 1
Cybercity, Ebene 72201, Mauritius.
The registered office of Tyacks is 10 Chato Street, Regent
Estate, PO Box 9020, Dar es Salaam, Tanzania.
On 23 May 2022, the Company entered into a Sales and Purchase
Agreement with Tyacks Gold Limited, a gold mining and exploration
company, to acquire the entire share capital of said company (66.7%
to the Company and 33.3% to MGIL). As consideration for the
transaction, the Purchase price was agreed to be a total of GBP1.2m
($1.5m) cash which was paid in three tranches ($500,000 on 27 June
2022, $413,000 on 3 August 2022 and the final amount of $587,000 is
still outstanding as at the date of these accounts) and the seller
was also granted a 0.5% gross net smelter return royalty on all
gold produced and sold related to the Project and Licences, less
any transportation, insurance, marketing and refining costs. The
present value of the contingent consideration (the net smelter
royalty) was calculated to be GBP619,000.
The acquisition provided the Company with the opportunity to
expand its gold production and exploration programme as Tyacks are
the holder of several mining licenses. On this date the Company
assumed 100% of the budgeted costs required to operate Tyacks and
the Project and therefore it is considered that control was to have
passed on the Signature Date of 23 May 2022.
The amounts recognised in respect of the identifiable assets
acquired and liability assumed as a result of the acquisition are
as follows:
Net book Fair value Fair value
value of assets adjustments of assets
acquired acquired
GBP'000 GBP'000 GBP'000
Intangible assets - 2,392 2,392
Financial assets 10 - 10
Financial liabilities (3) - (3)
Deferred tax liability - (552) (552)
----------------- ------------- -----------
Total identifiable assets
acquired and liabilities
assumed 7 1,840 1,847
----------------- ------------- -----------
Fair value of consideration
paid:
Cash paid 402
Cash due post year end 826
Contingent consideration 619
-----------
Total consideration 1,847
-----------
Under IFRS 3, a business must have three elements: inputs,
processes and outputs. Tyacks is an early stage exploration company
and has no mineral reserves and no plan to develop a mine. Tyacks
does have titles to mineral properties but these could not be
considered inputs because of their early stage of development.
Tyacks has no processes to produce outputs and has not completed a
feasibility study or a preliminary economic assessment on any of
its properties and no infrastructure or assets that could produce
outputs. Therefore, the Directors conclusion is that the
transaction is an asset acquisition and not a business combination.
The fair value adjustment to intangible assets of GBP2,392,000
represents the excess of the purchase and contingent consideration
of GBP1,847,000 over the excess of the net assets acquired (net
assets of GBP7,000) and a deferred tax liability of GBP552,000.
During the period since acquisition, Tyacks contributed a loss
of GBP2,000 to the Group. If the acquisition had occurred on 1
January 2021, consolidated pro-forma loss for the 18 months ended
30 June 2022 would have been GBP58,000.
14. Intangible assets
GROUP Total
GBP'000
Cost
Balance as at 1 January 2020 -
-------------------
Additions/acquisitions -
-------------------
Balance as at 31 December 2020 -
Acquisition of Tyacks 2,392
-------------------
Balance as at 30 June 2022 2,392
-------------------
No impairment was recorded in either period.
15. Property, plant and equipment
GROUP Land Land Buildings Mining Plant Production Field Office Total
(leased) assets and vehicles vehicles equipment
equipment (leased)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance as
at 31
December
2020 236 96 95 1,554 3,246 278 - 16 5,521
Additions - - 24 1,677 700 16 92 22 2,531
FX effect 7 4 3 71 124 10 4 1 224
---------------- -------------------- --------------------- ------------------ --------------------- ---------------------- -------------------- --------------------- -----------------
Balance as
at 30 June
2022 243 100 122 3,302 4,070 304 96 39 8,276
---------------- -------------------- --------------------- ------------------ --------------------- ---------------------- -------------------- --------------------- -----------------
Accumulated
depreciation
Balance as
at 31
December
2020 - 12 38 155 1,300 246 - 12 1,763
Depreciation
charge - 9 7 63 624 32 - 1 736
FX effect - 1 1 7 70 9 - - 88
Balance as
at 30June
2022 - 22 46 225 1,994 287 - 13 2,587
---------------- -------------------- --------------------- ------------------ --------------------- ---------------------- -------------------- --------------------- -----------------
Carrying
value
Balance as
at 31
December
2020 236 84 57 1,399 1,946 32 - 4 3,758
---------------- -------------------- --------------------- ------------------ --------------------- ---------------------- -------------------- --------------------- -----------------
Balance as
at 30 June
2022 243 78 76 3,077 2,076 17 96 26 5,689
---------------- -------------------- --------------------- ------------------ --------------------- ---------------------- -------------------- --------------------- -----------------
Details of land
Freehold land to the extent of 11,736 Ha, situated in Lolgorian,
Transmara West, Narok County, held under Title Deed Nr
TRANSMARA/MOYOI/2366,Registry Map Sheet No. 19, in the Transmara
District Land Registry. Purchased on 4 May 2015 for GBP230,216.
Pledged as security
Field vehicle additions in the period were acquired through a
finance lease agreement which is secured on these assets.
COMPANY Plant and Total
equipment
GBP'000 GBP'000
Cost
Balance as at 31 December 2020,2021 - -
Additions 330 330
------------ ---------
Balance as at 30 June 2022 330 330
Depreciation
Balance as at 31 December 2020,2021 - -
Additions 27 27
------------ ---------
Balance as at 30 June 2022 27 27
Carrying value
Balance as at 31 December 2020,2021 - -
------------ ---------
Balance as at 30 June 2022 302 302
------------ ---------
In assessing the carrying amounts of its mining assets, the
Directors have used an expansion of the mining capacity up to
24,000 oz of gold per annum in the next year, Gold revenues have
been estimated over the life of mine period at a management
estimate of $1,600 per oz. A discount rate of 20% has been utilised
to give a net present value of the existing mine. No impairment has
been indicated.
16. Inventories
GROUP As at As at
30 June 31 December
2022 2020
GBP'000 GBP'000
Consumable stores 138 360
Raw materials 457 5
Precious metal on hand and in
process 117 210
--------- -------------
712 575
--------- -------------
17. Trade and other receivables
Group Company
30 June 31 Dec 30 June 31 Dec
2022 2020 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
Trade debtors - 4 - -
VAT receivables 642 729 71 -
Amounts due from Group
undertakings - - 6,997 -
Other receivables and
prepayments 184 4 39 12
-------- -------- -------- --------
826 737 7,108 12
======== ======== ======== ========
All of the above amounts are due within one year.
Amounts due from Group undertakings are denominated in US
dollars and interest free and repayable on demand.
Under IFRS 9, the Expected Credit Loss ("ECL") Model is required
to be applied to the intercompany loans receivable from subsidiary
companies, which are held at amortised cost. An assessment of the
expected credit loss arising on intercompany loans has been
calculated and the directors do not believe a provision is required
in the parent Company financial statements during 2022 as the
cashflows from the underlying asset (the Kilimapsea Mine) show that
the repayments on the loan will cover the repayments required. The
Company had no subsidiaries in prior year.
18. Cash and cash equivalents
Group Company
30 June 31 Dec 30 June 31 Dec
2022 2020 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash equivalents 80 121 26 -
-------- -------- -------- --------
80 121 26 -
======== ======== ======== ========
Cash and cash equivalents consist of balances in bank accounts
and Company, a money transfer service used to efficiently execute
international foreign currency transactions. Corpay is a part of
the Barclays Group with a Fitch credit score of A and ABSA Bank
Limited holds a BB- credit score.
19. Trade and other payables
Group Company
30 June 31 Dec 30 June 31 Dec
2022 2020 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
Trade creditors 541 305 164 918
Amounts payable to related
parties - 221 - -
Other payables and accruals 3,882 804 2,922 505
Taxes and social security 8 - 8 -
Deferred consideration 1,500 - 1,500 -
Contingent consideration
due within one year 1,426 - 1,426 -
-------- -------- -------- --------
7,357 1,330 6,019 1,423
======== ======== ======== ========
Other payables include an amount of GBP825,000 due to the owners
of Tyacks for the completion of this acquisition (see note 13) and
an amount of GBP2m owed to Orca Capital for Shares paid for but
still to be issued.
The deferred consideration is due to Mayflower Capital as part
of the consideration due for the acquisition of KPGL (see note 5).
This is due to be paid in shares.
The contingent consideration is based on the management
performance shares as set out in note 5 and is also due to be paid
in shares.
20. Borrowings
Non-Interest Bearing: Group Company
30 June 31 Dec 30 June 31 Dec
2022 2020 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
Non-current liabilities
Other - 48 - -
--------- -------- -------- --------
Outstanding on purchase
price of Land - - - -
--------- -------- -------- --------
- 48
Current liabilities
Other - 48 - -
--------- -------- -------- --------
Outstanding on purchase
price of Land - 15 - -
--------- -------- -------- --------
- 63 - -
----------------------------------- -------- -------- --------
KPGL owns a plot of land measuring 11,736 hectares described as
parcel 2366 situated in the Transmara Region of Kenya. The
liability is unsecured, interest free and was repaid in 2022.
Interest Bearing: Group Company
30 June 31 Dec 30 June 31 Dec
2022 2020 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
Non-current liabilities
Other 5 32
-------- -------- -------- --------
Finance leases 162 110 - -
-------- -------- -------- --------
167 142
-------- -------- -------- --------
Current liabilities
Current portion of finance
leases 40 9 - -
Loan notes 1,657 - 1,657 450
-------- -------- -------- --------
1,697 9 1,657 450
-------- -------- -------- --------
Instalments due:
Minimum Interest Principle
instalment
GBP'000 GBP'000 GBP'000
30 June 2022
Less than one year 1,657 407 1,250
------------ --------- ----------
Finance Leases
------------ --------- ----------
Vehicles 95 11 84
------------ --------- ----------
Land 119 8 111
------------ --------- ----------
Finance lease creditors 2022 2020
GBP'000 GBP'000
Less than one year 40 9
1-2 years 72 9
2-5 years 23 31
Over 5 years 67 70
New interest-bearing loans and borrowings relating to motor
vehicles were taken out in the period and secured over these
vehicles with a net book value of GBP96,000. The finance leases are
repayable over 36 monthly instalments and bear interest at 8.58%.
For more information about the Group's exposure to interest rate
and foreign currency risk see note 4.
The Group also has a finance lease over the 10 acres of land
where the Mine is situated. It has a term of 20 years and bears an
interest rate of 10%.
Convertible loans
On 21 June 2022, the Company entered into a Loan Note Instrument
with Mill End Capital Limited (the "Noteholder") for a total of
GBP1.25m ($1.5m). This was draw down in its entirety on 27 June
2022. The total creditor recorded in the accounts is GBP1.7m which
is made up of GBP1.25m principal and GBP407,000 accrued
interest.
The terms of repayment vary on the time of such repayment as set
out below:
Within 90 days - 120% of the principal to be repaid
Between 90-120 days - 126.667% of the principal to be repaid
Between 121-150 days - 133.333% of the principal to be
repaid
If the amount is not paid within this time frame, then the
Noteholder may notify the Company to convert the loan into shares
which will be valued at 80% of the closing VWAP price of an
ordinary share on the business day prior to that on which the
Noteholder makes its request.
On 5 January 2021, the Company entered into individual
standalone agreements with the holders of the remaining GBP450,000
of convertible loan notes (interest bearing at 10%). The combined
outstanding interest payable was agreed at a fixed GBP62,500 and
the holders agreed to convert their combined loan and accrued
interest totalling GBP512,500 into 51,250,000 new ordinary shares
of 1 pence each in the Company which took place on 31 August 2021
when the company's enlarged share capital was admitted to trading
on the standard segment of the London Stock Exchange.
21. Deferred tax liabilities
Group GBP'000
Brought forward as at 1 January 2021 -
Deferred tax arising from acquisitions in period 552
Carried forward as at 30 June 2022 552
========
The deferred tax liability has arisen following the acquisition
of Tyacks in the year which has been accounted for as asset
acquisition. Therefore a deferred tax liability has been recognised
on the Fair Value uplift of the assets acquired (see note 13),
which has been calculated at a rate of 30% of the uplift of asset
value being the applicable Tanzanian tax rate.
22. Provisions and contingent liabilities
Group Company
30 June 31 Dec 30 June 31 Dec
2020 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
Provision for rehabilitation
and environmental provision 1,370 - - -
Contingent consideration 619 - 619 -
-------- -------- -------- --------
1,989 - 619 -
-------- -------- -------- --------
Group GBP'000
Provision for rehabilitation and environmental
provision
Brought forward as at 1 January 2021 -
Provision provided for on reverse acquisition 1,235
Unwinding of discount 135
--------
Carried forward as at 30 June 2022 1,370
========
Rehabilitation and environmental provisions are based on
management estimates of work and the judgement of the directors. By
its nature, the detailed scope of work required, and timing of such
work is uncertain. The provision had not been provided for prior to
the reverse acquisition and is presented as a provisional figure in
the current year accounts.
Group and Company GBP'000
Contingent consideration
Brought forward as at 1 January 2021 -
Contingent consideration provided for in the
period 619
Carried forward as at 30 June 2022 619
========
The contingent consideration is due on the purchase of Tyacks
(see note 13 for further details).
23. Share capital and premium
Group Ordinary Share Share
Shares Capital Premium Total
(number) GBP'000 GBP'000 GBP'000
At 30 December 2019 600,000 4,430 - 4,430
----------------------------------- -------------- ---------- --------- ----------
At 31 December 2020 600,000 4,430 - 4,430
----------------------------------- -------------- ---------- --------- ----------
Transactions dated 31 August
2021:
Transfer of capital of KPGL
to Reverse Acquisition Reserve (600,000) (4,430) - (4,430)
Issued share capital of CGP
at acquisition 132,400,000 132 602 734
Issue of shares for acquisition
of subsidiary 428,846,154 429 3,860 4,289
Issue of shares at placing
price GBP0.0075 358,251,275 358 2,329 2,687
Issue of shares at placing
price GBP0.01 280,700,000 281 2,526 2,807
Issue of Equity-for-Debt
shares 107,753,803 108 969 1,077
Issue of Convertible Debt
shares 51,050,000 51 460 511
Issue of shares in lieu of
settlement of fees 89,424,425 89 793 882
--------------
1,448,425,657
Issue of additional placing
shares GBP0.01 on 20 September
2021 30,897,834 31 278 309
Issue of shares in lieu of
settlement of fees on 20
September 2021 29,450,000 29 275 304
Issue of additional placing
shares at GBP0.0075 on 20
September 2021 19,080,000 19 124 143
Issue of shares for acquisition
of subsidiary (to GMRL $450,000) 32,867,800 33 296 329
Issue of shares in lieu of
settlement of fees on 4 November
2021 14,608,709 15 136 151
Issue of shares at placing
price of GBP0.0125 on 2 December
2021 40,000,000 40 460 500
Issue of shares at placing
price of GBP0.0125 on 27
December 2021 24,000,000 24 276 300
Issue of shares in lieu of
settlement of fees on 27
January 2022 9,100,000 9 82 91
Issue of shares on warrant
exercise on 7 February 2022 37,500,000 38 - 38
Issue of shares at placing
price of GBP0.0095 on 14
February 2022 177,048,592 177 1,505 1,682
Issue of shares at placing
price of GBP0.0125 on 17
February 2022 16,000,000 16 184 200
Cost of share issue (849) (849)
As at 30 June 2022 1,878,978,592 1,879 14,306 16,185
=================================== ============== ========== ========= ==========
The issued capital of the Group for the period to 31 August 2021
is that of KPGL which had 600,000 shares in issue of 1,000 Kenyan
Shillings (KSH) each.
Upon completion of the acquisition the share capital of KPGL was
transferred to the Reverse Acquisition Reserve (see note 5) and the
share capital of CGP was brought to account. The shares were all of
par value GBP0.001.
24. Warrants and share-based payments
The Group has issued the following warrants:
Date of Reason for issue No. of warrants Exercise price Expiry date
Issue pence per share
------------- ------------------------- --------------- ---------------- -----------
24.06.2016 Founder warrants 20,000,000 1.0p 24.06.2023
24.06.2016 Placing (2016) warrants 41,200,000 0.004p 24.06.2022
01.08.2016 JIM Nominees Warrants 10,300,000 1.00p 24.06.2021
Placing (2020/1)
31.08.2021 warrants 220,669,263 2.50p 31.12.2022
31.08.2021 Management warrants 150,000,000 1.00p 31.12.2022
---------------
08.03.2022 Placing Warrants 210,526,316 1.25p 30.09.2022
---------------
23.06.2022 Loan Note Warrants 52,101,062 0.8p 20.06.2024
---------------
704,796,641
---------------
Expired and Founder/Placing
exercised (2016)/JIM Nominee (71,500,000)
---------------
633,296,641
---------------
The movements in warrants during the period were as follows:
Number of warrants Exercise price
(pence)
-------------------------------------- ------------------ --------------
As at 31 December 2019, 2020 - -
Acquired through reverse acquisition 71,500,000 1.00p
Issued in the period 633,296,641 0.8p-2.5p
------------------
Expired in the period (41,500,000) 1.0p
Exercised in the period (30,000,000) Pay debt
633,296,641
------------------
The Founder and all Placing warrants have been determined as
equity instruments under IAS 32 and as such have been issued at nil
cost. The Founder warrants were repriced from 1.25p to 1.0p and
their expiry date was extended to 24 June 2023 on 31 August 2021.
The Placing (2106) warrants were repriced from 1.25p to 1.0p and
their expiry date was extended to 24 June 2022 on 31 August
2021.
The weighted average exercise price of the warrants outstanding
at the year-end is 2.6p (2020: 1.0p). The weighted average life of
the warrants outstanding at the year-end is 0.81 years (2020: 1.64
years).
The Management warrants and Loan Note warrants are valued in
accordance with IFRS 2, as equity settled share-based payment
transactions. GBP84,000 has been recognised as the fair value of
compensation for the Management warrants and GBP64,000 for the Loan
Note warrants.
Management warrants have the same milestones as the Performance
Shares set out in note 5 above, however, their expiry date of
31.12.2022 lowers the probability of the milestones being met.
The fair value was calculated using the Black Scholes model with
inputs as detailed below:
Management warrants Loan Note warrants
Share price 1.0p 0.7p
Exercise price 1.0p 0.8p
Expected life 1.3 years 3 years
Volatility 31% 31%
Risk-Free Interest rate 1.24% 1.24%
Probability of Milestone being 36% overall n/a
reached
Expected dividends - -
-------------------------------- -------------------- -------------------
Expected volatility has been based on an evaluation of the
historical volatility of a similar Company's share price in the
same industry and listed on the same Exchange.
25. Contingent liabilities
The Group does not have any contingent liabilities at the
year-end (2020: none).
26. Capital commitments
The Group has no known capital commitments as the licences do
not contain a minimum spend. Ground rent at the Kilimapesa mine is
500,000 KES per year (GBP3,333) and is due to be paid annually
until 2032. The exploration licence at Kilimapesa is 138,284 KES
per year (GBP922) and is due to be paid for a period of two further
years. All Royalty commitments are recorded as they fall due in the
same accounting period as the revenue it relates to.
27. Ultimate controlling party
The Directors do not consider there to be one ultimate
controlling party and the significant shareholders have been
disclosed in the Directors' Report.
28. Related party transactions
Transactions with subsidiaries/related parties
30 June 31 Dec
2022 2020
GBP'000 GBP'000
Amounts owed to related parties:
Gold Mineral Resources Limited (GMRL) - 8,433
Caracal Investments Limited 8 -
Amounts due from related parties:
Kilimapesa Gold 6,997 -
In prior year KPGL had been granted loans from its Holding
Company, GMRL. Interest was charged at 1% per annum. No interest
has been charged since the loan was reassigned. The loan is
unsecured and has no maturity date and is denominated in USD. This
loan was transferred to MGIL as part of the Reverse Acquisition
(see note 5).
Transactions with Key Management Personnel
Directors remuneration is set out in the Remuneration Report and
note 9 to these accounts.
During the period ended 30 June 2022 (Year ended 31 December
2020 in prior year) the Directors received consultancy fees through
the following companies:
Directors Company 2022 Fees 2020 Fees
Paid Paid
GBP'000 GBP'000
James Longley James Longley Limited 156 80
Charles Tatnall Tatbels Limited 146 80
During the prior year the Company received loans of GBP112,365
(2019: GBP8,915) from Fandango Holdings PLC at a rate of 5% per
month payable upon demand. The amount of interest accrued at the
year ended amounted to GBP24,792. Charles Tatnall is a director of
Fandango Holdings PLC.
During the prior year ended the Company received loans totalling
of GBP150,879 (2019: GBP57,000) from Stranger Holdings PLC at an
interest rate of 5% per month. The amount of interest accrued at
the year ended amounted to GBP 70,384. Both Charles Tatnall and
James Longley are directors of Stranger Holdings PLC.
On 5 January 2021 as part of a standstill agreement between
Fandango Holdings PLC, Stranger Holdings PLC and Papillon Holdings
PLC it was agreed that no further interest would accrue on any of
the borrowings from the two companies, that the total amount of
capital and interest due to Stranger Holdings PLC would be assigned
to Fandango Holdings PLC and that the revised total amount due to
Fandango Holdings PLC of GBP381,332 comprising capital and accrued
interest would be converted into 38,133,261 new ordinary shares of
1 pence each in the company. This allotment of new shares took
place on 31 August 2022 as part of the reverse acquisition of
KPG.
During the prior year ended 31 December 2020 the Company
received an interest free loan of GBP65,000 from Plutus Energy
Limited payable upon demand. James Longley and Charles Tatnall are
also the directors of Plutus Energy Limited. This was all paid back
by 30 June 2022.
Medini Rwanda Pty Limited received 98.5 million consideration
shares at GBP0.01 per share and Mansa Capital Limited received 5
million ordinary shares at GBP0.01 per share in lieu of cash as
part of an introducers fee in relation to the reverse acquisition
of KPG. Robbie McCrae is a director and has overall control of both
companies.
Theseus Enterprises Limited received 55.3 million consideration
shares at GBP0.01 per share in relation to the reverse acquisition
of KPG. Gerard Kisbey-Green is a director and has overall control
of said company.
KPG directors, due to the nature of the reverse acquisition, are
considered to be related parties. These directors, that are not
also directors of Caracal Gold are disclosed below:
Emoluments Share-based Total
payments
Directors 2022 2022 2022 2020
GBP'000 GBP'000 GBP'000 GBP'000
J Brewer 90 8 98 -
LK Biwott 10 - 10 23
R Shikuko 33 - 33 -
Gathoni Muchani Investments Limited received 15.9 million
ordinary shares at GBP0.01 per share in lieu of cash as part of an
introducers fee in relation to the reverse acquisition of KPG.
Jason Brewer, a director of KPG is also a significant shareholder
of said company.
Management Warrants and Performance Shares
The following awards were made to related parties - see note 5
for the performance related conditions relating to these
awards.
Directors Number Number Value of Performance Value of Management
of Performance of Management shares included warrants included
Shares awarded warrants in deferred in the share-based
awarded consideration payments in
the period
GBP'000 GBP'000
S Games-Thomas - 15,000,000 8 -
James Longley 18,750,000 30,000,000 17 178
Charles Tatnall 18,750,000 30,000,000 17 178
G Kisbey-Green 30,000,000 30,000,000 17 285
R McCrae 30,000,000 30,000,000 17 285
J Brewer 52,500,000 15,000,000 8 499
---------------- --------------- --------------------- --------------------
150,000,000 150,000,000 84 1,425
---------------- --------------- --------------------- --------------------
29. Events after the reporting period
On 3 August 2022, the Company paid GBP343,308 as part of the
final consideration for the purchase of Tyacks. The final payment
of GBP482,155 is still due to be paid These amounts have been
accounted for as a deferred consideration creditor in the
accounts.
On 18 July 2022, the Company entered into a Convertible Loan
Note Instrument with Koenig Vermoegensvermaltungsgesellschaft MBH
("Koenig"), a company incorporated and registered in Germany, for
GBP2 million at an interest rate of 8% per annum. The conversion
price being agreed as GBP0.06 per Ordinary share, save that where
the price per ordinary share falls below GBP0.06, the conversion
price shall be 90% of the 10 day VWAP price of an ordinary share.
266m warrants were also issued to Koenig, at an exercise price of
GBP0.0085 and are exercisable for 2 years from the date of
grant.
**ENDS**
For further information visit www.caracalgold.com or contact the following:
Caracal Gold plc info@caracalgold.com
Robbie McCrae
VSA Capital Ltd
Financial Adviser and Joint Broker
Andrew Raca (Corporate Finance) +44 203 005 5000
-------------------------------
Clear Capital Markets Limited
Joint Broker +44 203 897 0981 / +44 203
Keith Swann / Jon Critchley 869 6086
-------------------------------
St Brides Partners Ltd caracal@stbridespartners.co.uk
Financial PR
Charlotte Page / Isabel de Salis
/ Isabelle Morris
-------------------------------
DGWA, the German Institute for info@dgwa.org
Asset and
Equity Allocation and Valuation
European Investor and Corporate
Relations Advisor
Katharina Löckinger
-------------------------------
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END
FR FSWEFAEESESF
(END) Dow Jones Newswires
November 09, 2022 02:00 ET (07:00 GMT)
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