TIDMTSTR
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No 596/2014
until the release of this announcement.
5 November 2020
TRI-STAR RESOURCES PLC
RESULTS FOR THE YEARED 31 DECEMBER 2019
Tri-Star Resources plc ("Tri-Star", "TSTR" or the "Company" and together with
its subsidiaries, the "Group") the independent metal processing and technology
company, is pleased to announce its audited financial results for the year
ended 31 December 2019. The Company's principal interest is an antimony and
gold production facility (the "SPMP Project" or the "Project") being developed
in Sohar, Sultanate of Oman by Strategic & Precious Metals Processing LLC
("SPMP"), an Omani company in which Tri-Star had a 40% equity interest in the
period, subsequently reduced to 16.3%.
The Company's Annual Report and Audited Financial Statements for the year ended
31 December 2019 will be posted to shareholders on 9 November 2020 and are also
available on the website.
The Company will announce details of its Annual General Meeting ("AGM") and
despatch the Notice of AGM to shareholders in due course. Given the current
restrictions on public gatherings, shareholders will not be permitted to attend
the AGM in person, other than for the purposes of establishing quorum, and each
of the Resolutions to be considered at the meeting will be voted on by way of a
poll.
CHAIRMAN'S STATEMENT
Introduction
The last 18 months have been a very frustrating period for TSTR or the
"Company"). SPMP, TSTR's sole investment has achieved a number of important
milestones but there have been significant delays, costs continue to increase
and the funding of SPMP has looked uncertain.
On the positive side, SPMP produced and sold its first batches of antimony
metal and of gold dore and has been operating individual parts of the plant for
short periods at 50% of capacity. This proved that the plant was capable of
producing in small quantities but efforts to ramp up production have been
hampered in part by the continued lack of funding for SPMP.
Delays over several years have meant that the total funding required to
complete the plant has increased enormously. TSTR has not invested further in
SPMP since 2018 and SPMP has been seeking debt finance from both domestic and
international institutions from the middle of the year 2019. By the end of
2019, it was clear that SPMP would need to rely upon funding from local banks
rather than international ones.
At the end of 2019, a local institution ("Local Bank") had shown interest and
SPMP was actively engaged with the bank to agree terms. However, it transpired
that the Local Bank was only prepared to lend on terms unacceptable to SPMP's
shareholders.
At the end of the year and in January 2020, Investment Authority Company LLC
(previously Oman Investment Fund Holding Company LLC) ("IAC") injected a
further USD32m in SPMP and DNR Industries Limited ("DNR") a further USD8m
("December 2019 Funding"). It had not been agreed with TSTR the terms on which
this funding would be made.
In April 2020, IAC instituted arbitration proceedings in order to try and force
the December 2019 Funding to be treated as equity on a valuation to be agreed
only after the event. TSTR had a veto right over this and, based on legal
advice, the Board were confident that it would prevail.
We continued to negotiate with our fellow shareholders in SPMP in order to find
an equitable solution in the knowledge that TSTR was unlikely to be able to
provide any future funding for SPMP. Circumstances were exacerbated as the
magnitude of the final funding required to complete the SPMP project was
uncertain and likely to increase. It was announced in January 2020 that SPMP
required further debt funding of cUSD120m comprising USD60m for rectification
costs and a further USD60m for working capital, (the "Funding Gap") in addition
to the substantial sums already invested by the shareholders of SPMP.
The Board is pleased to report that we have reached a settlement agreement with
IAC, DNR and SPMP (the "Settlement Agreement"), which provides greater
certainty of funding for SPMP, redresses the imbalance of the amounts invested
by the three shareholders and provides certainty over TSTR's shareholding going
forward with no further need for TSTR to finance SPMP.
It is the Board's view that this solution, whilst reducing the Company's equity
stake, greatly increases the chances of the shareholders of TSTR achieving a
liquidity event in the future. There was ultimately no alternative for TSTR
with the possibility of SPMP going into liquidation, at which point the TSTR
shareholders would receive nothing. The agreement that we have achieved is, in
the Board's view, a better result than would have been achieved through
arbitration which would have cost at least GBP250,000 in costs and fees; funds
that TSTR, absent this Settlement Agreement, does not have.
Investment to date
In January 2020 TSTR announced the Funding Gap referred to above, in addition
to the substantial sums already invested by the shareholders of TSTR and an
additional equity requirement of cUSD40m. Tri-Star's inability during 2019 and
2020 to make further investments pari passu with its shareholding in SPMP had
led to an imbalance of funding between the shareholders of SPMP. As a result,
TSTR's investment in all forms comprises approximately 16.3% of the total
amount invested to date of cUSD206m, the balance being provided by IAC and DNR.
The Settlement Agreement
Over the last few months, Tri-Star and its joint venture partners have been in
discussions to find a resolution to the dispute. These concluded on 1 November
2020 with a settlement agreement between the parties embracing a number of
constitutional and financial changes. In broad terms, IAC and DNR have agreed
to provide sufficient further funding in order for the plant to reach
completion, without further equity dilution to TSTR and that all sums invested
to date are converted into equity and equity loans ("Equity Loans")
proportionately. The Equity Loans are zero coupon, undated and repayable at the
option of SPMP, subordinated but ranking above equity.
As a result of the Settlement Agreement, TSTR's investment in SPMP will
comprise equity of USD 2.6m (16.3% of total equity) and Equity Loans of USD30.8
million (16.3% of the total Equity Loans). The balance is held by IAS and
DNR. Each shareholder of SPMP owns an equal percentage of equity and equity
loans, such that their proportion of equity to Equity Loans is the same.
Tri-Star's claim to a final USD2m payment due from the assignment of the
intellectual property rights to SPMP has been settled by USD500,000 payable in
cash and the balance forming part of TSTR's total funding of SPMP. A further
sum of USD100,000 representing settlement for other outstanding amounts will
also be paid in cash to TSTR by SPMP.
It is envisaged that future SPMP funding until plant completion will be sought
first from third party sources; failing that, shareholders may fund SPMP with
subordinated non-convertible debt with a coupon of 20% ("New Loans"). IAC has
agreed to fund TSTR's share thereby avoiding dilution of TSTR's equity
interest. Of the Funding Gap noted above, USD40m has already been provided as
equity and equity loans. The balance, and any extra funding needed, is likely
to be provided in the form of New Loans at a rate of 20% interest.
TSTR's interest may only be diluted if shareholders with 75% or more of the
voting rights agree (which currently requires at least 2 shareholders): a) that
capital is required to expand the project in a material way; b) to apply for a
listing on a recognised stock exchange which results in the free float being at
least 25% of the issued share capital; c) that an independent third party
investor injects equity in the business on an arms-length basis; or d) in order
to continue compliance with bank facility covenants, the banks require any of
the New Loans to be converted to equity.
In the light of the change in shareholdings, it has been agreed that TSTR will
no longer have a seat on the board of SPMP, neither will it have any veto
rights over previously reserved matters, which will now require the consent of
shareholders holding 75% or more of the voting rights, i.e. at least two
shareholders.
The bank guarantee provided by TSTR, IAC and DNR in favour of Bank Nizwa and
Alizz Islamic Bank remains in place, although all parties have agreed to seek
to renegotiate the terms to ensure that it is released once the plant is
commissioned. TSTR's exposure to the guarantee has been reduced to reflect its
decreased shareholding of 16.3%. As a result of the Settlement Agreement,
which provides for the ongoing funding of SPMP, it is the Board's view that the
risk of the guarantee being called has been significantly reduced. The current
expected date of completion of the plant is in H1 2021 at which point the
guarantee should be expunged.
Total exposure to Bank Nizwa and Alizz Bank at 31 December 2020 stood at
USD57.3m.
Odey Loan
It has been agreed that interest on the Odey loan to TSTR will reduce to 5% on
completion of the Settlement Agreement. At 30 September 2020 the loan stood at
USD2.3m.
Cancellation of admission to AIM
As a result of the Settlement Agreement, TSTR will become a passive investor in
SPMP. Accordingly, the Board is of the view that the costs involved in keeping
TSTR admitted to AIM are not warranted. Accordingly, a shareholder circular
will be sent shortly to all shareholders recommending that TSTR's admission to
AIM is cancelled. It is intended that arrangements will be made for matched
market transactions to take place.
As a result of the Settlement Agreement, TSTR will receive cash of USD600,000.
Subject to the cancellation being approved by TSTR shareholders at a general
meeting, the current board will resign. A single director will be appointed and
running costs will be reduced to a minimum which are expected to be less than GBP
50,000 per annum.
Financial Summary
I am pleased to report that the Board has continued to reduce the overheads of
the Company, from GBP842,000 in 2018 to GBP485,000. The Company's current year
total comprehensive loss of GBP6.4m (2018: GBP1.5m) reflects the fair value
movement of our loan to SPMP of GBP5.4m. In October 2019 the Company raised GBP
316,000 (before expenses) for general working capital. A dividend payment is
not being recommended at this time.
Outlook and Summary
I am aware that this may not be the outcome that some shareholders had
envisaged, but I do believe that we will have a liquidity event in the
foreseeable future and I hope this will give shareholders the opportunity to
either receive a cash payment or shares in a listed SPMP.
I would like to thank our partners, the management team and our shareholders
for their dedication, commitment and efforts during this difficult time.
Adrian Collins
Non-Executive Chairman
Strategic Report
Introduction
The Company's principal activities are in the SPMP Project, an antimony and
gold production facility. The SPMP Project is based in Sohar, Sultanate of
Oman, and is being developed by SPMP, an Omani company in which TSTR had a 40%
equity interest at 31 December 2019, subsequently reduced to 16.3%.
SPMP Project
Background
The SPMP Project is a commercial facility producing high grade antimony ingots,
powdered antimony trioxides ("ATO"), gypsum and gold ore bars. Feedstock is
sourced internationally and treated by an environmentally friendly roasting
process.
The Project remains an attractive prospect for Tri-Star:
* Scale: The Project is the largest antimony roaster outside of China and the
world's first clean plant, designed to EU environmental standards. It is
designed to have the capacity to produce more than 50,000 oz. of gold per
annum and 20,000 tonnes in combined antimony metal and ATO products which
represents 12%-15% of average annual world antimony production and will
thus establish Oman as a major global producer of antimony.
* Earnings: The Project is forecast to generate significant revenues, divided
approximately 60:40 between antimony and gold but dependent on blend of
ores sourced.
* Technology: The Project applies a proprietary antimony and gold roasting
technology that is flexible and sophisticated enough to be able to process
many types of grade and impurities. There is potential for adaptation for
treatment of other metal ores.
* Logistics: The Project will supply value added antimony products to
customers across the globe. The location of the Project in the Gulf region
provides an excellent centralised logistics route, and access to relatively
inexpensive energy and modern infrastructure.
* Demand for product: Antimony is a rare metal with a range of industrial
applications. Amongst other things it is used as an additive to flame
retardant compounds, utilised in printed circuit boards, computers and
other electronic products. Antimony has consistently ranked highly in
European and US risk lists for supply of chemical elements or element
groups required to maintain the current economy and lifestyle.
* Refractory gold is gold 'ore', where the metal is trapped in sulphide
lattice structures that conventional processes are unable to extract. The
clean antimony roasting technology developed by Tri-Star and sold to SPMP
in 2015 has unlocked the potential of these gold resources, estimated to be
30% - 50% of remaining gold in the ground globally.
* Board: SPMP has an experienced and internationally focused Board of
Directors who have helped manage the project from inception through to near
completion.
Oman joint venture
SPMP was formed in June 2014 to develop and build the Project. Initially
Tri-Star had a 40% equity interest in SPMP, with the other joint venture
partners being The Oman Investment Fund ("OIF") (40% equity holder) and DNR
Industries Limited, part of Dutco Group in Dubai (20% equity holder).
An emerging application is the use of antimony in microelectronics.
Other Tri-Star projects
Canada
The Company owns 100% of Tri-Star Antimony Canada. Through this Canadian
subsidiary, the Company owns a license to explore the land of a large
undeveloped antimony project in Canada ("Bald Hill deposit"). Tri-Star does not
intend to renew this licence, which expired in May 2020.
Turkey
The Company disposed of its non-core asset Göynük mine in Turkey for a total
cash consideration of USD $0.5m (of which $0.1m is due on first product sales),
which was completed in March 2019.
Financing
In October 2019 Tri-Star completed a placing of 987,500 ordinary shares at 32
pence per share raising GBP316,000 before expenses for general working capital.
Result for the year
Administration costs were reduced by 42% in 2019 to GBP486,000 from GBP842,000 in
2018. This reduction reflects the cost savings measures implemented by the
Board.
2019 2018
Summary Profit and Loss Account GBP'000 GBP'000
Share based payments (224) (580)
Reversal of impairment - 244
Administrative expenses (486) (842)
Loss from operations (710) (1,178)
Movement in the fair value of financial asset (5,404) 293
Finance expense net (312) (624)
Loss before taxation (6,426) (1,509)
In accordance with IFRS 9, the fair value of the mezzanine loan from TSTR to
SPMP (the "SPMP Mezzanine Loan") has been derived using a net present value
calculation in which an effective discount rate of 23% has been applied. At 31
December 2019, it looked unlikely that SPMP would be in a position to repay the
loan in December 2022 and thus would be likely to default and, therefore, it is
assumed that the mezzanine would be converted into equity at the earliest
possible date, which is December 2023. The potential value of SPMP has been
assessed using cashflow forecasts prepared by SPMP to which an effective
discount rate of 23% has been applied. Tri-Star's investment in SPMP has been
reduced to 16.3% and Tri-Star no longer has significant influence over the
operations
Financial position
At 31 December 2019 the Company had GBP284,000 (2018: GBP312,000) in cash, total
assets of GBP15,662,000 (2018: GBP21,284,000), and total liabilities of GBP1,581,000
(2018: GBP1,331,000). As at 31 October 2020, the Company had GBP12,000 in cash,
with funds of USD$600,000 due from SPMP by 15 November 2020 under the
Settlement Agreement signed on 1 November 2020.
Key Performance Indicators ("KPIs")
At this stage in the Company's development, the key performance indicator is
the loss after tax, given the nature of the Company's assets and the current
development of its operations. This will be reviewed when appropriate.
Safety, health and environmental policies
Tri-Star is committed to meeting international best industrial practice in each
jurisdiction in which it operates with respect to human rights, safety, health
and environmental ("SHE") policies. Management, employees and contractors are
governed by, and required to comply with, Tri-Star's SHE policies as well as
all applicable international, national federal, provincial and municipal
legislations and regulations. It is the primary responsibility of the
supervisors and other senior field staff of Tri-Star and its subsidiaries to
oversee safe work practices and ensure that rules, regulations, policies and
procedures are being followed.
Principal risks and uncertainties
The Board continually reviews the risks facing the Company. The Company is not
yet revenue generating. The principal risks and uncertainties facing the
Company involve delays to the commissioning and ramp up of the SPMP Project
which may, in turn, lead to delays in repaying the TSTR equity loan. Delays can
be caused by construction issues, design failures or technological problems. At
the same time, as a processing plant, SPMP requires successful partnerships
with suppliers of metal ores and with Offtake providers or distributors to buy
the plant's output. The availability of such partners and the terms of
engagement may impact plant operations and profitability. The SPMP Project has
had recent setbacks and the timing and progress is not under the direct control
of Tri-Star. In terms of other more significant but lower probability risks,
there is the matter of political risk within Oman, and internationally.
Other risks and uncertainties are set out in the Corporate Governance section
below.
Financial risk management objectives and policies
The Company's principal financial instruments comprise of cash, loan notes and
other financial liabilities. The Company has various other financial
instruments such as loans and trade payables, which arise directly from its
operations.
It is, and has been throughout the year under review, the Company's policy that
no trading in financial instruments shall be undertaken. The main risks arising
from the Company's financial instruments are liquidity risk, price risk and
foreign exchange risk. The Board reviews and agrees policies for managing each
of these risks and they are summarised under Corporate Governance below.
Going concern
The Directors have prepared cash flow forecasts for the period ending December
2021. Subsequent to the signing of the Settlement Agreement with the
shareholders of SPMP as discussed in the Chairman's statement the Company is
due to receive USD $600,000, and the holders of the secured loan notes have
agreed to extend the term of the notes to 31 December 2021. With the
significant reduction in costs as a result of delisting (and taking the company
private), the cash flow forecasts indicate that the Company will require
approximately GBP350,000 to meet its liabilities as they fall due in the period.
The Directors' have considered the possible effects of Covid-19 but do not
expect any significant impact from this.
Accordingly, the Directors believe that it is appropriate to prepare the
financial statements on a going concern basis.
However, there is an outstanding guarantee from the Company in favour of local
banks in respect of a loan to SPMP, and although the Directors are confident
that this will not be called upon, there is no certainty of this. Whilst
Tri-Star's potential liability has been reduced as a result of signing the
recent Settlement Agreement, if the guarantee is called upon, it could render
the Company unable to pay its debts as they fall due and the existence of this
guarantee therefore presents a material uncertainty which may cast significant
doubt on the Company's ability to continue as a going concern.
Approval by and signature on behalf of the board
David Facey
Chief Executive Officer & Chief Financial Officer
Enquiries:
Tri-Star Resources plc c/o SBP
David Facey, CEO/ CFO Tel: +44 (0)20 7236 1177
St Brides Partners (Financial PR)
Isabel de Salis / Beth Melluish Tel: +44 (0)20 7236 1177
SP Angel Corporate Finance (Nominated
Adviser) Tel: +44 (0)20 3470 0470
Jeff Keating/ Caroline Rowe
finnCap Ltd (Broker)
Christopher Raggett Tel: +44 (0)20 7220 0500
Tri-Star Resources plc
Statement of Comprehensive Income
For the year ended 31 December 2019 Notes 2019 2018
GBP'000 GBP'000
Share based payments (224) (580)
Reversal of impairment of investment - 244
in subsidiary
Administrative expenses (486) (842)
Total administrative expenses (710) (1,178)
Loss from operations (710) (1,178)
Movement in fair value of financial (5,404) 293
asset
Finance income 2 1 43
Finance cost 2 (313) (667)
Loss before taxation (6,426) (1,509)
Taxation 3 18 48
Loss after taxation, and loss (6,408) (1,461)
attributable to the equity holders of
the Company
Other comprehensive expenditure
Items that will be reclassified
subsequently to profit and loss
Other comprehensive income for the
period, net of tax - -
Total comprehensive loss for the year, (6,408) (1,461)
attributable to owners of the company
Loss per share
Basic and diluted loss per share 4 (6.79) (1.90)
(pence)
Tri-Star Resources plc
Statement of Financial Position
As at 31 December 2019 2019 2018
ASSETS Notes GBP'000 GBP'000
Non-current
Investment in subsidiary 247
-
Investment in associates 3,893 3,893
Loan to associate held at fair 5 11,400 16,727
value through profit and loss
15,293 20,867
Current
Cash and cash equivalents 284 312
Trade and other receivables 85 105
Total current assets 369
417
Total assets 15,662 21,284
LIABILITIES
Current
Trade and other payables 92 91
Short term loans 1,396 1,129
Total current liabilities 1,488 1,220
Non-current loans
Deferred tax liability 93 111
Total liabilities 1,581 1,331
EQUITY
Issued share capital 6,936 6,884
Share premium 45,104 44,816
Share based payment reserve 1,811 1,671
Retained earnings (39,770) (33,418)
Total equity 14,081 19,953
Total equity and liabilities 15,662 21,284
Tri-Star Resources plc
Statement of Changes in Equity
Share Share Share based Retained Total
capital premium payment earnings equity
reserves
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2018 3,160 31,347 1,105 (31,957) 3,655
Issue of share capital 3,724 13,711 - - 17,435
Share issue costs - (242) - - (242)
Share based payments - - 566 - 566
Transactions with owners 13,469 566
3,724 - 17,759
Loss for the period - - - (1,461) (1,461)
Total comprehensive loss (1,461) (1,461)
for the period - - -
Balance at 31 December 6,884 44,816 1,671 (33,418) 19,953
2018
Issue of share capital 52 292 - - 344
Share issue costs - (4) - - (4)
Transfer on lapse of - - (56) 56 -
warrants
Share based payments - - 196 - -
Transactions with owners 140
52 288 56 536
Loss for the period - - - (6,408) (6,408)
Total comprehensive loss (6,408) (6,408)
for the period - - -
Balance at 31 December 6,936 45,104 1,811 (39,770) 14,081
2019
Tri-Star Resources plc
Statement of Cashflows
For the year ended 31 December 2019 2019 2018
GBP'000 GBP'000
Cash flow from operating activities
Continuing operations
Loss after taxation (6,408) (1,461)
Depreciation - 12
Impairment reversal - (244)
Finance income (1) (43)
Finance cost 313 667
Movement on fair value of financial asset 5,404 (293)
Fees paid by shares 28 15
Share based payments 196 565
Decrease/(increase) in trade and other 20 (14)
receivables
(Decrease)/increase in trade and other payables (17) (1)
Net cash (outflow) from operating activities (465) (797)
Cash flows from investing activities
Finance income 1 43
Loans made to associate (77) (12,698)
Net receipts on sale of subsidiary 247 -
Net cash inflow/(outflow) from investing 172 (12,655)
activities
Cash flows from financing activities
Proceeds from issue of share capital 316 17,420
Share issue costs (4) (242)
Finance costs - (491)
Loans repaid - (3,560)
Net cash inflow from financing activities 312
13,127
Net change in cash and cash equivalents 18 (325)
Cash and cash equivalents at beginning of period 312 473
Exchange differences on cash and cash equivalents (46) 164
Cash and cash equivalents at end of period 284 312
BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention except for the loan to associate and derivative financial instrument
which is at fair value and in accordance with International Financial Reporting
Standards as adopted by the European Union ("IFRS"), and in accordance with the
Companies Act 2006.
The Company's ordinary shares are quoted on AIM, a market operated by the
London Stock Exchange. The Company applies the Companies Act 2006 when
preparing its annual financial statements. The Company has taken advantage of
the exemption under S402-405 of the Companies Act, to not prepare Group
accounts as the subsidiary companies are considered to be immaterial. The
comparative accounts for 31 December 2018 also relate to the Company only.
The Company financial statements have been prepared under IFRS and in
accordance with the Companies Act 2006.
NOTES TO THE FINANCIAL STATEMENTS
1. SEGMENTAL REPORTING
An operating segment is a distinguishable component of the Group that engages
in business activities from which it may earn revenues and incur expenses,
whose operating results are regularly reviewed by the Group's chief operating
decision maker to make decisions about the allocation of resources and an
assessment of performance and about which discrete financial information is
available.
The Board considers that the Group comprises only one operating segment, that
of its investment in SPMP.
In respect of the non-current assets, GBP15,293,000 (2018: GBP20,867,000) arise in
the UK, and GBPNil (2018: GBPNil) arise in the rest of the world.
1. FINANCE INCOME AND COSTS
2019 2018
GBP'000 GBP'000
Finance income
Bank interest 1 43
1 43
2019 2018
GBP'000 GBP'000
Finance costs
Interest and fees payable on short term 313 667
loans
313 667
1. TAXATION
Unrelieved tax losses of approximately GBP11.9 million (2018: GBP6.1 million) are
available to offset against future taxable trading profits. The related
deferred tax asset arising at 31 December 2019 is GBP2,260,000 (2018: GBP1,147,000)
and has not been provided on the grounds that it is uncertain when taxable
profits will be generated by the Group to utilise those losses.
The tax credit for the Group for the year comprises:
2019 2018
GBP'000 GBP'000
Research and development taxation relief
- 29
Deferred tax relief in respect of 18 19
transition to IFRS
18 48
The tax assessed for the period differs from the standard rate of corporation
tax in the UK as follows:
2019 2018
GBP'000 GBP'000
Loss before taxation (6,426) (1,509)
Loss multiplied by standard rate (1,221) (287)
of corporation tax in the UK of 19%
(2018: 19%)
Effect of:
Expenses not deductible for tax purposes 44 179
R&D tax rebate - (29)
Interest disallowed 60 127
Deferred losses (13) -
Unrelieved tax losses 1,113 233
Total tax credit for year (18) 48
1. LOSS PER SHARE
The calculation of the basic loss per share is based on the loss attributable
to ordinary shareholders divided by the weighted average number of ordinary
shares in issue during the period.
2019 2018
GBP'000 GBP'000
(Loss) attributable to owners of the Company (6,408) (1,461)
after tax
2019 2018
Number Number
Weighted average number of ordinary shares
for calculating basic loss per share 94,318,114 76,820,518
2019 2018
Pence Pence
Basic and diluted loss per share (6.79) (1.90)
Dilutive earnings per share is the same as basic loss per share in each year
because the potential shares arising under the share option scheme and share
warrants are anti-dilutive. The weighted average number of ordinary shares
excludes deferred shares which have no voting rights and no entitlement to a
dividend.
5 LOANS RECEIVABLE HELD AT FAIR VALUE THROUGH PROFIT OR LOSS
Loans receivable represent the USD $6 (GBP4.4) million mezzanine loan which the
Company advanced to SPMP as announced on 29 November 2017 and the further
amounts of USD $16,700,000 (GBP12,700,000) advanced during 2018, and $100,000 (GBP
77,000) advanced during 2019. The principal terms of the loan are as follows:
* An interest rate of 15% per annum compounded, payable in full on redemption
of the loan;
* Ranks pari passu with the existing mezzanine loans already in place at
SPMP;
* Loan term of five years from December 2017, with SPMP having the option to
redeem (with accrued interest to date) from the third anniversary of
drawdown.
* There is an option to convert the loan into shares if it remains
outstanding for 12 months after the due date at 80% of the fair value of
the shares.
The loan has been measured at fair value. In accordance with IFRS 9, the fair
value of the mezzanine loan from TSTR to SPMP (the "SPMP Mezzanine Loan") has
been derived using a net present value calculation in which an effective
discount rate of 23% has been applied. The Mezzanine Loan is assumed to be
converted to equity in December 2023. The fair value at 31 December 2018 was GBP
16,727,000, a fair value movement of GBP5,404,000 was recorded and GBP77,000 was
invested in the year, giving a fair value of GBP11,400,000 at 31 December 2019.
The principal estimates and judgements policy provides further details of the
fair value calculation. The terms of the loan have been changed since the year
end as described in the Chairman's statement.
6 ANNUAL REPORT AND ACCOUNTS
The financial information set out in this announcement does not constitute
statutory accounts as defined in Section 434 of the Companies Act 2006.
The Statement of Financial position at 31 December 2019, the Statement of
Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows
and associated notes for the year then ended have been extracted from the
Group's 2019 financial statements upon which the auditor's opinion is
unqualified and does not include any statement under Section 498(2) or (3) of
the Companies Act 2006. Whilst the auditor's opinion is unqualified, their
report does contain a material uncertainty relating to going concern, as set
out in the going concern paragraph in this announcement.
The accounts for the year ended 31 December 2019 will be posted to shareholders
shortly and laid before the Company at the Annual General Meeting. Following
publication, a copy of the accounts will also be available on the Company's
website (www.tri-starresources.com) in accordance with AIM Rule 26, and will be
delivered to the Registrar of Companies in due course.
END
(END) Dow Jones Newswires
November 05, 2020 02:00 ET (07:00 GMT)
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