31 March
2023
LSE: PRE
Pensana Plc
(“Pensana”, “the company” or “the
group”)
Unaudited Interim
results for the six months ended 31 December
2022
The board is pleased to present its review of Pensana Plc, the
rare earth exploration, mining and processing group, whose flagship
development assets are the Saltend rare earth processing hub in the
UK and the Longonjo NdPr Project in Angola.
Half Year Highlights
- UK Critical Minerals Strategy launched at Saltend’s
Ground-breaking Ceremony.
- Early-stage construction programmes initiated on-site for each
of the Saltend and Longonjo projects.
- Offtake MOU for 25% of Saltend's annual production entered into
with a strategic major non-Chinese industry player.
- Collaboration with Polestar to create the first truly
climate-neutral car by 2030.
- Completion of the Ore Reserve Estimate undertaken by Snowden
Optiro over both the Longonjo and Saltend operations in support of
a 20-year life of mine.
- Trench and pit analytical results from Sulima West laterised
carbonatite within the Coola exploration project reported with high
rare earth grades over significant widths at surface.
- Angolan Sovereign Wealth Fund invests further US$10 million.
- Appointment of leading industry expert, Alison Saxby, as Independent Non-Executive
Director.
- Letter of intent signed with Yorkshire Energy Park securing
private wire connection to battery storage operated by Yorkshire
Energy Park under which it will have access to 4 MW rising to 10 MW
of low carbon electricity for 10 years.
- Pensana blueprint for Sustainable Rare Earths published in
September 2022.
- Total comprehensive loss for the period of US$4,218,451 (31 December
2021: US$4,235,572).
Post period-end
- Successful institutional equity placing of US$4 million with M&G in January 2023, one of the UK’s largest fund
managers and a long-standing Pensana shareholder.
- The company has been engaging and progressing with a major
potential strategic investor and an African based resource fund for
several months. Delivery would secure immediate term funding
that is required as well as longer term investment, although such
funding remains uncommitted.
CEO’s Review
Mobilization of Project Delivery Teams for each of the Saltend
and Longonjo projects took place in November 2022. Detailed
due diligence by several potential strategic investors have kept
the Pensana teams engaged on multiple work fronts over the period.
This has played out against a broader macroeconomic backdrop of
ever-increasing strategic interest from industrial sectors on
critical minerals strategy and the establishment of independent,
sustainable resilient European and US magnet metal supply chains.
Pensana is at the forefront of tackling these challenges. By
establishing a supply chain to the highest international standards,
we will be able to provide our customers with the sustainability
assurances they need.
Saltend
At Saltend, the company’s principal contractor, Wood, oversaw
Yorkshire Water's nominated contractor for the relocation of
existing pipework along the site’s western boundary. This was
completed in January 2023 as part of
the activities to enable the main contractual works to commence in
2023.
The contracts for the earthworks were assessed and are ready for
award pending conclusion of financing. Ahead of this, Pensana has
strengthened its owners' team including the appointment of
construction manager, Mark O’Rourke.
Construction offices, security and welfare cabins and the
development of the site access locations were established in
support of the early site-works. Engineering design by Saltend
Chemicals Park owner operators Px Group continued finalizing the
outside battery limits reticulation to support the supply of
services including power, water, compressed air, natural gas, steam
and effluent treatment.
During the period we announced the signing of a letter of intent
securing private wire connection to battery storage to be operated
by Yorkshire Energy Park under which it will have access to 4 MW
rising to 10 MW of low carbon electricity for 10 years. This future
low-cost supply of low-carbon electricity may power the Saltend
separation facility expansion plans including the conversion of
NdPr Oxide into magnet metal, this use of offshore wind to produce
ultra-low carbon magnet metal will be a significant step to further
decarbonize the rare earth supply chain. The Yorkshire Energy Park
will include up to 200 MW of battery storage and is located
adjacent to Pensana’s site within the Saltend Chemicals Park. The
£200m next-generation energy facility will connect 7 GW of offshore
wind to industrial consumers via large-scale batteries. The closest
wind farm is the RWE-operated Humber Gateway located 32 kilometres
from Saltend.
Longonjo
The Longonjo earthworks and civils contractor, Grupo Nov,
mobilised to site over the period. Ground clearing of the area for
the main construction camp has been undertaken. The fabrication of
the construction camp buildings by Bushtec at their plant in
South Africa, was completed and is
scheduled for delivery to site during Q2 2023. Kick-off site
sessions were held with the sub-contractors appointed for site
electrical reticulation (Electra) and main HT/LT sub-stations
(Enerline), who completed their pre-mobilisation site inspections
alongside the Pensana owners’ team. Contractors associated with the
process water supply (ERM), tailings storage facilities (SRK), and
waste management services (AES) have participated as part of the
ongoing detailed design development workstreams.
Under the Stakeholder Engagement Program, updates on the
Longonjo site activities were presented by Project Director,
Kevin Botha, to the Governor of
Huambo and the Longonjo Administrator. Sessions were further held
with Port of Lobito operations and local suppliers of construction
materials to confirm arrangements for the main construction
requirements.
Angola
Positive developments continue in the region with Angola, Zambia, and Democratic Republic of Congo (DRC) having
taken major steps to create a trade corridor that could transform
how the region’s resources are shipped. The three countries have
agreed to joint management of a trade corridor to and from the
Atlantic Ocean port of Lobito, recently concessioned to Portuguese
infrastructure group Mota-Engil for a $450
million mining upgrade. Transport ministers for the three
countries have signed an agreement to facilitate the Lobito
Corridor, which will connect the Atlantic Ocean port of Lobito in
Angola with mining hinterlands.
The Lobito Corridor will cross Angola and link up with the mining areas of
Katanga province in the DRC and the Copperbelt in Zambia. Harmonising regulations on the
corridor and developing infrastructure would allow the three
countries to transport metals used to make electric vehicles and
wind turbines from inland mines to port, cutting transport times
from weeks to days.
Environment Social Governance
(ESG)
Pensana can provide our customers with the assurances they need,
firstly in terms of ESG transparency and secondly in terms of
supply chain resilience, by establishing an independent and
sustainable supply chain with a commitment to embedding deep and
meaningful carbon reduction across the value chain.
In the six months ending 31 December
2022, Pensana has launched its blueprint for Sustainable
Rare Earths (www.pensana.co.uk/sustainability). This is a strategic
document in which the business has committed to achieving eleven
specific ambitions across the business’s four ESG workstreams, i.e.
carbon and climate; environment; colleagues and community; and
strong corporate governance. The Blueprint enshrines Pensana’s
commitments to developing a sustainable and low carbon supply chain
through clear ambitions to produce the lowest carbon rare earth
products and to be net zero throughout its value chain no later
than 2040.
Progress continues on ESG workstreams in Angola. The business has in the period
appointed an experienced resettlement action plan (RAP) manager to
coordinate delivery of the RAP. This supplements the experienced
in-house team and the agricultural expertise being provided by
Vuna-Agri. Phase one of the RAP has been delivered and 28
project-affected households were moved onto mutually-agreed
transitional support. Pensana’s commitment to ensure direct
long-term economic benefit to Longonjo’s local communities is
progressing well. Demonstration farming multiple-purpose plots has
been developed on a dedicated area targeting livelihood
restoration. This seeks to demonstrate increased yields and crop
optimisation, providing food security for the Longonjo operations,
providing a test environment for effective landscape restoration
practices and delivering economic benefit to the region. The
demonstration plots also allow Pensana to review the most
successful strategies to increase and enhance the natural habitat,
with the aim of overall biodiversity net gain.
ESG embedded work continues on our Saltend project, including
the development of strong community relations with universities,
elected officials and the local community along with the continued
discharge of the requirements of our planning consent and overall
environmental aims.
Release of Ore Estimate Report for
Longonjo and Saltend Operations
Pensana announced the completion of the Ore Reserve Estimate in
September 2022, which was undertaken
by Snowden Optiro over both the Longonjo and Saltend operations in
support of a 20-year life of mine (‘LoM”). The full Ore Reserve
Estimate report is available on the company’s website at
https://pensana.co.uk/company-reports/.
Pensana partners with Polestar to
create the world’s first climate-neutral car
In September 2022, it was
announced that Pensana was partnering with Polestar to create the
first truly climate-neutral car by 2030. The scope of the Polestar
0 project is to identify and eliminate all greenhouse gas emissions
from the extraction of raw materials to when the car is delivered
to the customer and onwards to the end of vehicle life. To achieve
this goal, Polestar has teamed up with like-minded partners across
the entire value chain, from raw material suppliers to retailers
and we have been delighted to have been invited to join this
significant collaboration.
Exploration
Exploration activities on the Coola License during the second
half of 2022 have been focused on the three highly prospective
targets (the Sulima West alkaline complex, the Benge Novo alkaline
complexes and the Coola carbonatite complex) identified.
Trench sampling of an extensive laterite surface developed at
Sulima West reported rare earth grades of up to 9.7% Total Rare
Earth Oxides (“TREO”), averaging 3.4% TREO over 68 meters at
surface. Individual samples from the other trenches reported grades
between 3.4 and 5.2% TREO, while pit sampling reported up to 5.2%
TREO, averaging 4.3% TREO over a vertical distance of 6 meters from
surface.
Samples of manganese from the laterite reported from 1.5% to 18%
Manganese Oxide (MnO), averaging 12% MnO, and regarded as
economically significant. Samples of this mineralized laterite have
been submitted for Mineral Liberation Analysis at SGS, South Africa.
Recent geological mapping at Sulima West identified a prominent
outcrop of supergene apatite occurring together with maghemite and
monazite. Initial representative sampling of this outcrop has
returned grades of 22% P2O5, 0.7% TREO and 49% Fe2O3. This is an
exceptional result, demonstrating that half of the rock consists of
apatite, and further samples of this material have been submitted
for Mineral Liberation Analysis at SGS, South Africa.
Reconnaissance mapping of the Benga Novo intrusion, immediately
to the north of the Sulima West complex, indicates a large almost
10 km alkaline intrusion largely covered by residual soils. Initial
mapping indicated potential for bauxite deposits, ionic clay type
Rare Earth Element (“REE”) deposits and direct application
fertilizers. Sampling results for bauxite returned lower than
expected values for Al2O3 (18-19%) and a lack of gibbsite or
boehmite. Analytical results for ionic-clay REE’s remain
outstanding.
Mineralogical studies of the banded dolomitic carbonatite at the
Coola carbonatite show the REE to be hosted in bastnaesite
(La/Ce/Y)Co3F, a fluorocarbonate mineral. The bastnaesite occurs as
thin veins, aggregates, and segregations within the fresh
carbonatite. Discrete grains have been observed in thin section up
to 3 mm in length. Rock chip sampling of this unit returned grades
of up to 4.9% TREO and a sample has been submitted for Mineral
Liberation Analysis at SGS, South
Africa. Auger drilling of the regolith within the central
diatreme was completed to a maximum depth of 5 metres. The auger
samples comprised essentially colluvial soils which showed only low
grades of REE, while the auger failed to penetrate an underlying
ferricrete horizon. These ferricrete horizons commonly form above
the saprolite and are therefore part of the upper regolith
developed above a carbonatite. The supergene REE mineralisation
potential of the complex thus remains to be drill tested with
deeper and more effective drilling and sampling scheduled for
2023.
Exploration activities on the Coola Exploration License were
halted in mid-November 2022 due to
heavy rainfall and seasonal flooding. Field work will recommence
once the rainy season is over in May and will include geophysical
survey of both Sulima West and the Coola Carbonatite, while
additional mapping, trenching, pitting, stream sediment, soil and
rock sampling is scheduled for Sulima West and Benga Novo.
Board and key company appointments
In August 2022, Alison Saxby joined the Board as an Independent
Non-Executive Director. Alison is an industry leading expert with
over 35 years of experience in industrial minerals and metals. Her
expertise includes pricing, deep market knowledge, research, and
communications, gained through consultancy projects, minerals
trading and commercial reports and has brought a further
significant skill set to our Board.
The company has also appointed experienced construction manager,
Mark O’Rourke to the owners’ team at Saltend.
Operational readiness
Recruitment of key operational personnel for both Saltend and
Longonjo has been a continuous area of focus over the period. The
intention is for key operators to be part of the construction
process to assist them with moving seamlessly into commissioning
and multiple initiatives have been implemented including the
partnering with Humber HR and multiple agencies to continue
sourcing and adding to our world-class rare-earth team.
Conflict in Ukraine
Russia’s invasion of Ukraine
has added increased concerns to an already constrained global
supply chain and rising inflationary pressures. The Group has no
direct exposure to the region, nor do we anticipate sourcing any
equipment or materials from the area, however we continue to
monitor the situation in the context of the contagion effect it is
having on Europe and the global
economy. The Board has agreed to incorporate specific measures
around procurement, the awarding of contracts and any associated
workstreams involving external third-party service providers to
ensure the Group is in no way exposed to countries on the sanctions
list.
Operating and Financial Review
During the period, the consolidated entity incurred a
comprehensive loss for the period of US$4,218,451 (31 December
2021: US$4,235,572 loss).
Administration expenses increased to US$4,160,865 (31 December
2021: US$3,670,738), this was
predominantly due to the full period effect of share-based payment
amortisation on awards issued in FY 2022.
The foreign currency exchange loss decreased from US$410,204 to US$42,468 for the six months ended 31 December 2022. These losses arise from the
settlement of invoices in currencies other than the functional
currencies (USD, GBP, AUD, AOA), as well as the translation of
balances denominated in currencies such as the pound, Australian
dollar, etc. to the US dollar, where the balances are held in
currencies other than the functional currency of the relevant
company and reflect the movements in these currencies during the
respective periods.
Group net assets increased in the period from US$39,635,285 at 30 June
2022 to US$45,834,652 at
31 December 2022. This
was mainly driven by an increase in property, plant and equipment
and exploration and evaluation expenditure of US$13,594,884, due to a ramp up in early
construction programmes at both the Longonjo (US$8,542,772) and Saltend (US$5,025,495) projects, as well as additions at
Coola (US$53,288). The loss of
US$4,203,333 incurred during the
period partially offset the increase in net assets.
The decrease in cash was due to cash spent on the Longonjo and
Saltend projects as mentioned above. This was partially
offset by an increase in funding following an equity raise in
August 2022 (US$10.0 million).
During the period the company embarked on several operational
readiness workstreams at the Saltend and Longonjo operations. To
ensure project momentum was maintained these workstreams continued
uninterrupted whilst ongoing financing was targeted for early Q2
2023. As a result of the timing mismatch between financing and
operational activities, the creditors as reflected at period end
were significantly higher than cash available. This was in main due
to costs associated with the Yorkshire Water pipeline that was
relocated at Saltend and the ongoing Wood engineering design
processes.
Post period end, the company raised funding via M&G in the
amount of US$4 million. This
was shortly followed by the company
entering
into a non-disclosable exclusivity period with a major strategic
mining house (the “Strategic”) during which time extensive due
diligence was carried out on the Group during Q3 FY2023 and
progressed to the point of Investment Committee review
status. The structure contemplated, looked to address the
immediate-term liquidity requirements to settle current creditor
balances, maintain project momentum whilst carrying out additional
testwork requested by the Strategic; to then be followed by a final
investment tranche to initiate project construction at both sites
subject to various conditions precedent. This process is still
subject to final Investment Committee approval from the Strategic
and completion of the transaction cannot be guaranteed at this
stage.
As an alternative and should the investment by the Strategic not
be approved by their Investment Committee or not proceed for any
other reason, the Board has further engaged with an African based
resource fund on the back of the Strategic’s exclusivity period
having recently expired. Their potential investment in the
company for an amount of approximately US$10
million would be used to address the immediate-term
liquidity requirements. The possibility of a further investment in
the form of equity and /or a debt-for-equity convertible note is
currently being considered. However, neither element of such
alternate funding can be guaranteed at this stage.
The Group experienced net cash outflows from operating
activities of US$2,818,626
(31 December 2021: US$4,204,325) with the decrease primarily
reflecting working capital movements.
Net cash outflows from investing activities of US$8,615,868 decreased from cash outflows of
US$11,407,586 for the six months to
31 December 2021, mainly due to an
increase in capex items locked up in working capital, due to the
timing of payment of invoices. Cash outflows for both periods
under review related to cash spent on additions to the Longonjo and
Saltend projects.
The increase in the cash inflows from financing activities from
US$3,360,677 for the six months ended
31 December 2021 to US$10,000,000 for the six months ended
31 December 2022 was due to the
increase in the proceeds from the issuance of equity.
The Directors have prepared a cash flow forecast for the period
to June 2024 from the date of this
report, together with assessment of events and circumstances in the
period beyond these forecasts. The forecast indicates that the
group requires additional funding over the next twelve months for
working capital and settlement of existing creditors as well as to
initiate the planned main construction phases at the Longonjo and
Saltend sites alongside the planned Coola exploration.
As at the date of this report the Group has approximately
US$0.2 million of cash and
US$9.1m of outstanding creditors in
relation to suppliers and, accordingly, the Group needs to secure
funding to settle these obligations in the immediate term. The
Group is dependent upon the continuing cooperation and forbearance
of those suppliers until such funding is secured.
Accordingly, the Directors are engaged with the Strategic which
would potentially see an investment of up to US$220 million subject to the required conditions
precedent being met. The transaction contemplated would involve an
initial conditional subscription for approximately US$10.8 million, followed by a further
subscription for approximately US$209.2
million, subject to further conditions precedent.
The first tranche of US$10.8million, if received in early April 2023 as planned will be applied initially
to the settlement of existing creditors and provision of short-term
working capital.
If the Strategic transaction contemplated does not receive the
necessary approval, the Board will look to place shares to the
value of approximately US$10 million
with an African based resource fund to address the immediate-term
liquidity requirements and address the settlement of the existing
creditors. The possibility of a second tranche of funding in the
form of equity and /or a debt-for-equity convertible note is
currently being considered.
The Board notes that the transactions set out above cannot be
guaranteed at this time.
Please refer note 3 to the financial statements for the going
concern statement which includes a material uncertainty in relation
to going concern.
Principal Business Risks
The Group is exposed to several risks and uncertainties which
could have a material impact on its long-term development, and
performance and management of these risks is an integral part of
the management of the Group. An overview of the key risks which
could affect the Group’s operational and financial performance was
included in the company’s 2022 Annual Report, which can be accessed
at www.pensana.co.uk. These may impact the Group over the medium to
long term; however, the following key risks have been identified
which may impact the Group over the short term.
Financing and liquidity
The Group does not currently have sufficient funding to meet its
outstanding creditors due to suppliers and is dependent on securing
immediate term funding to settle those creditors and provide
short-term working capital. The Group is dependent on the
continuing cooperation and forbearance of its suppliers while
funding is secured.
Additionally, the Group will require additional funding, over
and above that required in the immediate term, to meet its expected
liabilities and commitments as they fall due based on its
obligations, committed and planned development expenditure and
operating costs related to the Longonjo and Saltend Projects and
exploration costs at Coola for at least the next 12 months. The
group is in pre-production phase and therefore has no revenues from
operations currently.
In order to secure the requisite immediate term funding and
additionally ensure a route to the main funding component required
to initiate main construction at its Longonjo and Saltend Projects,
Pensana has been engaging with the Strategic over the past three
months for a potential amount of up to US$220 million comprising an initial conditional
subscription for approximately US$10.8
million to settle outstanding creditors and provide
short-term working capital, followed by a further subscription for
approximately US$209.2 million,
subject to further conditions precedent. However as highlighted in
Note 3 going concern, the transaction is subject to Investment
Committee approval and further conditions precedent that need to
complete and cannot be guaranteed at this stage.
Pensana has further engaged with an African based resource fund
on the back of the Strategic’s exclusivity period having recently
expired. Their potential investment in the company for an
amount of US$ 10 million would be as
an alternative in the event that the Strategic’s Investment
Committee do not provide the requisite approval and would be used
to address the immediate-term liquidity requirements. The
possibility of a second tranche of funding in the form of equity
and /or a debt-for-equity convertible note is currently being
considered. However, neither element of such funding can be
guaranteed.
In preparation for the longer-term funding needs, Pensana is
further actively engaged with potential debt/equity financiers,
which will be progressed, subject to the outcome on the Strategic’s
investment. There is a further risk that debt funding may not be
available and/or the cost of financing may be higher than
expected.
Development of the Longonjo and
Saltend Projects
The group’s operations are at an early stage of construction
development and future success will depend on the group’s ability
to manage the Longonjo and Saltend Projects (the projects) and the
production of NdPr-rich MREDS for export to the Saltend refinery
and further processing into a rare earth oxide. In particular, the
group’s success is dependent upon the directors’ ability to develop
the projects by commencing and maintaining production at the sites
and there is no certainty that funding will be available.
Development of the projects could be delayed or could experience
interruptions or increased costs because of supply chain or
inflationary pressures or may not be completed at all due to a
number of factors.
Logistical challenges and delays
Global supply chain challenges could result in logistical risks
relating to availability, potential delays and increased costs
of equipment and material both for the project and operations
phase.
Commodity price
If the group is able to develop the Longonjo and Saltend
Projects and/or the Coola Project for production and the market
price of rare earth oxide decreases significantly for an extended
period of time, the ability for the group to attract finance and
ultimately generate profits could be adversely affected.
Attracting skilled employees
The group’s ability to compete in the competitive natural
resources and specialist rare earth chemical processing sectors
depends upon its ability to retain and attract highly qualified
management, geological and technical personnel. The loss of key
management and/or technical personnel could delay the development
of the Longonjo Project, exploration at the Longonjo Project and
the Coola Project and development and commissioning of the Saltend
refinery thereby negatively impacting on the ability of the group
to compete in the resources and chemical processing sectors. In
addition, the group will need to recruit key personnel to develop
its business as and when it moves to construction and ultimately
operation of a mine, each of which requires additional skills.
Mr. Tim
George
Chief Executive Officer
30 March 2023
INDEPENDENT REVIEW REPORT TO PENSANA
PLC
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended
31 December 2022 is not prepared, in
all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency
Rules of the United Kingdom’s Financial Conduct Authority.
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2022
which comprises the condensed consolidated statement of
comprehensive income, condensed consolidated statement of financial
position, condensed consolidated statement of changes in equity,
the condensed consolidated statement of cash flows and the related
notes.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, “Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity” (“ISRE (UK) 2410”). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK) and consequently does not
enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 3, the Interim Financial Statements of the
group are prepared in accordance with UK adopted International
Accounting Standards. The Condensed set of Financial
Statements included in this half-yearly Financial report has been
prepared in accordance with UK adopted International Accounting
Standard 34, “Interim Financial Reporting”.
Material uncertainty related to Going
Concern
We draw attention to note 3 to the half-yearly financial report
which indicates that the group will require additional immediate
term funding to settle outstanding amounts due to suppliers and
further subsequent additional funding to meet its commitments and
planned expenditures which is not guaranteed. As stated in
note 3, these events or conditions, along with other matters as set
out in note 3, indicate the existence of a material uncertainty
which may cast significant doubt over the group’s ability to
continue as a going concern. Our conclusion is not modified in
respect of this matter.
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom’s Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the group’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the
review of the financial information
In reviewing the half-yearly report, we are responsible for
expressing to the company a conclusion on the condensed set of
financial statement in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the company in meeting the requirements of the
Disclosure Guidance and Transparency Rules of the United Kingdom’s
Financial Conduct Authority and for no other purpose. No
person is entitled to rely on this report unless such a person is a
person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised
to do so by our prior written consent. Save as above, we do
not accept responsibility for this report to any other person or
for any other purpose and we hereby expressly disclaim any and all
such liability.
Ryan Ferguson
BDO LLP
Chartered Accountants
London, UK
30 March 2023
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Condensed Consolidated Statement of
Comprehensive Income
for the six months ended 31 December
2022
|
|
Unaudited |
Unaudited |
|
|
31 December 2022 |
31 December 2021 |
|
Note |
US$ |
US$ |
| Administration
expenses |
5 |
(4,160,865) |
(3,670,738) |
| Foreign currency
exchange loss |
|
(42,468) |
(410,204) |
| Finance Income |
|
- |
28 |
| Loss before income
tax |
|
(4,203,333) |
(4,080,914) |
| Income tax
(charge)/credit |
6 |
- |
- |
| Total loss for the
period |
|
(4,203,333) |
(4,080,914) |
|
|
|
|
| Other comprehensive
loss |
|
|
|
| Items that may be
reclassified subsequently to profit or loss (net of income
tax) |
|
|
|
| Exchange loss arising
on translation of foreign operations |
|
(15,118) |
(154,658) |
| Total comprehensive
loss for the period |
|
(4,218,451) |
(4,235,572) |
|
|
|
|
| Net loss for the
period is attributable to: |
|
|
|
| Owners of Pensana
Plc |
|
(4,203,333) |
(4,080,914) |
|
|
|
|
| Total comprehensive
loss is attributable to: |
|
|
|
| Owners of Pensana
Plc |
|
(4,218,451) |
(4,235,572) |
|
|
|
|
| Loss
per share attributable to owners of Pensana Plc: |
|
| Basic (cents per
share) |
16 |
(1,72) |
(1.82) |
| Diluted (cents per
share) |
16 |
(1,72) |
(1.82) |
Notes to the interim financial
statements are included on pages 15 to 25.
Condensed Consolidated Statement of
Financial Position
as at 31 December 2022
|
|
Unaudited |
Audited |
|
|
As at
31 December
2022 |
As at
30 June
2022 |
|
Note |
US$ |
US$ |
| ASSETS |
|
|
|
| NON-CURRENT
ASSETS |
|
|
|
| Property, plant and
equipment |
9 |
51,311,888 |
37,770,292 |
| Exploration and
evaluation expenditure |
|
234,494 |
181,206 |
| TOTAL NON-CURRENT
ASSETS |
|
51,546,382 |
37,951,498 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Cash and cash
equivalents |
7 |
1,440,191 |
2,930,162 |
| Trade and other
receivables |
8 |
1,802,894 |
2,400,011 |
| TOTAL CURRENT
ASSETS |
|
3,243,085 |
5,330,173 |
|
|
|
|
| TOTAL
ASSETS |
|
54,789,467 |
43,281,671 |
|
|
|
|
|
LIABILITIES |
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Trade and other
payables |
10 |
8,954,815 |
3,646,386 |
| TOTAL CURRENT
LIABILITIES |
|
8,954,815 |
3,646,386 |
|
|
|
|
|
|
|
|
| TOTAL
LIABILITIES |
|
8,954,815 |
3,646,386 |
|
|
|
|
| NET ASSETS |
|
45,834,652 |
39,635,285 |
| EQUITY |
|
|
|
| Issued
capital |
11 |
310,418 |
295,425 |
| Share premium |
|
57,028,789 |
47,043,782 |
| Reserves |
|
48,010,898 |
47,608,198 |
| Accumulated
losses |
|
(59,515,453) |
(55,312,120) |
| TOTAL
EQUITY |
|
45,834,652 |
39,635,285 |
Notes to the interim financial
statements are included on pages 15 to 25.
Condensed Consolidated Statement of
Changes in Equity
for the six months ended 31 December
2022
|
Fully
paid ordinary shares |
Share
premium |
Accumulated Losses |
Merger Reserve |
Foreign Exchange Reserve |
Share
based Payments Reserve |
Equity Reserve |
Total |
| Unaudited |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
|
|
|
|
|
|
|
| Balance at 1
July 2022 |
295,425 |
47,043,782 |
(55,312,120) |
45,748,045 |
615,002 |
1,745,151 |
(500,000) |
39,635,285 |
| Loss for the
period |
- |
- |
(4,203,333) |
- |
- |
- |
- |
(4,203,333) |
| Other comprehensive
loss |
- |
- |
- |
- |
(15,118) |
- |
- |
(15,118) |
| Total comprehensive
loss for the period |
- |
- |
(4,203,333) |
- |
(15,118) |
- |
- |
(4,218,451) |
| Issue of shares (note
11) |
14,993 |
9,985,007 |
- |
- |
- |
- |
- |
10,000,000 |
| Share based payments
(note 15) |
- |
- |
- |
- |
- |
417,818 |
- |
417,818 |
| Balance at 31
December 2022 |
310,418 |
57,028,789 |
(59,515,453) |
45,748,045 |
599,884 |
2,162,969 |
(500,000) |
45,834,652 |
|
Fully
paid ordinary shares |
Share
premium |
Accumulated Losses |
Merger Reserve |
Foreign Exchange Reserve |
Share
based Payments Reserve |
Equity Reserve |
Total |
| Unaudited |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
|
|
|
|
|
|
|
| Balance at 1
July 2021 |
279,398 |
34,195,957 |
(49,841,241) |
45,748,045 |
422,678 |
5,863,797 |
(500,000) |
36,168,634 |
| Loss for the
period |
- |
- |
(4,080,914) |
|
|
- |
- |
(4,080,914) |
| Other comprehensive
income |
- |
- |
- |
- |
(154,658) |
- |
- |
(154,658) |
| Total comprehensive
loss for the period |
- |
- |
(4,080,914) |
- |
(154,658) |
- |
- |
(4,235,572) |
| Issue of shares (note
11) |
1,015 |
82,698 |
- |
- |
- |
(83,713) |
- |
- |
| Share
based payments (note 15) |
- |
- |
- |
- |
- |
35,130 |
- |
35,130 |
| Balance at 31
December 2021 |
280,413 |
34,278,655 |
(53,922,155) |
45,748,045 |
268,020 |
5,815,214 |
(500,000) |
31,968,192 |
Notes to the interim financial
statements are included on pages 15 to 25.
Condensed Consolidated Statement of
Cash Flows
for the six months ended 31 December
2022
|
|
Unaudited
31 December 2022 |
Unaudited
31 December 2021 |
|
Note |
US$ |
US$ |
| Cash flows from
operating activities |
|
|
|
| Operating cash
flows |
18 |
(2,818,626) |
(4,204,325) |
| Net cash used in
operating activities |
|
(2,818,626) |
(4,204,325) |
|
|
|
|
| Cash flows from
investing activities |
|
|
|
| Interest received |
|
- |
28 |
| Additions to property,
plant and equipment |
|
(8,615,868) |
(11,407,614) |
| Net cash used in
investing activities |
|
(8,615,868) |
(11,407,586) |
|
|
|
|
| Cash flows from
financing activities |
|
|
|
| Proceeds from issues
of equity securities |
11 |
10,000,000 |
3,360,677 |
| Net cash provided
by financing activities |
|
10,000,000 |
3,360,677 |
|
|
|
|
| Net decrease in
cash and cash equivalents |
|
(1,434,494) |
(12,251,234) |
|
|
|
|
| Cash and cash
equivalents at beginning of the period |
|
2,930,162 |
16,787,591 |
| Effects of exchange
rate changes on the balance of cash held in foreign currencies |
|
(55,477) |
16,505 |
| Cash and cash
equivalents at the end of the period |
7 |
1,440,191 |
4,552,862 |
Notes to the interim financial
statements are included on pages 15 to 25.
Notes to the financial statements
1. General information
The consolidated financial statements present the financial
information of Pensana Plc and its subsidiaries (collectively, the
group) for the six months ended 31 December
2022 in United States
dollars (USD or $). Pensana Plc (the company or the parent) is a
public company limited by shares listed on the Main Market of the
London Stock Exchange (LSE) and incorporated in England & Wales on 13 September
2019. The registered office is located at 107 Cheapside,
Second Floor, London, EC2V 6DN,
United Kingdom.
The company is focused on the establishment of an integrated
rare earth processing facility in the UK with a view to creating
the world’s first sustainable magnet metal supply chain.
Initial feedstock will be shipped as a clean, high-purity
mixed rare earth sulphate from the company’s Longonjo low-impact
mine in Angola.
In early 2020, Pensana Metals Ltd redomiciled the group to the
UK pursuant to a scheme of arrangement in which Pensana Metals
Limited became a wholly owned subsidiary of Pensana. Prior to the
transaction, the company was incorporated on 13 September 2019 and was a wholly owned
subsidiary of Pensana Metals Ltd.
2. New accounting standards and interpretations
(a) Changes in accounting
policies and disclosures
From 1 July 2022, the Group has
adopted the following Standards and Interpretations, mandatory for
annual periods beginning on or prior to 1
July 2022.
| Standard |
Description |
Effective date |
| IAS 16 |
Amendments to IAS 16 ‘Property,
plant and equipment’ |
1 January 2022 |
| IAS 37 |
Amendments to IAS 37 ‘Provisions,
contingent liabilities and contingent assets’ |
1 January 2022 |
| IFRS 3 |
Amendments to IFRS 3 ‘Business
Combinations’ |
1 January 2022 |
| Improvements to IFRSs |
Improvements to IFRS1, IFRS 9, IFRS
16 and IAS 41 |
1 June 2022 |
The application of these standards has not had a material impact
on the financial statements.
(b) Accounting standards and
interpretations issued but not yet effective:
The Group has elected not to early adopt the following revised
and amended standards.
| Standard |
Description |
Effective date |
| IFRS 17 |
IFRS 17 Insurance contracts |
1 January 2023 |
| Amendment to IFRS 17 |
Amendment to IFRS 17 – Initial
application |
1 January 2023 |
| Amendments to IAS 8 |
Amendments to IAS 8: Definition of
accounting estimates |
1 January 2023 |
| Amendments to IAS 1 and IFRS
Practise Statement 2 |
Amendments to IAS 1 and IFRS
Practise Statement 2 – Disclosure of accounting policies |
1 January 2023 |
| Amendments to IAS 12 |
Amendments to IAS 12: Deferred tax
related to assets and liabilities from a single transaction |
1 January 2023 |
| Amendment to IAS 1 |
Amendments to IAS 1: Classification
of liabilities as current or non-current |
1 January 2023 |
Management has reviewed and considered these new standards and
interpretations and none of these are expected to have a material
effect on the reported results or financial position of the
Group.
3. Significant accounting policies and Going Concern
Basis of preparation
The condensed interim report, which are unaudited, have been
prepared in accordance with UK-adopted International Accounting
Standard 34 Interim Financial Reporting and the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom’s Financial
Conduct Authority. This condensed interim report does not
include all the notes of the type normally included in an annual
financial report. This condensed interim report is to be read in
conjunction with the annual report for the year ended 30 June 2022, and any public announcements made
by the group during the interim reporting period. The comparative
financial information for the year ended 30
June 2022 in this interim report does not constitute
statutory accounts for that year. The statutory accounts for
30 June 2022 have been delivered to
the Registrar of Companies.
The auditors' report on those accounts was unqualified but drew
attention to a material uncertainty in relation to going concern.
It did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006. The financial report for the six months
ended 31 December 2022 was prepared
in accordance with the annual financial statements of the group and
are prepared in accordance with UK adopted International Accounting
Standards (IFRSs).
The accounting policies applied in this condensed interim report
are consistent with the polices applied in the annual financial
statements for the year ended 30 June
2022 and were prepared in accordance with UK adopted
International Financial Reporting Standards (IFRSs).
As disclosed in the 30 June 2022
Annual Report, the company was incorporated on 13 September 2019 as a wholly owned subsidiary of
Pensana Metals Limited. The company subsequently acquired 100% of
the share capital of Pensana Metals Limited and its subsidiary
companies for the effective issuance of 152,973,315 shares to the
shareholders of Pensana Metals further to the scheme of arrangement
approved on 22 January 2020 and
completed on 5 February 2020.
The shares issued to the former shareholders of Pensana Metals
Limited comprised 50,000,000 shares with a nominal value of £0.001
per share subscribed for incorporation of the company by Pensana
Metals Ltd which were transferred to CHESS Depositary Nominees Pty
Ltd (a subsidiary of the Australian Securities Exchange (ASX)) for
use in the scheme of arrangement and 102,973,314 shares with a
nominal value of £0.001 per share additionally issued by the
company to CHESS Depositary Nominees Pty Ltd for use in the scheme
of arrangement. CHESS Depositary Nominees Ltd subsequently issued
CHESS Depositary Instruments in proportion to the interests the
former shareholders of Pensana Metals held in that company for
trading on the ASX with 152,973,315 CHESS Depositary Instruments
issued for trading. The transaction represented a group
reconstruction and common control transaction.
The accounting for common control transactions is scoped out of
IFRS 3 and, accordingly the Group has developed an accounting
policy with reference to methods applied in alternative generally
accepted accounting principles (GAAPs). Consequently, the
consolidated financial statements are presented as if the company
has always been the holding company for the group and the group has
elected to apply merger accounting principles. Under this policy,
the company and its subsidiaries are treated as if they had always
been a group.
The results are included from the date the subsidiaries joined
the group and the comparatives reflect the results of the company
and its subsidiaries. No fair value adjustments occur as a result
of the transaction, and the assets and liabilities are incorporated
at their predecessor carrying values.
The policies have been consistently applied to all the periods
presented, unless otherwise stated.
Going Concern
The consolidated financial statements have been prepared on a
going concern basis with the directors of the opinion that the
group will be able to meet its obligations.
At 31 December 2022 the Group had
a net asset position of $45,834,652
(30 June 2022: $39,635,285) including cash and cash equivalents
of $1,440,191 (30 June 2022: $2,930,162), had incurred a loss after income tax
of $4,203,333 (Six months ended
31 December 2021: $4,080,914) and experienced cumulative net cash
outflows from operating and investing activities of $11,434,494 (Six months ended 31 December 2021: $15,611,911).
The Directors have prepared a cash flow forecast for the period
to June 2024 from the date of this
report including all obligations and committed expenditure,
together with assessment of events and circumstances in the period
beyond these forecasts. In assessing the going concern basis
of preparation, the Directors have considered supply chain
challenges, inflation, the availability of funding and its impact
on the progression of the Longonjo and the Saltend Project
(hereinafter “the Projects”). Similarly, the directors have also
considered the impact of the Russia-Ukraine war as it relates to costs and the
potential volatility in debt and equity markets.
As at the date of this report the Group had approximately
US$0.2 million of cash and
US$9.1m of outstanding creditors in
relation to suppliers and, accordingly, the Group needs to secure
funding to settle these obligations in the immediate term. The
Group is dependent upon the continuing cooperation and forbearance
of those suppliers until such funding is secured. The
Directors have considered correspondence and engagement with those
creditors in evaluating whether the Board has sufficient confidence
that cooperation and forbearance will be provided until such
funding can be secured.
Accordingly, the Directors are engaged with a major strategic
mining house (the “Strategic”) which would potentially see an
investment of up to US$220 million
subject to the transaction being executed and the required
conditions precedent being met.
The transaction contemplated would involve an initial
conditional subscription, for approximately US$10.8 million (“Initial Conditional
Subscription”), followed by a further subscription for
approximately US$209.2 million,
subject to further conditions precedent (“Further Conditional
Subscription”). The contemplated transaction remains subject to
approval by the Investment Committee of the Strategic.
The Initial Conditional Subscription, if received in early
April 2023 as planned will be applied
firstly to the settlement of the existing creditors and provision
of short-term working capital.
If the contemplated transaction with the Strategic does not
receive the necessary Investment Committee approval, alternative
funding will be required as a matter of urgency. The Board is
actively exploring alternatives and has further engaged with an
African based fund which invests in sub-Sahara African mining,
mineral processing and manufacturing in the EV and battery
sectors. The potential investment in the company would be in
addition to, or potentially as an alternative for, the Strategics’
investment with a view to placing shares to the value of
approximately US$10 million (the
“Alternative Placing”) to address the short-term liquidity
requirements and the settlement of the existing creditors.
Consideration to a second tranche of funding in the form of equity
and / or a debt for equity convertible note is further being
considered as an alternative to the Further Conditional
Subscription if required.
The Board notes that cash flow forecasts indicate that, in
addition to the immediate funding requirement which is planned to
be addressed through the Initial Proposed Subscription or
Alternative Placing, additional funding will also be required in H1
FY 2024 to maintain liquidity. Such additional funding would be
provided by the Further Conditional Subscription. In the
event that the Further Conditional Subscription is not secured,
alternative funding would be required.
Furthermore, forecasts beyond June
2024 indicate that funding additional to the envisaged
Further Conditional Subscription (which would cater for c. 40% of
project capital spend), will be required during H1 FY 2025 if the
company is to further progress with the main development of the
Projects.
The Board notes that the Initial Conditional Subscription and
Further Conditional Subscription cannot be guaranteed at this point
due to the transaction being subject to final Investment Committee
approval. The Initial Conditional Subscription is subject to
satisfaction of conditions precedent. In addition, should
Investment Committee approval be forthcoming and the conditions
precedent satisfied for the Initial Conditional Subscription, there
are further conditions precedent that would need to be completed
for the Further Conditional Subscription. Although the Board
is of the view that these conditions are achievable, they remain
outstanding as of the date of this review and cannot be
guaranteed.
In the event the Initial Conditional Subscription is not secured
the proposed Alternative Placing to provide immediate term funding
is equally not committed and cannot be guaranteed. While
immediate term funding is being secured the Group is dependent on
the co-operation and forbearance of its creditors and while the
Board anticipate this continuing for a period sufficient to secure
the necessary funding this cannot be guaranteed.
The above circumstances indicate the existence of a material
uncertainty which may cast significant doubt about the Group’s
ability to continue as a going concern and therefore it may be
unable to realise its assets and discharge its liabilities in the
normal course of business. The financial statements do not
include the adjustments that would result if the Group was unable
to continue as a going concern.
Critical
accounting judgements and key sources of estimation uncertainty
In applying the Group’s accounting policies, management
continually evaluates judgements, estimates and assumptions based
on experience and other factors, including expectations of future
events that may have an impact on the Group. All judgments,
estimates and assumptions made are believed to be reasonable based
on the most current set of circumstances available to management.
Actual results may differ from the judgements, estimates and
assumptions.
Significant judgements, estimates and assumptions made by
management in the preparation of these financial statements are
outlined below:
(i)
Significant accounting judgements
Impairment indicator assessment of
development assets (note 9), as well as impairment indicator
assessment of assets under construction (note 9).
The ultimate recovery of the value of the Group’s development
assets and assets under construction as at 31 December 2022, is dependent on the successful
development and commercial exploitation, or alternatively, the sale
of the Longonjo Project, as well as the successful development and
commercial exploitation of the Saltend facility.
Judgement was exercised in assessing the extent to which
impairment indicators existed as at 31
December 2022 in respect of the Longonjo and Saltend
Projects and associated balances. In forming this assessment,
internal and external factors were evaluated, including those that
applied last year. These factors include market value
fluctuations, changes in technology, economy and or laws, changes
in market interest rates, obsolescence, or physical damage to
property, plant and equipment.
Management determined that no impairment indicators existed
having considered the company’s market capitalisation relative to
the group’s net asset value, the progression of the Longonjo and
Saltend Projects and the financial life of mine plan, feasibility
study equivalent assessments and the associated Ore Reserve
Statement and the competent person’s report covering the Longonjo
and Saltend Projects. The underlying financial life of mine plan
involves estimates regarding commodity prices, production and
reserves, operating costs and capital development together with
discount rates and demonstrates significant headroom.
Recoverability of equity receivable
(note 8)
Management’s judgement is required to determine whether the
outstanding equity receivable at period end is fully
recoverable. The recoverability of the equity receivable has
been assessed, taking into account the period of time since issue,
the security in place over the balance (being the collaterisation
over the shares issued), management's intent to exercise the
collateral if required and the market value of the shares in issue.
Based on this, an ECL provision of US$116,041 has been recognised in the income
statement (31 December 2021:
$177,234).
(ii)
Significant accounting estimates and assumptions
Share-based payment transactions
(note 15)
The group measures the cost of equity-settled transactions with
directors and others by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value
is determined using a stochastic model to value awards with
market-based conditions and a Black-Scholes valuation model for
awards that are not subject to market-based performance conditions.
These models require estimates for inputs such as share price
volatility and total shareholder return. The share-based payment
arrangements are expensed on a straight-line basis over the vesting
period, based on the group’s estimate of shares that will
eventually vest. At each reporting date, vesting assumptions are
reviewed to ensure they reflect current expectations and
immediately recognise any impact of the revision to original
estimates. Judgement is required as to the likelihood of the
vesting conditions being met, such as the progress of financing of
various projects, the lost time injury frequency rate, progress of
construction of the projects, etc. If fully vested share options
are not exercised and expire, then the accumulated expense in
respect of these is reclassified to accumulated losses.
4. Operating Segments
Description of
segments
The Group has identified its operating segments based on the
internal reports that are used by the chief operating decision
makers in assessing performance and determining the allocation of
resources.
The Group has identified that it has two operating segments
being related to the activities in Angola and Saltend (UK), on the basis that the
assets in Tanzania are fully
impaired at 30 June 2022. The unallocated relates to
operations in Australia and
Portugal which consist of
corporate and head office-related costs.
2022
|
|
Angola |
UK |
Unallocated |
Total |
| As at 31 December
2022 |
|
US
$ |
US
$ |
US
$ |
US
$ |
| Non-current assets –
opening balance |
|
31,485,228 |
6,466,270 |
- |
37,951,498 |
| Non-current assets –
additions |
|
8,478,334 |
5,116,550 |
- |
13,594,884 |
| Non-current assets –
closing balance |
|
39,963,562 |
11,582,820 |
- |
51,546,382 |
| Current
liabilities |
|
1,194,968 |
6,727,117 |
1,032,730 |
8,954,815 |
|
|
|
|
|
|
| Six months ended 31
December 2022 |
|
|
|
|
|
| Operating Loss |
|
(682,645) |
(3,123,432) |
(397,256) |
(4,203,333) |
| Loss before tax |
|
(682,645) |
(3,123,432) |
(397,256) |
(4,203,333) |
| Loss for the
period |
|
(682,645) |
(3,123,432) |
(397,256) |
(4,203,333) |
2021
|
|
Angola |
UK |
Unallocated |
Total |
|
|
US
$ |
US
$ |
US
$ |
US
$ |
| As at 30 June
2021 |
|
|
|
|
|
| Non-current assets –
opening balance |
|
9,642,118 |
- |
7,002 |
9,649,120 |
| Non-current assets –
additions |
|
8,831,775 |
162,330 |
(3,417) |
8,990,688 |
| Non-current assets –
closing balance |
|
18,473,893 |
162,330 |
3,585 |
18,639,808 |
| Current
liabilities |
|
51,980 |
1,514,687 |
3,062,105 |
4,628,772 |
|
|
|
|
|
|
| Six months ended 31
December 2021 |
|
|
|
|
|
| Operating Loss |
|
(2,894,202) |
(3,242,001) |
2,055,261 |
(4,080,942) |
| Loss before tax |
|
(2,894,202) |
(3,242,001) |
2,055,289 |
(4,080,914) |
| Loss for the year |
|
(2,894,202) |
(3,242,001) |
2,055,289 |
(4,080,914) |
Non-current assets consist mainly of development assets and
assets under construction. Additions and depreciation of
property, plant and equipment are disclosed in note 9.
5. Other Expenses
|
|
|
|
Six
months ended 31 December
2022
US $ |
Six
months ended 31 December
2021
US $ |
| Administration
expenses: |
|
|
|
|
|
| General administration
costs |
|
|
|
1,080,759 |
1,076,237 |
| Audit fees |
|
|
|
79,628 |
138,205 |
| Consultant Fees |
|
|
|
447,622 |
449,972 |
| Travel expenses |
|
|
|
211,551 |
100,579 |
| Legal fees |
|
|
|
216,559 |
133,433 |
|
|
|
|
|
|
| Operating lease
rental expenses: |
|
|
|
|
|
| Lease payments (short
life leases) |
|
|
|
69,827 |
45,795 |
|
|
|
|
|
|
| Depreciation on
non-current assets: |
|
|
|
|
|
| Property, plant and
equipment |
|
|
|
26,671 |
16,682 |
|
|
|
|
|
|
Employee Benefits |
|
|
|
2022
US $ |
2021
US $ |
| Performance rights and
options granted to directors, officers and employees |
|
|
|
417,818 |
35,130 |
| Directors’ fees,
superannuation and salaries & wages |
|
|
|
1,610,429 |
1,674,705 |
| Total
Administration expenses |
|
|
|
4,160,865 |
3,670,738 |
Foreign currency
exchange gains/losses:
Foreign exchange loss of $42,468
(2021: $410,204 loss) comprises
realised foreign exchange movements on retranslation of monetary
balances and unrealised foreign exchange movements on intercompany
loans which are considered repayable in the foreseeable future.
6. Income Taxes
|
|
|
|
Consolidated |
|
|
|
|
2022
US $ |
2021
US $ |
| Current
taxation |
|
|
|
|
|
| Current tax charge/
(credit) |
|
|
|
- |
- |
No Liability to corporation tax arose
in ordinary activities for the half year ended 31 December 2022 or 31
December 2021.
The tax assessed for the year
utilised the standard rate of tax in the UK of 19% (2021: 19%).
Tax rate reconciliation:
|
|
|
|
|
|
|
|
|
Six
months ended 31 December
2022
US $ |
Six
months ended 31 December
2021
US $ |
| Loss from continuing
operations before tax |
|
|
|
(4,203,333) |
(4,080,914) |
|
|
|
|
|
|
| Loss on continuing
activities multiplied by the rate of corporation tax in the UK of
19% (2021:19%) |
|
|
|
(798,633) |
(775,374) |
|
|
|
|
|
|
| Tax effects of: |
|
|
|
|
|
| Different tax rates in
overseas jurisdictions |
|
|
|
(67,778) |
(681,057) |
| Permanent
differences |
|
|
|
8,557 |
(664,276) |
| Deferred tax assets
not recognised |
|
|
|
857,854 |
2,120,707 |
| Total tax
charge/(credit) |
|
|
|
- |
- |
|
|
|
|
|
|
7. Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
|
|
As at
31 December
2022 |
As at
30 June
2022 |
|
|
|
|
|
US$ |
US$ |
|
|
|
|
|
|
|
| Cash at bank and on
hand |
|
|
|
|
1,440,191 |
2,930,162 |
|
|
|
|
|
1,440,191 |
2,930,162 |
8. Trade and Other Receivables
|
|
|
|
|
|
|
|
|
|
|
As at
31 December
2022 |
As at
30 June
2022 |
|
|
|
|
|
US$ |
US$ |
|
|
|
|
|
|
|
| Trade receivables |
|
|
|
|
6,454 |
43,425 |
| Prepayments |
|
|
|
|
1,303,417 |
1,585,089 |
| Other debtors |
|
|
|
|
493,023 |
771,497 |
|
|
|
|
|
1,802,894 |
2,400,011 |
Of the other debtors as at 31 December
2022, US$1,239,059 (gross)
(30 June 2022: US$1,299,567) relates to payment pending as part
of the equity raise completed on 25 June
2021. The net amount included in the closing balance at
31 December 2022 was US$450,522 (30 June
2022: US$630,097).
$60,508 was received during the six
months ending 31 December 2022.
The recoverability of the equity receivable has been assessed,
considering the period since issue, the security in place over the
balance, being the collaterisation over the shares issued,
management’s intent to exercise the collateral if required and the
market value of the shares in issue. Based on this, an ECL
provision of US$116,041 has been
recognised in the income statement for the six months ending
31 December 2022 (30 June 2022: US$669,470).
04 105
9. Property, plant and equipment
|
Buildings |
Plant
and equipment |
Development
asset1 |
Assets under
construction2 |
Motor
vehicles |
Office
equipment |
Computer
equipment |
Total |
|
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
US$ |
|
|
|
|
|
|
|
|
|
| Cost |
|
|
|
|
|
|
|
|
| Balance at 1 July
2022 |
28,310 |
17,675 |
31,225,309 |
6,453,807 |
83,384 |
7,325 |
21,281 |
37,837,091 |
| Additions |
- |
15,345 |
8,385,673 |
5,025,495 |
130,855 |
- |
10,899 |
13,568,267 |
| Balance at 31
December 2022 |
28,310 |
33,020 |
39,610,982 |
11,479,303 |
214,239 |
7,325 |
32,179 |
51,405,358 |
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
|
|
| Balance at 1 July
2022 |
3,828 |
5,344 |
- |
- |
48,923 |
2,590 |
6,114 |
66,799 |
| Charge for the
year |
1,356 |
2,360 |
- |
- |
18,152 |
441 |
4,362 |
26,671 |
| Balance at 31
December 2022 |
5,184 |
7,704 |
- |
- |
67,075 |
3,031 |
10,476 |
93,470 |
|
|
|
|
|
|
|
|
|
| Net Book
Value |
|
|
|
|
|
|
|
|
| At 30 June 2022 |
24,482 |
12,331 |
31,225,309 |
6,453,807 |
34,461 |
4,735 |
15,167 |
37,770,292 |
| At 31 December
2022 |
23,126 |
25,316 |
39,610,982 |
11,479,303 |
147,164 |
4,294 |
21,703 |
51,311,888 |
1 Relate to expenditure on the Longonjo
Project.
2 Relate to expenditure at
Saltend.
10. Trade and Other Payables
|
|
As at
31 December
2022
$ |
As at
30 June
2022
$ |
|
|
|
|
| Trade and other
payables 1 |
|
5,526,655 |
1,526,310 |
| Accrued expenses |
|
3,428,160 |
2,120,076 |
|
|
8,954,815 |
3,646,386 |
- There has been no interest charged on the trade
payables.
11. Issued Capital
|
2022
No. |
2022
US$ |
2021
No. |
2021
US$ |
| Fully paid ordinary shares |
|
|
|
|
| Balance at 1 July |
235,599,539 |
295,425 |
216,145,822 |
279,398 |
| Shares issued - conversion of
performance rights |
- |
|
7,108,037 |
1,015 |
| Share Placement |
12,331,334 |
14,993 |
- |
- |
| Balance at 31 December |
247,930,873 |
310,418 |
223,253,859 |
280,413 |
|
|
|
|
|
|
|
|
|
|
Post period end, on 6 January
2023, the company issued 7,250,000 fully paid ordinary
shares to M&G Investment Management at a price of £0.44 per
share and raised US$4 million.
Placements during
half year ending 31 December 2022 and
31 December 2021:
On 5 August 2022, the company
issued 12,331,334 fully paid ordinary shares to M&G Investment
Management at a price of £0.67 per share and raised US$10.0 million.
On 6 January 2022, the company
issued 12,345,680 fully paid ordinary shares to M&G Investment
Management at a price of £0.81 per share and raised US$13.2 million.
On 6 July 2021, 7,108,037 shares
related to share awards were issued to executive management.
Share options on
issue
During the period, 750,000 options vested (31 December 2021: 750,000). As at
31 December 2022, there are 750,000
shares under option (31 December
2021: 1,500,000).
Performance rights
on issue
There are no performance rights outstanding as at period
end.
13. Commitments for Expenditure
The group has certain obligations to perform exploration work on
mineral exploration tenements.
No provision has been made in the accounts for minimum
expenditure requirements in respect of tenements, as no liability
has been incurred as at 31 December
2022 relating to these obligations.
- Exploration Commitments
Commitments for payments under exploration permits and mineral
leases in existence at the reporting date but not recognised as
liabilities payable are as follows:
|
|
As at
31 December 2022
$ |
As at
31 December
2021
$ |
| Exploration and
evaluation expenditure |
|
|
|
| Not longer than 1
year |
|
871,430 |
650,000 |
| Longer than 1 year and
not longer than 5 years |
|
3,894,076 |
4,350,000 |
| Longer than 5
years |
|
- |
- |
|
|
4,765,506 |
5,000,000 |
14. Contingent Liabilities and Contingent Assets
The Directors are not aware of any other contingent liabilities
or contingent assets that are likely to have a material effect on
the results of the Group as disclosed in these financial
statements.
15. Share-based Payments
Half year ended
31 December 2022
During the period no new share awards were issued.
US$417,818 was charged to the
statement of comprehensive income related to existing share
awards.
During the period, 750,000 of the outstanding 1,500,000 legacy
awards vested.
Half year ended
31 December 2021
During the period, 7,108,037 shares were issued. These
related to the vesting of executive share awards. In addition,
750,000, of the outstanding 2,250,000 legacy awards vested during
the period and 500,000 options expired.
US$83,713 was credited to the
statement of comprehensive income related to existing share
awards.
Reconciliation of
options outstanding
The following reconciles outstanding share options provided as
share-based payments at the beginning and end of the financial
period:
|
|
Half year ended
31 December 2022 |
|
Half year ended
31 December 2021 |
|
|
Number of
options |
Weighted average
exercise price |
|
Number of
options |
Weighted average
exercise price |
| Balance at beginning of the
financial year |
|
1,500,000 |
- |
|
2,750,000 |
- |
|
|
|
|
|
|
|
| Vested during the financial
period |
|
(750,000) |
$0.001 |
|
(750,000) |
$0.001 |
| Expired during the financial
period |
|
- |
- |
|
(500,000) |
$0.001 |
| Exercised during the financial
period |
|
- |
- |
|
- |
- |
|
|
|
|
|
|
|
| Balance at end of the financial
period |
|
750,000 |
- |
|
1,500,000 |
- |
16. Loss per share
|
|
2022
cents per share |
2021
cents per share |
| Basic loss per
share |
|
|
|
| From continuing
operations |
|
1.72 |
1.82 |
| Total basic loss per
share |
|
1.72 |
1.82 |
| Diluted loss per
share |
|
|
|
| From continuing
operations |
|
1.72 |
1.82 |
| Total diluted loss per
share |
|
1.72 |
1.82 |
Basic loss per
share
The net loss and weighted average number of ordinary shares used
in the calculation of basic loss per share are as follows:
|
|
Unaudited
As at
31 December 2022
US$ |
Unaudited
As at
31 December
2021
US$ |
| Net loss |
|
(4,203,333) |
(4,080,914) |
|
| Losses used in the
calculation of basic loss per share from continuing operations |
|
(4,203,333) |
(4,080,914) |
|
| Losses used in the
calculation of diluted loss per share attributable to ordinary
shareholders |
|
(4,203,333) |
(4,080,914) |
|
|
|
As
at
31 December 2022
No. |
As
at
31 December
2021
No. |
| Weighted average
number of ordinary shares for the purposes of calculating basic
loss per share and diluted loss per share |
|
244,654,098 |
223,253,859 |
750,000 options (31 December 2021:
1,500,000) and nil performance rights (31
December 2021: nil) have not been included in the diluted
earnings per share, as they were anti-dilutive in the current and
prior period.
17. Related party transactions
Transactions with
Key Management Personnel and Related Parties
No reportable related party transactions occurred during the
period under review.
18. Notes to the Consolidated Statement of Cashflows
Reconciliation of loss for the period
to net cash flows from operating activities
|
|
Half
year ended
31 December
2022
US$ |
Half year ended
31 December 2021
US$ |
|
|
|
|
| Net
loss |
|
(4,203,333) |
(4,080,914) |
| Add/less
non-cash items |
|
|
|
| Depreciation |
|
26,671 |
16,682 |
| Share based
payments |
|
417,818 |
35,130 |
| Impairment of
assets |
|
116,041 |
177,234 |
| Foreign exchange
losses |
|
42,468 |
410,204 |
| Changes in Trade and
other receivables |
|
481,077 |
(88,819) |
| Changes in Trade and
other payables |
|
300,632 |
(673,842) |
| Net cash used in
operating activities |
|
(2,818,626) |
(4,204,325) |
The movement in trade and other payables shown in the Statement
of Financial Position includes items related to capital projects.
Accordingly investing cash flows have been adjusted for these
movements.
19. Subsequent events
Post period end, on 6 January
2023, the company issued 7,250,000 fully paid ordinary
shares to M&G Investment Management at a price of £0.44 per
share and raised US$4 million.
Refer to note 3 for details of developments regarding
funding.
No other matters or circumstances have arisen since 31 December 2022 that have significantly
affected, or may significantly affect:
- The Group’s operations in future financial years; or
- The results of those operations in future financial
years; or
- The Group’s state of affairs in future financial
years.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge: a. the Condensed
Interim Report have been prepared in accordance with IAS 34 Interim
Financial Reporting and give a true and fair view of the assets,
liabilities, financial position and profit of the Group; and b. the
Interim Management Report includes a fair review of the information
required by FCA’s Disclosure and Transparency Rules (DTR 4.2.7 R
and 4.2.8 R).
By order of the Board
Mr Paul
Atherley
30 March 2023