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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Edenville Energy Plc | LSE:EDL | London | Ordinary Share | GB00BN47NP32 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 14.25 | 14.00 | 14.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMEDL
RNS Number : 2519Q
Edenville Energy PLC
05 June 2018
05 June 2018
EDENVILLE ENERGY PLC
("Edenville" or the "Company" or the "Group")
Annual Results for the year ended 31 December 2017
Edenville Energy plc (AIM: EDL), the company developing a coal project in southwest Tanzania, is pleased to announce its audited results for the year ended 31 December 2017.
2017 Highlights
-- Infrastructure purchased and commissioned to allow mining operations to commence and coal to be processed
-- Mining licence enlargement completed -- Commencement of mining at the Company's Rukwa site -- Trial shipments to commercial customers made -- Further progress on Power Plant Project
Post Period Highlights
-- Operation of the mine and wash plant developed following the construction phase and a variety of sized coal products are being produced
-- From 1 January 2018 to 24 May 2018 approximate numbers show 20,634 tonnes of Run of Mine coal processed, producing 5,665 tonnes of washed coal and 9,285 tonnes of fine coal
-- Of the 5,665 tonnes of washed coal, 3,101 tonnes has been shipped and the Company is in receipt of orders that in aggregate total more than the currently stockpiled washed coal
Commenting, Jeffrey Malaihollo, Chairman of Edenville, said: "2017 was a pivotal year for Edenville as we moved from being an exploration company through to producing coal. It is a significant achievement to construct and operate a modern coal mine within approximately eight months and I believe the Company is now well positioned for the future.
"As we move through 2018 we intend to increase production levels from our Rukwa Mine and report further sales and contracts in the coming months, whilst continuing to progress our Power Plant Project."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
For further information please contact:
Edenville Energy Plc Jeff Malaihollo - Chairman +44 (0) 20 3934 Rufus Short - CEO 6630 Northland Capital Partners Limited (Nominated Adviser and Broker) David Hignell John Howes +44 (0) 20 3861 Jamie Spotswood 6625 Optiva Securities Limited (Broker) Jeremy King +44 (0) 20 3137 Graeme Dickson 1902 IFC Advisory (Financial PR and IR) Tim Metcalfe Graham Herring +44 (0) 20 3934 Heather Armstrong 6630
Chairman's Statement
During 2017 Edenville evolved from an exploration company through to producing coal for trial orders. This is in line with the strategy we set out last year to generate cash flow from mining operations whilst pursuing our longer-term Coal-to-Power Project. We believe that this is the best route to creating a profitable mining company around our coal deposit at the Rukwa site.
In February 2017 we raised GBP2,000,000, before expenses, to acquire a wash plant, critical mining equipment and commence construction at Rukwa. This was followed by another capital raise of GBP1,250,000, before expenses, in October to progress the project into production following construction and to develop the mining operation and infrastructure. By early October the Company had started mining coal on a trial basis and the wash plant entered the commissioning phase, with the first shipments of its trial coal being sent to East African customers in November and December.
It is a significant achievement to construct and operate a modern coal mine within approximately eight months. Quotations from contractors to supply equipment and construct the mine were significantly higher than the development route we chose, with some quoted capital costs such as the wash plant more than twice as high. Similarly, quotations for operating costs from contract miners were much higher than what we are able to achieve.
Following the commissioning of the plant, the operation is now producing and selling coal. The majority of orders have, up to now, been for trial coal and the Company is working with these companies with the intention of securing long-term supply contracts. The intention is to break even and achieve a cash flow positive position on the receipt of additional orders. Our target is a regularised 8,000 to 10,000 tonnes of production per month by the end of 2018 and although no guarantees can be given that our intended production target will be met in the desired timeframe, with the implementation of the plant upgrade, the Company's Directors believe this is achievable.
High-level discussions conducted with Tanzania Electric Supply Company ("Tanesco") and our partner Sinohydro Corporation of China, regarding the Power Plant Project, continue to shape our longer-term strategy. Additionally, the mining operation has given the Company valuable input on the character of the coal which will be critical in putting together a Definitive Feasibility Study for the Power Plant Project. Edenville and Sinohydro continue to work together under the terms of their MoU with the intention of progressing the development of the power project within the guidelines given by the Tanzanian authorities.
During the year we have had visits to the mine from various high-level officials and we anticipate that the Power Plant Project will advance more swiftly in the coming months now that the mine is operational. Amongst these visits was a recent inspection in February 2018 by the Deputy Minister of Minerals who also talked with the local community on the impact of the project to date. As one of the larger employers in the region we are very conscious of our role in local community.
Post Period
By January 2018, coal mining was underway and the wash plant was operational, as the Company continued to adjust and optimise production and quality control procedures. As is typical in any start-up operation, the Company faced operational challenges during this period including:
-- Unusually heavy rainy season - affecting both the access and regional roads;
-- Dependence on third party trucks to transport the coal to customers - affecting the timing of sales of coal and the supply of large-scale commercial samples to customers for long-term contracts; and
-- Larger percentage of fine coal - affecting the efficiency of the wash plant.
All of these challenges have either been or are in the process of being resolved, however they did impact the Company's ability to enter full production in line with its initial timetable.
Customers are taking trial orders of differing quantities, some of several thousand tonnes. As announced on 27 February 2018, one group has entered into a one year contract for 2,000 tonnes of coal per month. Other potential customers are showing interest, so to ensure that current and potential orders can be fulfilled and to provide some additional working capital, the Company took the decision to raise GBP740,000 (before expenses) from the market in April 2018.
From 1 January 2018 to 24 May 2018 approximate numbers show we have processed 20,634 tonnes of Run of Mine ("ROM coal"), producing 5,665 tonnes of washed coal and 9,285 tonnes of fine coal. Of the 5,665 tonnes of washed coal, 3,101 tonnes has been shipped and we are in receipt of orders that in aggregate total more than the currently stockpiled washed coal. The wet season was a challenging time to start operations, but throughput is now increasing as dry conditions become more prevalent.
In closing I would like to thank all our stakeholders including you the Shareholders, our partners, the local authorities and local communities, my fellow Directors, our employees and contractors who have collectively enabled the Company to transition from exploration to production.
We look forward to increasing the production from our Rukwa Mine and reporting further sales and contracts in the coming months.
Dr Jeffrey Malaihollo
Chairman
Chief Executive Officers Report
I would first like to thank our shareholders and employees for their commitment over the previous year that has enabled the Company to evolve from an exploration project to a mine over the course of 2017.
We finished 2017 with an operating mine producing coal, established in under one year with several trial orders for coal and the prospect of additional long-term orders as production continued to ramp up.
In February 2017 GBP2,000,000, before expenses, was raised to fund the purchase of critical items for production and the construction of the project. Items included the coal washing plant, sourced from the UK, along with essential mobile equipment such as an excavator for the mine and a wheel loader for the plant stockpile area.
The wash plant was shipped to Tanzania in April and May. The customs formalities and in country transport took longer than we had anticipated, but the plant started to arrive on site in August and construction then proceeded swiftly thereafter, taking advantage of the dry season.
In parallel with the plant assembly we started to open up the mining area, stripping overburden from September onwards. After reviewing several different options for mining we decided to owner manage the project, hiring in relevant equipment as necessary to supplement our own loading units. So far this has proved to be an efficient and cost effective way to mine and we have been able to open up the mine with a minimal fleet of one excavator and three trucks, supported by ancillary equipment such as a hired bulldozer and grader.
In April 2017 the mining licence enlargement was completed to include the previous Primary Mining Licences (PML) in the Mkomolo area. This enabled a smooth transition to mining, with all areas of Mkomolo being held in the one licence, ML562/2016.
We constructed a new road over a length of 16km from the main public road to the west to allow access to site. Where possible existing tracks were utilised and upgraded but over 10km of brand new road was also constructed during the road building process. This road, although primarily for access to the site and use by trucks taking delivery of coal, also serves as a valuable resource for local villages and communities, which is part of our ongoing commitment to corporate social responsibility (CSR).
Once the remaining components were delivered to site in late September the construction was completed with the plant switched on in October. First collections of coal for trail orders were collected by customers in November.
Earlier in the year we had made the decision to expedite the construction process in the Tanzania dry season with the aim of completing the project by November. Whilst this enabled construction to take place in the dry months, it did mean we would be commissioning the new mining and processing operations during the wet season. Heavy rains, particularly in December and running into 2018, provided challenges to site access at times but the mining operation was able to keep pace with demand and plant capacity.
The site infrastructure installed included a weighbridge and a laboratory to analyse the coal for quality before and during shipment.
In parallel with the mine, it was clear the progression of the planned power plant depended to a great extent on the new energy policy and commercial metrics being developed by the Tanzanian Government throughout 2017. During 2017 we held discussions with the Senior Management of Tanesco to move our power project along according to the wishes of the Tanzanian Government. In May 2017 the Company received a formal request from the Ministry of Energy and Minerals (MEM) to proceed with development of the Power Project. This was a very positive step by the Government and we are expecting clarity from the newly formed Ministry of Energy on the timing of the necessary transmission infrastructure and commercial terms for operation in 2018.
Undoubtedly the commissioning of the coal mine and the availability of the coal has contributed to the Project's ability to move to the next stage of the power plant development process. It should be emphasised that prior mine development is crucial to any future power development. Without a clear understanding of the coal and its characteristics as a fuel for the power plant it would be extremely difficult to finance the construction of a power plant that relied exclusively on the coal deposit as a fuel source. Only by opening up the coal and through a significant trial burn of the planned fuel, can an efficient design for the plant be determined.
Along with our EPC (Engineering, Procurement and Construction) partner, Sinohydro, we are now waiting for the power scenario to be clearly mapped out by the newly formed Ministry of Energy and the Tanzanian authorities. The Company continues to work with Sinohydro to progress the power project in line with the Tanzanian Government timeline and policy.
Post Period
Going into 2018 the operation of the mine and wash plant developed following the construction phase. Multiple short-term orders for coal have been fulfilled and there are ongoing orders for approximately 7,000 tonnes of coal. From January to May 2018, the Project had processed approximately 20,000 tonnes of ROM coal. Throughput has now started to increase as the wet season comes to an end and this along with the modifications being carried out on the plant should result in increased production in the coming months ahead.
Mining has proved efficient with our fleet of one excavator and three hired in pit haul trucks achieving mining rates of approximately 40,000 cubic metres (60,000 tonnes) of raw material per month. As production increases we plan to use some of the funds raised in April 2018 to supplement this fleet. A likely scenario being an additional excavator (most likely Company owned) and a further 3 locally hired in pit trucks to open up new mining areas. At this stage the overburden can be excavated without drilling and blasting, keeping mining costs to a minimum.
The wash plant is operating well and can produce a consistent clean, sized product. A variety of sized products are being produced, the majority of these in a range between 10mm to 70mm. The average product quality is currently coming out at approximately 5800kcal/kg on a gross calorific value basis. As the mine has developed we have identified some modifications and improvements that can be made to optimise throughput and treatment of the raw coal to reach our target production levels. A filtration system has been constructed that cleans the fines from the waste water and this is improving water usage and treatment overall. We are also planning on installing a pre-screening module to take out the majority of fines before it reaches the washing circuit and this should greatly improve general throughout rates in the plant.
There is currently around 70% of the ROM coal that is converting to either sized washed coal or fines coal, both of which have an economic value. If this scenario continues, it would be positive in terms of the amounts of coal available for the power plant.
Financing
The Company raised a total of GBP3,250,000 (before expenses) in 2017, the majority of this being committed to the construction and development of the Rukwa Coal Project. GBP2,000,000 (before expenses) was raised in February 2017 on the decision to progress to commercial mining which secured various capital items and enabled the construction to be completed by October 2017. This capital also enabled the construction of the access road, compensation for the Stage 1 mining area and the opening up of accessible coal in the mine. A further GBP1,250,000 (before expenses) was raised in October 2017 predominantly for working capital for the mine to enter the commissioning and production phase. Throughout the process we have continued to be conscious of keeping both operational and construction costs to a minimum and developing the mine in the most cost effective way without debt. The Company now has a fully functioning mining project that can provide a variety of products to our existing customers. The majority of production costs are calculated in the local currency of Tanzanian Shillings, as are the majority of our sales. A small quantity of trial coal sales did occur earlier in 2017 with approximately 200 tonnes being shipped to customers. Sales of trial coal are netted-off against development expenditure, rather than recognised in the income statement.
Corporate Social Responsibility
The Company has continued to take its corporate social responsibility (CSR) very seriously and understands it social licence to operate in Tanzania is an essential part of making its projects viable in the long term. The construction of the mining project provided several opportunities to improve infrastructure for the local community, the most visible being the construction of the road from Kipandi, past Mkomolo village and beyond, to the mine. This has opened up a major artery in the area which services farmers, the local population and communications as well as the mine itself.
Wherever possible we have sought to employ local people from surrounding villages. Many of the operators and management are local and are proving to be highly competent and skilled employees. The positive social benefits also overflow into the general community where enterprising individuals are providing services such as food supply for workers.
Relinquishments
In February 2017 the Company's remaining exploration prospecting licence for uranium was relinquished. This Matiri South licence (PL6147/2009) covered 28.5km(2) and was originally acquired for shares at the time of the Company's admission to AIM in 2010. After initial investigation the licence area appeared to contain little indication of economic mineralisation.
Summary
2017 was an important year for the Company where it took its coal resource in Tanzania from pre-development stage to a functioning mining operation in less than 12 months. The project is currently fulfilling orders for various companies with the intention of securing further long-term commitments for offtake of coal. In parallel the Tanzanian Government is firming up its policy and direction on the implementation of coal fired power generation in the country and we expect to integrate our project into this structure as it is finalised by the various government departments and Tanesco. Importantly the Company now has an accessible fuel resource for coal fired power generation and is ready to move forward in parallel with the Tanzanian Government.
Rufus Short
Chief Executive Officer
GROUP STATEMENT OF COMPREHENSIVE INCOME
YEARED 31 DECEMBER 2017
Hot Features
Premium
Note 2017 2016
GBP GBP
Administration expenses 6 (927,640) (892,854)
Share based payments 23 (155,077) -
Written off intangible assets 14 (104,211) (2,271,560)
Group operating loss (1,186,928) (3,164,414)
Finance income 10 864 18
Loss on operations before taxation (1,186,064) (3,164,396)
Income tax 11 - 173,450
Loss for the year (1,186,064) (2,990,946)
Other comprehensive (loss)/income
Loss/(gain) on translation of
overseas subsidiary (553,211) 1,088,078
Total comprehensive loss for
the year (1,739,275) (1,902,868)
Attributable to:
Equity holders of the Company (1,738,557) (1,900,371)
Non-controlling interest (718) (2,497)
Loss per Share (pence) Basic and diluted loss per share 12 (0.11p) (0.50p)
All operating income and operating gains and losses relate to continuing activities.
No separate statement of comprehensive income is provided as all income and expenditure is disclosed above.
GROUP STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
Note 2017 2016
GBP GBP
Non-current assets
Property, plant and
equipment 13 1,059,583 19,222
Intangible assets 14 5,071,318 4,705,760
6,130,901 4,724,982
Current assets
Trade and other receivables 15 299,666 170,341
Cash and cash equivalents 16 951,078 246,120
1,250,744 416,461
Current liabilities
Trade and other payables 17 (146,797) (133,486)
Current assets less
current liabilities 1,103,947 282,975
Total assets less
current liabilities 7,234,848 5,007,957
Non-current liabilities
Provision for deferred 18 - -
tax
7,234,848 5,007,957
Equity
Called-up share capital 19 2,679,750 2,563,325
Share premium account 17,910,928 14,250,401
Share option reserve 309,943 108,802
Foreign currency translation
reserve 554,965 1,108,176
Retained earnings (14,212,274) (13,026,926)
Attributable to the equity
shareholders of the company 7,243,312 5,003,778
Non- controlling interests (8,464) 4,179
Total equity 7,234,848 5,007,957
The financial statements were approved by the board of directors and authorised for issue on 4 June 2018 and signed on its behalf by:
Rufus Short
Director
Company registration number: 05292528
GROUP STATEMENT OF CHANGES IN EQUITY
YEARED 31 DECEMBER 2017
--------------------------------------------------Equity
Interests-------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January
2016 1,872,978 13,623,545 (10,059,286) 129,610 20,098 5,586,945 5,618 5,592,563
Issue of share
capital 690,347 697,806 - - - 1,388,153 - 1,388,153
Cost of issue - (70,950) - - - (70,950) - (70,950)
Exercise of - - - - - - - -
warrants
Cancellation
of share options - - 20,808 (20,808) - - - -
Foreign currency
translation - - - - 1,088,078 1,088,078 1,059 1,089,137
Loss for the
year - - (2,988,448) - - (2,988,448) (2,498) (2,990,946)
_________ _________ _________ _________ _________ _________ _________ _________
At 31 December
2016 2,563,325 14,250,401 (13,026,926) 108,802 1,108,176 5,003,778 4,179 5,007,957
Issue of share
capital 116,425 3,869,091 - - - 3,985,516 - 3,985,516
Cost of share
issue - (162,500) - - - (162,500) - (162,500)
Share
options/warrants
charge - (46,064) - 201,141 - 155,077 - 155,077
Foreign currency
translation - - - - (553,211) (553,211) (9,327) (562,538)
Loss for the
year - - (1,185,348) - - (1,185,348) (718) (1,186,066)
Non- controlling
interest share
of goodwill - - - - - - (2,598) (2,598)
_________ _________ _________ _________ _________ _________ _________ _________
At 31 December
2017 2,679,750 17,910,928 (14,212,274) 309,943 554,965 7,243,312 (8,464) 7,234,848
_________ _________ _________ _________ _________ _________ _________ _________
GROUP CASH FLOW STATEMENTS
YEARED 31 DECEMBER 2017
Year ended Year ended
31 December 31 December
Note 2017 2016
GBP GBP
Cash flows from operating activities
Operating loss (1,186,928) (3,164,414)
Impairment of tangible & intangible
non-current assets 104,211 2,271,560
Depreciation 65,726 5,819
Share based payments 155,077 -
Increase in trade and other receivables (149,109) (7,219)
Increase in trade and other payables 21,905 46,776
Foreign exchange differences (142,174) -
Net cash outflow from operating
activities (1,131,292) (847,478)
Cash flows from investing activities
Purchase of exploration and evaluation
assets (882,649) (541,455)
Purchase of property, plant and (1,104,381) -
equipment
Finance income 864 18
Net cash used in investing activities (1,986,166) (541,437)
Cash flows from financing activities
Proceeds from issue of ordinary
shares 3,985,515 1,388,153
Share issue costs (162,500) (70,950)
Net cash inflow from financing
activities 3,823,015 1,317,203
Net increase/(decrease) in cash
and cash equivalents 705,557 (71,712)
Cash and cash equivalents at beginning
of year 246,120 316,652
Effect of foreign exchange rate
changes on cash and cash equivalents (599) 1,180
Cash and cash equivalents at end
of year 16 951,078 246,120
NOTES TO THE GROUP FINANCIAL STATEMENTS
YEARED 31 DECEMBER 2017
1. General Information
Edenville Energy Plc is a public limited company incorporated in the United Kingdom. The address of the registered office is Aston House, Cornwall Avenue, London, N3 1LF. The company's shares are listed on AIM, a market operated by the London Stock Exchange.
The principal activity of the Group is the exploration, development and mining of energy commodities predominantly coal in Africa.
2. Group Accounting Policies
Basis of preparation and statement of compliance
The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC Interpretations and the parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Group's financial statements have also been prepared under the historical cost convention, as modified by the revaluation of available for sale investments.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group's financial statements are disclosed in Note 4.
Going concern
At 31 December 2017 the Group had cash balances totalling GBP951,078.
On 27 April 2018 the company raised GBP740,000, before expenses, via the issue of 211,428,572 ordinary shares of 0.02p each at 0.35p per share.
Based on the current working capital forecast which includes the recent placing, the Group has sufficient funds in order to allow it to move into production phase. However, if there are delays in the production, impacting revenue generation, or delays in procuring orders, then the Group may require additional funds within twelve months of the date of approval of these financial statements. The ability of the Group to raise additional funds is dependent upon investor appetite.
Expenditure on excavation is related to the level of orders and both head office costs and Tanzanian administration costs can be reduced if the additional funds cannot be raised and the Group therefore continues to adopt the going concern basis in preparing its consolidated financial statements.
Standards and interpretations in issue but not yet effective or not yet relevant
At the date of authorisation of these financial statements the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective:
Effective
date for
accounting
period beginning
on or after
IFRS Amendments to clarify the classification 1 January
2 and measurement of share-based 2018
payment transactions
IFRS Amendments resulting from Annual 1 January
3, IFRS Improvements 2015-2017 Cycle 2019
11 (remeasurement of previously
held interest)
IFRS Finalised version, incorporating 1 January
9 requirements for classification 2018
and measurement, impairment,
general hedge accounting and
derecognition
IFRS Amendments regarding prepayment 1 January
9 features with negative compensation 2019
and modifications of financial
liabilities
IFRS Clarification of IFRS 15 1 January
15 2018
IFRS Leases - new standard 1 January
16 2019
IAS Amendments resulting from Annual 1 January
12 Improvements 2015-2017 Cycle 2019
(income tax consequences of
dividends)
IAS Amendments regarding plan amendments, 1 January
19 curtailments or settlements 2019
IAS Amendments resulting from Annual 1 January
23 Improvements 2015-2017 Cycle 2019
(intended use or sale)
IAS Amendments resulting from Annual 1 January
28 Improvements 2014-2016 Cycle 2018
(clarifying certain fair value
measurements)
IAS Long-term interests in associates 1 January
28 and joint venture 2019
IAS Amendments to clarify transfers 1 January
40 or property to, or from, investment 2018
property.
IFIC Foreign currency transactions 1 January
22 and advance consideration 2018
The Directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the Group's financial statements.
Share based payments
The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets and remaining an employee of the entity over a specified time period); and
-- excluding the impact of any non-vesting conditions (for example, the requirement of employees to save).
Assumptions about the number of options that are expected to vest include consideration of non-market vesting conditions. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the Group issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
Basis of consolidation
The Group's financial statements consolidate the financial statements of Edenville Energy Plc and all its subsidiary undertakings (Edenville International (Seychelles) Limited, Edenville International (Tanzania) Limited and Edenville Power (TZ) Limited) made up to 31 December 2017. Profits and losses on intra-group transactions are eliminated on consolidation.
Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
Business combinations
The Group adopts the acquisition method in accounting for the acquisition of subsidiaries. On acquisition the cost is measured at the fair value of the assets given, plus equity instruments issued and liabilities incurred or assumed at the date of exchange. The assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition. Any excess of the fair value of the consideration over the fair value of the identifiable net assets acquired is recorded as goodwill.
Any deficiency of the fair value of the consideration below the fair value of identifiable net assets acquired is credited to the income statement in the period of the acquisition.
The results of subsidiary undertakings acquired or disposed of during the year are included in the group statement of comprehensive income statement from the effective date of acquisition or up to the effective date of disposal.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the group. Inter-company transactions and balances between group companies are eliminated.
Revenue recognition
Revenue from the sale of energy commodities is recognised upon delivery of goods to the customers. Interest income is recognised on a proportional basis taking into account the effective interest rates applicable to the financial assets.
Whist the group is in the development stage revenue from test sales is capitalised within development costs within intangible assets.
All revenue is stated net of the amount of sales tax.
Currently the group does not generate any revenue.
Presentational and functional currency
This financial information is presented in pounds sterling, which is the Group's functional currency.
In preparing the financial statements of individual entities, transaction in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date.
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations (including comparatives) are expressed in pounds sterling using exchange rates prevailing at the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange differences arising, if any, are classified as equity and transferred to the Group's foreign currency translation reserve. Such translation differences are recognised in the income statement in the period in which the foreign operation is disposed.
Financial instruments
The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, or financial liability or an equity instrument in accordance with the substance of contractual arrangement.
Financial instruments are recognised on the balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument.
Financial assets
Financial assets comprise investments, cash and cash equivalents and receivables. Unless otherwise indicated, the carrying amounts of the Group's financial assets are a reasonable approximation of their fair values.
Recognition and measurement
Investments are initially recognised at fair value plus transactions costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when rights to receive cash flows from investments have expired or the group has transferred substantially all the risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost.
Equity investments available for sale
Equity investments available for sale are non-derivatives that are either designated in this category or not classified in any of the other categories. Equity investments available for sale do not have a quoted market price in an active market. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Investments are initially classified at fair value. Gains and losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists the cumulative loss, measured as the difference between the acquisition cost and the current fair value, less any impairment loss previously recognised in statement of comprehensive income, is removed from equity and recognised in the statement of comprehensive income.
Where the fair value cannot be reliably measured as a result of a lack of an active market and/or reliable estimates could not be made the equity investments are measured at cost.
Trade and other receivables
Provision for impairment of trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts due to it in accordance with the original terms of those receivables. The amount of the write-down is the difference between the receivables carrying amount and the present value of the estimated future cash flows.
An assessment for impairment is undertaken at least annually.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, demand deposits and other short term highly liquid investments that are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial liabilities comprise only trade and other payables.
All financial liabilities are recorded at amortised cost, using the effective interest method, with interest-related charges being recognised as an expense under finance costs in the Income Statement.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged, is cancelled, or expires.
Property, plant and equipment
Property, plant and equipment are stated at cost on acquisition less accumulated depreciation and accumulated impairment losses.
Depreciation is provided on all property, plant and equipment categories at rates calculated to write off the cost, less estimated residual value on a reducing balance basis over their expected useful economic life. The depreciation rates are as follows:
Basis of depreciation
Fixtures, fittings 25% reducing balance
and equipment
Plant and machinery 5 years straight line
Office equipment 25% reducing balance
Motor vehicles 25% reducing balance
Costs capitalised include the purchase price of an asset and any costs directly attributable to bringing it into working condition for its intended use.
Finance costs
Finance costs of debt, including premiums payable on settlement and direct issue costs are charged to the income statement on an accruals basis over the term of the instrument, using the effective interest method.
Income taxation
The taxation charge represents the sum of current tax and deferred tax.
The tax currently payable is based on the taxable profit for the period using the tax rates that have been enacted or substantially enacted by the balance sheet date. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred taxation
Deferred tax is recognised, using the liability method, in respect of temporary differences between the carrying amount of the Group's assets and liabilities and their tax base. Deferred tax liabilities are offset against deferred tax assets within the same taxable entity or qualifying local tax group. Any remaining deferred tax asset is recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits, within the same jurisdiction, in the foreseeable future against which the deductible temporary difference can be utilised. Deferred tax is determined using tax rates that are expected to apply in the periods in which the asset is realised or liability settled, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Deferred tax is recognised in the income statement, except when the tax relates to items charged or credited directly in equity, in which case the tax is also recognised in equity.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as deduction, net of tax, from the proceeds.
Exploration and evaluation assets
Capitalisation
Certain costs (other than payments to acquire the legal right to explore and costs which are directly attributable to those payments) incurred prior to acquiring the rights to explore are charged directly to the income statement. All costs incurred after the rights to explore an area have been obtained, such as geological and geophysical costs and other direct costs of exploration and appraisal are accumulated and capitalised as intangible exploration and evaluation ("E&E") assets. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the areas or where activities in the areas have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves.
E&E costs are not amortised prior to the conclusion of appraisal activities.
At completion of appraisal activities, if technical feasibility is demonstrated and commercial reserves are discovered, then, following development sanction, the carrying value of the relevant E&E asset will be reclassified as a development and production ("D&P") asset, but only after the carrying value of the relevant E&E asset has been assessed for impairment, and where appropriate, its carrying value adjusted. If after completion of appraisal activities in the area, it is not possible to determine technical feasibility and commercial viability or if the legal right to explore expires or if the Company decides not to continue exploration and evaluation activity, then the costs of such unsuccessful exploration and evaluation are written off to the income statement in the period the relevant events occur.
Impairment
Management consider on a regular basis the geological resources and exploration and evaluation results of each licence and based on their analysis may relinquish or abandon a particular licence area. When this occurs the costs related to the relinquished area are written off to the income statement.
Where the licences will be retained an impairment review is performed when facts and circumstances indicate that the carrying value of E&E assets may exceed its recoverable amount.
For E&E assets when there are such indications, an impairment test is carried out by grouping the E&E assets with the D&P assets belonging to the same geographic segment to form the Cash Generating Unit ("CGU") for impairment testing. The equivalent combined carrying value of the CGU is compared against the CGU's recoverable amount and any resulting impairment loss is written off to the income statement. The recoverable amount of the CGU is determined as the higher of its fair value less costs to sell and its value in use.
Development assets
When the technical feasibility and commercial viability of extracting a mineral resource are demonstrable, the Group:
-- stops capitalising E&E costs for that area -- tests recognised E&E assets for impairment; and -- ceases classifying any unimpaired E&E assets (tangible and intangible) as E&E.
For Evaluation and Exploration assets reclassified to development assets, the Group classifies such assets either as tangible or intangible development assets. Intangible E&E assets may be reclassified into tangible development assets or intangible development assets and vice versa. Identifiable tangible assets that cease to be classified as E&E assets are generally classified as tangible development assets. Any costs incurred in testing the assets to determine if they are functioning as intended, are capitalised, net of any proceeds received from selling any product produced while testing. Identifiable intangible E&E assets may continue to be classified as an intangible asset, or may be reclassified as a tangible asset if the intangible asset is considered to be integral to the tangible development asset and the tangible element of the asset is more significant.
Amortisation
On reclassification of E&E assets, an entity depreciates (amortises) the resulting tangible development assets. Intangible development assets are not depreciated until the production stage is reached at which point both tangible and intangible development assets, are depreciated using the units-of-production method is used.
Goodwill
At the date of acquisition of a subsidiary undertaking, fair values are attributed to the acquired identifiable assets, liabilities and contingent liabilities. Goodwill represents the difference between the fair value of the purchase consideration and the acquired interest in the fair value of those net assets.
Goodwill is initially recognised at fair value. Any negative goodwill is credited to the income statement in the year of acquisition. If an undertaking is subsequently sold, the amount of goodwill carried on the balance sheet at the date of disposal is charged to the income statement in the period of disposal as part of the gain or loss on disposal.
Goodwill is associated with exploration and evaluation and development assets, the impairment of which is discussed in the accounting policy note for exploration and evaluation assets.
3. Financial risk management
Fair value estimation
The carrying value less impairment provision of trade receivables and payables is assumed to approximate their fair values, due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments.
4. Critical accounting estimates and areas of judgement
The Group makes estimates and assumptions concerning the future, which by definition will seldom result in actual results that match the accounting estimate. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are those in relation to:
-- the impairment of intangible assets; -- classification of exploration and evaluation assets; and -- share based payments.
Impairment - intangible assets
The Group is required to perform an impairment review, on reclassification of exploration and evaluation assets to development assets, for each CGU to which the asset relates. Impairment review is also required to be performed on goodwill annually and on other intangible assets when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount. The recoverable amount is based upon the Directors' judgements and are dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development and future profitable production or proceeds from the disposal until the technical feasibility and commercial viability of extracting a mineral resource becomes demonstrable, at which point the value is estimated based upon the present value of the discounted future cash flows.
The outcome of ongoing exploration and evaluation and development assets, and therefore whether the carrying value of exploration and evaluation and development assets will ultimately be recovered, is inherently uncertain.
In assessing whether an impairment is required for the carrying value of an asset, its carrying value is compared with its recoverable amount. The recoverable amount is the higher of the asset's fair value less costs to sell and value in use. Given the nature of the Group's activities, information on the fair value of an asset is usually difficult to obtain unless negotiations with potential purchasers or similar transactions are taking place. Consequently, unless indicated otherwise, the recoverable amount used in assessing the impairment charges described below is value in use.
The calculation of value in use is most sensitive to the following assumptions:
-- Production volumes -- Discount rates -- Coal prices -- Operating overheads
Estimated production volumes are based on the production capability of the plant and estimated customer demand.
The Group generally estimates value in use using a discounted cash flow model. The future cash flows are adjusted for risks specific to the asset and discounted using a pre-tax discount rate of 10%.
The directors have assessed the value of exploration and evaluation expenditure and development assets and goodwill carried as intangible assets. In their opinion there has been no impairment loss to these intangible assets in the period, other than the amounts charged to the income statement.
At the reporting date, the carrying value of evaluation expenditure and development assets is GBP4,757,087 (2016: GBP4,358,699) and the carrying value of goodwill is GBP314,231 (2016: GBP347,091).
Classification of exploration and evaluation assets
E&E assets are reclassified from Exploration and Evaluation, to development assets, when evaluation procedures have been completed and the Directors consider commercial viability has occurred. The Directors consider commercial viability occurs when the project development reaches a stage where the mining and processing of the mineral is at commissioning stage and the project has been successfully built or developed in such a way that cash flow can be received for the product in question. Critically this point shows the project has been able to be developed for a cost that can be both quantified and also sourced in some way to allow the project to reach this stage. Commissioning is generally defined in mineral exploitation as the point at which the project can deliver products in a regular and sustainable way, be that from the mine or a processing plant.
When the commissioning stage has completed, it is considered that the mine has moved into the production phase of its lifecycle.
Share based payments
The estimate of share based payments costs requires management to select an appropriate valuation model and make decisions about various inputs into the model including the volatility of its own share price, the probable life of the options, the vesting date of options where non-market performance conditions have been set and the risk free interest rate.
5. Segmental information
The Board considers the business to have one reportable segments being Coal exploration and development projects, the Uranium exploration projects were fully written off in 2016.
Other represents unallocated expenses and assets held by the head office. Unallocated assets primarily consist of cash and cash equivalents.
Exploration and
Development Projects
2017 Coal Uranium Other Total
Consolidated Income GBP GBP GBP GBP
Statement
Intangible assets
written off (104,210) - - (104,210)
Share based payments - (155,077) (155,077)
Other expenses (191,586) - (736,055) (927,641)
Group operating loss (295,796) - (891,132) (1,186,928)
Finance income - - 864 864
Loss on operations
before taxation (295,796) - (890,268) (1,186,064)
Income tax - - - -
Loss for the year (295,796) - (890,268) (1,186,064)
2016
Consolidated Income
Statement
Impairment of intangible
assets - (2,271,560) - (2,271,560)
Share based payments - - - -
Other expenses (111,095) - (781,759) (892,854)
Group operating loss (111,095) (2,271,560) (781,759) (3,164,414)
Finance income - - 18 18
Loss on operations
before taxation (111,095) (2,271,560) (781,741) (3,164,396)
Income tax - 173,450 - 173,450
Loss for the year (111,095) (2,098,110) (781,741) (2,990,946)
By Business Carrying value Additions to Total liabilities
Segment of segment assets non-current assets
and intangibles
2017 2016 2017 2016 2017 2016
GBP GBP GBP GBP GBP GBP
Coal 6,421,089 4,872,249 1,987,031 541,455 92,898 95,265
Other 960,556 269,194 - - 53,899 38,221
7,381,645 5,141,443 1,987,031 541,455 146,797 133,486
By Geographical
Area
GBP GBP GBP GBP GBP GBP
Africa (Tanzania) 6,421,089 4,872,249 1,987,031 541,455 92,898 95,265
Europe 960,556 269,194 - - 53,899 38,221
7,381,645 5,141,443 1,987,031 541,455 146,797 133,486
6. Administration expenses
2017 2016
GBP GBP
Staff costs 356,805 337,919
Other expenses 570,835 554,935
927,640 892,854
7. Auditors' remuneration
2017 2016
GBP GBP
Fees payable to the Company's auditor
for the audit of the parent company
and consolidated accounts 30,000 20,000
8. Employees
2017 2016
GBP GBP
Wages and salaries 221,552 308,874
Share based payments 113,686 -
Social security costs 20,732 28,766
Pensions 835 279
356,805 337,919
Included with exploration and evaluation assets (note 14) are capitalised wages and salary costs of GBP212,572 (2016: GBP202,264).
The average number of employees and directors during the year was as follows:
2017 2016
Administration 10 8
9. Directors' remuneration
2017 2016
GBP GBP
Emoluments 221,000 290,297
Shared based payments 113,686 -
Pensions 835 279
335,521 290,576
The highest paid director received remuneration of GBP197,260 (2016: GBP130,124).
Directors' interest in outstanding share options per director is disclosed in the directors' report.
10. Finance income
2017 2016
GBP GBP
Interest income on short-term bank
deposits 864 18
864 18
11. Income tax
2017 2016
GBP GBP
Current tax:
Current tax on loss for the year - -
Total current tax - -
Deferred tax
On write off/impairment on intangible
assets - 173,450
Tax charge for the year - 173,450
No corporation tax charge arises in respect of the year due to the trading losses incurred. The Group has Corporation Tax losses available to be carried forward and used against trading profits arising in future periods of GBP5,550,871 (2016: GBP4,827,266).
A deferred tax asset of GBP943,110 (2016: GBP819,918) calculated at 17% (2016: 17%) has not been recognised in respect of the tax losses carried forward due to the uncertainty that profits will arise against which the losses can be offset.
The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:
2017 2016
GBP GBP
Loss on ordinary activities
before tax (1,186,064) (3,164,396)
Expected tax credit at standard
rate of UK Corporation Tax
19% (2016: 20%) (225,352) (632,879)
Disallowable expenditure 87,667 477,838
Depreciation in excess of capital
allowances 200 281
Tax losses carried forward 137,485 154,760
Tax charge for the year - -
12. Earnings per share
The basic loss per share is calculated by dividing
the loss attributable to equity shareholders by the
weighted average number of shares in issue.
The loss attributable to equity shareholders and weighted
average number of ordinary shares for the purposes
of calculating diluted earnings per ordinary share
are identical to those used for basic earnings per
ordinary share. This is because the exercise of warrants
would have the effect of reducing the loss per ordinary
share and is therefore anti-dilutive.
2017 2016
GBP GBP
Net loss for the year attributable
to ordinary shareholders (1,186,064) (2,990,946)
Weighted average number of
shares in issue 1,106,162,059 595,688,399
Basic and diluted loss per
share (0.11p) (0.5p)
13. Property, plant and equipment
Fixtures,
Plant fittings Motor
and machinery and equipment vehicles Total
GBP GBP GBP GBP
Cost
As at 1 January 2016 7,471 6,919 83,327 97,717
Foreign exchange adjustment - 554 13,356 13,910
As at 31 December 2016 7,471 7,473 96,683 111,627
Depreciation
As at 1 January 2016 5,993 6,095 63,337 75,425
Charge for the year 369 205 5,245 5,819
Foreign exchange adjustment - 554 10,607 11,161
As at 31 December 2016 6,362 6,854 79,189 92,405
Net book value
As at 31 December 2016 1,109 619 17,494 19,222
Fixtures,
Plant fittings Motor
and machinery and equipment vehicles Total
GBP GBP GBP GBP
Cost
As at 1 January 2017 7,471 7,473 96,683 111,627
Additions 1,104,381 - - 1,104,381
Foreign exchange adjustment - (289) (6,974) (7,263)
As at 31 December 2017 1,111,852 7,184 89,709 1,208,745
Depreciation
As at 1 January 2017 6,362 6,854 79,189 92,405
Charge for the year 61,358 154 4,214 65,726
Foreign exchange adjustment (2,847) (289) (5,833) (8,969)
As at 31 December 2017 64,873 6,719 77,570 149,162
Net book value
As at 31 December 2017 1,046,979 465 12,139 1,059,583
14. Intangible assets
Evaluation
and Exploration
Assets
Tanzanian
Licences Goodwill Total
GBP GBP GBP
Cost or valuation
As at 1 January 2016 3,993,976 1,367,301 5,361,277
Additions 541,455 - 541,455
Foreign exchange adjustment 800,538 274,050 1,074,588
Written off (977,300) - (977,300)
At 31 December 2016 4,358,669 1,641,351 6,000,020
Accumulated amortisation and
impairment
As at 1 January 2016 - - -
Charge for the year - (1,294,260) (1,294,260)
Foreign exchange adjustment - - -
At 31 December 2016 - (1,294,260) (1,294,260)
Net book value
As at 31 December 2016 4,358,669 347,091 4,705,760
Evaluation
and Exploration
Assets
Tanzanian Development
Licences Expenditure Goodwill Total
GBP GBP GBP GBP
Cost or valuation
As at 1 January 2017 4,358,669 - 1,641,351 6,000,020
Additions 882,649 - - 882,649
Foreign exchange adjustment (380,020) - (143,106) (523,126)
Written off (104,211) - - (104,211)
Change in minority interest - - (12,280) (12,280)
Transfer to development
expenditure (4,757,087) 4,757,087 - -
At 31 December 2017 - 4,757,087 1,485,965 6,243,052
Accumulated amortisation
and impairment
As at 1 January 2017 - - 1,294,260 1,294,260
Charge for the year - - - -
Change in minority interest - - (9,683) (9,683)
Foreign exchange adjustment - - (112,843) (112,843)
At 31 December 2017 - - 1,171,734 1,171,734
Net book value
As at 31 December 2017 - 4,757,087 314,231 5,071,318
Tanzanian Licences and Goodwill
The Tanzanian licences comprise a mining licence and various prospecting licences. The licences are located in a region displaying viable prospects for both uranium and coal and occur in a country where the government's policy for development of the mineral sector aims at attracting and enabling the private sector to take the lead in exploration mining, development, mineral beneficiation and marketing.
Goodwill arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation of the Goodwill was based on the valuation of the Group's licences and was been allocated between coal and uranium licences.
In 2015 as the Group focused firmly on the development of the Rukwa Coal to Power Project the directors have looked at rationalisation of other licences which will allow available funds to be focussed on the development of the Group's core asset at Rukwa.
During 2016 the group wrote off the last of its uranium licences and associated goodwill; the licence was subsequently relinquished in February 2017.
During 2017 the company evolved from an exploration company to a development company, as a result its exploration and evaluation assets were transferred to development expenditure.
The Directors carried out an impairment review on reclassification of exploration and evaluation assets to development assets. Further, IAS 36, requires that an annual impairment review is carried out goodwill. Following the impairment reviews the Directors did not consider the intangible assets to be impaired.
15. Trade and other receivables
2017 2016
GBP GBP
Trade Receivables 7,163 -
Receivables 70 5,347
VAT receivable 281,711 159,537
Prepayments 10,722 5,457
299,666 170,341
There was no provision for impairment of receivables at 31 December 2017 (2016: GBPnil).
Included within VAT receivable is VAT owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by Edenville International (Tanzania) Limited. The Group expects to start producing commercial coal later in 2018, from which Vatable income would be generated against which the Directors expect to be able to commence recovery of the VAT receivable.
16. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statement:
2017 2016
GBP GBP
Cash at bank and in hand 951,078 246,120
17. Trade and other payables
2017 2016
GBP GBP
Trade and other payables 22,398 10,960
Social security costs and other taxes 7,002 11,865
Accruals and deferred income 117,397 110,661
146,797 133,486
18. Deferred Taxation
A deferred tax liability of GBPNil (2016: GBPNil) calculated at 30% (2016: 30%) has been provided in respect of the potential tax liability arising on licences acquired on the acquisition of Edenville International (Tanzania) Limited. The deferred tax liability related to a fair value adjustment made to the original six Tanzanian prospecting licences. During 2016, one of these licences was written off, having already written off five previously, resulting in the fair value adjustment relating to this licence. As a consequence, the deferred tax liability was reduced by GBP173,450.
2017 2016
GBP GBP
Provision brought forward - 144,490
Foreign exchange movement - 28,960
Released in the year - (173,450)
Provision carried forward - -
19. Share capital
2016 2016 2016 2016 2016 2016 2016 2016 2016 2016 2016
No GBP No GBP No GBP No GBP No GBP GBP
Ordinary Ordinary Ordinary Ordinary Deferred Deferred Deferred Deferred Deferred Deferred Total
shares shares shares shares shares shares shares shares shares shares share
of 0.02p of 0.02p of 0.01p of of 0.08p of of 0.001p of of 0.019p of capital
each each each 0.01p each 0.08p each 0.001p each 0.019p
each each each each
Issued and
fully paid
At 1 January
2016 9,108,171,206 1,821,634 - - 64,179,632 51,344 - - - - 1,872,978
7 March
2016 (a) 1,333,333,333 266,667 - - - - - - - - 266,667
1 June 2016
(b) 63,333,333 12,666 - - - - - - - - 12,666
17 June
2016 (c) 1,922,222,222 384,444 - - - - - - - - 384,444
----------------- ------------ ----------------- ---------- ------------- --------- ---------------- ---------- ----------------- ------------ ----------
12,427,060,094 2,485,411 - - 64,179,632 51,344 - - - - 2,536,755
30 August
2016 (d)
Subdivision
of deferred
shares (d)
(i) and
(ii) - - - - (64,179,632) (51,344) 5,134,370,560 51,344 - - -
Subdivision
of ordinary
shares (12,427,060,094) (2,485,411) 12,427,060,094 124,270 - - - - 12,427,060,094 2,361,141 -
----------------- ------------ ----------------- ---------- ------------- --------- ---------------- ---------- ----------------- ------------ ----------
- - 12,427,060,094 124,270 - - 5,134,370,560 51,344 12,427,060,094 2,361,140 -
Subdivision
of ordinary
shares 621,353,005 124,270 (12,427,060,094) (124,270) -
236,114,141,786 2,361,141 (12,427,060,094) (2,361,141) -
----------------- ------------ ----------------- ---------- ------------- --------- ---------------- ---------- ----------------- ------------ ----------
621,353,005 124,270 - - - - 241,248,512,346 2,412,485 - - 2,537,755
9 November
2016 (e) 1,602,563 320 - - - - - - - - 320
4 October
2016 (f) 125,000,000 25,000 - - - - - - - - 25,000
25 October
2016 (g) 6,247,330 1,250 - - - - - - - - 1,250
----------------- ------------ ----------------- ---------- ------------- --------- ---------------- ---------- ----------------- ------------ ----------
As at 31
December
2016 754,202,898 150,840 - - - - 241,248,512,346 2,412,485 - - 2,563,325
================= ============ ================= ========== ============= ========= ================ ========== ================= ============ ==========
a) On 7 March 2016 the Company issued 1,333,333,333 new ordinary shares of 0.02p each for a consideration of 0.03p per share. The Company also issued 666,666,666 warrants with an exercise price of 0.04p each.
b) On 1 June 2016 the Company issued 63,333,333 new ordinary shares of 0.02p each for consideration of 0.03p in satisfaction of creditors totalling GBP19,000.
c) On 17 June 2016 the Company issued 1,922,222,222 new ordinary shares of 0.02p each for a consideration of 0.0225p per share. The Company also issued 961,111,111 warrants with an exercise price of 0.03p each
d) On 30 August 2016 undertook a capital reorganisation comprising three subdivisions:
-- The company subdivided of the 64,179,632 existing deferred shares of GBP0.0008 each in the capital of the Company into 5,134,370,560 deferred shares of GBP0.00001 each in the capital of the Company.
-- Then, the 12,427,060,094 Existing Ordinary Shares were subdivided into two share classes:
(i) 12,427,060,094 ordinary shares of GBP0.00001 each in the capital of the Company (the "Subdivided Ordinary Shares"); and
(ii) 12,427,060,094 deferred shares of GBP0.00019 each in the capital of the Company (the "New Deferred Shares") (the "Second Subdivision").
-- The 12,427,060,094 new deferred shares will then be subdivided into 236,114,141,786 deferred shares of 0.001p each.
-- The subdivided Ordinary Shares were consolidated into 621,353,005 ordinary shares of GBP0.0002 each in the capital of the Company (the "Consolidated Shares") (the "Consolidation"), the Consolidated Shares have the same rights and are subject to the same restrictions as the Existing Ordinary Shares.
e) On 9 November 2016 the Company issued 1,602,563 Ordinary shares of 0.02p each for consideration of 0.54p each on exercise of warrants.
f) On 4 October 2016 the Company issued 125,000,000 Ordinary shares of 0.02p each for consideration of 0.40p each. The company also issued 62,500,000 warrants with an exercise price of 0.54p each
g) On 25 October 2016 the Company issued 6,247,330 Ordinary shares of 0.02p in settlement of invoices totalling GBP28,000.
The deferred shares have no voting rights, dividend rights or any rights of redemption. On return of assets on winding up the holders are entitled to repayment of amounts paid up after repayment to ordinary share holders
No GBP No GBP GBP
Ordinary Ordinary Deferred Deferred Total
shares shares shares shares share
of 0.02p of 0.02p of 0.001p of 0.001p capital
each each each each
Issued and fully paid
At 1 January 2017 754,202,898 150,840 241,248,512,346 2,412,485 2,563,325
On 26 January 2017 the company
issued the following ordinary
shares:
Ordinary shares issued at
0.83p in lieu of consultancy
services 963,855 193
Ordinary shares issued at
0.77p in lieu of consultancy
services 1,948,051 390
Ordinary shares issued on
exercise of warrants at
0.80p 1,375,000 275
Ordinary shares issued on
exercise of warrants at
0.60p 5,555,555 1,111
Ordinary shares issued on
exercise of warrants at
0.54p 34,699,778 6,940
On 31 January 2017 Ordinary
shares issued on exercise
of warrants at 0.80p 3,304,167 661
On 6 February 2017Ordinary
shares issued on exercise
of warrants at 0.80p 612,500 122
On 7 February 2017 Ordinary
shares issued on exercise
of warrants at 0.80p 6,625,002 1,325
On 7 February 2017 Ordinary
shares issued on exercise
of warrants at 0.60p 14,999,780 3,000
On 23 February 2017 the
company issued shares at
0.80p each 22,781,732 4,557
On 17 March 2017 the company
issued shares at 0.80p each 227,218,268 45,443
20 March 2017 Ordinary shares
issued on exercise of warrants
at 0.60p 10,000,000 2,000
29 March 2017 Ordinary shares
issued on exercise of warrants
at 0.60p 2,777,778 556
On 16 June 2017 Ordinary
shares issued on exercise
of warrants at 0.60p 14,722,442 2,945
On 23 June 2017 Ordinary
shares issued on exercise
of warrants at 0.54p 4,273,505 855
On 26 September 2017 Ordinary
shares issued on exercise
of warrants at 0.54p 21,924,153 4,385
On 9 October 2017 Ordinary
shares issued on exercise
of warrants at 0.60p 208,333,333 41,667
-------------- ---------- ---------------- ----------- ----------
As at 31 December 2017 1,336,317,797 267,265 241,248,512,346 2,412,485 2,679,750
============== ========== ================ =========== ==========
20. Capital and reserves attributable 2017 2016
to shareholders
GBP GBP
Share capital 2,679,750 2,563,325
Share premium 17,910,928 14,250,401
Other reserves 864,908 1,216,978
Retained deficit (14,212,274) (13,026,926)
________ ________
Total equity 7,243,312 5,003,778
There have been no significant changes to the Group's capital management objectives or what is considered to be capital during the year.
21. Capital management policy
The Group's policy on capital management is to maintain a low level of gearing. The group funds its operation through equity funding.
The Group defines the capital it manages as equity shareholders' funds less cash and cash equivalents.
The Group objectives when managing its capital are:
-- To safeguard the group's ability to continue as a going concern.
-- To provide adequate resources to fund its exploration, development and production activities with a view to providing returns to its investors.
-- To maintain sufficient financial resources to mitigate against risk and unforeseen events.
The group's cash reserves are reported to the board and closely monitored against the planned work program and annual budget. Where additional cash resources are required the following factors are considered:
-- the size and nature of the requirement. -- preferred sources of finance. -- market conditions. -- opportunities to collaborate with third parties to reduce the cash requirement. 22. Financial instruments
The Board of Directors determine, as required, the degree to which it is appropriate to use financial instruments to mitigate risk with the main risk affecting such instruments being foreign exchange risk, which is discussed below.
Categories of financial instruments 2017 2016
GBP GBP
Financial assets
Receivables at amortised cost including
cash and cash equivalents:
Cash and cash equivalents 951,078 246,120
Trade and other receivables 288,944 170,341
Total 1,240,022 416,461
--------- -------
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables 139,795 121,621
Net 1,100,227 294,840
========= =======
Cash and cash equivalents
This comprises cash held by the Group and short-term deposits. The carrying amount of these assets approximates to their fair value.
General risk management principles
The Directors have an overall responsibility for the establishment of the Group's risk management framework. A formal risk assessment and management framework for assessing, monitoring and managing the strategic, operational and financial risks of the Group is in place to ensure appropriate risk management of its operations.
The following represent the key financial risks that the Group faces:
Interest rate risk
The Group is not exposed to significant interest rate risks as it does not have any interest bearing liabilities and its only interest-bearing asset is cash invested on a short-term basis which attracts interest at the bank's variable interest rate.
Credit risk
Credit risk arises principally from the Group's trade receivables and investments in cash deposits. It is the risk that the counterparty fails to discharge its obligation in respect of the instrument.
The Group holds its cash balances with reputable financial institutions with strong credit ratings. There were no amounts past due at the balance sheet date.
The maximum exposure to credit risk in respect of the above at 31 December 2017 is the carrying value of financial assets recorded in the financial statements.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as and when they fall due.
Liquidity risk is managed through an assessment of short, medium and long-term cash flow forecasts to ensure the adequacy of working capital.
The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances to meet expected requirements for a period of one year.
Currency Risk
The Group is exposed to currency risk as the assets of its subsidiaries are denominated in US Dollars. The Group's policy is, where possible, to allow group entities to settle liabilities denominated in their functional currency (primarily US Dollars) with cash. The Company transfers amounts in sterling or US dollars to its subsidiaries to fund its operations. Where this is not possible the parent company settles the liability on behalf of its subsidiaries and will therefore be exposed to currency risk.
The Group has no formal policy is respect of foreign exchange risk; however, it reviews its currency exposure on a regular basis. Currency exposures relating to monetary assets held by foreign operations are included in the Group's income statement. The Group also manages its currency exposure by retaining the majority of its cash balances in sterling, being a relatively stable currency.
The effect of a 10% rise or fall in the US dollar/Sterling exchange rate would result in an increase or decrease in the net assets of the group of GBP632,503.
Fair value of financial assets and liabilities
Fair value is the amount at which a financial instrument could be exchanged in an arm's length transaction between informed and willing parties, other than a forced or liquidation sale and excludes accrued interest. Where available, market values have been used to determine fair values. Where market values are not available, fair values have been calculated by discounting expected cash flows at prevailing interest rates and by applying year end exchange rates.
The Directors consider that there is no significant difference between the book value and fair value of the Group's financial assets and liabilities.
23. Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
Grant Date Exercise price Number of options
outstanding
at 31 December
2017
21 October
2013 5.00p 6,011,481
28 March 2017 1.08p 46,000,000
The options granted on 21 October 2013 are exercisable from 21 October 2014. The options are valid for a period of 10 years from the date of grant. There are no vesting conditions.
Of the 46,000,000 issued on 28 March 2017, 38,000,000 were issued to the Directors and a member of senior management and 8,000,000 to two engineers.
The 38,000,000 options issued to the Directors and a member of senior management will vest one third immediately, one third upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months and one third upon completion of the Bankable Feasibility Study for the Rukwa Power Plant.
8,000,000 of the options , being granted to two recently appointed engineers, will vest one half upon production of in excess of 5,000 tonnes of commercial coal per month over three consecutive months and one half upon production of in excess of 10,000 tonnes of commercial coal per month over three consecutive months.
The options are exercisable for a 5 year period from 27 March 2017.
At the date of grant, the options were valued using the Black-Scholes option pricing model. The fair value per option granted and the assumptions used in the calculation were as follows:
Date of grant 21 October 28 March 2017
2013
Expected volatility 85% 131%
Expected life 4 years 3 years
Risk-free interest
rate 1.23% 0.37%
Expected dividend - -
yield
Possibility of ceasing - -
employment before
vesting
Fair value per option 0.09p 0.56p/0.42p/0.28p
Volatility was determined by reference to the standard deviation of daily share prices for one year prior to the date of grant.
The charge to the income statement for share based payments for the year ended 31 December 2017 was GBP155,077 (2016: GBPnil).
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
2017 2016
Number Weighted Number Weighted average
of options average exercise of options exercise price
price per per share
share pence
pence
At 1 January 6,011,481 5.00 7,167,535 5.00
Granted 46,000,000 1.08 - -
Exercised - - -
Cancelled - - (1,156,054) (5.00)
At 31 December 52,011,481 1.53 6,011,481 5.00
Exercisable
at year
end 18,678,148 6,011,481
The weighted average remaining contractual life of options as at 31 December 2017 was 4.42 years (2016: 6.81 years).
Warrants
The following warrants over ordinary shares have been granted by the Company:
Date granted Expiry Date Exercise Number of warrants
price outstanding at
31 December 2017
21 February 20 August
2017 2018 1.08p 137,500,000
03 October 02 October
2017 2018 0.80p 104,166,667
241,666,667
At the date of grant, the options were valued using the Black-Scholes option pricing model. The fair value per warrant granted and the assumptions used in the calculation were as follows:
Date of grant 21 February
2017
Expected volatility 145%
Expected life 1 years
Risk-free interest
rate 0.01%
Expected dividend -
yield
Possibility of ceasing -
employment before
vesting
Fair value per option 0.36p
Volatility was determined by reference to the standard deviation of daily share prices for one year prior to the date of grant.
The charge in respect of the 12,500,000 Broker warrants granted for the year ended 31 December 2017 was GBP46,064 (2016: GBPnil) and is included in share premium as cost of issuing shares.
125,000,000 and 104,116,667 warrants were issued on 21 February 2017 and 3 October 2017 respectively. No share-based payments were recognised in respect of these warrants as they fell outside of the scope of IFRS 2 - Share-based Payment.
Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:
2017 2016
Number Weighted Number Weighted average
of options average exercise of options exercise price
price per per share
share pence
pence
At 1 January 142,286,325 0.62 50,062,500 5.95
Granted 241,666,667 0.96 143,888,889 0.68
Exercised (120,869,661) 0.59 (1,602,564) (0.54)
Cancelled (21,416,664) 0.80 (50,062,500) (5.95)
At 31 December 241,666,667 0.96 142,286,325 0.68
The weighted average remaining contractual life of warrants as at 31 December 2017 was 0.69 years (2016: 0.55 years).
24. Reserves
The following describes the nature and purpose of each reserve:
Share Capital represents the nominal value of equity
shares
Share Premium amount subscribed for share capital
in excess of the nominal value
Share Option Reserve fair value of the employee and key
personnel equity settled share option
scheme and broker warrants as accrued
at the balance sheet date.
Retained Earnings cumulative net gains and losses less
distributions made
25. Related Party Transactions
During 2016 the Company paid GBP15,000 for engineering services to Sunjem Consulting Limited, which is controlled by the former director, Mark Pryor.
During 2016 the former Director, Sally Schofield invoiced the Company GBP15,000 for her role as Interim Chairman.
During the year, Rufus Short, a Director, acquired 1,111,426 ordinary shares of 0.02p each at 0.60p per share, on exercise of warrants.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling activities of the Company, and are all directors of the Company. For details of their compensation please refer to the Remuneration report.
During the year the Company paid GBP2,413,192 (2016: GBP586,148) to or on behalf of its wholly owned subsidiary, Edenville International (Tanzania) Limited. The amount due from Edenville International (Tanzania) Limited at year end was GBP7,130,243 (2016: GBP4,717,050). This amount has been included within loans to subsidiaries.
Included in trade creditors at year end is an amount of GBP1,639 owed to Rufus Short, a director, in respect of expenses incurred on behalf of the company.
At the year end the Company was owed GBP3,712 (2016: GBP3,712) by its subsidiary Edenville International (Seychelles) Limited.
At the year end the Company was owed GBP6,340 (2016: GBP6,340) by its subsidiary Edenville Power Tz Limited.
26. Events after the reporting date
On 27 April 2018 the company raised GBP740,000, before expenses, via the issue of 211,428,572 ordinary shares of 0.02p each at 0.35p per share.
27. Financial commitments
The group has rental commitments of $35,257 (2016: $39,670) and required expenditure of $16,125 (2016: $78,530) in respect of its licences for the forthcoming year.
28. Ultimate Controlling Party
The Group considers that there is no ultimate controlling party.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR FIMFTMBMMBJP
(END) Dow Jones Newswires
June 05, 2018 02:00 ET (06:00 GMT)
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