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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 May 2022 to May 2024
TIDMEDL
RNS Number : 7296Q
Edenville Energy PLC
30 June 2022
30 June 2022
Edenville Energy Plc
("Edenville" or the "Company")
Annual Results for the year ended 31 December 2021
Edenville Energy Plc (AIM: EDL), the AIM quoted company operating the Rukwa Coal Project in southwest Tanzania ("Rukwa"), announces its audited results for the year ended 31 December 2021.
The Company's Annual Report for the year ended 31 December 2021 (the "Annual Report") will be available on the Company's website at: https://edenville-energy.com/annual-reports/ later today, pursuant to the Company's Articles of Association which allow Edenville to use electronic communications for the posting of the Annual Report.
Notice of the Company's Annual General Meeting will be announced shortly, along with information regarding how shareholders can request a hard copy of the Annual Report.
For further information please contact:
Edenville Energy Plc Jeff Malaihollo - Chairman +44 (0) 20 3934 Alistair Muir- CEO 6630 Strand Hanson Limited (Financial and Nominated Adviser) James Harris +44 (0) 02 7409 Rory Murphy 3494 Tavira Securities Limited (Broker) Oliver Stansfield +44 (0) 20 7100 Jonathan Evans 5100 IFC Advisory Limited (Financial PR and IR) Tim Metcalfe +44 (0) 20 3934 Florence Chandler 6630
CHAIRMAN'S STATEMENT
The first half of 2021 was once again dominated by the impact of COVID across the world. The start of 2021 coincided with the re-emergence of lockdowns across much of the globe. Naturally this provided significant challenges to the Company with the reduced demand for coal seen in 2020 continuing and the logistical issues remaining. In light of this the Company took a number of steps to address both its financial position as well as its operational plans for the future.
In January 2021 we announced an oversubscribed placing raising GBP900,000. The placing was supported by Edenville's existing three largest shareholder groups and specialist mining investor RAB Capital. In May 2021 we announced a further placing to raise gross proceeds of nearly GBP2.5 million, including a GBP1 million participation from a new strategic investor, Tony Buckingham. The Company used part of the proceeds to repay the outstanding debt to Lind Partners LLC, leaving the majority to fund future operations.
In August 2021 Franco Caselli joined the Board as a Non-executive Director of the Company. Mr Caselli is a geologist with more than 40 years of international operational and market experience in the energy and mining sectors.
With the Company better capitalised, and with the support of new shareholders, our focus during the year was to both monitor the situation in Tanzania with respect to Rukwa and to look at various opportunities and new assets to inject into the Company. We continue to explore various options and look forward to updating shareholders as soon as appropriate.
Post period end, in February 2022, the Company entered into a contract mining agreement with Nextgen Coalmine Limited ("Nextgen") for the operation of the Company's Rukwa Coal Project. Shortly after that both the international and domestic coal price increased significantly. This resulted in significant demand for both Rukwa's washed and fine coal. Therefore, we were pleased that in May 2022 the Company reached an agreement with NextGen to terminate the contract and the Company is now again in full control of the operations at Rukwa.
Although the last few years have been difficult for the Company, we believe that the current trend of high coal prices and increased demand, combined with the fact that the Company is better capitalised, put us in a great position to move the Company forward significantly.
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 supported the Company throughout this difficult period.
I believe the Company is now better positioned than it has been for some considerable time and we look forward to reporting on the Company's progress in the coming months.
Dr Jeffrey Malaihollo
Chairman
29 June 2022
CHIEF EXECUTIVE OFFICER'S REPORT
2021 was a year in which there was a significant positive change in the prospects for the Company, both with regard to the Rukwa coal project and more widely with an improved cash position.
Funding
On 19 January 2021 we announced an oversubscribed placing raising gross proceeds of GBP900,000, supported by Edenville's existing three largest shareholder groups and specialist mining investor RAB Capital. On 5 May 2021 we announced a further placing to raise gross proceeds of GBP2.48 million, including a GBP1 million participation from a new strategic investor, Tony Buckingham.
Mr Buckingham is well known in the natural resources market, particularly in Africa, having been CEO and major shareholder of Heritage Oil Limited from 2006 until its acquisition by a wholly owned subsidiary of Qatari investment fund, Al Mirqab Capital SPC, in 2014 for a consideration of US$1.6 billion.
Additionally, following the GBP2.48 million fund raise, we announced on 22 June 2021 that the Company had fully repaid in cash the full outstanding amount owing to Lind Partners LLC ("Lind") under the Funding Agreement dated 6 November 2018. and the Company had no further outstanding obligations to Lind.
The fundings undertaken through the year ensured that the Company is well capitalised, with cash resources as at 31 December 2021 of GBP1,229,801 (31 December 2020: GBP25,690) and reduced borrowings of GBP18,258 (31 December 2021: GBP440,831).
As at 27 June 2022 the Company had cash balances of approximately GBP515,428. Whilst this is sufficient for the Company's current needs, at Rukwa, where it is expected the Company will become cashflow positive later this year as production ramps up.
Operational Review
Whilst the first half of 2021 was another period impacted by the Covid 19 pandemic and the resultant reduced demand, there were significant changes in the demand scenario and outlook as the year progressed as international coal prices rose and local Tanzanian producers started to switch to supplying the export market.
Prior to this uptick in coal prices and demand duringthe later part of the year the Company successfully focused on preserving cash for possible further asset acquisitions and focussed on supplying existing customers. This translated into increasing production in the final quarter of the year and revenue for the year as a whole of GBP105,228 (2020: GBP33,852)
Corporate Social Responsibility
The Company has continued to take its corporate and social responsibility very seriously. We understand that Edenville must meet the social requirements of an operator in Tanzania. The construction of a mining operation at Rukwa has already 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 and the local population, as well as the mine itself.
At Rukwa, wherever possible, we have sought to employ local people from the 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.
Post Period Events
On 3 February 2022 we announced that the Company's subsidiary Edenville International (Tanzania) Limited had entered into a contract with Nextgen Coalmine Limited ("Nextgen") for the operation of the Company's Rukwa Coal Project. This superseded the Coal Mining Agreement with Infrastructure and Logistics Tanzania Limited and the Sales and Marketing Agreement with MarTek Global FZ-LLC, announced on 8 June 2020 and 26 August 2020 respectively. These agreements were terminated by Edenville due to lack of progress on implementation.
Subsequent to entering into the agreement with NextGen both the international and domestic coal price increased significantly. This coincided with heightened interest from potential customers to enter into offtake agreements for coal from Rukwa. Additionally, the implementation of the coal mining agreement with Nextgen was, for various reasons, problematic, resulting in very poor production figures over the period from February to May 2022 and no material revenue for the Company.
The lack of progress by Nextgen culminated in the announcement on 31 May 2022 that the Company had reached an agreement with NextGen to terminate the contract. Following the termination of the contract all mining equipment has been brought back into service by Edenville, whilst an additional pre-strip excavator has been added to the fleet. Up to three additional trucks have been sourced to rapidly scale production. Our initial goal is to satisfy existing demand from local customers of 1,500 tonnes of washed lump coal product and 500 tonnes of coal fines in the immediate future, targeting sales of 5,000 tonnes per month of washed coal late in Q3 2022, with coal fines sales also expected to continue and possibly expand. During the first half of 2022, 9,466 tonnes of ROM coal has been mined.
We believe there is sufficient demand based on the Company's order book and recent discussions with potential customers to sell any coal that is produced at Rukwa. The Company is also exploring the potential of exporting its coal for the first time, given margins would be expected to be even greater.
Much of 2021 and the first half of 2022 was spent pursuing reverse takeover and other opportunities to add assets to the Company. During this time the Company focused on reducing cash burn on its Tanzanian project whilst it has explored these potential new projects. One potential transaction progressed significantly, however was ultimately terminated by mutual consent. As part of the termination it was agreed that the transaction costs incurred by the Company would be re-imbursed in full by the potential take-over target.
Further to the Company announcements on 18 and 31 May 2022 that Upendo Group Ltd.'s current 10% economic interest in the joint venture, which holds the licences governing the Rukwa Project, had been transferred to a 10% direct holding on the principal production licence. The Company has sought legal advice and has been advised that the variation has been undertaken illegally and that the holding should be reversed by the Government, This reversal has been sought. The Company will provide a further update as appropriate.
Summary and Outlook
With Edenville now being in full control of the operations at Rukwa we are able to take advantage of the recent macro changes that have made the economics of our Rukwa project considerably more attractive. Edenville is determined to maximise cash returns in the current global coal environment, especially given the attractive pricing forecast over the coming years. To this end we have already started applying a modest proportion of our existing cash resources towards expanding the Rukwa operations to meet these heightened sales enquiries.
Additionally, with an improved cash position we continue to target additional asset acquisitions, leveraging the natural resources and capital markets expertise of the Board, and significant shareholders.
I look forward to the remainder of 2022 and beyond with confidence that there is a positive future for Edenville that can deliver shareholder value.
Alistair Muir
Chief Executive Officer
29 June 2022
REPORT OF THE INDEPENT AUDITORS TO THE MEMBERS OF EDENVILLE ENERGY PLC
FOR THE YEARED 31 DECEMBER 2021
Opinion
We have audited the financial statements of Edenville energy plc (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the group statement of comprehensive income, the group and company statement of financial position, the group and company statement of changes in equity, the group and company cash flow statements and notes to the group and company financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the companies act 2006.
In our opinion:
Hot Features
Premium
-- The financial statements give a true and fair view of
the state of the group's and of the parent company's affairs
as at 31 December 2021 and of the group loss for the year
then ended;
-- The group financial statements have been properly prepared
in accordance with UK-adopted international accounting
standards;
-- The parent company financial statements have been properly
prepared in accordance with UK-adopted international accounting
standards and as applied in accordance with the provisions
of the companies act 2006; and
-- The financial statements have been prepared in accordance
with the requirements of the companies act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 2 in the financial statements, under the heading 'Going concern' concerning the ability of the group and parent company to continue as a going concern. The group and parent company's forecasts and projections indicate that the group and parent company has sufficient cash reserves to operate within the level of its current facilities. However, if there are any material variances to the forecasts which it is unable to manage with cashflow management to continue in operation, the group and parent company would be obliged to raise additional funds within twelve months of the date of the approval of these financial statements. The ability of the group and parent company to raise additional funds is dependent upon investor appetite.
As stated in note 2, these events or conditions, along with the other matters as set forth in note 2, indicate that a material uncertainty exists that may cast significant doubt on the group and company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors' assessment of the group and parent company's ability to continue to adopt the going concern basis of accounting included:
a) Reviewing management's assessment of going concern.
b) Determining if all relevant information has been included
in the assessment of going concern including completeness
of forecasted expenditure.
c) Analysing cash flow forecasts and budgets, reviewing
the underlying assumptions in relation to expenditure
and checking mathematical accuracy.
d) Considering the cash position at and after the year end.
e) Reviewing the reasonable worst-case forecast scenario
and the financial resources available to deal with this
outcome i.e. ability of the group and parent company
to raise funds.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Emphasis of matter - recoverability of value added tax
We draw attention to note 4 of the financial statements, which describes group's assessment over the VAT receivable balance of GBP279,157 in Tanzania. The group have explained their assessment over the recoverability within critical accounting estimates and conclude this to be recoverable. The nancial statements do not include the adjustments that would result if the group was unable to fully recover this.
Our opinion is not modi ed in this respect.
Emphasis of matter - recoverability of inventory
We draw your attention to Note 4 of the financial statements, which describes the group's assessment over the inventory balance of GBP142,721 in Tanzania. The group have explained their assessment over the recoverability within the critical accounting estimates and conclude this to be recoverable. The financial statements do not include the adjustment that would result if the group was unable to fully recover this.
Our opinion is not modified in this respect.
Our application of materiality
The quantitative and qualitative thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit procedures. The materiality for the financial statements as a whole applied to the group financial statements was GBP74,700 (2020: GBP67,250) based on 1% of gross assets. We based the materiality on gross assets because we consider this to be the most relevant performance indicator for a mining group. The performance materiality for the group was GBP44,800 (2020: GBP40,350). The materiality for the financial statements as a whole applied to the parent company financial statements was GBP12,500 (2020: GBP37,100) based on 2% of the expenses. The performance materiality for the parent company was GBP7,500 (2020: GBP22,260). For the component in the scope of our group audit, we allocated a materiality that was less than our overall group materiality. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
We agreed with those charged with governance that we would report all differences identified during the course of our audit in excess of GBP3,735 (2020: GBP3,363) for the group and GBP625 (GBP1,855) for the parent company.
Our approach to the audit
In designing our audit approach, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular we assessed the areas involving significant accounting estimates and judgements by the directors in respect of the carrying value of the mining assets and carrying values of the parent company's investments in and loans to subsidiaries and considered future events that are inherently uncertain. We also addressed the risk of management override of internal controls, including evaluation whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Of the four components of the group, a full scope audit was performed on the complete financial information of the parent and its Tanzanian subsidiary that owns the asset. The remaining components were subject to analytical review only because they were not significant to the group.
Of the two reporting components of the group, one is located in Tanzania and audited by a component auditor operating under our instructions, and the audit of the remaining component was performed in London, conducted by PKF Littlejohn LLP using a team with specific experience of auditing mining entities and publicly listed entities. The Senior Statutory Auditor interacted regularly with the component audit team during all stages of the audit and was responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our opinion on the group and parent company financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters described below to be the key audit matters to be communicated in our report.
Key How
Audit our
Matters scope
addressed
these
matters
Carrying value mining assets
(Note 15)
The entity has capitalised Our work in this area included
mining assets of GBP5,116,268. but was not limited to:
Management is required to assess * Carried out testing to ensure existence, and
whether there is any indication ownership of mining licenses; and consideration has
of impairment of these assets. been given to whether a dilapidation provision is
The carrying value and recoverability required.
of these assets are tested annually
for impairment. The estimated
recoverable amount of this balance * Ensuring the reasonableness of the capitalization of
is subjective due to the inherent the new additions;
uncertainty involved in the
assessment of exploration projects.
* Considering whether there were indicators of
impairment of the mining assets such as expiring
concessions, licenses or rights, projections of
declining coal prices and/or declining demand and
projections of increased future capital costs or
operating costs and we note that the forecasted
revenue and production is higher than the actual and
historical levels
* Performing sensitivity analysis
* Consideration of whether treatment of mining assets
is in accordance with IFRS 6, and has been correctly
classified
* Reviewing management's assessment of the impairment
of mining assets and challenging their key
assumptions and estimates used as a basis to value
the intangible assets.
In forming our opinion, which
is not modified, our work indicated
that the value of mining assets
are fairly stated in the financial
statements, but that the future
carrying value of these mining
assets are dependent on the ability
of the subsidiary to fully realise
the potential of the mine and
increase the mining activities
and extraction to pre-pandemic
levels. This should be supported
by signing long term sales contracts
with a few customers in the short
to medium term. The financial
statements do not include the
adjustments that would result
if the group was unsuccessful
in increasing the production
and sales.
=============================================================
Valuation of the parent company's
investment in and loans to subsidiaries
(Note 14)
=============================================================
The parent company owns a significant We have obtained and critically
investment in Edenville International assessed the directors' impairment
(Tanzania) Limited of GBP17,197,652 review of the carrying value
which includes loans to the of the parent company's net investment
subsidiary of GBP10,154,340. in the subsidiaries. Our work
The value of the investment included:
is linked to the value of the * Reviewing the valuation methodology for the
assets held in Edenville International investment held and ensuring that the carrying values
(Tanzania) Limited. Value in were supported by sufficient and appropriate audit
use calculation for the carrying evidence.
value of investments are based
on judgments and estimates made
by the management which lead * Reviewing and challenging their key assumptions and
to a risk of misstatement estimates used as a basis to support carrying value
of investment by comparing the forecasted mining
levels to historic production, agreeing coal prices
used in the valuation to prices regulated by local
government, reviewing sales plan supported by signed
contracts or under contracts under negotiation. We
note that the forecasted revenue and production is
higher than the actual and historical levels.
* Performed sensitivity analysis and stress tests on
the valuation
* Ensuring the parent company has full title to the
investments held;
* Ensuring that appropriate disclosures surrounding the
estimates, including a review of how these estimates
were arrived at, are made in respect of any
valuations are included in the financial statements.
In forming our opinion, which
is not modified, our work indicated
that the value of its investment
and loans are fairly stated in
the financial statements, but
that the recoverability is dependent
on the ability of the subsidiary
to fully realise the potential
of the mine and increase the
mining activities and extraction
to pre-pandemic levels. This
should be supported by signing
long term sales contracts with
a few customers in the short
to medium term. The financial
statements do not include the
adjustments that would result
if the subsidiary was unsuccessful
in increasing the production
and sales.
=============================================================
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the
financial statements are prepared is consistent with the
financial statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-- adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited
by us; or
-- the parent company financial statements are not in
agreement with the accounting records and returns;
or
-- certain disclosures of directors' remuneration specified
by law are not made; or
-- we have not received all the information and explanations
we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the group and parent company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing the group and the parent company'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 and parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the group and parent company financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
-- We obtained an understanding of the group and parent
company and the sector in which they operate to identify
laws and regulations that could reasonably be expected
to have a direct effect on the financial statements.
We obtained an understanding in this regard through discussions
with management and the application of our cumulative
audit knowledge and experience of this sector.
-- We determined the principal laws and regulations relevant
to the group and parent company in this regard to be
those arising from Companies Act 2006, AIM Rules and
mining regulations applicable to the subsidiaries.
-- We designed our audit procedures to ensure the audit
team considered whether there were any indications of
non-compliance by the group and parent company with those
laws and regulations. These procedures included, but
were not limited to enquiries of management, review of
minutes and Regulatory News Service (RNS) announcements
and review of legal and regulatory correspondence.
-- We also identified the risks of material misstatement
of the financial statements due to fraud. We considered,
in addition to the non-rebuttable presumption of a risk
of fraud arising from management override of controls,
that the potential for management bias was identified
in relation to the impairment assessment of intangible
assets and valuation of investments. We addressed this
by challenging the assumptions and judgements made by
management when evaluating any indicators of impairment.
-- As in all of our audits, we addressed the risk of fraud
arising from management override of controls by performing
audit procedures which included, but were not limited
to: the testing of journals; reviewing accounting estimates
for evidence of bias; and evaluating the business rationale
of any significant transactions that are unusual or outside
the normal course of business
-- At a significant component level, we engaged with the
component auditors to ensure that they had conducted
an extensive review into whether the operating subsidiary
was fully compliant with laws and regulations at a local
level, and reviewed their work conducted into the posting
of journal entries to ensure there were no instances
of fraud detected at a local level.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities . This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Zahir Khaki (Senior Statutory 15 Westferry Circus Auditor) For and on behalf of PKF Canary Wharf Littlejohn LLP Statutory Auditor London E14 4HD 29 June 2022
GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December 2021
Note 2021 2020
GBP GBP
Revenue 5 105,228 33,852
Cost of sales (684,848) (583,876)
Gross loss (579,620) (550,024)
Administration expenses 6 (875,564) (529,632)
Share based payments 27 - (50,398)
Group operating loss (1,455,184) (1,130,054)
Finance income 10 701 112
Finance costs 11 (5,842) (111,503)
Loss on operations before
taxation (1,460,325) (1,241,445)
Income tax 12 (526) -
Loss for the year (1,460,851) (1,241,445)
Attributable to:
Equity holders of the Company (1,458,586) (1,239,553)
Non-controlling interest (2,265) (1,892)
Other comprehensive loss
Item that will or may be reclassified
to the profit and loss:
Gain/(loss) on translation
of overseas subsidiary 87,013 (203,935)
Total comprehensive loss for
the year (1,373,838) (1,445,380)
Attributable to:
Equity holders of the Company (1,371,573) (1,443,488)
Non-controlling interest (2,265) (1,892)
Earnings per Share (pence)
Basic and diluted loss per
share 13 (8.04p) (16.66p)
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 AND COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
Note Group 31 31 December Company
31 December December 2021 31 December
2021 2020 2020
GBP GBP GBP GBP
Non-current assets
Investment in
subsidiaries 14 - - 17,197,652 16,561,617
Property, plant
and equipment 15 5,451,921 5,644,577 1,000 1,334
Intangible assets 16 315,002 311,032 - -
5,766,923 5,955,609 17,198,652 16,562,951
Current assets
Inventories 17 142,721 251,736 - -
Trade and other
receivables 18 415,479 301,251 225,635 8,499
Cash and cash
equivalents 19 1,229,801 25,690 1,226,235 25,628
1,788,001 578,677 1,451,870 34,127
Current liabilities
Trade and other
payables 20 (389,264) (685,809) (103,362) (213,559)
Borrowings 21 (18,258) (440,831) - (416,142)
407,522 (1,126,640) (103,362) (629,701)
Current assets
less current
liabilities 1,380,479 (547,963) 1,348,508 (595,574)
Total assets less
current liabilities 7,147,402 5,407,646 18,547,160 15,967,377
Non-current liabilities
Borrowings 21 - (39,873) - (16,084)
Environmental
rehabilitation
liability 22 (24,632) (21,912) -
7,122,770 5,345,861 18,547,160 15,951,293
Equity
Called-up share
capital 23 4,176,601 4,041,601 4,176,601 4,041,601
Share premium account 22,254,317 19,390,849 22,254,317 19,390,849
Share option reserve 453,614 301,174 453,614 301,174
Foreign currency
translation reserve 581,143 494,130 - -
Retained earnings (20,325,577) (18,866,991) (8,337,372) (7,782,331)
Attributable to the equity
shareholders of the Company 7,140,098 5,360,763 18,547,160 15,951,293
Non- controlling
interests (17,328) (14,902) - -
Total equity 7,122,770 5,345,861 18,547,160 15,951,293
The financial statements were approved by the board of directors and authorised for issue on 29 June 2022 and signed on its behalf by:
Alistair Muir, Director
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
--------------------------------------------------Equity
Interests---------------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January 2020 3,414,935 18,811,157 (17,718,347) 281,502 698,065 5,487,312 (13,517) 5,473,795
Comprehensive
Income
for the year
Foreign currency
translation - - - - (203,935) (203,935) - (203,935)
Loss for the year - - (1,239,553) - - (1,239,553) (1,892) (1,241,445)
---------- ----------- ------------- --------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for the
year - - (1,239,553) - (203,935) (1,443,488) (1,892) (1,445,380)
Transactions with
owners
Issue of share
capital 626,666 648,334 - - - 1,275,000 - 1,275,000
Share issue costs - (68,642) - - - (68,642) - (68,642)
Share
options/warrants
charge - - - 110,581 - 110,581 - 110,581
Cancellation of
share options - - 90,909 (90,909) - - - -
Total
transactions
with owners 626,666 579,692 90,909 19,672 - 1,316,939 - 1,316,939
Non- controlling
interest share
of
goodwill - - - - - - 507 507
At 31 December
2020 4,041,601 19,390,849 (18,866,991) 301,174 494,130 5,360,763 (14,902) 5,345,861
========== =========== ============= ========= ============ ============ ================ ============
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
--------------------------------------------------Equity
Interests---------------------------------------
Share Share Retained Share Foreign Total Non-controlling Total
Capital Premium Earnings Option Currency interest
Account Reserve Translation
Reserve
GBP GBP GBP GBP GBP GBP GBP GBP
At 1 January 2021 4,041,601 19,390,849 (18,866,991) 301,174 494,130 5,360,763 (14,902) 5,345,861
Comprehensive
Income
for the year
Foreign currency
translation - - - - 87,013 87,013 - 87,013
Loss for the year - - (1,458,586) - - (1,458,586) (2,265) (1,460,851)
---------- ----------- ------------- -------- ------------ ------------ ---------------- ------------
Total
comprehensive
income for the
year - - (1,458,586) - 87,013 (1,371,573) (2,265) (1,373,838)
Transactions with
owners
Issue of share
capital 135,000 3,240,000 - - - 3,375,000 - 3,375,000
Share issue costs - (224,092) - - - (224,092) - (224,092)
Share
options/warrants
charge - (152,440) 152,440 -
---------- ----------- ------------- -------- ------------ ------------ ---------------- ------------
Total
transactions
with owners 135,000 2,863,468 - 152,440 - 3,150,908 - 3,150,908
Non- controlling
interest share
of
goodwill - - - - - - (161) (161)
At 31 December
2021 4,176,601 22,254,317 (20,325,577) 453,614 581,143 7,140,098 (17,328) 7,122,770
========== =========== ============= ======== ============ ============ ================ ============
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2021
Retained Share
Share Capital Share Earnings Option
Premium Account Reserve Total
GBP GBP GBP GBP GBP
At 1 January 2020 3,414,935 18,811,157 (7,358,134) 281,502 15,149,460
Comprehensive Income for
the year
Total comprehensive loss
for the year - - (515,106) - (515,106)
---------------- ----------- ------------ --------- -----------
Total comprehensive income
for the year - - (515,106) - (515,106)
Transactions with owners
Issue of share capitals 626,666 648,334 - - 1,275,000
Share issue costs - (68,642) - - (68,642)
Share option/warrants charge - - - 110,581 110,581
Cancellation of share options - - 90,909 (90,909) -
---------------- ----------- ------------ --------- -----------
Total transactions with
owners 626,666 579,692 90,909 19,672 1,316,939
At 31 December 2020 4,041,601 19,390,849 (7,782,331) 301,174 15,951,293
Comprehensive Income for
the year
Total comprehensive loss
for the year - - (555,041) - (555,041)
---------------- ----------- ------------ --------- -----------
Total comprehensive income
for the year - - (555,041) - (555,041)
Transactions with owners
Issue of share capital 135,000 3,240,000 - - 3,375,000
Share issue costs - (224,092) - - (224,092)
Share option/warrants charge - (152,440) - 152,440 -
Total transactions with
owners 135,000 2,863,468 - 152,440 3,150,908
At 31 December 2021 4,176,601 22,254,317 (8,337,372) 453,614 18,547,160
================ =========== ============ ========= ===========
GROUP AND COMPANY CASH FLOW STATEMENTS
Year ended 31 December 2020
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2021 2020 2021 2020
GBP GBP GBP GBP
Operating activities
Operating loss (1,455,184) (1,130,054) (557,208) (515,218)
Adjustments to reconcile profit
before tax to net cash flows:
Depreciation 264,677 277,921 334 445
Interest paid - (351) - 100,090
Expected credit losses - - - -
Share based payments - 50,398 - 50,398
Foreign exchange difference 2,687 (34,531) -
Working capital changes:
Decrease/(Increase) in inventories 17,799 (4,198) - (10,482)
Impairment of inventories 92,150 - - -
(Decrease)/increase in trade
and other receivables (116,768) 54,984 (217,136) 39,912
Decrease in trade and other
payables (286,968) (116,836) (110,197) (189,149)
Net cash outflow from operating
activities (1,481,607) (902,657) (884,207) (524,004)
Cash flows from investing
activities
Capital introduced to subsidiaries - - (636,035) (400,904)
Purchase of property, plant - - - -
and equipment
Finance income 701 112 2,167 112
Net cash used in/(from) investing
activities 701 112 (633,868) (400,792)
Cash flows from financing
activities
Proceeds from borrowings - 180,000 - 180,000
Repayment of borrowings (120,000) - (120,0000 -
Repayment of convertible loan
notes (312,226) (160,421) (312,226) (160,421)
Repayment of lease liabilities (30,214) (17,404) - -
Lease interest (3,451) (5,059) - -
Proceeds from issue of ordinary
shares 3,375,000 950,000 3,375,000 950,000
Share issue costs (224,092) (60,000) (224,092) (60,000)
Net cash inflow from financing
activities 2,685,017 887,116 2,718,682 909,579
Net decrease in cash and
cash equivalents 1,204,111 (15,429) 1,200,607 (15,217)
Cash and cash equivalents
at beginning of year 25,690 41,110 25,628 40,845
Effect of foreign exchange
rate changes on cash and cash - 9 - -
equivalents
Cash and cash equivalents
at end of year 19 1,229,801 25,690 1,226,235 25,628
NOTES TO THE COMPANY'S FINANCIAL STATEMENTS
Year ended 31 December 2021
1. General Information
Edenville Energy Plc is a public limited Company incorporated in England and Wales. 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 and Company's financial statements have been prepared in accordance with UK-adopted international accounting standards, 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, except for the measurement to fair value of assets and financial instruments as described in the accounting policies set out below.
The preparation of financial statements in conformity with UK-adopted international accounting standards 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..
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the Parent Company Income Statement. The loss after tax for the Parent Company for the year was GBP555,041 (2020: GBP515,106)
Going concern
At 31 December 2021 the Group had cash balances totalling GBP1,229,801.
Production through the later half of 2021 struggled to achieve target levels and as a result of this the company entered into a Coal Mining Agreement which failed to have impact on production rates despite the current high coal prices. This agreement was terminated in May 2022.
The high coal prices have resulted in:
- the export of coal from the traditional local coal
suppliers in Tanzania, usually to India and
- created major demand from East Africa who would normally
source their coal from South Africa but now find
pricing prohibitive.
As a result of this situation the company is receiving regular enquiries for coal supply from within Tanzania, East Africa and internationally, the company has therefore taken back control of the mining operations and is already investing to raise production levels to leverage off the current demand situation.
Based on the current working capital forecast which includes previous placings, the Group has sufficient funds in order to allow it to continue in production and implement planned project development and any upgrades. However, if there are delays in procuring orders or if large export contracts are entered into 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 or the willingness of the banking sector to finance ongoing operations.
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.
Adoption of new and revised standards and changes in accounting policies
There were no new standards or interpretations impacting the Group that will be adopted in the annual financial statements for the year ended 31 December 2021, and which have given rise to changes in the Group's accounting policies.
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:
Standard Detail Effective for
annual periods
commencing on
or after
--------- -------------------------------------------------------- ----------------
IFRS Amendments resulting from Annual improvements to 1 January 2022
1 IFRS Standards 2018-2020 (subsidiary as a first
time adopter)
IFRS Amendments updating a reference to the Conceptual 1 January 2022
3 Framework
IFRS Amendments resulting form Annual improvements to 1 January 2022
9 IFRS Standards 2018-2020 (fees in ' 10 per cent'
test for de-recognition of financial liabilities)
IFRS Original issue 1 January 2023
17
IAS 1 Amendments regarding the classification of liabilities. 1 January 2023
Amendments regarding the disclosure of accounting
policies
IAS 8 Amendments regarding the definition of accounting 1 January 2023
estimates
IAS 12 Amendments regarding deferred tax on leases and 1 January 2023
decommissioning obligations
IAS 16 Amendments prohibiting a company from deducting 1 January 2022
from cost of property, plant and equipment amounts
received from selling items produced while the
company is preparing the asset for its intended
use.
IAS 37 Amendments regarding the cost to include when assessing 1 January 2022
whether a contract is onerous
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 (Share options and Warrants)
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 (share 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 Group also , from time to time , issues warrants, primarily to advisors of the company in connection with placing of shares and/or other services. There fair value of these warrants is either recognised as an expense or as a share issue costs offset against share premium, depending on the nature of services.
The total amount to be expensed or offset against share premium in respect of share issue costs 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 2021 (Note 11). 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.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Where the Group's interest is less than 100 per cent, the interest attributable to outside shareholders is reflected in non-controlling interests (NCIs).
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
consideration received or receivable, and represent amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. Under IFRS 15 there is a five-step approach to revenue recognition which is adopted across all revenue streams. The process is:
Step 1: Identify the contract(s) with a customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations in the contract; and
Step 5: Recognise revenue as and when the entity satisfies the performance obligation.
The Group has one revenue stream being the sale of coal and other aggregate bi-products produced by the Group. Sales are predominantly made at the Group's premises as customers collect their quantities from the mine. Such revenue is recognised at the point of contact at a pre-agreed fixed price on a per tonnage basis. For deliveries made to customer premises, revenue is recognised at the point of which the products leave the Group's premises
Presentational and functional currency
This financial information is presented in pounds sterling, which is the Company's functional currency.
The functional currency of the Groups subsidiaries is US Dollars. The financial statements are presented in pounds sterling.
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
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.
Classification and measurement
The Group classifies its financial assets into the following categories: those to be measured subsequently at fair value (either through other comprehensive income (FVOCI) or through the income statement (FVPL) and those to be held at amortised cost.
Classification depends on the business model for managing the financial assets and the contractual terms of the cash flows.
Management determines the classification of financial assets at initial recognition. The Group's policy with regard to financial risk management is set out in note 3. Generally, the group does not acquire financial assets for the purpose of selling in the short term.
The group's business model is primarily that of "hold to collect" (where assets are held in order to collect contractual cash flows). When the group enters into derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm commitments or anticipated transactions.
Financial Assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original EIR. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables (not subject to provisional pricing) and other receivables due in less than 12 months, the Group applies the simplified approach in calculating ECLs, as permitted by IFRS 9. Therefore, the Group does not track changes in credit risk, but instead, recognises a loss allowance based on the financial asset's lifetime ECL at each reporting date.
The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows and usually occurs when past due for more than one year and not subject to enforcement activity.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Financial Assets held at fair value through other comprehensive income (FVOCI)
The classification applies to the following financial assets:
- Debt instruments that are held under a business model
where they are held for the collection of contractual
cash flows and also for sale ("collect and sale") and
which have cash flows that meet the SPPI criteria. An
example would be where trade receivable invoices for certain
customers were factored from time to time. All movements
in the fair value of these financial assets are taken
through comprehensive income, except for the recognition
of impairment gains and losses, interest revenue (including
transaction costs by applying the effective interest method),
gains or losses arising on derecognition and foreign exchange
gains and losses which are recognised in the income statement.
When the financial asset is derecognised, the cumulative
fair value gain or loss previously recognised in other
comprehensive income is reclassified to the income statement.
- Equity investments where the group has irrevocably elected
to present fair value gains and losses on revaluation
of such equity investments, including any foreign exchange
component, are recognised in other comprehensive income.
- When equity investment is derecognised, there is no reclassification
of fair value gains or losses previously recognised in
other comprehensive income to the income statement. Dividends
are recognised in the income statement when the right
to receive payment is established.
Financial Assets held at fair value through profit or loss (FVPL)
The classification applies to the following financial assets. In all cases, transaction costs are immediately expensed to the income statement.
- Debt instruments that do not meet the criteria of amortised
costs or fair value through other comprehensive income.
- Equity investments which are held for trading or where
the FVOCI election has not been applied. All fair value
gains or losses and related dividend income are recognised
in the income statement.
- Derivatives which are not designated as a hedging instrument.
All subsequent fair value gains or losses are recognised
in the income statement.
Derecognition
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
Financial Liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial
Liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables and loans.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the statement of profit or loss and other comprehensive income.
Trade and other payables
After initial recognition, trade and other payables are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in the statement of profit or loss and other comprehensive income when the liabilities are derecognised, as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss and other comprehensive income.
Derecognition
A financial liability is derecognised when the associated obligation is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or loss and other comprehensive income.
Liabilities within the scope of IFRS 9 are classified as financial liabilities at fair value through profit and loss or other liabilities, as appropriate.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Financial liabilities included in trade and other payables are recognised initially at fair value and subsequently at amortised cost.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the average costing method. Components of inventories consist of coal, parts and supplies, net of allowance for obsolescence. Coal inventories represent coal contained in stockpiles, coal that has been mined and hauled to the wash plant (raw coal) for processing and coal that has been processed (crushed, washed and sized) and stockpiled for shipment to customers.
The cost of raw and prepared coal comprises extraction costs, direct labour, other direct costs and related production overheads (based on normal operating capacity). It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
The Company performs inventory obsolescence at each reporting date. In determining whether inventories are obsolete, the Company assesses the age at which inventories held in the store in order to make an assessment of the inventory write down to net realisable value.
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.
Convertible loan notes
The convertible loan notes issued by the Company are classified separately as financial liabilities in accordance with the substance of contractual arrangements. The convertible loan note ("CLN") is a compound financial instrument that cannot be converted to share capital at the option of the holder. As the CLN, and the accrued interest, can only be repaid as a loan, it has been recognised within liabilities. Interest is accounted for on an accruals basis and charged to the Consolidated Income Statement and added to the carrying amount of the liability component of the CLN.
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 and 25% reducing balance
equipment
Plant and machinery 5 years straight line or 25% reducing
balance
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.
Production assets
Coal land, mine development costs, which include directly attributable construction overheads, land and coal rights are recorded at cost. Coal land and mine development are depleted and amortised, respectively, using the units of production method, based on estimated recoverable tonnage. The depletion of coal rights and depreciation of restoration costs are expensed by reference to the estimated amount of coal to be recovered over the expected life of the operation.
Coal Mine Reclamation Costs
Future cost requirements for land reclamation are estimated where surface operations have been conducted, based on the Group's interpretation of the technical standards of regulations enacted by the Government of Tanzania. These costs relate to reclaiming the pit and support acreage at surface mines and sealing portals at deep mines. Other costs include reclaiming refuse and slurry ponds as well as related termination/exit costs.
The Group records asset retirement obligations that result from the acquisition, construction or operation of long-lived assets at fair value when the liability is incurred. Upon the initial recognition of a liability, that cost is capitalised as part of the related long-lived asset and expensed over the useful life of the asset. The asset retirement costs are recorded in Land, Coal Rights and Restoration Costs.
The Group expenses reclamation costs prior to the mine closure. The establishment of the end of mine reclamation and closure liability is based upon permit requirements and requires significant estimates and assumptions, principally associated with regulatory requirements, costs and recoverable coal lands. Annually, the end of mine reclamation and closure liability is reviewed and necessary adjustments are made, including adjustments due to mine plan and permit changes and revisions of cost and production levels to optimize mining and reclamation efficiency. The amount of such adjustments is reflected in the year end reclamation provision calculation.
Stripping (waste removal) costs
As part of its mining operations, the Group incurs stripping (waste removal) costs both during the production phase of its operations. Stripping activities undertaken during the production phase of a surface mine (production stripping) are accounted for as set out below.
After the commencement of production, further development of the mine may require a phase of unusually high stripping that is similar in nature to development phase stripping. The cost of such stripping is accounted for in the same way as development stripping (as outlined above). Production stripping is generally considered to create two benefits, being either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories.
Where the benefits are realised in the form of improved access to ore to be mined in the future, the costs are recognised as a non-current asset, referred to as a 'stripping activity asset', if the following criteria are met:
a) Future economic benefits (being improved access to the ore body) are probable;
b) The component of the ore body for which access will be improved can be accurately identified; and
c) The costs associated with the improved access can be reliably measured
If any of the criteria are not met, the production stripping costs are charged to profit or loss as operating costs as they are incurred.
In identifying components of the ore body, the Group works closely with the mining operations personnel for each mining operation to analyse each of the mine plans. Generally, a component will be a subset of the total ore body, and a mine may have several components. The mine plans, and therefore the identification of components, can vary between mines for a number of reasons. These include, but are not limited to: the type of commodity, the geological characteristics of the ore body, the geographical location, and/or financial considerations.
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping activity that improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If incidental operations are occurring at the same time as the production stripping activity, but are not necessary for the production stripping activity to continue as planned, these costs are not included in the cost of the stripping activity asset.
If the costs of the inventory produced and the stripping activity asset are not separately identifiable, a relevant production measure is used to allocate the production stripping costs between the inventory produced and the stripping activity asset. This production measure is calculated for the identified component of the ore body and is used as a benchmark to identify the extent to which the additional activity of creating a future benefit has taken place. The Group uses the expected volume of waste extracted compared with the actual volume for a given volume of ore production of each component.
The stripping activity asset is accounted for as an addition to, or an enhancement of, an existing asset, being the mine asset, and is presented as part of 'Intangible assets' in the statement of financial position. This forms part of the total investment
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.
Intangible assets
Intangible assets arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation price was based on the price paid to acquire these the Group's licences. The licences are amortised over the life of the production asset using rates of depletion.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief executive officer.
The Board considers that the Group's project activity constitutes one operating and reporting segment, as defined under IFRS 8.
The total profit measures are operating profit and profit for the year, both disclosed on the face of the combined income statement.
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 coal production assets and intangible
assets;
-- share based payments
-- Valuation of provision for restoration costs
-- Recoverability of VAT balance
-- Recoverability of Inventory
Impairment - coal production assets and intangible assets (notes 15 and 16)
The Group is required to perform an impairment review, on coal production assets, for each CGU to which the asset relates. Impairment review is also required to be performed 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 ability of the Company to obtain necessary financing to complete the development and future profitable production or proceeds from the disposal, at which point the value is estimated based upon the present value of the discounted future cash flows.
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 -- Sales volumes -- Discount rates -- Coal prices -- Operating overheads -- Inventory
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 believe this rate to be appropriate as this is in line with the borrowing rates the Group are expected to receive if they were to obtain significant long term finance based on discussions between the Directors and prospective parties. The Directors acknowledge that the Group does have small short term finance arrangements which attract a higher rate but have chosen not to use these rates as they would not be financing the production asset using short term borrowing facilities. These short term loans were needed mostly for working capital needs and most have been paid off in 2021.
The directors have assessed the value of exploration and evaluation expenditure and development assets and 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.
Share based payments (note 27)
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.
Valuation of provision for restoration costs (note 15)
The Company makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites, which are expected to be incurred in the future, which is when the producing mine properties are expected to cease operations. These provisions have been created based on the Company's internal estimates and a third party estimate from an independent consultant. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. This, in turn, will depend upon future coal prices, which are inherently uncertain.
Management increases reclamation costs estimates at an annual inflation rate to the anticipated future mine closure date. This inflation rate is based on the historical rate for the industry for a comparable.
Recoverability of VAT receivable (note 18)
The group considers the recoverability of the VAT balance in Tanzania to be a key area of judgement, as the VAT can only be recovered by an offset against VAT payable on future sales.. The directors believe that the debtor is recoverable based on their knowledge of the market in Tanzania.
Recoverability of Inventory (Note 17)
The group considers the recoverability of the inventory to be a key area of judgement, and this is held at its realisable value. The directors believe the inventory to be in good condition and the main reason why the stock has remained high in the last two years is mainly because of the Covid-19 impact which necessitated the closure of the mine. The mine has now fully reopened in May 2021 and the directors are taking making concerted efforts to sell this excess stock. They have recently identified key customers and have sold 1,000 tonnes in June 2021 with an expected commitment to purchase at a rate of 1,200 tonnes per month thereafter. They are optimistic that the remainder of the stock will be sold over the next 1-3 years on the presumption that one of the key customers will sign a long term contract. As a result of this, they have concluded no impairment is required at this stage, based on the directors' judgement of the local market and estimates regarding the timeframe in which the goods can be sold.
5. Segmental information
The Board considers the business to have one reportable segment being Coal production assets.
Other represents unallocated expenses and assets held by the head office. Unallocated assets primarily consist of cash and cash equivalents.
Coal Production
Assets
2021 Coal Other Total
Consolidated Income Statement GBP GBP GBP
Revenue - Tanzania 105,228 - 105,228
Cost of sales (excluding
depreciation and amortisation) (470,780) - (470,780)
Depreciation (207,604) - (207,604)
Depletion of development
assets (6,464) - (6,464)
Gross profit (579,620) - (579,620)
Administrative expenses (183,321) (646,874) (830,195)
Depreciation (45,035) (334) (45,369)
Group operating loss (807,976) (647,208) (1,455,184)
Finance income 701 701
Finance cost (5,842) (5,842)
Loss on operations before
taxation (813,818) (646,507) (1,460,325)
Income tax (526) - (526)
Loss for the year (814,344) (646,507) (1,460,851)
Coal Production
Assets
2020 Coal Other Total
Consolidated Income Statement GBP GBP GBP
Revenue - Tanzania 33,030 - 33,030
Revenue - other 822 - 822
Cost of sales (excluding
depreciation and amortisation) (349,121) - (349,121)
Depreciation (209,208) - (209,208)
Depletion of development
assets (25,547) - (25,547)
Gross profit (550,024) - (550,024)
Administrative expenses (122,780) (363,685) (486,465)
Share based payment - (50,398) (50,398)
Depreciation (42,722) (445) (43,167)
Group operating loss (715,526) (414,528) (1,130,054)
Finance income - 112 112
Finance cost (10,812) (100,691) (111,503)
Loss on operations before
taxation (726,338) (515,107) (1,241,445)
Income tax - -
Loss for the year (726,338) (515,107) (1,241,445)
By Business Segment Carrying value Additions to Total liabilities
of segment assets non-current assets
and intangibles
2021 2020 2021 2020 2021 2020
GBP GBP GBP GBP GBP GBP
Coal 6,199,083 6,498,828 17,788 335,132 548,980
Other 1,361,402 35,458 - 97,022 639,445
7,560,485 6,534,286 - 17,788 432,154 1,188,425
By Geographical
Area
GBP GBP GBP GBP GBP GBP
Africa (Tanzania) 6,199,083 6,498,828 - 17,788 335,132 548,980
Europe 1,361,402 35,458 - - 97,022 639,445
7,560,485 6,534,286 - 17,788 432,154 1,188,425
Information about major customers
Included in revenues arising from the sale of coal are revenues which arose from sales to the Group's largest customers based in Tanzania. No other customers contributed 10% or more to the Group's revenue in either 2021 or 2020.
2021 2020
GBP GBP
Customer 1 28,507 31,386
Customer 2 69,886 -
98,393 31,386
6. Expenses by nature
2021 2020
GBP GBP
Staff costs 256,776 235,557
Audit fees 35,000 38,019
Office and other administrative services 109,840 70,257
AIM related costs including investor relations 77,405 3,220
Professional, legal and consultancy fees 317,131 113,110
Travel, entertaining and subsistence 10,534 7,906
Exchange gain (1,358) (10,482)
Depreciation 45,369 43,167
Provisions and expected credit losses - 1,929
Other costs 24,867 26,949
875,564 529,632
7. Auditors' remuneration
2021 2020
GBP GBP
Fees payable to the Company's auditor for the audit
of the parent Company and consolidated accounts 47,000 40,000
8. Employees
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Wages and salaries 405,452 325,009 174,000 179,250
Social security costs 40,484 20,781 13,807 -
Pensions 13,354 10,071 814 303
459,290 355,861 188,621 179,553
The average number of employees and directors during the year was as follows:
Group Company
2021 2020 2021 2020
Administration 8 11 3 3
Mining , plant processing and security 13 29 - -
21 40 3 3
Remuneration of key management personnel
The remuneration of the directors and other key management personnel is set out below:
2021 2020
GBP GBP
Emoluments 272,130 197,988
Compensation for loss of office - 28,000
Pensions 814 303
272,944 226,291
9. Directors' remuneration
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Emoluments 184,000 151,250 184,000 151,250
Compensation for loss of office - 28,000 - 28,000
Pensions 814 303 814 303
184,814 179,553 184,814 179,553
The highest paid director received remuneration of GBP97,500 (2020: GBP97,500).
Included in the above are accrued Director's remuneration of GBP17,750 (2020: GBP122,750)
Directors' interest in outstanding share options per director is disclosed in the directors' report in the Annual Report.
10. Finance income
2021 2020
GBP GBP
Interest income on short-term bank deposits 701 112
701 112
11. Finance Costs
2021 2020
GBP GBP
Interest on convertible loan notes - 87,977
Convertible loan finance costs - 12,652
Bank interest - 61
Hire purchase interest 3,450 6,423
Interest on rehabilitation provision 2,392 4,390
5,842 111,503
12. Income tax
2021 2020
GBP GBP
Current tax:
Current tax on loss for the year - -
Foreign taxation 542
Total current tax 542 -
Deferred tax
On write off/impairment on intangible assets - -
Tax charge for the year 542 -
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 GBP7,840,335 (2020: GBP7,313,803).
A deferred tax asset of GBP1,959,833 (2020: GBP1,389,369) calculated at 25% (2020: 19%) 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:
2021 2020
GBP GBP
Loss on ordinary activities before tax (1,460,325) (1,241,445)
Expected tax credit at standard rate
of UK Corporation Tax
19% (2020: 19%) and 30% (2020:30%) In
Tanzania (377,043) (235,875)
Disallowable expenditure 4,501 21,116
Depreciation in excess of capital allowances 79,367
Other adjustments (106,947)
Capital allowances in excess of depreciation - (310,464)
Movement in deferred tax not recognised 400,648 525,223
Tax charge for the year 526 -
On 24 May 2021, the UK Government enacted that from 1 April 2023 the corporation tax rate would increase to 25% for companies with profits of over GBP250,000. A small profits rate will also be introduced for companies with profits of GBP50,000 or less so that they will continue to pay corporation tax at 19%. From this date companies with profits between GBP50,000 and GBP250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.
13. 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.
2021 2020
GBP GBP
Net loss for the year attributable
to ordinary shareholders (1,460,851) (1,241,445)
Weighted average number of shares
in issue 18,144,205 7,452,470
Basic and diluted loss per share (8.04p) (16.66p)
The earnings per share as at 31 December 2020 has been restated to reflect the consolidation of shares that took place in January 2021 (see note 23).
14. Investment in subsidiaries
Shares Loans
in to
subsidiaries subsidiaries Total
Company GBP GBP GBP
Cost
At 1 January 2020 7,043,312 9,117,401 16,160,713
Additions - 400,904 400,904
Disposal
_________ _________ _________
At 31 December 2020 7,043,312 9,518,305 16,561,617
Accumulated impairment
As at 1 January 2020 - - -
Impairment - - -
_________ _________ _________
At 31 December 2020 - - -
Net Book Value
As at 31 December 2020 7,043,312 9,518,305 16,561,617
Shares Loans
in to
subsidiaries subsidiaries Total
Company GBP GBP GBP
Cost
At 1 January 2021 7,043,312 9,518,305 16,561,617
Additions - 636,035 636,035
_________ _________ _________
At 31 December 2021 7,043,312 10,154,340 17,197,652
Accumulated impairment
As at 1 January 2021 - - -
Impairment - - -
_________ _________ _________
At 31 December 2021 - - -
Net Book Value
As at 31 December 2021 7,043,312 10,154,340 17,197,652
The value of the Company's investment and any indications of impairment is based on the prospecting and mining licences held by its subsidiaries.
The Tanzanian licences comprise a mining licence and various prospecting licences. The licences are, located in a region displaying viable prospects for 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.
During 2018 the activities of the Company's subsidiary evolved from exploration and evaluation to development and as a result the exploration and evaluation assets held by the Company's subsidiary were transferred to development expenditure. The Directors carried out an impairment review on reclassification of exploration and evaluation assets to development assets, which covered the Company's investments in, and loans to, its subsidiaries. Following the impairment reviews the Directors did not consider the Company's investments to be impaired.
In April 2019, the subsidiary moved into the production phase.
The Directors have carried out an impairment review and consider the value in use to be greater than the book value in respect of The Company's investment in its subsidiary Company Edenville International (Tanzania) Limited.
The Directors considered the recoverable amount by assessing the value in use by considering future cash flow projections of the revenue generated by its subsidiary through the sale of its coal resources.
Cash flows were based on the revenue generated to date plus expected growth from current production levels to 10,000 tons per month in the short to medium term.
In addition, the projections include future potential revenue generated from the Company's plans relating to the Rukwa Coal to Power Project. It is expected that the Project will move ahead in parallel with the transmission development which is currently in the procurement stage and the Directors understand should be completed sometime in 2024. There is no guarantee that the Company will be chosen as the successful party to develop the Power Project, and therefore there is no guarantee that revenue will be generated from this Project. Should this be the case then the Company would need to review its cash flow projections, and review the carrying value of its investment in Edenville International Tanzania Limited
However, based upon current know resources the subsidiary has significant coal resources which based upon current projections prepared by the Directors would be sufficient to support the book value in the financial statements. The Directors are of the view that this amount is adequately supported by proposed returns generated by the Power Plant Project. The Directors have applied a 10% discount rate in their forecasts. Additional factors that may affect these projections include the following: -
A 16% reduction in the margin per ton of coal would result in an impairment of the Edenville International (Tanzania) Limited investment by GBP187k.
An increase in the discount factor to 11.1% would result in an impairment of the Edenville International (Tanzania) Limited investment by GBP125k.
A decrease of 16% of the EBITA would result in an impairment of the Edenville International (Tanzania) Limited investment by GBP187k.
The mining licence is due to expire in 2026. Should the mining licence not be renewed this would result in an impairment of GBP14.1m.
Holdings of more than 20% :
The Company holds more than 20% of the share capital of the following companies:
Subsidiary undertaking Country of incorporation Class Shares held
Edenville International (Seychelles)
Limited Seychelles Ordinary 100%
Edenville International (Tanzania) Tanzania Ordinary 99.75%*
Limited
Edenville Power (Tz) Limited Tanzania Ordinary 99.9%
Edenville (South Africa)
Limited England Ordinary 100%
* These shares are held by Edenville International (Seychelles) Limited.
15. Property, plant and equipment
Group Plant and Fixtures, Motor vehicles Total
machinery fittings
Coal Production and equipment
assets
GBP GBP GBP GBP GBP
Cost
As at 1 January
2020 5,317,637 1,225,972 7,253 197,196 6,748,058
Additions 17,788 - - - 17,788
Foreign exchange
adjustment (171,033) (39,191) (100) (5,806) (216,130)
As at 31 December
2020 5,164,392 1,186,781 7,153 191,390 6,549,716
Depreciation
As at 1 January
2020 83,342 482,401 6,990 89,925 662,658
Depletion/Charge
for the year 25,547 224,719 65 27,590 277,921
Foreign exchange
adjustment (2,674) (28,648) (97) (4,021) (35,440)
As at 31 December
2020 106,215 678,472 6,958 113,494 905,139
Net book value
As at 31 December
2020 5,058,177 508,309 195 77,896 5,644,577
Coal Production Fixtures,
assets Plant and fittings Motor
machinery and equipment vehicles Total
GBP GBP GBP GBP GBP
Cost
As at 1 January
2021 5,164,392 1,186,781 7,153 191,390 6,549,716
Foreign exchange
adjustment 65,902 15,050 38 2,230 83,220
As at 31 December
2021 5,230,294 1,201,831 7,191 193,620 6,632,936
Depreciation
As at 1 January
2021 106,215 678,472 6,958 113,494 905,139
Depletion/ Charge
for the year 6,464 238,444 49 19,720 264,677
Foreign exchange
adjustment 1,347 8,568 38 1,246 11,199
As at 31 December
2021 114,026 925,484 7,045 134,460 1,181,015
Net book value
As at 31 December
2021 5,116,268 276,347 146 59,160 5,451,921
Plant and machinery depreciation amounting to GBP207,604 (2020: GBP209,208) is included within cost of sales as it relates to mining equipment.
Company
Fixtures,
Plant and fittings Motor Vehicles
machinery and equipment Total
GBP GBP GBP GBP
Cost
As at 1 January 2020 and 31
December 2020 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2020 7,003 3,894 15,640 26,537
Charge for the year 117 64 263 444
As at 31 December 2020 7,120 3,958 15,903 26,981
Net book value
As at 31 December 2020 351 195 788 1,334
Fixtures,
Plant and fittings Motor Vehicles
machinery and equipment Total
GBP GBP GBP GBP
Cost
As at 1 January 2021 and 31
December 2021 7,471 4,153 16,691 28,315
Depreciation
As at 1 January 2021 7,120 3,958 15,903 26,981
Charge for the year 88 49 197 334
As at 31 December 2021 7,208 4,007 16,100 27,315
Net book value
As at 31 December 2021 263 146 591 1,000
16. Intangible assets
Group
Mining Licences
GBP
Cost or valuation
As at 1 January 2020 1,519,712
Foreign exchange adjustment (48,879)
At 31 December 2020 1,470,833
Accumulated depletion, amortisation
and impairment
As at 1 January 2020 1,198,344
Amortisation
Foreign exchange adjustment (38,543)
At 31 December 2020 1,159,801
Net book value
As at 31 December 2020 311,032
Mining Licences
Intangible assets arose as a result of the valuation placed on the original six Tanzanian licences acquired on the acquisition of Edenville (Tanzania) Limited. The allocation price was based on the price paid to acquire these the Group's licences.
These assets are reviewed for impairment annually alongside the coal production assets.(see note 4 for Critical accounting estimates and judgements).
17. Inventories
Group
2021 2020
GBP GBP
ROM stockpiles 453 10,752
Fines 134,756 223,480
Washed coal 7,512 17,504
142,721 251,736
The cost of inventories recognised as an expense during the year in was GBP158,296 (2020: GBP78,448 restated).
18. Trade and other receivables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Other receivables 128,281 - 126,127 -
Amounts due from related parties - 91,467
VAT receivable 287,198 301,251 8,041 8,499
Prepayments - - - -
415,479 301,251 225,635 8,499
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 recover the above VAT from sales of commercial coal.
19. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Cash at bank and in hand 1,229,801 25,690 1,226,235 25,628
20. Trade and other payables
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Trade and other payables 308,043 227,288 15,801 41,505
Amounts owed to subsidiary undertakings - 6,340 6,340
Social security costs and other
taxes - 10,279 - 10,279
Other creditors - - - 33,437
Accruals and deferred income 81,221 448,242 81,221 121,998
389,264 685,809 103,362 213,559
21. Borrowings
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
(restated)
Convertible loan notes
Repayable within 1 year - 416,142 - 416,142
Repayable within 2 to 5 years - 16,084 - 16,084
- 432,226 - 432,226
Hire purchase finance
Repayable within 1 year 18,258 24,689 - -
Repayable within 2 to 5 years - 23,789 - -
18,258 48,478 - -
Total
Repayable within 1 year 18,258 440,831 - 416,142
Repayable within 2 to 5 years - 39,873 - 16,084
18,258 480,704 - 432,226
Convertible loan
In November 2018 $750,000 conditionally convertible loan notes were issued: the face value of these convertible securities is $900,000. A commitment fee of GBP37,500, which has been offset against the proceeds of issue of the convertible loan notes, was payable by the Company as well as issuing share options over 99,568,966 ordinary shares exercisable for 4 years at a conversion price on 0.29p per share. The Company is required to make repayments of $45,000 over 20 months commencing in February 2019. If repayments are made in cash, then an additional 3% is payable on the $45,000. The Company may elect to make the repayment in its shares priced at 90% of the average five day Volume Weighted Average Price (VWAP) chosen by the investor during the 20 days before issuance, or a combination of both.
The Company has the option to buy back the entire outstanding face value at any time at a premium of 5%. If this right is exercised the investor has an option to convert 25% of the face value into shares at the lesser of the repayment price or 0.29p per share. The repayment price being 130% of the 10-day VWAP immediately prior to the Company entering the Convertible Agreement.
In addition to the above the investor was offered 36,000,000 collateral shares which were issued by the Company on 20 February 2019.
In April 2019, the Company agreed a repayment holiday up to September 2019 in respect of the convertible loan notes. As a condition of granting the repayment holiday the outstanding balance at the time. $855,000, was increased by 15% to $983,250
On 15 January 2021 the Company also agreed repayment terms with Lind Partners LLC whereby it agreed to repay 20% of the outstanding debt by 31 January 2021 with the balance to be paid in monthly instalments from the end of April 2021. Lind Partners LLC also agreed that no further interest is to be charged on the outstanding balance.
As announced on 22 June 2021, following two fund raises in January and May 2021, Edenville was able to pay off all outstanding obligations to Lind.
22. Environmental rehabilitation liability
Group
2021 2020
GBP GBP
At 1 January 2020 21,912 -
Additions - 17,784
Interest 2,392 4,389
Foreign exchange movement 318 (261)
24,623 21,912
The group makes full provision for the future cost of rehabilitating mine sites and related production facilities on a discounted basis at the time of developing the mines and installing and using those facilities. The rehabilitation provision represents the present value of rehabilitation costs relating to mine sites which are expected to be incurred in the future, which is when the producing mine properties are expected to cease operations. Those provisions have been created based on the Company's internal estimates. Assumptions based on the current economic environment have been made, which management believes are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to take into account any material changes to the assumptions. However actual rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation costs will ultimately depend upon future market prices for the necessary rehabilitation works required that will reflect market conditions at the relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mines cease to produce at economically viable rates. This, in turn will depend upon future coal prices, which inherently uncertain.
23. Share capital
Group and Company
No GBP No GBP GBP
Ordinary shares Ordinary Deferred Deferred Total
of 0.02p each shares shares of shares share capital
of 0.02p 0.001p each of 0.001p
each each
Issued and fully paid
At 1 January 2020 5,012,241,761 1,002,450 241,248,512,346 2,412,485 3,414,935
On 9 January 2020 Ordinary
shares were issued
at 0.05p 50,000,000 10,000 - - 10,000
On 21 January 2020
Ordinary shares were
issue at 0.04p 1,750,000,000 350,000 - - 350,000
On 8 June 2020 Ordinary
shares were issued
at 0.04p 1,250,000,000 250,000 - - 250,000
On 14 August 2020 Ordinary
shares were issued
at 0.06p 83,333,333 16,666 - - 16,666
As at 31 December 2020 8,145,575,094 1,629,116 241,248,512,346 2,412,485 4,041,601
================ ========== ================ =========== ===============
No No GBP No GBP GBP
Ordinary Ordinary Ordinary Deferred Deferred Total
shares shares of shares shares of shares share
of 1p each 0.02p each of 0.02p/1p 0.001p each of 0.001p capital
each each
Issued and fully
paid
At 1 January 2021 - 8,145,575,094 1,629,116 241,248,512,346 2,412,485 4,041,601
On 5 January the
company consolidated
and then subdivided
the brought forward
shares* 8,145,575 (8,145,575,094) (1,547,659) 154,765,925,000 1,547,659 -
On 21 January
the company issued
3,600,000 1p shares
at 0.25p 3,600,000 - 36,000 - - 36,000
On 26 May the
company issued
9,900,000 1p shares
at 0.25p 9,900,000 - 99,000 - - 99,000
As at 31 December
2021 21,645,575 - 216,457 396,014,437,346 3,960,144 4,176,601
============ ================ ============= ================ =========== ==========
*On 5 January 2021 the Company reduced the number of issued ordinary shares of GBP0.0002 each in the Company by a multiple of 1,000 (the "Consolidation"), Following the Consolidation the Company sub-divided each consolidated ordinary share of GBP0.20 each in the capital of the Company, into 1 ordinary share of GBP0.01 each in the capital of the Company and 19,000 new deferred shares of GBP0.00001 each in the capital of the Company.
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.
24. Capital and reserves attributable to shareholders
Group Company
2021 2020 2021 2020
GBP GBP GBP GBP
Share capital 4,176,601 4,041,601 4,176,601 4,041,601
Share premium 22,254,317 19,390,849 22,254,317 19,390,849
Other reserves 1,034,757 795,304 453,614 301,174
Retained deficit (20,325,577) (18,866,991) (8,337,372) (7,782,331)
Total equity 7,140,098 5,360,763 18,547,160 15,951,293
============= ============= ============ ============
There have been no significant changes to the Group's capital management objectives or what is considered to be capital during the year.
25. Capital management policy
The Group's policy on capital management is to maintain a low level of gearing. The group funds its operation primarily 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.
26. 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.
Group Company
Categories of financial instruments 2021 2020 2021 2020
GBP GBP GBP GBP
Receivables at amortised cost
including cash and cash equivalents:
Investments and loans to subsidiaries - - 10,154,340 9,518,305
Cash and cash equivalents 1,229,801 25,690 1,226,235 25,628
Trade and other receivables 415,479 301,251 225,635 8,498
---------- ---------- ----------- -----------
Total 1,645,280 326,941 11,606,210 9,552,431
---------- ---------- ----------- -----------
Financial liabilities
Financial liabilities at amortised
cost:
Trade and other payables 389,264 675,330 103,362 203,280
Convertible loan notes - 432,226 - 432,226
---------- ---------- ----------- -----------
389,264 1,107,566 103,362 635,506
---------- ---------- ----------- -----------
Net 1,256,016 (780,625) 18,546,160 15,960,237
========== ========== =========== ===========
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 only interest-bearing asset is cash invested on a short-term basis which attracts interest at the bank's variable interest rate.
In 2020, the Group was exposed to interest rate risk through its convertible loan notes, its only interest-bearing liabilities. The level of interest payable will vary depending on whether the repayments are made with shares or in cash. The effective interest rate per month is 20.78%. If repayments are made in cash then the monthly repayments increase by 3%. These convertible loan notes were repaid during the year.
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.
VAT receivable is owed to Edenville International (Tanzania) Limited which is only recoverable against future sales made by Edenville International (Tanzania) Limited. The Group expects to recover the above VAT from sales of commercial coal.
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 2020 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 (see note 5) 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 GBP650,958.
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.
The tables below summarise the maturity profit of the combined Group's non-derivative financial liabilities at each financial year end based on contractual undiscounted payments.
Group
2020
Less than 1- 2 years 2-5 years
1 year
Trade payables 227,288 - -
Other payables 10,279 - -
Accruals 448,242 - -
Borrowings 440,831 39,873 -
---------- ------------------ ----------
1,126,640 39,873 -
========== ================== ==========
2021
Less than 1- 2 years 2-5 years
1 year
Trade payables 308,043 - -
Accruals 81,221 - -
Borrowings 18,258 - -
========== ================ ==========
407,522 - -
========== ================ ==========
Company
2020
Less than 1-2 years 2-5 years
1 year
Convertible loan notes (current
and non - current) 416,142 16,084 -
Trade payables 41,505 - -
Other payables 39,777 - -
Accruals 121,998 - -
---------- ------------------ ----------
619,422 16,084 -
========== ================== ==========
2021
Less than 1-2 years 2-5 years
1 year
Convertible loan notes (current
and non - current) - - -
Trade payables 15,801 - -
Other payables 6,340 - -
Accruals 81,221 - -
---------- --------------- ----------
103,362 - -
========== =============== ==========
27. Equity-settled share-based payments
The following options over ordinary shares have been granted by the Company:
Number of options
Grant Date Expiry date Exercise As at Granted Lapsed As at
price* 1 January 31 December
2021 2021
28 March 27 March
2017 2022** GBP10.80 23,333 - - 23,333
7 November 6 November
2018 2022 GBP2.90 99,569 - - 99,569
9 May 2019 8 May 2023 GBP2.60 100,000 - - 100,000
3 April 2020 2 April 2025 GBP3.00 270,000 - - 270,000
----------- -------- ------- -------------
492,902 - - 492,902
=========== ======== ======= =============
The following warrants over ordinary shares have been granted by the Company:
*The brought forward outstanding share options have been divided a factor of 1,000 and the related exercise price has been multiplied by 1,000 to account for the share consolidation that took place on 5 January 2021 (see note 23)
** These options were not exercised and have expired post year end.
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:
28. Equity-settled share-based payments (continued)
Date of grant 28 March 5 November 26 April 17 April
2017 2018 2019 2020
Expected volatility 131% 70% 101% 72%
Expected life 3 years 4 years 3.5 years 3 years
Risk-free interest
rate 0.37% 0.96% 0.75% 0.11%
Expected dividend - - - -
yield
Possibility of ceasing - - - -
employment before
vesting
Fair value per option 0.56p/0.42p/0.28p 0.08p 0.02p 0.02p
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 2020 was GBPNil (2020: GBP50,398).
On 6 June 2020 85,900,800 warrants were issued to settle liabilities of GBP51,540.
The following warrants over ordinary shares have been granted by the Company:
Number of Warrants
Grant Date Expiry date Exercise As at Granted Exercised As at 31
price 1 January December
2021 2021
2 May 2019 31 May 2022** 20p* 127,500 - - 127,500
23 January 22
2020 January 2022** 60p* 791,667 - - 791,667
6 June 2020 5 June 2023 40p* 125,000 - - 125,000
6 June 2020 5 June 2023 60p* 85,901 - - 85,901
14 January 13 January
2021 2024 25p - 180,000 - 180,000
26 May 2021 25 May 2024 25p - 9,900,000 - 9,900,000
26 May 2021 25 May 2024 25p - 495,000 - 495,000
26 May 2021 25 May 2024 35p - 117,459 - 117,459
----------- ----------- ---------- -----------
1,130,068 10,692,459 - 11,822,526
=========== =========== ========== ===========
*The brought forward outstanding share options have been divided a factor of 1,000 and the related exercise price has been multiplied by 1,000 to account for the share consolidation that took place on 5 January 2021 (see note 23).
** These warrants were not exercised and have expired post year end.
At the date of grant, those warrants that came under the scope of IFRS 2 Share based payment 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:
28. Equity-settled share-based payments (continued)
Date of grant 14 January 26 May 2021
2021
Expected volatility 81% 69%
Expected life 3 years 3 years
Risk-free interest rate (0.06)% 0.14%
Expected dividend yield - -
Possibility of ceasing employment before vesting - -
Fair value per option GBP0.2241p GBP0.1571/GBP0.1892
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 GBP152,440 was made against share premium in respect of share issue costs. (2020: GBPNil).
Movements in the number of options outstanding and their related weighted average exercise prices are as follows:
2021 2020
Number of Weighted Number of Weighted average
options average exercise options exercise price
price per per share
share pence
pence
At 1 January 492,901 327 240,574 46
Granted - - 270,000 30
Cancelled - - (17,672) 1750
At 31 December 492,901 327 492,902 327
Exercisable at
year end 482,235 482,235
The weighted average remaining contractual life of options as at 31 December 2021 was 2.15 years (2020: 3.15 years).
Warrants
Movements in the number of warrants outstanding and their related weighted average exercise prices are as follows:
2021 2020
Number of Weighted average Number of Weighted average
options exercise price options exercise price
per share per share
pence pence
At 1 January 1,130,067 53.27 127,500 20.00
Granted 10,692,459 25.11 1,085,900 60.00
Exercised - - (83,333) 60.22
At 31 December 11,822,526 27.80 1,130,067 53.27
The 2020 outstanding warrants have been divided a factor of 1,000 and the related exercise price has been multiplied by 1,000 to account for the share consolidation that took place on 5 January 2021 (see note 23)
The weighted average remaining contractual life of warrants as at 31 December 2021 was 2.20 years (2020: 1.36 years).
28. Contingent liabilities
Edenville International (Tanzania) Limited has a dispute with a third party and arises from an Acquisition and Option Agreement signed in August 2010 (and its variation made in 2015) ("Agreement"). The third party is seeking financial compensation and other costs in addition to a dispute over certain mining licenses granted in the name of Edenville International (Tanzania) Limited. Further to the Company announcements on 18 and 31 May 2022 that Upendo Group Ltd.'s current 10% economic interest in the joint venture, which holds the licences governing the Rukwa Project, had been transferred to a 10% direct holding on the principal production licence. The Company has sought legal advice and has been advised that the variation has been undertaken illegally and that the holding should be reversed by the Government, This reversal has been sought. The Company will provide a further update as appropriate.
29. 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
30. Related Party Transactions
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 GBP636,035 (2020: GBP400,904) 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 GBP10,154,340 (2020: GBP9,518,305). This amount has been included within loans to subsidiaries. The company also invoiced Edenville International (Tanzania) Limited GBP90,000 (2020: Nil) in respect of management fees. This remained outstanding at the year end.
At the year end the Company was owed GBP3,712 (2020: GBP3,712) by its subsidiary Edenville International (Seychelles) Limited.
At the year end the Company was owed GBP6,340 (2020: GBP6,340) by its subsidiary Edenville Power Tz Limited.
At the year end Edenville International (Tanzania) limited was owed $41,677 (2020: $41,677) by Edenville Power Tz Limited and $9,517 (2020: $9,517) was owed to JICL Consultants.
31. Events after the reporting date
Subsequent to the year end, the Directors confirmed their intention to convert the loan of GBP10,154,340 between the Company and its subsidiary into equity. This process will commence soon and it is anticipated that the conversion will be completed before 31 December 2022.
On 3 February 2022 we announced that the Company's subsidiary Edenville International (Tanzania) Limited had entered into a contract with Nextgen Coalmine Limited ("Nextgen") for the operation of the Company's Rukwa Coal Project. This superseded the Coal Mining Agreement with Infrastructure and Logistics Tanzania Limited and the Sales and Marketing Agreement with MarTek Global FZ-LLC, announced on 8 June 2020 and 26 August 2020 respectively. These agreements were terminated by Edenville due to lack of progress on implementation.
Subsequent to entering into the agreement with NextGen both the international and domestic coal price increased significantly. This coincided with heightened interest from potential customers to enter into offtake agreements for coal from Rukwa. Additionally, the implementation of the coal mining agreement with Nextgen was, for various reasons, problematic, resulting in very poor production figures over the period from February to May 2022 and no material revenue for the Company.
The lack of progress by Nextgen culminated in the announcement on 31 May 2022 that the Company had reached an agreement with NextGen to terminate the contract. Following the termination of the contract all mining equipment has been brought back into service by Edenville, whilst an additional pre-strip excavator has been added to the fleet. Up to three additional trucks have been sourced to rapidly scale production. Our initial goal is to satisfy existing demand from local customers of 1,500 tonnes of washed lump coal product and 500 tonnes of coal fines in the immediate future, targeting sales of 5,000 tonnes per month of washed coal late in Q3 2022, with coal fines sales also expected to continue and possibly expand. During the first half of 2022, 9,466 tonnes of ROM coal has been mined.
We believes there is sufficient demand based on the Company's order book and recent discussions with potential customers to sell any coal that is produced at Rukwa. The Company is also exploring the potential of exporting its coal for the first time, given margins would be expected to be even greater.
Much of 2021 and the first half of 2022 was spent pursuing reverse takeover and other opportunities to add assets to the Company. During this time the Company focused on reducing cash burn on its Tanzanian project whilst it has explored these potential new projects. One potential transaction progressed significantly, however was ultimately terminated by mutual consent. As part of the termination it was agreed that the transaction costs incurred by the Company would be re-imbursed in full by the potential take-over target.
Further to the Company announcements on 18 and 31 May 2022 that Upendo Group Ltd.'s current 10% economic interest in the joint venture, which holds the licences governing the Rukwa Project, had been transferred to a 10% direct holding on the principal production licence. The Company has sought legal advice and has been advised that the variation has been undertaken illegally and that the holding should be reversed by the Government, this reversal has been sought. The Company will provide a further update as appropriate.
32. Commitments
License commitments
Edenville owns a coal mining exploration licences in Tanzania. These licences includes commitments to pay annual licence fees and minimum spend requirements.
As at 31 December 2021 these are as follows:
Group 2021 2020
GBP GBP
------- -------
Not later than one year 21,993 23,089
Later than one year and no later than five years 65,979 72,619
------- -------
Total 87,972 95,708
======= =======
33. Ultimate Controlling Party
The Group considers that there is no ultimate controlling party.
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END
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June 30, 2022 02:00 ET (06:00 GMT)
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